Performance reviews and asking for a raise

More and more, companies are dispensing with traditional annual employee reviews. They say this is out of sensitivity to a new generation of employees who find reviews stressful. The real reason may be that dispensing with employee reviews saves companies money — albeit at the expense of their employees.

Microsoft and Dell are among the high-profile companies that have made news recently by dumping annual employee reviews, and Silicon Valley has long turned its nose up at such traditional means of measuring performance and managing people. For many employees, the initial reaction is relief, but they would be wise to look closer. Without that annual review process, they could find that opportunities to get a raise are fewer and more difficult to obtain.

Young woman asking for a raise

Nothing Ventured, Nothing Gained

As much as you may view a formal review as resembling an interrogation scene out of George Orwell's “1984,” it should work to your benefit — both financially and in terms of feeling more connected to your workplace.

PayScale.com found that most employees never ask for a raise on their own initiative. Just 43 percent of the workers surveyed reported having done so, compared with 57 percent who had not. This does not mean that those who never asked for a raise did not occasionally get one anyway — 38 percent reported that their employer gave them a raise without their having to ask. However, this pales in comparison with the success rate of people who did ask for a raise — fully 75 percent of this group got one.

In other words, your chances of getting a raise are nearly twice as good if you ask for one than if you don't. Also, there's a strong likelihood that many of the 38 percent who got a raise without asking did so as the result of a periodic review process. If your company has eliminated that kind of process, it's all the more important that you summon up the nerve to ask for a raise, because otherwise the topic may never come up. Being shy could cost you money.

Why You Need to Ask for a Raise

Between a shaky stock market and near-zero savings account rates, there is little chance of building a fortune passively these days. Consider this: Someone saving $5,000 a year and investing at historical interest rates would have amassed a nest egg of about $372,000 over 30 years. However, that same savings program at today's interest rates would only produce about $158,000, or less than half as much.

So, to reach financial independence in this climate, you have to do it actively, by maximizing your earnings. This means that as companies do away with the formal review process, the onus is on you to take the initiative to get the raises you deserve.

Address the Gender Gap — be More Assertive!

The PayScale data also indicated that women in particular need to be more assertive about asking for a raise. You are probably familiar with the gender gap — the fact that women generally get paid less than men. Well, asking for a raise may be one way to address the problem.

PayScale found that, even after adjusting for factors like experience, education and training, responsibilities, and company size, women on average earn 2.7 percent less than men. One reason is that the study found women are 2 percent less likely than men to ask for a raise. Beyond just asking, the willingness to negotiate also makes a difference. By a margin of 31 to 23 percent, women are more likely than men to say they are uncomfortable negotiating salary.

There are certainly issues of gender bias that contribute to the pay gap, but women can address that gap to some degree just by being assertive about asking for a raise. And this will only get more important if more companies eliminate regular reviews.

There's ore to Lose Than Money

Getting the raises you deserve is important, but there are other reasons not to neglect communicating with your employer about your job performance, whether by a traditional review or by taking the initiative to bring up the subject.

Overwhelmingly, tech companies have been at the forefront of eliminating traditional employee reviews in favor of softer methods of managing people. But a recent survey by TINYPulse, which monitors employee satisfaction, suggests that the looser structure may be resulting in more alienated employee bases.

According to the survey, only 19 percent of tech employees report being happy in their jobs, and only 17 percent say they feel valued at work. Compared to people at non-tech companies, tech workers are less likely to feel they have a clear career path, understand their company's vision, or feel they have good relationships with their co-workers. This alienation of the workforce may be the result of doing away with a structured means of communicating goals and rewarding performance.

Communication is important in any relationship. As despised as they may be by many people, annual reviews are one way of making sure that communication happens. If your company does not have that kind of system, then it may be up to you to initiate periodic discussions of your performance and your future with the company.

It's on You – so Here's What To Do

In this new environment, it's on you to make sure your performance is properly evaluated and rewarded. Here's what to do about it:

  1. Do not let a year go by without a formal discussion of your performance and compensation. If your company does not have regular annual reviews, make it a point to initiate this discussion once a year.
  2. Schedule time with your supervisor in advance, rather than trying to catch someone on the fly. Busy people don't like to be buttonholed unexpectedly, especially about a sensitive subject. You'll get a better reception if you make sure the discussion happens at a mutually convenient time.
  3. Ask as well as tell. You should have your points to make, but you should also go in looking for feedback on how you can improve. Getting a raise depends on the company's belief that you are more valuable to them than your current compensation, so find out what you can do to be perceived as more valuable.

Companies that eliminate the traditional review process have put the onus on their employees not just to ask for raises, but also to get the feedback they need to advance their careers. Those who are shy about doing so will get left unhappily behind.

Has your workplace eliminated its review process? How has that affected your ability to advance in your career and make progress toward retiring? Have you ever asked for a raise without a review?

More about...Career

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Karthigan Srinivasan @ StretchADime
Karthigan Srinivasan @ StretchADime
4 years ago

A fantastic post! I have been in the field of management for a number of years now. During this time, I have had 20+ direct reports. So, I have seen both sides of the equation — being a boss and having a boss. I couldn’t emphasize enough the importance of annual reviews. As an employee, I am proactive and don’t wait for the annual review to come around. I initiate and set up 1:1 meetings to receive feedback periodically, like once a quarter. Asking for performance feedback helps you get a pulse check on how your work is perceived, on… Read more »

Money Saving
Money Saving
4 years ago

Karthigan,

Wow – a 40% increase? That’s awesome! As I am reading your comment, I feel like I am in the same exact boat you were. I have been with my company 13 years, and just learned that there will be to merit increases due to tight times. I was also informed that the bonus is going to be substantially less because of the same. I feel like I could go outside and get a 30%-40% pay increase. Maybe it is time I put it to the test?

Karthigan Srinivasan @ StretchADime
Karthigan Srinivasan @ StretchADime
4 years ago
Reply to  Money Saving

Thank you! Yes, I would encourage you to look for opportunities outside and go for it. Our work life span is about 40 years. I believe that switching jobs to better positions or moving higher within the company every 4-5 years is the right thing to do. This gives you about 7-8 career moves over your work life span. In my former company, I was in three different roles over the 14 year period and being promoted up. Then I had hit a ceiling and decided to find greener pastures. There are plenty of opportunities outside. Be patient and diligent… Read more »

freebird
freebird
4 years ago

Funny you mention this, where I work I think it happened although quietly. Previously we had to write essays documenting our accomplishments at year end, and the general impression was that this system was biased in favor of those who are careful record keepers and can write well. Whether such bias seems fair may depend on whether that person is strong in such skills– and how closely these skills are attached to the needs of the business. I don’t recall writing anything for our annual review over the past couple of years, so maybe that system is gone, or it… Read more »

Honey Smith
Honey Smith
4 years ago

I was at my former employer 7 years, and they did performance reviews. The first year, the economy crashed, so we got furloughed (so I made 10 percent less than my stated salary). The next three years, we were told prior to performance reviews there would be no raises for anyone. Then I got a raise of $2,000 and a raise of $840 (my original base was $40K). I left soon after my seventh performance review, after which I was told there would be no raises for anyone. Wrong industry? Bad timing? I received 4’s and 5’s (out of 5)… Read more »

AMW
AMW
4 years ago
Reply to  Honey Smith

I work as an adjunct in higher ed and have never got a performance review. I don’t like this because I never get much feedback. This wouldn’t help with my pay because I work at public college so paychecks are non negotiable. I just want to know if there is anything my superiors feel that could be improved. Any positive feed back would be a gift. I do not enjoy the “no news is good news approach”.

Financial Samurai
Financial Samurai
4 years ago

I had a performance review twice a year and had to give a performance review twice a year. Painful!

Always manage upward.

Sam

stellamarina
stellamarina
4 years ago

Most of the time I found reviews at work to be just bullshit….on both sides. Glad to rid of them.

Mike Mugridge
Mike Mugridge
4 years ago

I’m more in the “glad to see them go” camp. I think they are one of those things that superficially seem so good, but really most people dislike and don’t get much benefit from. Just search for a paper called “Performance Appraisal Reappraised: It’s Not All Positive” by Todd Grubb to see a fairly thorough criticism. As Edwards Deming the quality guru said: employees work within a system that is created by management and the influence of any one employee is usually not significant. Like Honey Smith, my raises have been largely from changing jobs or the rare times the… Read more »

Jeff
Jeff
4 years ago
Reply to  Mike Mugridge

<>

Two times I’ve gotten that, once from each employer. Both times I found a new job as quickly as I could.

BRB
BRB
4 years ago

This isn’t true, Microsoft employees get evaluated twice a year.

Richard Barrington
Richard Barrington
4 years ago
Reply to  BRB

Interesting – both Fortune and the Wall Street Journal cited them as an example of a company that had abandoned traditional formal reviews.

samathathyme
samathathyme
4 years ago

I work at Microsoft. We actually have quarterly “connects” that include writing goals, looking at your work for the last quarter and both supervisor and peer reviews. Then once yearly they adjust compensation based on reviews and mete out bonus rewards. What they got rid of was the yearly stack ranking they previously had that worked much like a bell curve grading system where someone was required to be ranked at the bottom. The new review system just focus on regular smaller touch-points rather than a single large yearly review. Many of the tech companies in the Seattle area are… Read more »

Longnok
Longnok
4 years ago
Reply to  BRB

Same at Dell. Annual reviews still occur.

Jen From Boston
Jen From Boston
4 years ago
Reply to  BRB

I know someone who works at Google, and IIRC they get peer reviewed 4 times a year. Thent this route to address impostor syndrome, which is prevalent in Silicon Valley.

Also, I’ve read that Millennials want more frequent feedback on their performance.

L
L
4 years ago

There is a bit more to it than what is mentioned in the article. This was how it was done in my company this year and it wasn’t a bad thing. The plan wasn’t to completely disconnect from the employees. On the contrary, our managers are now supposed to meet with us, 1 on 1, for at least an hour every 2 weeks. This way, feedback is provided on a regular basis than at the very end of the year (which in the past usually meant that it was too late to act upon anyway). I did have my usual… Read more »

amanda
amanda
4 years ago

I agree great post. Perhaps the people who required to complete performance reviews do them as automatons and thus the people who receive them don’t see their value. As the person who completes the performance reviews now I look at the salient performance standards each year, to much sure they are still needed and relevant. These become really helpful as management changes, you get to know how your boss values work as compared to a previous one. Just because its stressful doesn’t mean it should be avoided. The goal should be improved performance, both the sides should consider where improvement… Read more »

Frugal Turtle
Frugal Turtle
4 years ago

This post was really eye-opening. I haven’t heard of any companies doing this, and it seems really shady. I’ve always had reviews at any job I’ve had and ,luckily, have always gotten raises with them!

Money Saving
Money Saving
4 years ago

I think annual reviews are important, but the forced ranking should go the way of the dodo bird! Why am I forced to rate 10% of my reports as not meeting expectations if everyone is doing a great job?? The joys of working for a large corporation :-).

RNR
RNR
4 years ago

My former employer didn’t stress performance reviews, which were supposed to happen annually.

I learned to schedule mine on my anniversary date, because if my boss got busy, I eventually got one – but my raise was never retroactive to the anniversary date.

It only took that happening one time to convince me that I was losing out on money, real money, that I had coming.

If your employer does not do reviews, make sure you have a very clear understanding what it takes to get your next raise – and go for it!

Michael
Michael
4 years ago

“In other words, your chances of getting a raise are nearly twice as good if you ask for one than if you don’t.”

This sentence destroys the credibility of the article. Most people find it very awkward to ask for a raise, so will only do it if they are absolutely sure they are being underpaid and they can demonstrate why they earned it. If every single person in a company asked for a raise, do you seriously think 75% would get one?

Carol
Carol
4 years ago

I am officially removing Get Rich Slowly from my headlines on My Yahoo. I used to like the frequent, personal posts. These posts are infrequent and very non-personal.

Shawn Kuruganti
Shawn Kuruganti
4 years ago

Very insightful article. I personally prefer to be reviewed by my employer so I know what I need to be improving and what I am doing well, but I can see how it can be stressful for most people. It is a great point to make about the gender gap and how some of that could be due to women being less comfortable asking for more money and negotiating. My fiancée is a very intelligent and hard-working, but she is much more introverted than I and she is less likely to negotiate for a higher salary. I should send her… Read more »

Paul Dabuco
Paul Dabuco
4 years ago

Asking for a raise is a proactive move, really. However in an authoritative company it is truly neglected as salary increases have a cap so no matter how much increase you want to have it wouldn’t make any difference.

Hence, this is only applicable if the company values its people and the people itself are performing excellent work!

Barb
Barb
4 years ago

What is going on here? I’ll remove this from my bookmarks. 20 days and no new posts? Not sure there’s any point to checking in any more. Such a shame, I used to visit daily.

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