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Salary talk: when and how.

Salary talk: When and how

Now that inflation has leveled off, cost of living increments no longer account for the lion's share of payroll increases. Many employers may consider this a good time to switch from a compensation system based on seniority to a system based on performance.

Performance reviews thus take on a new significance, since they are a key determinant of monetary rewards. A decision that managers face is whether or not to discuss salary during the performance review meeting. If not, when and how should this sensitive subject be brought up?

Experts favor discussing salary at another time.1-3 They cite several problems caused by combining a performance review with pay talk:

Some employees listen only to the part about their salaries. The rest of the discussion is wasted.

Interviewees tend to weigh each comment to see if it means a raise or not. Arguments occur over ratings, disrupting the performance review and wiping it out as a learning experience for employees. Both sides often become defensive, which destroys rapport.

The interviewer becomes a judge whose verdict is the new salary level. The employee finds it hard to accept the same person as friend and counselor. Adult adult transactions slip into parent /child relationships.

Salary considerations affect the judgment of the rater. Managers hate to be responsible for an employee's failure to get more pay, so there's a strong tendency to inflate ratings. Some managers decide on a raise, then write an evaluation to match it.1

On the other hand, because there's a price tag on evaluations, too much time may be devoted to discussing employee weaknesses, at the expense of praise and recognition for accomplishments.

The interviewer may hurry to avoid confrontation. An attitude of "let's get this over with' can ruin the performance review meeting.4

My own feeling is that traditional, numerically documented ratings should be avoided entirely, but most of us don't have the option or authority to make that decision.5 We are given forms designed by the human resources department and told to use them.

Ideally, these forms would serve as guidelines for inexperienced managers. But the ones in current use are usually a maze of check-off boxes, scores, and definitions. One observer has complained that "the more you attempt to make a direct link between performance and pay; the more you are forced into a mathematical formula . . . and it never works.' Competent supervisors overcome this handicap. Those who are not so competent flub the performance review and blame the forms.

How do you get around the fact that a rating must be awarded during the meeting? How do you get the employee to think about performance improvement rather than salary?

Tell the employee that the specific salary change will be disclosed at a subsequent meeting, and provide the date if you can. Also state (if this is true) that you don't know the exact amount of increase or what percentage of employees will receive a merit increase.

Finally, note all the other factors, besides the numerical rating, that play a part in determining pay increases: budgetary restrictions, salaries offered by competitors, availability of individuals with similar skills, the percentage of employees who receive superior ratings, the work group's productivity and quality of work, where the employee fits in the salary scale (employees who are near or at the top of the scale usually do not get as large an increase as those who are lower down), and plans and objectives formulated during the performance review meeting.

Once the interviewee realizes that the numerical rating is just on factor out of many, he or she is likely to settle down and participate in all phases of the discussion. The clincher should be that the employee's objectives and plans for the future will have an impact on the pay-setting process. That insures undivided attention when a manager says something like: "You have more than met your performance standards, but the new objectives you propose don't seem very ambitious or challenging. Let's pursue that subject further.'

If the interviewer sticks closely to the rating form, some topics may be omitted or slighted. They include updating of position descriptions, changes in performance standards, modifications of limits of authority, and new, creative work objectives. If the same form is used for all employees, which is usually the case, there will probably be gaps in the evaluation of supervisory skills and research and development projects. For these reasons, it's advisable to develop techniques that supplement the form you must use.

All right, then, when should salary discussions take place? According to Rue and Byars, the ideal time is two to three weeks after the performance review.3 The salary review can be very brief. The manager simply states the amount of the raise and answers questions, and the employee, it is hoped, reaffirms his or her commitment to the work ahead.

To summarize, first the manager and the employee discuss accomplishments and plans for improving performance. Then the manager makes salary recommendations, after having the benefit of the employee's input. Finally, the manager informs the employee of the amount of salary increase or bonus.

Don't try to do it all in one sitting.

1. King, P. "Performance Planning and Appraisal. New York, McGraw-Hill, 1984.

2. Truell, G. "Performance Appraisal. Currentissues and New Directions.' Buffalo, N.Y., PAT Publishers, 1980.

3. Rue, L., and Byars, L.L. "Supervision: Key Link to Productivity. Homewood, Ill., Richard D. Irwin, 1982.

4. Maratea, J.M. Preventive maintenance on employees. MLO 17(7): 21-22, July 1985.

5. Umiker, W.O. Performance appraisals: Beware the numbers game. MLO 15(12): 79-86, December 1983.
COPYRIGHT 1986 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1986 Gale, Cengage Learning. All rights reserved.

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Author:Umiker, William O.
Publication:Medical Laboratory Observer
Date:Apr 1, 1986
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