When the Going Gets Tough, The Best Get Going – Michael Dennis, CBF

When the Going Gets Tough
When the Going Gets Tough

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

Michael Dennis, MBA, CBF, LCM
Michael Dennis, MBA, CBF, LCM

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.

6 Replies to “When the Going Gets Tough, The Best Get Going – Michael Dennis, CBF”

  1. I agree! I also received a 2% increase this year (which was actually more than the previous year’s increase). At the same time, I was told that I acheived superior results handling nearly twice the portfolio due to a reduction in staff that occured during the year. It doesn’t cover inflation, it doesn’t cover the increase in medical premiums, it doesn’t reflect their stated appreciation of my performance, and it doesn’t make sense.

  2. I haven’t had ANY raise in over three years and we have acquired two more companies to add to our portfolio. Company policy has been stated as “zero raises across the board.” Very frustrating and I am definately looking at other options.

  3. A 2% raise is shameful but welcome to today’s reality. The reason the companies take that risk is because it is reduced due to the state of the economy & availability of alternative positions. If and when things improve they’ll either pay the price for their shortsightedness or they’ll simply begin paying reasonable salaries.

  4. I agree with Ralph. Employers do so because they are shortsighted. Michael is right about the risk the employer takes. Some of the potential costs are: Lost productivity, slower collections, slower decision making resulting in lost sales, and Higher bad debt losses — not to mention the time, energy and effort required to advertize, interview, select, hire, and train a new person for the key credit manager role. This also does not factor in the fact that the employer is exchanging an individual whose decision making and risk management skills are known for someone who may or may never have The Right Stuff.

  5. Answering The Clash’s question – Should I Stay or Should I Go – requires evaluating the local economy, your employer’s/industry’s prospects, and your willingness to relocate to where the jobs are (like Texas or North Dakota). It is not productive to see employers as stupid or villains. We live in an economy characterized by Financial Repression.

  6. Despite my promotion to credit manager from AR supervisor over a year ago, I have not received a raise in the entire two years of my tenure with this employer. The official company policy over the past four years has been a wage freeze for everyone, however I’m positve that when my boss received his promotion at the beginning of the year, he got a raise. In fact, despite the wage freeze, select people have gotten increases. If the executives think that information will stay confidential, they are being naive. The disparity has created a negative morale which of course effects productivity. Being the credit manager, I know that sales and collections have turned around. This wage freeze could be lifted. I see it as a short sighted way of increasing profits right now. In the end it will force the quality people to move on to a situation where they feel appreciated and are compensated accordingly. The company will suffer then, but for now their profits are a little bit higher.

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