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I like lump sums and feel a bit sad that no one ever gives me one. It's no favor to someone to keep increasing their salary for the exact same job year after year until suddenly that graduate student starts looking like a real bargain...


That is sad. :(

But you bring up a really good point - are we, over the long term, doing a person a favor if we allow their base salary to increase far beyond the value of their skills in the marketplace? Does this distortion help - or hurt - their career development over the long run?

I'm just asking - for the sake of giving conventional compensation wisdom a kick in the behind and prompting debate - whether there should be exceptions to the max out rule. And, if so, what would they look like.

Thanks for weighing in!

n my relative childhood, I interviewed the world-leading designer of spacelab door-lock systems as he mourned the end of his career specialty, with a family dependent on a very high salary now unattainable anywhere, particularly with his formal KSAs in the broader technical applications quite inferior to current graduates. Like a squirrel too far out on the limb. Tragic.

Alternate remuneration options existed. There is no reason anyone should have a finite limit to their pay growth... unless they refuse to upgrade their KSAs for a higher-valued post. I don't need a platinum paper clip and would not pay for one. Why should the employer pretend that work of finite value carries infinite cash entitlements?

See my point? The PERSON's value may be infinite, but the economic value of a particular set of skills in a given context is finite. IMHO, the employer has a certain moral obligation to clarify that and to offer paths with potential opportunities to qualify for progression as high as possible, consistent with reality. Anyone "topped out" or capped in one job really should be guided to possible alternatives that could permit them to continue mutual enhanced exchanges of higher-valued services for greater rewards. Must be a thousand ways to do those things.

That said, yes, there are exceptions to every max-out rule. Some totally unique jobs are the outliers that don't fit the standard limits. Some individual workers are literally irreplaceable and should not be bound by the rules that properly handle all others. For a perfect example: the aerospace space capsule cabin environment engineer/technician whose absence tucking the astronauts into the capsule capsule in the many Mercury and Gemini manned launches was NOT the one in charge in the tragic Apollo I disaster where all died. The word was that thereafter the astonauts demanded he be the guy or they don't fly. Without him, any manned space capsule contract was doomed; so he could name his price.


Great points. A good friend of mine who provides career counseling has shared numerous examples to me of individuals struggling to move on from situations where they were paid way out of whack with the market - places they needed to leave and move on from - and yet they found themselves, as you say, like a squirrel too far out on the limb. Trapped. And while we may chuckle that - yes - we would love to be in the position of being so overpaid, the life implications and choices of someone who finds themselves in that position are not always pretty.

So yes - I do buy that pay systems should establish finite pay limits for certain skill and capability sets, and that the way around this wall is to increase your skills and capabilities. But I also believe that we must have an open mind as to how limits are set and capabilities are judged - even if only at the outer edges.

Thanks for weighing in, I am really enjoying the discussion.


Thank you for sharing your thoughts and reasoning about salary range maximums. We work with both public and private employers and we have observed school districts to be the highest violators for allowing pay adjustments beyond the pay range maximums for their non-certified staff. We found one school district with 85 pay steps which means that they probably started their pay schedule with 30 steps - 30 years of service and they added an additional step for each year for the past 55 years. We encourage organizations to establish true 50% salary range spreads and cap employee base pay upon receiving the maximum. For those who desire recognizing their employees' contribution for the past year that have reached the cap, we recommend the lump sum increase. In addition, we help the organization identify if opportunities exist for true job expansion beyond "job creep" so employees that have "top out" are able to seek and obtain the additional KSA's (Jim's point)to qualify for the job of higher value and contribution to the organization. Also, for the high performing and topped-out employees, we encourage organizations to place these employees in mentoring roles and receive additional pay for sharing their KSA's with the junior staff.


Great thoughts and advice. Sounds like we are - probably all of us - aligned in our thinking. Thanks for the comments!

In the past two years I've moved all our staff to a merit/pay for performance system based on goals developed in each role, tied to the organization's mission/vision as well as the goals I, as CEO, have developed for the year. There's no longer the automatic CPI-type increase at the beginning of the year -- that increase is now a part of the P4P pay system and is based on a listing of desirables in our staff such as community participation (meaning within our office community), having integrity in our work and dealings, and a host of others I've cobbled together from some university programs I've seen. That increase tends to be from 0 to 1.5% -- so that baseline salaries themselves don't stay stagnant and then the true potential is the end of year merit payment, which can be quite substantial. My concern has been the stellar performers and their salaries. I want to keep these individuals and the KSA approach seems to lend itself to building in a formal policy for income growth for these individuals based on their desire to upgrade skills and assume more responsibilities. That may address my concern - so thank you for this thread and your ideas!


Sounds like you've made some great strides in your pay and performance systems. Research would suggest that when changes in these programs are strongly supported by the CEO (or, as in your case, the CEO has a direct hand in them), the chances of success are much, much higher. Thanks for sharing your ideas and experience here with us!

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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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