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Ann, I *love* this idea, but don't think we're anywhere close to getting rid of annual merit and rolling it up into some sort of variable comp. For one, the 2%-4% (broadly speaking) that most people get are much too small to make this something the business at most companies would buy into.

Secondly, at this point merit increases have become an entitlement. Moving away from the annual nature of them would require some serious change management.

That said, very good read and thanks for the survey.

Keep writing.




Thanks for weighing in. Even a few months ago, I would have said the same thing ... nowhere close to moving away from annual merits ... but I am hearing the question come up in a lot of places. Too many to ignore. Particularly, I am hearing the question coming from operational leaders -- not from HR. Which makes me curious to see how much talking, and much action, is actually happening out there.

Be sure to follow the link to the survey and weigh in!

I hear similar: very radical ideas and yet I still don't see movement toward a significant change. My hunch is, as Rory suggests, the behemoth of change management required may just be the thing keeping people from effecting the change. That and the discomfort it causes: we know people generally don't like change, even though they sure complain about the present!

I personally do think it's time for a significant change, and to use that pool to truly differentiate high performer compensation from that of 'satisfactory performers'. I agree with Rory that the merit has (for a long time) been an entitlement. That becomes an extremely expensive proposition for employers, with the chance for lower returns on their investments.

I look forward to seeing the results of your survey.

I think there is an acknowledgement that the classic performance/position in range matrix approach does necessarily work, at least in the short term. However, employees, as with companies, are generally annual cycle creatures. I would think that we can do much more than "tinkering around the edges" without throwing out the process and timing.

I do believe that employees have been guided (inadvertently) by managers to focus on the increase and to pay less attention to the growth and improvement process. We are losing a lot of communication and leverage opportunity if we are serious about continuing improvement.

Additionally, unless you are in a radical thinking organization, e.g. Google, or a very large corporation with patience and resources, it will be easier to develop a dramatic change inside a comfortable timeframe and familiar process steps.

Love it - took the survey.Thanks as always for thought-provoking ponderings, Ann.

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About The Author

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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