As Accounting Supervisor, you must recommend annual salary increases for 2017. Y

Question

As Accounting Supervisor, you must recommend annual salary increases for 2017. You have “fresh” performance ratings for each of your employees and have had face-to-face discussions with each. Your company’s compensation function is currently using a “performance matrix” (e.g. ratings from 1 to 5) based on several different dimensions of the job. You have a 3% merit budget to award your team as you see fit, and this is consistent with what other companies are doing locally, as well as regionally and nationally.

1. Identify some of the pros and cons of employing a forced performance ranking matrix (i.e. Grading employees 1 through 5) in managing annual merit increases. Base your answer on evidence from the book.

2. Provide sample dialog explaining the merit increase decision to a “top performer” and a “bottom performer.”

3. What can companies do to continue to attract, retain and motivate employees if they cannot provide a raise?

Explanation / Answer

While for annual raise every organization follows the PMS to evaluate the performance of the employees during the completed financial year. In this they define the parameters on basis of which employee will be evaluated and rating is given to employee on those paramenter by varios people.

Answer 1)

While this ranking matrix will definitely help the company to convert the performance of the employees into the numerical format which is then very easy to calculate and finalize the ratings

While the numerical matrix consists of parameters and ranking given may be biased or not justifiable. Thus the reliablity of the matrix comes to very low and company can loose the trust and belief into the system.

Answer 2)

Generally the merit increase decision will be communicated to "top performer" by sharing his achievments, way above all performance and output, target reaching, and expectation from company for such continuous performance.

To a "bottom performer" company will communicate the low performance indicators, share feedback, and improvement areas that needs to be worked on with expectations from company for the increase in performance in next year or company may take appropriate action for the same.

Answer 3)

If a company is not able to provide a raise, company can provide the employees an opportunity to learning, exploring and gaining new knowledge platform which will attract employee and retain them. It will also motivate further to the contrubution to operations of the company. Thus creating a culture of motivation will help the company attract, retain and motivate employees if they can not provide a raise.

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