Performance reviews and salary reviews – there is a difference

Who wouldn’t love a pay rise? After all, many of us believe we deserve one. But when a performance review date pops up in your office calendar, don’t assume this is your ticket to a new salary band. Performance reviews and salary reviews are not the same thing.

The six-month review sweetener

It isn’t uncommon for an employer to mention a six-month performance review as a salve for a potential employee’s disappointment at the salary on offer. However, new employees often take this as a virtual guarantee of a salary rise in the near future. The impression the employer gives is that accepting the offer on the table today is a mere formality that he or she will correct at the first review.

Of course, there is never such a guarantee. Three, six, nine and 12-month performance reviews are pretty standard in any business, so the employer isn’t necessarily promising anything more than the normal working arrangement. But this approach does lead to an unrealistic expectation that salary increases are a routine and systematic result of performance reviews. And they just aren’t.

Whether you’re a job seeker or an employer, it’s important to be clear on exactly what you’re agreeing to at this stage. Will the meeting review performance or salary?

Good performance is not enough

Even if there is firm assurance that the six-month review is linked to salary, it doesn’t mean the business has to agree to a pay rise when the time comes.

First, average performance may not be enough. If the employee’s performance is merely “good” (read: adequate), it’s unlikely the employer will want to pay more for simply meeting the job requirements. The business is just getting what it paid for.

For an employer to see the sense in paying more, the performance review needs to demonstrate how the employee delivers above the expected value to the business. And that means above average or exceptional performance.

Success is its own reward

Even if an employee’s performance is noteworthy, there are many reasons a business might not offer salary bumps on his or her preferred schedule.

Most obviously, budget to increase salaries might not exist. Even though an individual’s performance may be exceptional, if the business overall is doing less well, it might be more damaging to the bottom line to award that pay rise. And the bottom line will always win in any such salary discussion.

Sometimes companies reward good performance in ways other than with hard cash. A McKinsey Quarterly survey found that, assuming the base salary is at least satisfactory, non-financial recognition of performance can be more effective than money in motivating employees.

A title bump or performance-related award can boost future chances of promotion or career advancement. Management recognition, leadership development or exciting new projects can also be more motivating and can provide greater job satisfaction. Recognition of outstanding performance can be just as important to us as salary, so don’t take these things lightly.

Asking for a pay rise

So if a performance review isn’t necessarily the place to discuss pay, how do you convince the boss you’re worth more?

If you think you’re worth it, don’t be afraid to ask for a salary review when the time is right. But when you have the meeting, it will be up to you to make the case. This is when you can pull out those exceptional performance reviews, awards and recognitions. This is the time to document when you have delivered extra value above and beyond your job description.

Just be aware that even if your employer agrees with your case, he or she still may be unable to give you what you want – for now at least. So don’t act entitled or say you’ll quit if the wrong answer comes back. No one ever got a pay rise by threatening their boss.

Understanding the difference between a performance review and a salary review allows you to better prepare for each – and it removes the risk of disappointment.

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