6 Reasons Triennial Increases are the Latest Pay Trend!
Triennial merit pay increases are the latest trend in compensation. This exciting new approach to base pay is something to consider before your next round of raises. Once every three years.
I have listed five reasons to consider triennial increases and am sure you can add to this list. I am also sure that naysayers will point out potential problems, but we optimists can chat about those some other time.
1. Save money on surveys and compensation consulting
Imagine participating in surveys three times a decade. How much could you save by validating your pay data once every three years unless your managers or talent acquisition professionals could identify a real problem (opportunity?)
2. Reduce, or even eliminate, common problems with linking performance reviews to pay
Telling someone they were the best among many then giving them a nominal increase is every manager’s worst nightmare. The current trendy solution is getting rid of performance “reviews.” Perhaps there is a better way.
3. It’s fun to make raises impactful again
Many people reading this remember the days of significant raises. Yes, inflation may have been rising just as a fast, but experiencing someone getting a real raise is fantastic. The triennial approach gives you this opportunity for both great and mid-level performers!
4. Better flexibility to handle hot jobs and critical emerging positions
Since your pay budget remains fairly static, on a per person basis, over the three years, it is far easier to address positions or locations that require additional pay and attention.
5. Lead the field in attracting new talent
If you use the triennial method and choose a lead or lead-lag approach to pay you will be ahead of your competitors for at least 18 months or more! Only the strongest of companies have the money to accomplish this, but who among us is planning to be one of the weakest?
6. It’s time for base pay to reflect the focus on variable pay
The past ten years have seen a progressive move to variable pay as the solution for pay-for-performance. The triennial approach heightens the focus on incentive pay two out of every three years. Communication is more effective and simple.
Triennial increases are a hallmark of the coolest companies today. The rule-breakers. The innovators. The companies who cannot be named because they don’t want to give away this secret. Or, they may not exist at all.
By now you may have guessed that the “triennial increase” is not actually a trend. But, you may also be wondering if such a thing is actually possible. (It’s also possible you think I have lost my mind.) Breaking the paradigm of annual increases will not be easy. It will take a commitment to innovation that most companies will be unwilling to apply to base pay.
The problems associated with annual 3% increases are significant. Differentiation is limited. Entitlement is rampant. Poaching a good employee costs a competitor almost nothing. Perhaps the triennial approach isn’t the right solution, but it certainly far past time for us to admit the current process seldom accomplishes our goals. It’s time for some new ideas, what are yours?