Annual Pay Raises

This week’s article was about companies rethinking annual pay raises. As the article sates some experts think that giving larger and more frequent bonuses might spur better performance. Some experts and some leaders are starting to question annual pay raises. Annual pay raises reward every employee whether they are a “rock star” or your average everyday mediocre employee. The employee that gives that extra 10% each and every day ends up with the same pay raise as the guy in the mail room that shows up every day and puts in his 8 hours of work and goes home. The current pay raise system does little to motivate or differentiate between the stellar employee and the average employee.

The new trend in business for improving performance rather than annual raises companies are giving out on the spot awards and meaningful bonuses. I work for a division of the government that doesn’t relate very well to the outside business world but where I am at they do on the spot bonuses. I see a problem with that when an employee does something out of the norm or goes above and beyond they are automatically looking for that on the spot bonus. I’ve also witnessed different amounts of on the spot awards. What action makes one bonus worth more than another? I think that’s a challenge for managers and another …show more content…
Variable pay can include on the spot bonuses and merit raises. Rewarding the employee for a job well done “on the spot” but not raising the annual salary of said employee. This avenue of rewarding employees also works for the company as it give companies flexibility in down times. Variable pay is used to motivate employees because the employee realizes if they come to work every day and only does enough to get by they won’t be getting any type of raise nor should they expect any kind of incentive pay or on the spot award. Variable pay encourages employees to do the best they can each and every