Should IT Managers Still Give Raises?

Is giving raises still the right thing to do?
Is giving raises still the right thing to do?
Image Credit: Brian Reid

As IT managers we use our IT manager skills to spend a lot of time each year conducting performance reviews with each of the members of our team. The reason that we’ve had the IT manager training to do this is so that ultimately the company can evaluate each person and give them a merit raise once a year. However, these days those merit raises can appear to be pretty paltry – they’ve averaged 3% for the past few years. Is this really motivating anyone?

What’s Wrong With The Current System

In all honesty, most people who are working these days have gotten used to the way that raises are handled. We do our work and then at the end of the year we get a meager raise if we’ve done a good job or a less than meager raise if we need to improve our performance. However, things are starting to change. The people who handle raises and the people who consult on raises are starting to ask if it really makes sense to give a raise to everyone every year?

The problem that most IT managers face today is that on their team they will have high performers and then everyone else. At the end of the year they may be able to give their high performers a 3% pay increase and everyone else is going to be getting a 2% pay increase. Sure, the best workers get more, but not a lot more. What’s happening here is that there is really only a symbolic difference between the two types of raises.

Some of the consulting companies that have started to take a look at how companies hand out raises have come to a conclusion that we’re doing it all wrong. What they have determined is that IT managers have pretty much been wasting their time. They’ve determined that it does not seem to make a lot of sense to spend time trying to link small differences in performance to small differences in pay. It turns out that a lot of IT managers share this opinion.

What’s A Better Way To Handle Raises?

So if the way that we’ve been handling raises is not the best way to go about doing this, then what would be a better way? One approach might be to give out larger and more frequent bonuses. This kind of thinking could lead to the elimination of merit raises as we know them and the introduction of meaningful bonuses for high performers.

If you end up doing away with annual raises, you can expect a number of changes to occur. Your high performers could start to see annual wage increases of 10% or even more. Your low performers are going to start to understand that you view them as being low performers and you’ll probably start to see some healthy turnover in this area.

One thing that you need to remember as an IT manager is that an annual raise is not the only motivational tool that you have at your disposal. You may also have bonuses that you can use. Spot bonuses don’t permanently raise an employee’s salary and they end up giving the company more flexibility in down times. You’ll need to remember that with bonuses workers may find that it’s harder to grow their earnings over time unless they win regular promotions.

What All Of This Means For You

As IT managers it is our responsibility to evaluate the job performance of the members of our team in order to do more IT team building. Traditionally we spend time each year creating a written evaluation of each of the members of our team which is then used to determine what level of merit raise those team members will be receiving. However, more often than not these merit raises are roughly 3% — does that really motivate anyone?

More and more people are starting to take a look at the merit raise systems that we currently have in place and are starting to ask if it is really the right way to be doing things. The difference between the raises that the best workers are getting and what everyone else is getting is fairly small. There are several different ways to deal with this issue. One is to no longer promise all employees an annual merit raise. Another is to provide more frequent and larger merit raises. IT managers also have the option of using spot bonuses to reward good performers.

Although it is not the only way to reward workers for a job well done, pay is a powerful tool that IT managers have to work with. Current pay practices don’t allow for a significant difference between high performers and low performers. IT managers need to spend some time and determine what they can do to make their company’s merit system clearly reward their best performers.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Management Skills™

Question For You: Do you think that you would need to get worker’s agreement before doing away with merit raises?

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What We’ll Be Talking About Next Time

I think that I’m safe in saying that at some point during the past week, despite all of your IT manager skills you probably would have described yourself as being “down”. Just exactly what we mean by this probably differs from person to person, but one thing that we can all agree that at some point in time we were feeling negative feelings that made us feel uncomfortable or unhappy. Is it possible that these are good feelings to have?