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Any potential solution would have to fit the company specific issues and culture. Some of this issue is why I moved away from grade and band structures over a decade ago. Individually market pricing a job structure avoids moving all ranges x% when some don't need to.

Other potential solutions;
- If you are using the typical market range spread (+-20% from midpoint) modify to -10% for your minimum. This will give you a better starting point and actual market data typically has a tighter range below the midpoint anyway.
- Differentiate pay increases based on performance and position in range.
- Allocate a portion of Merit funding based on need (department position in range vs performance)
- Create the ability to recommend out-of-cycle increases mid year for individuals below the mid-point with high performance.

Just my thoughts. I have yet to see a "perfect" solution.

Those are all good valid options, Trevor.

Your 90% CR hiring rate would work well for most jobs requiring ~8-year nominal increases to reach the MRP. High-side outliers may extend farther than the artificially symmetrical (rather useless, IMHO) range ceilings allow, of course. Few positions really demand more than a handful of years incumbency to quality for the central market-competitive rate. Proper range penetration becomes a terrible issue when individual progression trajectory plans are based on false assumptions.

Strongly endorse non-uniform departmental merit increase funding... or at least funding based on unit market ratio. See http://blog.worldatwork.org/2015/06/calibration-triple-crown-component-of.html.

Keep the ideas coming!

This is one of the reasons why job hopping is so prevalent. The most common answer to the question "how do I get a big increase in pay?" has become "by changing employers". The slow increase in compensation over time for incumbent employees, increased employee mobility and decreased loyalty on both sides of the table leads inevitably to more turnover. Many companies try to offset this by doing other things to help make people want to stay, such as a great benefits plan or on-site gyms and other perks that their employees value. That helps, but it does not address the long, slow march to the midpoint for most employees that has become institutionalized through how pay structures are typically set up.

I don’t think there is a perfect across-the-board solution to slow wage growth for the masses. Increasing the frequency and size of pay adjustments beyond the growth rate of ranges is expensive and not everyone performs well enough to merit accelerated salary growth. Most of them also do not perform badly enough to merit being made available to the employment community at large. It also can be difficult to justify offering a newly-promoted employee facing a new challenge a pay level that should be commensurate with demonstrated competency in the role, or one where the MRP can be attained in just one or two cycles. Getting rid of ranges and grades altogether invites chaos and potentially lawsuits.

Really, I can only offer the old standard ideas of making sure that top performers get larger increases that help keep their salaries at or even ahead of market coupled with trying to make your company a great place to work. Pay the non-superstar-but-still-valuable masses a competitive enough wage the business can support. Some people you’d rather not see go will still leave (and others you’d rather leave will stay). For the good people that still leave, take pride in the fact that you have given them the opportunity to grow and develop and therefore made that great offer possible. They have also helped the organization along the way. You have improved their lives, and they will think well of your company for it.

Thanks for a thoughtful response, Scott. Your observations are on target, too.

Maybe the problem is that most grade range systems were formulated in the ancient prehistoric days of double-digit inflation, aggressive hiring practices and generous net pay increases that let new people progress from starting rates to midpoint in a few years. Those days are long gone, but the habit of annual structure updates despite feeble pressure on hiring rates and MRPs, paired with miserly payroll budgets (except for NEOs), is a recipe for disaster.

Imagine what will happen when the economy recovers!

Pay people equally, transparently, at your desired position to market; be rigorous and absolutely ruthless in performance appraisal; and reward your stars through mechanisms other than base pay.

Tony voices another revolutionary concept. ;-) Sounds a bit like the military, where "up or out" is the rule for officers competing for the increasingly fewer open slots above their current rank. Works in a highly structured bureaucracy where there is a broad central band for acceptable performance but no room for outliers. Would discomfit those who believe in seniority-based programs where worker output value is assumed to depend on length of time spent in the same job, however.

We created a grade step system that had these attributes:
1.We recognized multiple, distinct job families and for each job family, we created a unique structure.
2.We attached p50 of survey data to the maximum of the range.
3.Then, created steps from entry (hiring rate) up to the maximum. The number of steps for each job family varied based on the length of time it took to become fully proficient in their job.
4.Employees would progress through the range based on their ongoing value to the organization.
5.When they reached maximum of the range, the employee was eligible for annual awards.
6.Structures were updated annually.

Very logical and sensible approach, David.

Suspect that the step #2 range maximum was a compromise semi-subjective guesstimate arbitrary limit based on what the organization was prepared to pay... but what else is a max for? Here you use the market median as the Control Point, to avoid compounding. The maturity curve approach presumes that only workers whose value appreciates over time are retained, of course.

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