How to Manage a Pay-for-Performance Misperception

What do you do when a new hire outperforms current employees monumentally? Recently, experts weighed in on compensation management ethics.

“Management: How do we handle this over-ambitious Junior Developer? We hired a guy as a Junior Developer about six months ago who significantly outperforms the intermediate and senior developers.During his review interview he’s indicated dissatisfaction with his title as a junior developer.We’ve reminded him that it’s company policy not to promote anyone within 1 year of their start date and that his title and salary expectations are simply not appropriate for someone so junior. We’ve told him we may offer him a bonus and adequate salary within a year. He’s not responded yet.”

Policy is a set of guidelines and rules put in place to guide people in normal circumstances. In my experience, it’s normal to bring someone in at a conservative level. If they do well, typically you promote them after the first year.

If they do REALLY well and they’re clearly under-leveled, it’s cause for an exception. Talk to your manager and HR and let them know that he was brought in low and that you should have bumped him at the 6-month review, but you’d like to do it now because you believe he’s a significant attrition risk.

It’s a little risky, of course, but if he’s delivered significant results for those six months that are too much to be a blip, it’s worth taking the chance.” — John L. Miller, PhD in C.S.

John brings up a good point. If a newer employee is exceptional at his or her job, the company should reconsider their compensation package. At Reviewsnap, we offer an easy compensation management software that allows you to track employee achievements and engagement. Reviewsnap’s compensation module makes the task of rewarding your over performing employees easy as well as reliable.

A seasoned executive recruiter Connor Clark-Lindh was starkly against changing company policy for a number of company culture-related concerns:

“He/she has already started looking for another role. If they find one that pays what they think they are worth, they will leave — if they can’t, they will stay.

Your company policy is there for a reason and I’m doubtful you could change it fast enough to make a difference. Your company may want stability over ambition. Or one of a million other things.

It’s wrong to try and retain everyone. They could be an amazing developer but you’re unable to offer them a track that excites them. That isn’t wrong. It just means you need to hire different people.

Your culture and dynamic is most important. Don’t bend over backwards to try and keep someone who doesn’t fit. They will leave anyway.

Kit Wetzler, Head of Sales and Business Development, Opswerksbrings up a good point about the cost of replacing the over performing employee vs. paying an already trained and talented employee:

“You realize that you’d spend more than that in lost productivity and recruiting costs to replace him, right? If he’s performing better and you can still get away with paying him peanuts (which $80k is for a good developer) then pay the man, if he’s performing that well.

The title bump can wait, but if you want to retain the guy, do whatever it takes from a W2 perspective because losing someone who is outperforming is an expensive mistake. The way I explained it to people usually was, “Hey, let us pay you market now, and give you the title bump (with an additional raise) on the normal promotion cycle.” Gives you 2 chances to recognize him and retain him.”

While all of these experts bring up good points, we can’t help but point to one of the bigger issues at hand. Had this company used a system to better keep track of employees achievements/accomplishments, the company could have foreseen this meeting with a dissatisfied employee and possibly corrected the situation before the upset employee had to bring it up.

Bio: Chris Arringdale

Chris Arringdale is the Co-Founder and President of Reviewsnap, an online performance appraisal software that allows you to customize performance management, competencies, rating scales and review periods. Reviewsnap serves more than 1,200 customers worldwide including, Penske Racing, CubeSmart, PrimeSource and Nonprofit HR Solutions.

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