Salary grade creep, in my experience, is rarely a "universal" problem in most organizations. More often, there is a particular manager - or group of managers - who seem to have made it their life mission to exert a continued push against the pay grade structure.
The question is: why?
I got an interesting peek into the motivation behind this recently when an executive admitted to me that, as a matter of course, she always brings jobs forward for re-evaluation as soon as the incumbent gets close to the maximum. While most managers may not be quite as candid about their strategy, I have a feeling that, in reality, this is the case more often than people admit.
The truth is that our pay structures, to a large extent, influence how careers progress within our organizations. With a traditional salary range structure, the circumstance of being "maxed out" presumably presents the employee with two options:
Door Number 1. If the employee, often one who has been in the position a long time, prefers to remain within the comforting confines of their current job and not develop new skills and competencies, salary growth from this point will be limited to the extent by which the range itself moves in response to competitive pressures (although there is often a lump sum increase policy in place). Keep in mind that an employee at maximum in a classic 50% wide salary range is earning a salary 20% higher than the range midpoint, which typically represents the "going rate" for the work.
Door Number 2. If the employee is willing and interested, this is an opportunity for a discussion about how they might augment their skills and capabilities, further their education, and pursue a new career path - so that they can increase the value they bring to the organization and create a commensurate salary growth opportunity for themselves.
Often, per my opening point, a third door magically appears.
Door Number 3. The employee's current position is re-evaluated and moved to a higher salary grade level with a higher salary range, thereby creating more room for salary increases.
Here's where the sticking point lies. Door Number 3 is a legitimate third option to the extent that the manager and employee have truly made changes to the purpose and accountabilities of the role in a way that increases its value - to the organization as well as in relation to market practices. Too often, however, Door Number 3 is just a method of circumventing the rules and limitations of the system.
Which, for those having a Door Number 3 problem, begs the question: are the system's rules and limitations the right ones?
Or the bigger questions:
What should a career in this organization look like? How should it progress?
Does the pay structure support this kind of career? Are the right rules and limitations in place?
What should the options be for an employee who reached their salary maximum? Is it primarily Doors 1 and 2? If so, have we trained our managers and given them the tools and assistance needed to have these conversations with employees?
If the options include Door 3, do we have guidelines and support available to ensure that this option becomes a value-adder for everyone concerned, and not just a workaround to get the employee more money and the manager off the hook?
What's your take?
Ann Bares is the Editor of Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School, enjoys reading in her spare time and is currently enjoying having her daughter home from China. Follow her on Twitter at @annbares.
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