I spoke to a friend of mine recently. I have always considered her to be a truly accomplished and knowledgeable credit professional and manager. She told me that she received a 2% increase at her most recent annual performance review. Her said that her manager told her that 2% was “the best the company could do.” He added that many employees would be receiving no performance increase this year. She was not pleased by a 2% increase which she pointed out was not even keeping up with inflation.
She asked if her manager thought that her performance over the last year actually warranted only a 2% increase. He responded that the 2% increase was not based on her performance; It was based on the company’s sales and profitability, and also on the Board of Director’s decision about the amount of money available for raises.
She told me she was both befuddled, demoralized, and demotivated and she planned to evaluate all of her options. I asked if that meant she would be looking for other employment. She said, almost matter-of-factly, that she could think of no incentive to stay but would not leave until she had secured other employment.
When one considers the huge costs associated with replacing any employee and in particular a key decision maker such as the credit manager, I find it hard to understand why companies would risk the
attrition / defections that are likely as a result of a maximum 2% annual performance increase… because when the going gets tough, the best get going.
What are your thoughts?
Michael Dennis’ Covering Credit Commentary. Michael’s website is www.coveringcredit.com.
The opinions presented are those of the author. The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors. Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them.