Feedback for Management: Give More Off-Cycle Raises

Over the last few months, I’ve spoken to a few people who I consider star performers and who are frustrated at work. They’re the kind of people who take initiative and ownership, have a great attitude, do great work, and create huge value. They’re the kind of people who a company should go out of their way to retain.

Why are they frustrated? On-cycle raises.

On-cycle raises are when a company raises people’s compensation once (or sometimes twice) a year on a pre-determined schedule.

There are few better ways to show you care about and value your employees, and to retain your best people, than the unrequested, unexpected, unscheduled, off-cycle raise.

There are few better ways to alienate your best employees than forcing them to wait until the next raise cycle to pay them their value.

Do your best people take on more responsibility only “on cycle”? Do their roles grow only “on cycle”? Do they start adding more value once a year?

I’ve been on the management side of this too many times to count, way more times than I’ve been on the employee side. Sticking to on-cycle raises solves problems for the company. It’s much easier to give raises once a year. It’s a lot more work and administration to always be considering a raise for someone. And then if you do it for one person, it will lead to more people asking for raises more often and cause even more administration. It even saves the company a little money by having people wait a few months.

But see it from their point of view, if they should be earning more, why should they have to wait until the next raise cycle? If they’re adding more value, shouldn’t they be receiving more value? And ask yourself, if people have to ask for raises off cycle, are you fairly compensating them today?

Sticking to on-cycle raises creates problems for the employees and therefore for the company. And it creates the most problems for your best performers.

Be careful not to create a system where everyone starts expecting surprise raises and everyone starts asking for raises all the time. But also beware of the dangers of the strict on-cycle raise policy.

(Fair compensation is necessary but not sufficient to retain your best people. To be satisfied, they need more than money. Money is actually one of the easier requirements to satisfy. The other requirements, such as empowerment, ongoing learning, feeling valued and impactful, and having a great manager, are harder.)

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