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Office superstars get part of your raise

Top people get lion's share of salary boosts

By T. Shawn Taylor

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More than ever, it pays to be a superstar at work.

With the bad economy cutting into raises, companies are moving away from across-the-board salary increases and, instead, are giving the biggest piece of the pie to their top performers. Most workers get the crumbs, a barely noticeable bump in their base salaries. Mediocre or poor performers might get nothing.

To identify who is most worthy, companies are constantly tweaking their employee evaluation forms and beefing up the criteria that separates the "A" performers from the "B's" and the "C's." The cutoff for the "A's" can range from the top-performing 5 percent to 15 percent of workers, say compensation experts. The idea is to increase productivity and to hold employees more accountable.

But, with average raises expected to be in the 3 percent range again, even top performers are likely to get less than in the past. When the difference between a good and an average raise is little more than a couple of lattes after taxes, it's hard to stay motivated.

"If you're giving someone you really think is good 3.1 percent versus 2.9 percent, 'Oh, yippee!' When you've got a 3 percent [ceiling], you can't differentiate. It's absurd," says Sandra Sipari, director of compensation, benefits and systems for Rexall Sundown in Boca Raton, which makes and sells nutritional products.

To employers faced with increased global pressures and demands from investors and shareholders, it makes sense to reward best the people they want to keep. The problem is when other people find out -- and people do talk -- they feel cheated.

"Companies counter that with, 'If you perform at that level, you can get [that amount] too,' " Sipari says.

The people getting less aren't necessarily bad employees. They probably meet their manager's expectations; they're just not stars. But this typical "B" worker -- which represents the majority -- also is the employee who's most likely to be overlooked.

"In a booming economy, people in the middle are rewarded more aggressively," says John Bremen, who leads the compensation practice for Watson Wyatt in Chicago. "It's going to take another economic growth period for full pay levels to be restored to anybody, but especially to people in the middle."

Bremen says he doesn't think that most companies are being stingy. A sluggish economy and rising health-care costs are forcing employers to re-examine compensation.

Some employers have frozen salaries or switched to giving raises every 16 months instead of every 12 months, says Ann Scott, managing director of RSM McGladrey, a consulting and accounting firm in Milwaukee and Schaumburg, Ill. Some are giving out bonuses, stock options and nonmonetary recognition.

In these tough economic times, workers should not necessarily take it personally if their raises are tiny. Join the club. But managers shouldn't take it personally when their "A" and even some of the "B" workers jump ship as the economy begins to improve.

"They will look for a place where they can get that reward," Scott says.

© Copyright 2005. All rights reserved. The information contained in this article may not be published, broadcast or otherwise distributed without the prior written authority
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