Ask HN: Owners/Managers who personally decided on annual 1-2% raises, why? Genuine, non-trolling question. I'd like to know the thought process of anyone in the owner / upper management position who decided to reward employee performance across the board with "merit" raises that only/barely match the cost of living increase. |
The reason I assume that is, I've come to learn working in huge IT organizations that things work much differently than they did at a small startup. At a small startup, the VP/CEO assigning the high % raises could determine how much money would be spent on raises for the year, down to the individual contributor level, and factor in things like "we need to pay this one guy way more this year to retain him, because he's responsible for XYZ which is making us a lot of money" etc.
In contrast, at a huge IT organization, IT leadership is assigned pools of money specifically for merit increases, and have very little latitude to request more. Any requests for more needs to be framed in the argument around why a team of over 50+ (in other words, an organizational unit) requires an increase in funding. Typically though, those buckets of money are assigned by financial teams who have little visibility into the individual contributors in the technology space. It's then up to the IT leadership who's given that pool of money to split it among team members. Given that choice, it's typically only enough to give people a 1-2% merit increase, with about 10% of the highest performers getting a little more (3-4%).
I think if it were up to IT leaders in large orgs, they would assign raises based on merit, but they rarely have access to purse strings.
Money does not grow on trees, and companies also need to decide if they need to pay significantly above average.