When You Reach a Pay Range Maximum

by Carey Klosterman on April 16, 2018

in Compensation,Recognition,Rerun Classic

Money

You hit it … the maximum of a pay range! Now what? When I get this question, I have a few questions that I need answered:

The answers to these questions are essential when figuring out what to do once you reach the maximum of a pay range. Realistically there should be a cap on pay, and ideally there should be added opportunities provided for those employees who want them. However, you may have that content employee who is happy as a clam doing the same thing day in and day out. They are consistently performing acceptably. Do they deserve some form of cost-of-living adjustment? The simple answer is yes. Yet the real question is, do they deserve anything more than that?

Not having a consistent practice in place makes situations like this difficult. Further questions need to be considered: Have they consistently gone above and beyond what has been asked of them and are they consistently adding to the bottom line either directly or indirectly? Those questions may be harder to answer.

Having a policy in place for employees who are happy right where they are at is necessary, and providing opportunities to cultivate employee skills and abilities for those who want them is a good way of avoiding the range maximum. As their position evolves and they gain more skills and responsibility they will most likely move into higher pay ranges. It eliminates questions and you know what to do when faced with this issue as it comes up.

Here are a few simple options to consider:

  1. Paying a lump sum bonus; it may not always be guaranteed and it eliminates the fixed cost of a standard pay increase
  2. Providing new opportunities for your employees to further develop their skills and abilities
  3. Implementing a pay for performance or variable compensation program
  4. Widening the spread of your current ranges
  5. Finding alternative ways to reward employees that may not be tied to an annual increase

Typically it is your long-time tenured employees who will reach the maximum of the range. Finding creative ways to reward them for their service, and showing them you appreciate their dedication to the job, is essential in retaining your best people. Having the formal policy in place will make your job a whole lot easier!

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