To calculate the batting average for a baseball team, you simply add up the number of "hits" and divide by the number of at-bats. Players with batting averages above .300 are considered to be good batters. Translating this analogy to the business setting, if you have a team of solid contributors and top performers, your team is batting .300 or better! This is a great position to be in, however, during merit increase time it can present a challenge.
Not surprisingly, once again the average merit increase is projected at 3%. This means in order to reward a top performer with a 5% increase, you will be forced to give another team member a smaller increase of just 1% to 2% to stay within your budget. If your team is comprised of solid contributors and high performers, working within a 3% budget is difficult. The dynamic becomes even more difficult if you lead a small but mighty team of top performers, as there are fewer employees to spread the averages between. How can you reward top talent and keep your employees motivated and engaged, and stay on budget?
Home-Run Hitters – these are the solid contributors on your team, who also take on stretch assignments and projects. Consider setting aside some money in your budget to provide these employees with a spot bonus. This allows for an immediate reward for a job well done upon completion of a project, but has less of an impact on your bottom line.
Base Hitters – these are the solid contributors on your team, who show up to work every day, are engaged, and consistently meet or exceed expectations. As a leader, you may desire to reward their efforts with a higher merit increase, but may be limited to 3% to stay within budget. For these employees, consider the nonmonetary benefits that you can offer to keep them engaged and also reward their efforts. This can include: flexible scheduling, remote work capabilities, dress-for-your-day, training and development opportunities, and even customized rewards and recognition. Know how your employees like to be recognized and tailor the reward to the employee.
Pinch Hitters – these solid contributors are an essential part of your team. A pinch hitter may be a tenured employee who is higher in the paygrade, so may receive a smaller increase per your compensation structure and merit guidelines. It is essential that these employees understand the compensation and merit increase matrix, and the reasoning surrounding the lower increase. The below-average increase is not a reflection of poor performance, rather a result of their current position in the paygrade. Similar to your base hitters, consider the nonmonetary rewards you can offer the pinch hitters and engage in long-term career goal discussions to understand the next step in their career path.
In a candidate-driven economy, now more than ever it is important to reward and recognize your top talent. Take a personal approach. Talk to your employees so you understand what motivates them and how they like to be rewarded and recognized. Employers can no longer afford to take a "one-size-fits-all" position or they stand to lose top talent.
Source: Laurie Greenlees, HR Hotline Manager, MRA - The Management Association