After a couple of months as a manager I had my feet under me enough to look forward to the annual review cycle. The department had raises tied to the review cycle. Deciding how to portion out raises is critical. My time as a developer had done little to prepare me for it.
I anticipated that at least some would always be unhappy. As I considered what I could measure in order to make the process credible and fair I feared that people would resent the measuring itself.
How could I make this looming decision?
To introduce the topic I published this:
Thought Experiment: Uneven Dozen
You are a web development manager. You have 12 developers that report to you. All of the developers currently make exactly the same amount of money. In exactly one year you will have 110% of your current budget for salary. The money MUST be spent on your employees’ salaries. On the day you get your new budget HR will let you split it any way you see fit among your current employees. You can double someone’s salary, cut another in half, or just give everyone the same 10% raise.
Question: How will you distribute raises?
In one year, how will you distribute the extra budget? Follow-up question (assuming your decision is based on information): How will you collect the information that your decision is based on?
Bear in mind:
- you are responsible for gaining maximum value for the budget—it is not only your professional obligation as a manager, but a solemn trust.
- all of your developers don’t contribute equally to success
- even those who have comparable impact will achieve it in distinct ways
- chronic under-compensation leads to attrition of the best contributors
I’ll post some bad answers to this experiment. Hopefully, I’ll eventually post some not-so-bad answers. I welcome your answers in the comments below. While the problem has been simplified this is almost exactly the problem I have to solve as a web dev manager.
It has been nearly two years since I posted it. I’m still not completely satisfied with my answers, but I have made progress. I’ll post more about my tools. Here’s a thumbnail sketch:
- Results against goals they set monthly and quarterly.
- 360 reviews with open and closed ended questions. Sprinkle in some analysis and bias removal.
- Employee self assessments completed monthly and annually. Combine with notes from weekly one-on-one meetings.
- Results against a growing number of performance standards I glean from their team activity and review with them at least monthly.
I review their current overall performance with my directs at least monthly. I’m careful to gauge wether my measurements cause un-healthy competition or resentment.
So far I am pleasantly surprised. Most people are glad to see how they are being measured and confident there is enough pie to go around.
