Evaluations and Pay Raise

Dear Dave
We have just wrapped up our annual staff performance review process. We conduct all employee evaluations during the month of December each year and make all pay rate changes effective as of January 1st. Changing pay all at once as of the beginning of the year makes it easier for us for purposes of updating our standard billing rates and preparing our annual company budget. On the downside, we now have 45 people working for us and doing all reviews in one month on top of everything else we need to be doing is becoming a real burden. With the time pressures this creates, I’m afraid we are starting to be less thorough and complete in how we go about preparing for and conducting the evaluations. How can we deal with this? What do you think about spreading the reviews out over the year?
GS KS

Dear GS

I’d be all in favor of spacing the individual evaluations over the entire year in order to keep the quality of the review process from eroding under the load. I also think it is entirely feasible to maintain your January pay change practice to boot.

Performance evaluations and pay rate changes are two different processes that need not be simultaneous to work. In fact, there is a school of thought that says you should not discuss pay rates around the same time as performance evaluations because doing so immediately before, during or after the review meeting can be a distraction taking focus away from the performance discussion. On the other hand, some would argue that by not directly linking pay changes with evaluations, you are missing a golden opportunity to drive home the points you are making by concurrently demonstrating the pay consequences of the evaluations. Generally, I prefer to separate the two. Each firm needs to decide for itself what feels right.

Seems like every firm has their own particular way to handle the timing of evaluations, but a common method firms use to schedule performance reviews is to conduct each employee’s review during the month of each employee’s employment anniversary with the firm. An alternative would be to simply assign each staff member to a performance review date in order to space them out as evenly as possible over the entire year.

If you elect to spread the performance evaluations, and wish to stick with your practice of changing everyone’s pay rate as of the first of the year, you should plan to conduct a brief (10 to 15 minute), face-to-face mini-review with each staff member during December. The purpose of the mini-review is to highlight performance trends since the last formal review and to announce any January pay adjustments. Should someone be promoted during the year, and that promotion comes with a pay increase, you would deal with the increased pay in the same manner you do currently.