Raises

I’d like to cover these first, as they are more straightforward. A raise is an increase in an employee’s pay without a corresponding increase in their responsibilities or level in the organization. Good looks like this:

  • The employee and manager mutually understand the purpose of a raise, e.g.,
    • Is a raise meant to keep the employee whole in the face of inflation?
    • Is a raise meant to retain the employee in a competitive job market?
    • Is the raise meant to reflect an employee’s increased productivity due to training, accumulated experience, or some other factor?
  • The employee and manager mutually understand when raises will happen
    • This should be written in the employee handbook, is driven primarily by the needs of the company, and is not usually open for negotiation
  • The employee and manager mutually understand how the amount of a raise will be determined. Examples:
    • Cost of living raises will be based on the US CPI index
    • Competitive job market raises will be based on independent survey data re: pay (shared with the employee for transparency) and on performance evaluations
    • Increased productivity pay will be based partly on the employee’s performance, measured by performance evaluations, and partly on company performance. The split should be company policy and will likely vary as an employee’s level in the org chart changes.

Promotions

A promotion is an increase in job responsibilities that may be accompanied by a change in title and should include an increase in pay. In contrast to general employee management, promotions should be done systematically. Exceptions should happen rarely and with abundant, transparent justification—this reduces perceptions of favoritism or any other -ism affecting the decision(s). A good system includes these elements:

  • Clear criteria for eligibility 
  • Clear, agreed expectations about when promotions will happen
  • Clear, objective selection criteria, focused on job performance
    • Do not include “potential” as a criterion, because
      •  Potential is a subjective assessment and humans are notoriously bad at judging it 
      • If you doubt this, consider that NFL scouts are explicitly paid to assess “potential” and usually have decades of experience to back up their judgments. Then consider that Tom Brady was picked dead last in his draft. Are you better at assessing “potential” than the professionals who passed on the greatest quarterback of all time?
  • Transparency about who will be involved in the decision and who the final decision-maker is
  • Transparency to every candidate on how they scored on the stated criteria