How to Use Employee Appraisals to Give Raises

Employee evaluations (or appraisals) are critical when it comes to determining raises. The raises that you provide, however, can lead to positive, neutral, and negative reactions — all heavily influenced by the performance appraisal process itself.

Garnering bravos for the raises you give

With solid performance appraisal data, you can look back at clear, specific, and consistent measures of performance for each employee on your team. Instead of trying to recall how an employee did or simply relying on gut feel, a state-of-the-art performance appraisal system allows you to accurately focus on such factors as quality, quantity, communication, cooperation, attendance, and much more. As a result, you’re able to base your raise decisions on factors that are fair, consistent, and tailored to individual performance.

When raises are based on accurate, fair, and measurable behaviors and outcomes, all your employees are literally on the same page. With a clear link between performance and pay increases, the entire process becomes more transparent, equitable, and motivational.

Dodging rotten tomatoes after you hand out raises

If raises appear arbitrary or unfair, employees view them negatively. When employees believe they’ve met all the criteria for a specific raise, but they’re granted a lower raise for no apparent reason, their reaction will be a combination of dissatisfaction, disappointment, distress, and resentment. And these feelings aren’t likely to energize employees to put forth extra effort in the future.

In fact, when an employee believes that he is underrewarded, he has a conscious or unconscious tendency to get even with the company. The attitude goes something like this: “If they’re going to shortchange me, I’m going to shortchange them.” And employees do this by cutting back in such areas as quality, quantity, commitment, and dedication.

When raises make no impact on employees

Sometimes raises elicit a ho-hum response from employees, indicating that the pay increase neither dissatisfies nor energizes them. This response is typically what you see when all employees receive essentially the same raise, year after year. When raises have nothing to do with performance, they actually become background noise. Employees typically receive them with a shrug, and there is no measurable positive impact on motivation or performance.

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