Dive Brief:
- General Electric Co. (GE) is contemplating an alternative to the traditional annual raise, according to Bloomberg. GE executives are not sold that such raises – a long-time compensation strategy – are cutting it in today's changing world of work.
- Bloomberg reports that based on Mercer's 2016 compensation survey, just 1.2 % of U.S. companies use a discretionary timescale for increasing base pay, while about 90% use a fixed date for raises when given. Another 5% or so make the change for each employee on the anniversary of their hiring or move to their current job.
- Goldman Sachs, Microsoft Corp. and GE are among employers about to overhaul their performance review systems. Ending the time-tested annual raise was never in part of those announcements. Valerie Van den Keybus, a GE spokeswoman, told Bloomberg that decisions on both pay-related issues (raises and performance reviews) may happen any time within the next several months.
Dive Insight
“We uncovered an opportunity to improve the way we reward people for their contributions,” Janice Semper, GE’s head of executive development, told Bloomberg in an e-mailed response to questions. She said it will involve “being flexible and re-thinking how we define rewards, acknowledging that employees and managers are already thinking beyond annual compensation in this space.”
GE has long been known as a trend-setter on the HR front, according to Bloomberg, and today its people management concepts are studied at business schools. Its controversial employee rating points system was championed by former CEO Jack Welch and copied by many employers – but even that is changing.
Current CEO Jeffrey Immelt told Bloomberg he wants to to simplify the company and streamline decision-making. Some of Immelt’s thinking seems to be inspired by the disruption of people management strategies happening among Silicon Valley's smaller startups, Bloomberg notes.
