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. 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?

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