Separate Performance Reviews and Salary Increases

A clear explanation on why?companies?should?practice separating the performance review?process and develop an independent merit increase strategy.

I'll start with a?story;?this is about?the?first?time I was given a performance review?by a?small business that?could not afford to give me a?large?increase. My manager scheduled a meeting with me and?gave me a great review. They?told me all these wonderful things about my accomplishments?and?the?goals?I?had?me. However,?as we approached the end of the review,?I?started to?feel?anxious?because?I could tell my manager was starting to get?uncomfortable. It was time to talk about my merit?increase.??

When we got to that point,?the manager said,?

?“OK we're?going to?give you an increase and I am so sorry to say that?this is?the maximum?we can do right now.”??

I?actually?wasn’t?too surprised?by the dollar amount, it was?close to?the expectation that was set when I onboarded,?but?what most surprised?me?was how the manager delivered?the news.??They were?extremely apologetic?and?kept saying,?

“I'm?sorry we can't afford more,?you're great but this is all we can do right now”.???

I found myself then in return consoling?them?and?replying,?

?“Don't worry,?I understand,?I'm here because I’m aligned with the company’s mission and feel good about the work I do.” I went on to say, “what is important to me?right now,?is to improve where I can,?if there is anything you can tell me about what I can do better that’s what I want to know”??

They?were so?relieved;?this was a?conversation they were?absolutely dreading and?now?they?could approach my review honestly?and not hide behind the guilt they felt about the increase amount.?

59% of?US?employees think that traditional performance reviews have “no impact” on their personal performance (Gartner, 2019)?

That experience stuck with me and?I?have taken?that?interaction?with me?over the?years in my approach to performance reviews and my firm belief in?the separation of?performance reviews and?merit increases.?When?a person?contributes to your organization,?you?must?give them?actual performance?feedback. That should have been the focus of my performance review?back then?and that should be the focus?for?everyone?at every organization that values their teams.??

It’s not?just positive feedback,?but constructive feedback. People should feel?great after a review?and?walk out of?it?with?a sense of purpose,?goals?to go towards, and new?accomplishments?to achieve.?

When managers?focus on the career development of?their teams?and?then give?them?the resources to help?them grow, it?results in increased?trust and engagement which are the?perquisites?for innovation?and the overall?financial?health of the company.??

The operational?tools?of performance review?can vary?however the

Key?components?to accomplish effective?Performance?Reviews?are?

Time?

Planning??

An accurate?Job Description??

Fiscal?Transparency??

Consistency??

Now I'm not saying that the disappointment?in a low salary increase?may still not exist. But it is easier?for people?to comprehend when it isn’t?tied to?one's performance.??The result of?a performance review should be engagement and a team approach to?working toward a collective goal to make?sure everyone can continue to thrive.?If the?focus?is?specifically on career growth, people are?going to make themselves successful inside your company?and?the return will be?worth every second spent?on engagement.??I advise managers to be consistent with the idea that a performance review is something to be?celebrated and not?shy away from.??These conversations?must happen?regularly and more often, it’s the future of work.?

• US?HR professionals agree that semiannual (60%), quarterly (86%), or ongoing reviews (90%) give more of an accurate appraisal of an employees’ work (SHRM, 2018)?
• ?Almost all (97%) of Gen Z?in the US?is open to receiving feedback, and 67% want it in timely constructive manner throughout the year?PR Newswire, (2018)?

?Monthly?is ideal with quarterly being a minimum recommendation,?given?the state of our current employment?environment.??I believe the “Great?Resignation” is forcing companies?refocus to how we approach employment and?is quickly dissolving into the “Great Retention”.??People are making moves more than ever and effective performance reviews can be an effective advantage?in retaining top talent.??

In?my September?article, we’ll dive into how to create a merit increase strategy.??

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Kelly?Pallanti, SHRM-SCP, HRCEO US, Kennedy Global HR LLC.??

Kelly has been a strategic human resources consultant for over 20 years and has extensive experience with SME and nonprofits in a wide-range of industries.??She can help your company assess and improve your performance review process.??To learn more about Kelly and?the?company?she co-founded, Kennedy Global HR?LLC visit?www.kennedyglobalhr.com??