Raises and Bonuses in 2020 - Raise or no raise that is the question!
What will employers do in 2020?
Almost all companies other than a select few have faced great economic challenges in 2020 with the COVID crisis and related shutdowns.
Are most employees expectations in 2020 to see "normal" salary increases and bonuses paid?
Are employers going to dig deeper into cash reserves to give increased salary and bonus this year based on historical past business practices?
Based on how companies are used to addressing this issue I think the answers to all of these questions are going to lead to a lot of angst in what has already been the most challenging year that I have experienced in business.
Now I will share my philosophy on how to avoid this quandary every year going forward. The answer is in performance based compensation programs. I believe in having fewer employees that make more money than my competition in whatever industry I am in. Simplistically it works like this at every level:
1) Salaries remain the same each year unless duties or title changes.
2) Merit pay is earned based on key metrics that are agreed to, and attainment of those metrics. 80% attainment = 80% merit bonus. 110% attainment = 110% payout.
3) Additional annual bonuses would also be paid to employees based on the companies performance and profitability against budget.
More on performance based compensation is explained in more detail in my book "Enforcer to Entrepreneur" available at Amazon and Barnes & Noble.