If you find yourself on the WorldatWork member homepage, you'll see this video discussing the data from the "2013-2014 Salary Budget Survey." My bet is that most of you already know that the merit budget projection for 2014 is 3.1%. And I don't think it's hard to remember that the last three years' projections were 2.8%, 2.8% and 3.0% -- or that the actual increase numbers were just shy of the projections.
At least the trend from 2.8% to 3.1% is positive, but let's not pretend. .3% is really, really negligible when it comes to dollars.
I think it is important to face this fact before we get deeper into close-of-year plans and communications. If merit matrices are going to look pretty similar to last year (and the video makes a good case for this), then lots of employees will be earning raises in the 1.5% to 2.5% range. Perhaps for the third or fourth year. By this time your employees may understand why they need to live with numbers like these, but there's no way they'll feel acknowledged by those percentages. It's just plain human nature.
It's important to know the truth of how your employees feel about their pay at this point. Yes, it's obvious that they can't be thrilled (who is?), but there are bigger issues involved. The guru of trust, Charles Green from the Trusted Advisor, points out that trust is a "human balance of mind and heart." That we feel trust when we see that the other person understands and appreciates us by demonstrating that they have our best interests in mind.
Charles also talks about the economics of trust. A critical dimension to making money from the customer/salesperson relationship, and comparably important to the employee/employer relationship. Higher trust leads to higher engagement, deeper relationships, stronger commitment to excellence, unshakeable support for management. Low trust leads to resentment, among other damaging emotions.
In addition to being clear with your top performers, be sure to address the misgivings of the "1.5% to 2.5%ers" when you plan your communications this year. Tell them what's in it for them in a realistic way. If there is nothing new you can talk about, plan something that sincerely addresses their concerns or expect to deal with their resentment. And make sure your managers are equipped to address these employees' tough questions by giving managers discussion guides that are customized for conversations with these employees.
It may be "business as usual" this year but don't imagine that makes your job easy. After all, these employees have a point. They've helped to keep things going through tough times WHEN YOU NEEDED THEIR HELP. They may not be your high flyers, but they can make your infrastucture hum.
Margaret O'Hanlon is founder and Principal of re:Think Consulting. She'll join Ann Bares and Dan Walter of the Compensation Cafe to speak the unspoken -- Everything You Do (in Compensation) Is Communication -- in an upcoming book. Margaret brings deep expertise in compensation, career development and communications to the dialog at the Café. Before founding re:Think Consulting, she was a Principal with Towers Watson. Margaret earned her M.S. and Ed.S. in Instructional Technology at Indiana University, Bloomington. Creative writing is one of her outside passions, along with Masters Swimming.