“I think annual merit pay increases should be tied to employees’ productivity,” stated a manager.
“I agree,” I responded.
“I also think,” the manager continued, “that appraisal interviews should focus on employee development. But it seems that during my appraisal interviews, all employees want to talk about is the amount of their raises.”
While many organizations consider both performance appraisals and salary reviews on an annual basis, they should not be combined. Pay raises, or lack thereof, communicate strong messages to employees. Salary discussions during appraisal interviews bury attempts of meaningful employee development conversations.
Consider appraisals and salary reviews to be related but separate. I like quarterly appraisals where managers discuss where employees have performed well and what they might improve upon. The appraisal at the end of quarter four builds on feedback given and received during the first three appraisals.
Approximately two weeks after the fourth appraisal, managers can report annual merit increases individually to employees. There is no need to mention appraisal information when communicating pay increases. Employees are very insightful. If managers have been candid during appraisal interviews, employees will connect the dots between productivity and salary.