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GE Considers Scrapping The Annual Raise (bloomberg.com)
A user shares a report that details General Electric's rethinking of the annual raise. Bloomberg reports: "GE executives are reviewing whether annual updates to compensation are the best response to the achievements and needs of employees. The company may also scrap the longstanding and much-imitated system of rating staff on a five-point scale. Decisions on both issues may come within the next several months, spokesperson Valerie Van den Keybus said by phone." "We uncovered an opportunity to improve the way we reward people for their contributions," GE's head of executive development, Janice Semper, said in an e-mailed response to questions. It will involve "being flexible and re-thinking how we define rewards, acknowledging that employees and managers are already thinking beyond annual compensation in this space." In response to this news, ErichTheRed writes: First it was "stack ranking," the process where GE fires the bottom-rated 20% of the workforce every year. Now, a new HR trend may be brewing at GE that is destined to be copied by MBAs everywhere if it takes hold. Personally, in terms of cargo-cult HR trends, I'd take Google's open office nightmare over this one. What do you think this would do to employment stability if widely enacted? I can definitely see banks rethinking 30 year mortgages, for example...
The biggest problem with firing the bottom 20% of your workforce every year is that you're always going to have a "bottom 20%" no matter how good your employees are doing. If 20% of your employees exceed expectation, 70% meet expectations, and 10% are below expectations, you're going to wind up firing 10% of your employees who met their expectations purely because you decided on that 20% number. It doesn't matter that they are perfectly good workers and do everything they're told to do competently, you committed to firing 20% of your workforce every year so off they go.
Meanwhile, you need to hire new people to fill those vacant slots in which case, you're likely not saving much in salaries. If anything, you pay more because you need to train the new staff with your systems/processes. And if the new staff takes too long to get up to speed, they might hit the bottom 20% and you'll wind up training someone new.
If you don't hire new staff, you're going to wind up with an ever-shrinking workforce both by bottom-20%-firings and by people leaving because they're sick of the ever increasing workload coupled with yearly threats of being fired if you land in the bottom 20% (despite having more work to do).
Having a set "we're firing this percentage every year regardless of how well the staff actually does" is an idiotic concept that was thought up my management who likely exempted themselves from winding up in the bottom 20%.
My sci-fi novel, Ghost Thief, is now available from Amazon.com.
IIRC it takes about 150% of the annual salary of a typical white collar worker to train a replacement, plus the actual salary. So you're cutting 20% off the bottom, we presume you're replacing them with a better 20%, and you're paying 50% of the salary cost of the company in new training. That doesn't seem like a good idea unless the bottom 20% are really, really bad at what they do. In which case you should probably have started with firing all the hiring managers and HR department personnel who let those slackers in in the first place!
Is it just my observation, or are there way too many stupid people in the world?
I might take a pay cut to work "full time" at 32 hours, and that might be good enough that I don't need a raise.
Inflation is going to screw you.
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Oh, so it is easy looking for a new job, yes? Ever reach 50 and try looking for a new job? Companies only want to hire young and dumb. Your years of experience mean you are too expensive to employ. They also mean you are too wedded to what you have previously learned and cannot be up on the latest whizzy things or molded into the kind of corporate drone they'd like to see. Your health care costs will be rising as you plough through your 50's. And you'll be looking for an off ramp to retirement the first chance you get.
So why would a company hire you?