Merit-Based Pay VS. Flat Salaries | Yearly Raises - Ask Clay Anything (2023)

Audio Transcription

Merit-Based Pay VS. Flat Salaries | Yearly Raises - Ask Clay Anything (1)

Do you have questions? America’s number one business coach has answers. It’s your brought up from Minnesota. Here’s another edition of ask clay. Anything on the thrive time business coach radio show.

Welcome back to another exciting edition of ask us anything, and on today’s show we’re talking about the difference between merit based pay employees and a flat

employee at the fat flat pay employees. A salaried employees, again, easy for me to say a merit based pay employees versus salaried employees or employees who can’t make any more money, no matter how hard they work. So let’s, before we get into the data and the research, before we get too deep into the weeds here, Marshall, why does the job for you or not appeal at all? If it is a flat salary, it doesn’t appeal because my ceiling is kept. I know that I’m going to make so much and no matter whether I perform well or don’t perform well, I’m not going to be able to make more money. And so I love to be able to go eat what I kill. I love to be able to know that because I am busier because I am performing more effectively because I’m producing more results, I’m going to get paid more and that’s why I love the merit based pay versus the flat salary. All right. Clay stairs. You are a former former school teacher. Um, what. Talk to me about the kinds of behavior that you would see from your fellow colleagues who are all on a flat salary. No, seriously. Because a lot of people have never been a school teacher who had never worked for the government, but what kind of a work ethic or lack thereof would you see from your colleagues who all made a flat? A salaried wage in the public, in any public school system?

Oh, let’s see. I’m really tired today. I think we’ll watch videos in the classroom today. I think that’ll be a good thing. You know, I think I’ll wear my sweats today. I think that’s a good move for me. I get 10 sick days a year. I’m taking every dad gum, one of them. Uh, I get another six personal days. I’m going to take those as well. Every single year

I had a friend of mine that was a very, uh, he’s a teacher who taught in the public school system for over 30 years and he got a distinct called tenure. I’m not sure how many years you have to work before you earn the tenure. Is it? Three? Three. And so basically, unless he sexually or physically assaulted a kid, he’s good to go. Yup. And they had this thing called personal days. I’m not sure if you’re familiar with that, but it’s where you could call in and your employer was not allowed to ask a why I yes, I remember this. And he went just at that point, at that point, like I loved it because I was a c player at the, in those days. So let me just tee up what he would do. He deejayed for us on the weekends, on a Saturday usually.

So what happened is if he would tell him, he’s like, dude, here’s the deal. Because we were merit based, pay in the job he had during the day was not merit based thing because I was merit based pay. He would tell me, just so you know, I am not going to be at work a Saturday or Sunday, I’m just telling you in advance, we’ll be out of town. I’m like, okay. But then as I got to know this person, he started telling me I’m calling in my workplace and I’ve put you as like a backup employer or my second employer, whatever, and I took a pr paid personal or wherever this personal day, so I’m going to call in last minute on Thursday and Friday. I’m going to call and last minute on Thursday and Friday. I’m telling you in advance, advanced. I’m going to be gone Saturday and Sunday.

I also have a call last business coach minute on Monday so I can string together a long weekend because I’m going to Florida and I’m like, so you’re going to go to Florida on Wednesday knowing for sure you won’t be at work on Thursday, but you’re going to call them Thursday morning with a personal issue? Yes. Oh, exactly. System. He said all the teachers do it, man. Yeah, I’m going, are you serious? Have you seen. Have you seen that scenario unfold, clay stairs? Oh, completely. I have, unfortunately. Again, unfortunately, yes. I would say, and again, it’s not just teachers, I mean it’s just in that salaried world of whether I’m awesome or whether I suck, I, it doesn’t matter. I’m going to get paid the same so I might as well just be more so again, as we’re talking today about flat salaries or, or just, you know, is salaries where you’re kept versus a merit based pay system.

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Uh, the level of performance of the average employee is just dramatic Marshall, I mean, people who are chasing a carrot, they are just sincerely and a much more motivated than the average person who no matter how hard they work, they make the same amount of money. And there’s a book called the service profit chain that’s written about this concept and then they add service. Profit chain essentially establishes relationships between profitability, customer loyalty, loyalty, employee satisfaction, loyalty and productivity. But Marshall, you’ve read the book, you broken down the service profit chain. Why does merit based pay dramatically impacted the performance of the average employee? Okay, so merit based pay is so crucial because at the service profit chain core, that’s what drives it, so they find, okay, we understand that we need to increase customer loyalty. Well, what drives customer loyalty? What they found in the Harvard business review is that customer satisfaction, that’s what drives it.

So they’re like, okay, how do we drive customer satisfaction? Well, what they found is employee satisfaction and at the core of employee satisfaction are things like merit based pay. They know I can make more if I produce more in my employer’s going to engage with me, they’re going to train me, they’re going to help me become better and therefore help me make more money. That’s really cool and so that’s why merit based pay in the Harvard Review. This is one of my favorite topics. If it’s okay, I would like to just tee up some ample examples and we’ll go to quick trip first, the convenience store industry, the gas stations, for those of you listening in different parts of the country where you cannot find a quick trip convenience store. There are billions and billions of dollars generated every year by Quik trip. They are very successful company. Just Google search, quick trip convenience stores to learn more.

Marshall, contrast your experience as a customer going into a Shell gas station versus a quick trip gas station going into a quick trip. Merit based pay culture versus a shell flat rate, salary based culture. Talk to me about the difference between merit based pay. Quick trip versus salary. Let’s pay as little as possible. Shell, I have a confession to make and it was one of the low moments of my life, but last week I was like, I’m looking around for a quick trip to pull over, maybe use the restroom, get some gas, get something to get something to drink on the way on the way to the show or something. So I just pulled over at a local gas station and I’m like, hey, it can’t possibly be bad, and I, I assure you there’s like open standing water back there. There’s like a gas tanks. I’m like, oh my gosh, I, they, they, they’re giving me a key to the restroom with like a car carburetor attached to it or something like that.

It is wild. But you walk into Quiktrip, it’s always clean. Everything’s always stocked. There’s checklists on the door showing the last time it was clean in who it was. Cleaned blind as a customer. I wouldn’t want to go anywhere else. I would go out of my way in order to go to quiktrip. Clay stares. You travel a lot. You’re a paid speaker. You travel now all around the world. Uh, people in San Diego. Love. Yet people in New York love you. People in Florida, lovey. You speak all around the world at different events and you and Lisa, your, your wife and credible life have a great time to, a great opportunity to travel together to speak. It’s a neat, uh, I just in the future, as you’re adding more and more speaking events and it’s exciting to see you guys do that, but you, I’m sure if flown on many different airlines. Yes. Could you please contrast southwest southwest airlines and they’re merit based pay culture versus that pretty much

everyone. Everyone, yeah. Oh my gosh. Yeah. It’s night and day and you know, there’s been several times where flying out of Tulsa sometimes can be tough with your choices. Right? But man, if I can get on southwest, it’s the only way to go. The friendliness, the ease in, in, uh, in getting onto the plane and so is so much easier. Clay was actually literally on a plane one time and it was on not southwest and I just asked the stewardess or the flight written, pardon me, and uh, you know, could, could I have some snacks, some peanuts or something like that. She literally looked at me with anger in her eyes and said, this

isn’t southwest. She literally said that, okay, now I want to be more Marshall. I want to be united. Oh, Ooh. This idea. I want to be united in this idea because as great Americans, we’re not here to name specific, uh, you know, American Airlines that suck. We need to be united in this sense, right? Yes. We don’t want to name specific American Airlines that suck. We don’t want to do that. We’re not the kind of people that would name specific. Right. Are we united in this idea? We’re not going to name specific American Airlines. It’s a exec. Right? Exactly. But talk to me, Marshall, your, your experience. You’re a tall guy. You’re a tall man. How tall are you? Six foot seven. You have flown on many different airlines. Yes. Talk to me about the courtesy or lack thereof of southwest airlines versus other airlines when it comes to just accommodating you and other people.

I would say on other airlines it has been disastrous. When the flight is empty, I kid you not. There’s an economy class and then there’s economy plus with a little extra leg room and when the flight is empty, I might like to go up a little extra couple rows and sit in the economy plus because there’s five people on the plane and I’m promptly ask us, or you didn’t pay for an economy plus, can you please move back to the economy seating? Um, there’s literally nobody else on the plane. You know it. We’ll have fun factoid for you. This is all fun factoid for some of the listeners out there, a little bit of a lot of our listeners to tune in for fun factoids. Yeah. Oh Marshall, I think I might’ve hit the wrong button. I’ll just kind of make a sound effects. Okay.

Okay. So a Marshall, I’m not sure if you’re aware of this, but Delta is actually the fourth letter of the Greek alphabet. That’s right. Completely unrelated to this conversation. That’s correct. Because we are united in our decision as Americans speak specifically antagonistically about any other American Airlines. That’s correct. Have you ever flown on another airline outside of southwest airlines? That was a positive experience because if you have wouldn’t keep it fair and balanced. I mean there’s. People have said good things about virgin. People said good things about jet blue, which was started by a former southwest employee. This, ah. Have you ever have you got. Have you ever, ever, ever had marshall and experience that was positive with another airline outside of southwest airlines? No. Clay stares. We want to be united in our non attack of American Airlines. Fun factoid. The fourth letter of the alphabet here in the Greek language is delta.

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Just a fun factoid. Have you ever had a positive experience with another airline? It’s not southwest airlines. No. I have not. Six hours. Six hours on the tarmac. Starbucks. Starbucks. Merit based pay. So what happens is I actually met a lady who is the regional manager for, for the starbucks stores in this area a few years back and she was sharing with me at the end of the month, she makes a percentage of the store’s profitability. Okay. She personally gets to keep a percentage of the store’s profit ability. Sounds to me a lot like what? Like merit based pay, the better they perform, the more she makes. Bingo. So have you ever been into a starbucks Marshall? Yes. Clay staires. Have you ever been into a. not a to a non starbucks Dsi? Definitely. Have you noticed the difference between a local donut slash coffee shop with the white ambiguous star Styrofoam cups versus a starbucks Marshall? Yeah. It’s. It’s vastly different in that I as a business coach could go to a starbucks on in the northeast or down south or here in Tulsa and I know that I’m going to get the exact same experience across the board.

It seems to me in these first few examples that merit based pay versus salaried pay. There might be something to this whole idea that you pay people based upon what they do versus what they say they’re gonna do. Do you guys agree at this point? Are we. I agree. I’m with you. Okay. So Disney world versus the average amusement park. Have you ever been clay stairs to a bell’s amusement park and Tulsa, Oklahoma? Yes. Bells. I remember Bill Marshall. Do you remember Bill Phantasmagoria? Oh, thank you very much. You guys. You could actually bring a Pepsi can know and you could get in for like $5. That’s right. Your ear and mission to bells. Amusement Park in Tulsa, Oklahoma was only $5 if you brought in a Pepsi can. That’s right. And do you remember how that was too much? Yeah. You’re like, ah man. It was like you’re going into um, it was like you went into like an airport, an airport store, you know, the airport store has a store called like news or something new CBS News, CNBC News, and you’re looking for like a tuna fish sandwich from the CNBC airport store.

It’s weird. And you’re looking for a tuna fish sandwich and you’re thinking, well, you know, in a typical of the American economy, 2018, I’d probably spend $6, $5 on that at the airport it’s like 26 slash 17. Yes. It’s like $26 and seventeen cents. Or are you going to the airport and you’re looking for a yogurt, like a yogurt parfait. Oh, the yogurt parfait is typically what guys? $2 it. A whole foods, $3 at whole foods. Sprouts, maybe $3, whatever you go in the airport. Marshall, how much could you expect to pay for a yogurt parfait at a typical airport? It’d be like 1750. Do you remember how that felt when you went into bells? You brought in a Pepsi can you did your duty to help recycle you go in there and it was normally it was like $30 and they said, well, you know, you bring a Pepsi can you said, yeah.

I said, well it’s $5. Do you ever the feeling of like, this is probably too much. You’re like that I could use this $5 per. So many. Oh, that’d be engaged here. And you are how like no matter how your shoes, we’re going into bells, you would always leave with gum. They were different on your shoes going out. Shoes were different. What about bell’s amusement park was terrible. Their culture of salaries, of paying people as little as possible. And then let’s contrast that to Disneyworld. Okay, so let’s go with Disney world versus bell. So clay stairs, you’re on the team bells. Tell us what was terrible about bells. And then Marshall one up and with team Disney. So let’s go with clay stairs first. Well, just the cleanliness at bells. Like you were saying, your shoes change while you’re there. They’re like offering tetanus shot. You go to the bathroom.

And another one. Well I’ll take that one then. Marsha will go to you with, uh, with Disney world. So when, when we were interviewing the former executive vice president of Walt Disney world resort partner, a friend, a frequent guest on the thrive time show Lee Cockerel. We’re, we’re there in Walt Disney world. And we watched different cast members, not team members but cast members, past members walk around the park and pick up trash. And we never saw trash down on the ground for longer than, I don’t know, 10, 15 seconds. We got somebody coming by and picking it up because that was how important that will. They assign a specific area and they walk up and down all day picking up trash and greeting guests. That’s a Disney world does. It was impressive. It bells. People almost walk around like avoiding the trash. Oh, there’s, try not to see it.

Try not to see that salary. I make a flat rate here. I can’t get promoted no matter how hard I work. I can’t make anymore. I’m out. Yeah. Bells bells had that culture of carnies to that were always. Just a little bit for the listeners out there, we have a lot of listeners who are in Florida, small hand, California, Canada, Australia. We have a lot of high class listeners that cannot relate to the term carney. You please explain what a carney has. Mr Clay, their carnival people there, they’re vagabonds. They are travelers that are Bohemians. They are. They’re moving with the truck usually talk. They kind of have their own like thing where it’s like a mock. Tell you what you, you, you want to pray here today to win a chance to win that big old stuffed animal. I respect that because you know you want to step right up or are you awaiting?

Yeah, and you’re like, did he just call me and need you? Just ask somebody, how much does it cost to play this game? Walk tell you. Would you know you, you a Weenie? Are you going to play the game there and they do a lot of like, well, I’ll tell you what, by God, and they do a lot of just because like a lot, but it’s like up there into doodling, right? We go games. They’re just there. It’s an interesting breed of people. That’s good. Carnies Marshall, contrast to carney culture of bell’s versus that by the way, they bankrupt bells. Bells now out of business versus that of the consistently profitable Walt Disney world resorts. Marshall, talk to me. Carnies versus what? What kind of people can you find at Walt Disney world resorts? Well, first of all, they were talking about cast members, so they’re not. They’re not employees.

They’re not team members. Their cast members in. That’s exactly how they acted. They’re actually always on a showtime. They call it showtime. They’re at on my pants this morning and then became showtime right away. You. So you’ll see all of these cast members in their character. They’re. They’re acting as Cinderella. There are acting as a goofy. Goofy is a another one. They’re acting dressing up like I’m Mario and crochet. I didn’t brush my teeth, but do we know if Mario and Russia, Russia going on and so you’ll see that regardless of what’s going on in whatever the cast member’s life, how they feel, they’re acting the entire time that they’re out in front of their guests because this is supposed to be the happiest place in the world and bells or you know, a lot of people are getting fancy and Bluetooth technology and barrels. We’re offering brown to technology.

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I know you can’t have that. That’s not a move. I want to make sure you get this bills. Those of you who have not been to bells, it was unbelievable how low the quality standard was in for years. Tulsa was forced to go to bells as it’s only entertainment option. Now we go to chick filet clay stairs. Have you ever been to a chick flick yesterday? Marshall? Have you ever been to a Popeye’s? Oh yeah. Have you been to a chick fil a cluster? Which have you been to a Popeye’s? Marsha is so pleased. Contrast down clay stares. You get to be the good guy now. Oh yeah. Talk to me about the merit based pay culture of Chick filet where they pay people based upon results and not based upon intentions versus that of Popeye’s. No events to Popeye’s. We’re just talking about facts.

I say with all due respect and no offense since for it, I can say whatever I. Henceforth I can say whatever I want. So clay stares. Chick a. Why do people line up and form a line around the building for chick filet? Well, number one, I’ll go first here. Marshall, number one, my pleasure. [inaudible] my blood. Just the, the courtesy and the kindness of the people behind the counters and they’re like 16, 17, 18 years old. Nice people, Nice people and looked nice. I feel like I’m going to like, I’m Mormon missions trip. Thank you very much. Nice people filled with homeschoolers. Now we go. Here we go here to Popeye’s or Mark Marshall. Have you been to Popeye’s? Yeah. Objectively. Do you have like the chicken? Uh, I don’t. I don’t like it more than chick-fil-a. Have you been into a Popeye’s? Yeah, I’ve been into a Popeye’s.

What’s the difference between the people at a chick fil a versus the people love Popeye’s? Well, you’ll just stand at that counter with the register and you can almost see the eyes from back behind the grill and they’re like looking, does he see customer coming? What do we do? I wasn’t prepared. I wasn’t prepared for what is going on, but that’s how it feels like with chick fil a when you walk in there greeting you and acknowledging your presence immediately. Um, but at Popeye’s here, like, I’m here. You almost want to yell, shout. Oh guys, I’m here. I mean it. Seriously, when you walk into Popeye’s, you want to freak a Popeye’s employee out. Just go there. They’ve never seen customer show. It’s amazing how it still exists. Seriously? Okay. Now chick filet, another good attribute. Clay stares of chicks lifting about chick fil a.

What makes chick fil a so spectacular in your mind? Okay, I’m doing to hear clean, clean, and the music I’m going, they’re cleaning the music. Marshall, a contrast that to Popeye’s, the fluorescent light bulbs that are out in or worse than that, they’re not out, but they’re just kind of flickering. So you feel like you’re. You feel like you’re in an industrial park inside the Popeye’s and you’re like, oh gosh, it’s eerily quiet. Who? Yeah, live and so you’re like, can I just get my chicken, get out of here? They got the TV going toe to toe, you know, drama going on now again, chick filet. It really does accommodate as apparent to accommodate the kids. They always had balloons for the kids, slides for the kids and I environment for the kids. My kids want to go to my kids. You know, kids when they’re like 12 or 13, they start to develop a filter, but nine, eight, seven, six, five.

My kids will just say no filter. They’ll say, dad, we don’t want to go to Popeye’s. It’s terrible. Now as an adult you go, this podcast host is me [inaudible]. He’s slanderous, been person. He’s mentioning a company by name and talking about how terrible it is. Yes. Because everybody out there knows it. You just don’t want to say it. Marshall. Talk to me about how Popeye’s, you know, accommodates kids. Talk to me about the slides. The balloons for the kids. Talk to me about the Popeye’s aura they bring to the table on a daily basis. Okay. I’m not a parent. Clay stares. You help me out with this. I’ve never been to papa, but you helped me out with. Okay. I’m with you. You’re going to Popeye’s. You’re bringing your kids when your kids are little kids don’t touch anything. Kids, little kids. If they’re headed towards the playground, the thought crosses your mind.

What did the other kids touch before they touched it? Actually true. Do we need a wipe this town, but at chick filet it’s always clean and everything is spotless. Yeah. I, if you’re out there today and you’re going, I don’t really see the difference between merit based pay and flat pay salary pay. Marshall, could you read the notable quotable from Jack Welch project books, the CEO who famously grew ge by 4,000 percent during his tenure? Uh, yes. So Jack Welch, he says, if you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it, you almost don’t have to manage them in clay. I want to one up you with uh, with another quote from my main man, steve jobs in my face. Okay? So this is what steve jobs talks about. A players, okay? He said, I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or a hundred to one.

Given that you’re well advised to go after the cream of the cream, a small team of a plus players can run circles around a giant team of BNC players. What does this mean? This means if you’re going to hire people, hire the a plus players and what are a plus players looking for? They’re looking for merit based pay. Set it up. If you are out there today and you’re fighting this idea, I want to, I want to just give you an example. We can all relate to everybody. Everybody knows about this. Marshall, are you aware od you watch a lot of NFL? Yeah. Uh, well, who’s your favorite team? The Cleveland browns baby now. And I will tell you that the Cleveland browns objectively, they, these guys are really turning an organization around, but I want to make sure that we get an example of merit based pay.

The NFL stands for not for long if you don’t produce. That’s right. Why? What, what, why Marshall? Why does it stand for not for long if you don’t produce? Because they’re in the business to win games and sell tickets. Okay. So think about this, the average career of the NFL players. What Marshall, if you had a guest? The average career length of nfl players. One. Uh, I would say maybe six years. Eight years. Three, four. Really? I’m going three or four? Three point three. Oh really? Yeah. Three point three. Now I want to, I want to tell you an example of from my favorite team, the New England patriots, and I just want to give an example about why the Patriots can win year after year. Um, they create a team where the vast majority of the income for players can be made via incentives. So as an example, a rob Gronkowski who is a, uh, you know, all pro, um, future hall of fame, a tight end for the new, for the New England patriots, he has a contract that’s very nice, but the guy can earn up to $4,000,000 a year of additional income based upon incentives.

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And those are like making the pro bowl playing per game. He plays. So he has an incentive to play hurt. He has an incentive to play it as best it’s based upon getting to the playoffs, number of catches. There’s a lot of incentives and we’ll put a link to Rob Gronkowski 2018 patriots incentives. But at the NFL level, and I, I’m just ripping on myself right now. I definitely do not have the talent and slash or skill or the will to play in the NFL. I couldn’t do it even if I wanted to, but if I just say that we were all six foot eight and we were very athletic. Marshall, would you want to play in the nfl if you couldn’t earn millions of dollars per year? No, I probably wouldn’t play stairs. I mean if you were offered an opportunity to play in the NFL, knowing that there’s concussions, injuries a lot of times life altering.

Like I, I heard an interview the other day with Jerome Jerome Bettis, a drone bestie, former running back for the hall of fame running back for the steelers. And they were asking him about what it’s like getting up every day, you know, hi, how are you dealing with retirement and does every morning is again, I’m paraphrasing. He says every morning is a living hell. Wow. He’s like, I just have so much pain, arthritis, it’s just, it takes me till about noon just to kind of get my mind right. You know, kind of get. And there’s a lot of people in the nfl that have the similar. Um, if you look at, if you look up a Marshall put on the show, Michael Stray, Hans, Hans clay stairs. Have you seen Michael Straight hands, hands? I don’t think I have. Okay. I’m going to pull it up. If you can see it on the screen here it, it’ll blow your mind.

This is Michael Strahan and this is what an NFL career does a look at his fingers. Oh my. Look at those fingers. Whoa. That’s not raw right now. But I’m just saying like how many people out there, Marshall, you included, would want to play any sport at all if your fingers were gonna, be in continual arthritic pain. Wow. For the rest of your life. If you could not earn millions of dollars as a reward, I mean, nobody’s going to do it. Would you do it? Clusters? I would do one play, but not too. Okay. So a lot of people though would say, I’m not going to play in the NFL, but there wasn’t that kind of merit based pay. No. Let’s dial it down a little bit. How many listeners out there, uh, Mr. Listener and Mrs. Listener listening out there today, I asked you this, would you be willing to care about the profitability of a billion dollar company like starbucks if you did not earn a bonus based upon the profitability?

I mean clay stairs, if you were the district manager, regional manager for a starbucks, would you care at all about the profitability if you couldn’t make more by essentially living at starbucks to make it more profitable? No. Marshall, Disney world. You’re a manager of Disney world, which you at all care about the profitability of Disney world. If you could not make more money as a result of the success of the team? No, I wouldn’t care. Okay. Chick, filet clay stairs. If you owned a chick filet and no matter how bad or good at did you made the same amount of money per year, which you care? No. Would not. I can say this, if I ran a quick trip or southwest airlines, I wouldn’t care. And maybe you’re listening to and you say we’re are bad people. I think um, I think we’re honest. People.

Clay, that goes back to again to me as a school teacher, flat pay and the only way for me to make more money was to teach another year and I got like a two and a half percent increase. There’s just no reason to want to do a great job. Yeah. I think if you’re out there and you’re honest with yourself, you’re going to probably not be super motivated to do something unless you can make more money. That’s where you started a company. That is why you started the company. You started a company because you want it to make money based upon the value that you add to the hour and not get paid based upon the hours that you work. So why would you not share the wealth and create a merit based pay program for Your Team Marshal? What’s the biggest struggle that clients have that entrepreneurs have that business owners have when it comes to implementing merit based pay?

Where do you get the pushback? I don’t know how to implement it and what it should be. I don’t know like metrics wise, what it should be. Clay stairs. Where do you get the most pushback on how to introduce and implement a merit based pay program? Yeah. Most of the people that, uh, when I bring up the topic with our clients, clay, they, they just, they don’t have any idea what it is and they, they think immediately they go to pink employees, more money. No, I can’t afford that. I can’t afford that. That’s, that’s the pushback that I’ve had. So if you’re out there today and you are struggling with implementing merit based pay or any other, a best practice that we teach them, thrive time show, I would encourage you to day book your tickets to our next in person, thrive time show workshop because Marshall, when people have a specific question about how to implement merit based pay for their specific company, homebuilders, doctors, dentists, lawyers, chiropractors, what do we do in between the breaks a while.

We have a 45 minute sprint where we’re teaching a principle and then the 15 minute break we’re actually breaking out into small, different groups in answering any questions that you have. And then we actually have boards that we’ll have up there so that you can write down your questions and we’ll answer all of the questions that you have before you leave clay stairs. If somebody has a question at the workshop, you’ve seen this. They’re going, I just don’t know how to implement the merit based pay. I have a question. What do you see us do a. do we do we just disregard the question or how do we handle it? Oh No, we address it right there. Just right there. We do. We answer it to, to the satisfaction or the person that answered the question. We even stayed during lunch. We stay after the workshop.

Oh, you’ve met people before the workshop. That’s where we can the workshop at 150 people or so. So if you’re out there today and you’re going, gosh, I want to take my business or life to the next level, I would encourage you to book your tickets to our next in person. Thrive time show workshop today. It is irrefutably the world’s highest and best. It’s the world’s best and most reviewed workshop. The world’s best. And most reviewed business workshop, it’s called the thrive time show workshop. You can book your tickets online today by going to thrive time show.com. That’s thrive time show.com. And now at that point he

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further ahead.

FAQs

What is the difference between a merit increase and a raise? ›

Put simply, the difference between a merit increase and a pay raise is a merit increase is a boost in pay as a result of excellent work, while a pay raise isn't necessarily related to quality of work. Merit increase is a type of pay raise that is given based on how employees perform at work.

What are problems with merit raises? ›

Merit pay plans may create problems in employee relationships, problems in morale related to jealousy, fear, favoritism, undesirable competition, and job insecurity. Merit programs tend to develop divisive and competitive attitudes rather than cooperation among employees.

Are merit salary increases always based on merit why why not? ›

In short, no. A merit increase is a reward for good performance but it doesn't mean the employee is getting a promotion. With a merit increase, the employee grows their compensation but remains in the same job. Think of a merit increase as a form of recognition and appreciation.

What are the advantages of a merit pay? ›

The Pros Of Merit Pay

Merit pay allows the employer to differentiate and account for individual performance amongst the team. The program can increase morale for those who feel they are paid what they are worth.

What is a good merit increase in 2022? ›

However, that data showed that the actual median increase in 2022 for executives was 3.5% compared to 4% for all other categories.

What is a typical merit raise? ›

What's the average merit increase? Merit increases are usually a small percentage of your overall salary, with an overall average of about 3% . The same company may offer a 1% merit increase to one employee and a 10% merit increase to another, depending on how their performance ranks within the company.

Can you reject a merit increase? ›

Employees that wish to decline these offers should put their wishes in writing and sign it; if they do not, the employer should request that they do so. Although there are not any federal laws that force employees to accept raises and promotions, it makes sense to document the circumstances.

Is 5% a good merit increase? ›

Is a 5% merit increase good? The average pay raise is between 3-4%, so a 5% merit increase can certainly be considered good. Also note that while a 5% salary bump may not look like much on your paycheck, these small changes compound over time.

What jobs are inappropriate for merit pay? ›

Answer and Explanation: The three occupations for which the merit pay system will be unsuitable are teachers, government officials and community workers. A merit pay system for these jobs will increase competition in schools and government offices if it is introduced.

How do I justify merit increase? ›

The body paragraph should clearly express why you are worthy of the raise. If you took on more work, summarize your accomplishments. You might use bullet points to highlight them and include figures when possible. Keep your sentences straightforward and concise.

Is a 7% merit increase good? ›

Normal raise: 2-3% Good raise: 4-7%

How do you ask for a merit increase? ›

Email your manager and explain that you'd like to connect to review your compensation. Outline your impact clearly and concisely. Prepare compelling bullet points that describe exactly how you've excelled in your role. Don't mention what your coworkers make or any personal reasons you might have for needing more money.

Is merit pay a raise? ›

Merit pay, also known as pay-for-performance, is defined as a raise in pay based on a set of criteria set by the employer. This usually involves the employer conducting a review meeting with the employee to discuss the employee's work performance during a certain time period.

Is merit increase a bonus? ›

A merit increase, also known as a merit bonus, means that an employee will get a bump in their normal salary, based on a previously agreed upon policy of conduct, such as above average efficiency and performance.

How does merit pay affect salary? ›

Merit pay is sometimes called incentive pay or pay-for-performance, and it involves giving employees base pay increases or bonuses based on their performance. Merit pay may take the place of simple pay raises, compensation increases based on employee seniority or general cost-of-living adjustments.

How much of a raise should I ask for in 2022? ›

Research salary databases online

And so far in 2022, job-seekers expect to make 34% more than their current salary in a new gig, or a pay bump of $9,253 on average. Of course, the increase you can expect will depend on your job, experience, geography and industry, among other factors.

What is a normal raise in 2022? ›

According to our extensive research: The average annual raise in the US is 7.6% as of 2022. The average salary increase when changing jobs is 14.8%, while wage growth is 5.8% for those who remain at their job.

How much of a salary increase can you expect in 2022? ›

The projected average CPI for 2022/23 is 4,5% and should form the basis of the wage increase quantum.

How much should I ask for merit increase? ›

It's always a good idea to ask for anywhere between 10% to 20% higher than what you're making right now. You may be able to ask for more based on your performance, length of time with the company, and other factors. Make sure you come prepared when you negotiate your raise and be confident.

Is 10% considered a good raise? ›

A good pay raise ranges from 4.5% to 5%, and anything more than that is considered exceptional. Depending on the reasons you cite for a pay raise and the length of time that has passed since your last raise, you could request a raise in the 10% to 20% range.

Is merit raise same as yearly raise? ›

Depending on the company, employees may receive merit raises yearly or as a direct reward for outstanding work performance, with the best performing employees earning higher increases. Employees need to reach certain performance-based targets before becoming eligible for a raise.

How do you respond to a merit raise? ›

I want to sincerely thank you for this year's raise. I've enjoyed working with you this year and have learned so much from your guidance. I'm proud to be a part of such a hardworking and innovative team.

What to do if you ask for a raise and don't get it? ›

Here are seven tips that can help you along the way.
  1. 1) Stay Calm if Your Raise Request was Denied.
  2. 2) Ask Why You Were not Given a Raise.
  3. 3) Don't Become a Jerk.
  4. 4) Focus on the Future.
  5. 5) Request Ongoing Check-ins.
  6. 6) Have a Contingency Plan.
  7. 7) Think About a New Job.

How do you decline a raise and ask for more? ›

  1. Schedule a meeting in a private place. All the employees do not need to know that you are denying an employee a raise. ...
  2. Get to the point quickly. ...
  3. Explain briefly why you did not grant her the raise. ...
  4. Allow the employee time to ask any questions he may have. ...
  5. Encourage the employee.

What is a typical raise percentage? ›

Companies typically offer employees a 3-5% pay increase on average. Even if this range doesn't seem like a reasonable raise to you, keep in mind that consistent wage increases can add up over time, providing you with a higher income than what you received when you started at the company.

How much should your salary increase every year? ›

On average, companies that offer employees a three to five percent wage increase are offering a fair raise. What constitutes a good raise usually depends on your perception and unique circumstances.

How much is a typical annual raise? ›

The average annual pay raise was about 4.6% in 2022. Pay raises are smaller in normal years, usually around 3%. Many factors influence whether you'll see a pay raise in 2022.

Can you pay different salaries for the same role? ›

Can a company pay different wages for the same job? It is legal for a company to pay different wages for the same or similar job, but only if there are non-discriminatory material factors which explain the reason for the difference.

Which is the best example of merit pay? ›

Merit pay is a raise based on employee performance. It's based on a set of standards created by your workplace and if you've reached certain goals, merit pay could be on the table. Promotions, salary bumps and bonuses are all types of merit pay that employers can offer.

What is merit pay policy? ›

Merit pay is a system of compensating employees based on their individual achievement or merit, as opposed to their seniority, position, or hours worked. Employees who receive merit pay are typically rewarded with a salary increase or bonus, though the specifics of the system vary from company to company.

Should I quit if I don't get a raise? ›

Deciding when to leave your job because of a lack of pay raises is a decision you should make when you feel ready. If you've been with a company for more than two or more years, have showed good work ethic and have asked for a raise directly but still haven't received one, then it might be time to move on.

How much of a raise should I ask for after 2 years? ›

As a general rule of thumb, it's usually appropriate to ask for 10% to 20% more than what you're currently making. That means if you're making $50,000 a year now, you can easily ask for $55,000 to $60,000 without seeming greedy or getting laughed at.

How do you ask for a raise if you are underpaid? ›

Set up a meeting to discuss your pay.

Remind them of your recent wins, and then say, "I've done some research, and it appears I'm underpaid by x percent." Then stop talking. "We always want to fill the awkward moment, but just wait," she says. This will make it clear that the next step is your boss's to take.

What are the two types of raises? ›

4 types of pay raises
  • Cost of living raises. Cost-of-living raises, also known as cost-of-living adjustments (COLAs), are pay raises that are provided to counteract inflation—rising prices in the economy. ...
  • Merit increases. ...
  • Equity raises. ...
  • Promotions.
13 Jul 2022

Is it better to get a bonus or salary increase? ›

Raises are a permanent increase in payroll expenses; bonuses are a variable cost and therefore give business owners greater financial flexibility when business is down. Bonuses can be tied to sales or production volumes to incentivize employees and help companies boost their profits during peak times.

What is a flat rate increase? ›

For hourly wage earners, a flat-rate increase is an increase in the amount per hour you pay the employee. For workers that receive a regular salary, a flat-rate increase may involve a monthly increase or an annual increase; whichever you use routinely for your employee's salary records.

How much should raise increase every year? ›

On average, companies that offer employees a three to five percent wage increase are offering a fair raise.

How much of a raise is normal after a year? ›

Pay increases tend to vary based on inflation, location, sector, and job performance. Most employers give their employees an average increase of 3% per year.

What is the average raise per year 2022? ›

According to our extensive research: The average annual raise in the US is 7.6% as of 2022. The average salary increase when changing jobs is 14.8%, while wage growth is 5.8% for those who remain at their job.

How often should a company give raises? ›

Naturally, as you become more capable in your position you begin to expect a raise in compensation. But, how often does this raise actually come? Investopedia reports that most employers give employees a 3% pay increase per year. Most companies operate according to this yearly pay increase.

Are merit increases negotiable? ›

Negotiating a raise in addition to your annual merit increase can be tricky. But there are things you can do to start the conversation with your manager and maybe even get a raise right away. Follow these five steps to negotiate a raise in addition to your annual merit increase: Set your expectations.

How much of a raise do I need to keep up with inflation 2022? ›

The obvious solution is to ask for a pay raise of 8.5% or so to at least stay even with inflation, but that's not always the best strategy, experts say. Your first order of business should be to research pay rates not only for your specific industry and job, but also average pay raises across all industries.

Is it better to get a raise or a bonus? ›

Raises are a permanent increase in payroll expenses; bonuses are a variable cost and therefore give business owners greater financial flexibility when business is down. Bonuses can be tied to sales or production volumes to incentivize employees and help companies boost their profits during peak times.

What should you not say when asking for a raise? ›

Avoid these 5 phrases when asking for a raise—and what to say instead, according to a salary negotiations expert
  1. 1. ' More money' ...
  2. 'I think I deserve this because...' What to say instead: “I deserve this because...” ...
  3. 'I was hoping for...' ...
  4. 'I'm going to have to go to the competition...' ...
  5. 'Thanks, anyway...'
8 Dec 2021

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