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05/10/2018

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Alright, you've given six reasons. How likely to do you think it is that they will catch on?

I do not see employees responding favorably to this trend as the recognition time its too extended--too far removed. Maybe there are some mechanics to the process that I am not aware of that address this.

We're in a tight labor market. I think it's more likely to see innovation to have higher budgets or more frequent increases.

It's thought provoking tough--cheers!

Interesting concept. As I digested the points, my mind went immediately to Finance and how they would budget/prepare for the large hit to the salary and wage budget in year 3, presuming we hope to incorporate a 9-10% budget increase in that year. They certainly prefer to increase gradually. One would most certainly take promotions out of the annual process, since you wouldn't wait three years to promote. We have basically done that already - it's almost impossible to have promotions included in the 3% budget.

I do like the emphasis on variable pay. If you are a sales company, there is a component of the company that has a flat base salary and variable pay to drive performance. It works for them, why not the rest of the organization - if you could come up with the metrics to compensate them with variable pay.

Joe,

I honestly don't think most companies will do this. That probably says more about the hidebound nature of our industry than the possibilities of this being useful.

As pay pros we tend to think that recognition is represented by dollars, especially base pay dollars Imagine if we gave the raise people were hoping to get over the next three years all at once this fall. Most would be ecstatic...for a while. We would then need to manage their performance and expectations over the next three years through a combination of actual management and variable pay (and other budgeted recognition programs).

Use the higher budget immediately. Next year instead of wasting time working on determining nominal base pay increases, spend that time getting your managers better and managing.

Any company who does this would already need to be performing well, since the cash cost would be material. But if you had cash, and wanted to change the game, this may put you ahead for a while.

Thanks Karen.

Finance might not love the concept at first, but they get on board when they realize they generally operate on 3-year long-term cycles. Whereas year one may be expensive, knowing that things will stay relatively constant in years 2 and 3 may give them some planning opportunities that they would have otherwise had.

I like that this would de-link annual raises from the promotion process. Promotions should first be about work, then about pay. And, since all jobs would receive the triennial approach the differences between two levels would remain relatively consistent to the current methodology.

The emphasis on variable pay is probably the bigge4st factor. This makes variable more critical and would require many companies to be better at every aspect of it. It is not without challenges, but challenges are often what makes our jobs the most fun!

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