02-20-2020, 04:42 PM
https://finance.yahoo.com/news/why-performance-bonuses-merit-raises-173310077.html
Even the executives who are invested in you believing the bullshit about these so called merit raises don't believe they work. Also, in case you missed the bold text near the end, the companies who have implemented merit raises don't even fully fund their own programs which means that some people who deserve to get a raise by the company's own performance metrics aren't receiving the raises they deserve. And did you see the part where only half of the executives believe annual raises make any difference in performance and only 20% believe merit raises work? That applies to the executive pay, also. Paying executives 127X or 278X the employee's pay doesn't make a difference in executive performance, either.
And what did I say previously about labor costs? If you keep the labor costs down that helps increase profits which in turn goes to the shareholders which includes the executives that aren't fully funding these programs. But, hey . . . keep drinking that Kool Aid . . . once it trickles down to you, of course.
Oh, and I received a merit raise in January of 1.85% which is less than the rate of inflation. The person who did my performance review isn't qualified to do my job so I'm not sure how they can determine if I did a good job or not. Also, off the top of my head I can't tell you the metrics used to determine if I deserve a merit raise or not, but they're pretty subjective instead of objective. And lastly, the metrics to determine if I deserve a merit raise really don't deal with how well I do my job (such as did I get the diagnosis correct, did I prescribe the correct medication, was there a good outcome or a bad outcome, did I order a bunch of unnecessary tests, did I follow the standard of care), but rather deal with how much income I generated. When my job involves taking care of sick and injured patients, should my merit raised be based upon how much the patient is charged? I don't think so, but that is basically what it boils down to.
Quote:Why Performance Bonuses and Merit Raises Don’t Work
Fortune Anne Fisher February 24, 2016
In theory, it sounds like a no-brainer: Come up with a compensation system that rewards and encourages topnotch employees with bonuses and other short-term incentives. Fund it, without blowing up the overall pay budget, by giving mediocre (or worse) performers tiny raises, or none at all.
In practice, though, it's a different story.
Senior managers at 150 large and midsized companies in a new Willis Towers Watson study admit their incentive pay plans don't actually work. Barely one-third (32%) of the executives polled think their programs are "effective at differentiating pay based on individual performance."
Only half say annual incentives, like bonuses for top employees, make any difference in how well people do their jobs. Least effective of all: Merit raises, which managers are supposed to give (or not) to employees based on, well, merit. Just one in five (20%) of the executives surveyed thinks merit pay "drives higher levels of individual performance" in their companies.
This wouldn't matter quite so much if pay for performance plans weren't so popular. But, since reaching a record high in 2014, the number of companies counting on incentive pay to produce stellar results has kept on rising. "Companies are spending hundreds of millions of dollars a year on these disappointing programs," observes Laura Sejen, global chief of rewards at Willis Towers Watson. "If this were any other business process, certainly we'd all have moved to improve the ROI by now."
So what's the hold-up here? The biggest reason incentive pay so often doesn't deliver results, it seems, is that individual managers don't stick with the program.
That's especially true when it comes to merit raises. "The traditional annual raise has become so ingrained in U.S. companies that every employee over age 30 has 'grown up' with it and expects it," observes Sejen. "Now companies are saying, 'OK, from now on, not everyone gets a raise every year.' They're relying on managers to keep some salaries flat so they can pay larger salary raises and bonuses in critical, targeted areas."
Those managers, however, are the ones who face difficult conversations with unhappy subordinates who don't get pay hikes. So most often, bosses are still handing out annual "merit" increases, regardless of how individual employees perform. Not only that, but 26% of companies in the study have paid bonuses even to "employees who fail to meet expectations."
It would probably help if there were more cash to go around--that is, if companies fully funded their projected bonus pools. The study notes that has happened only twice since 2005, adding that "average projected bonus pool funding levels for 2015 were only 87% of target."
When combined with that shortfall, managers' tendency to chicken out on conflict with mediocre or underperforming team members means that "even top performers receive a lower bonus than called for in the plan design," says the study. In the current market for talent, a skimpy payout may look pretty unappealing next to the signing bonus a competitor is offering.
Even the executives who are invested in you believing the bullshit about these so called merit raises don't believe they work. Also, in case you missed the bold text near the end, the companies who have implemented merit raises don't even fully fund their own programs which means that some people who deserve to get a raise by the company's own performance metrics aren't receiving the raises they deserve. And did you see the part where only half of the executives believe annual raises make any difference in performance and only 20% believe merit raises work? That applies to the executive pay, also. Paying executives 127X or 278X the employee's pay doesn't make a difference in executive performance, either.
And what did I say previously about labor costs? If you keep the labor costs down that helps increase profits which in turn goes to the shareholders which includes the executives that aren't fully funding these programs. But, hey . . . keep drinking that Kool Aid . . . once it trickles down to you, of course.
Oh, and I received a merit raise in January of 1.85% which is less than the rate of inflation. The person who did my performance review isn't qualified to do my job so I'm not sure how they can determine if I did a good job or not. Also, off the top of my head I can't tell you the metrics used to determine if I deserve a merit raise or not, but they're pretty subjective instead of objective. And lastly, the metrics to determine if I deserve a merit raise really don't deal with how well I do my job (such as did I get the diagnosis correct, did I prescribe the correct medication, was there a good outcome or a bad outcome, did I order a bunch of unnecessary tests, did I follow the standard of care), but rather deal with how much income I generated. When my job involves taking care of sick and injured patients, should my merit raised be based upon how much the patient is charged? I don't think so, but that is basically what it boils down to.
