
Ask HN: Owners/Managers who personally decided on annual 1-2% raises, why? - 943_924
Genuine, non-trolling question.<p>I&#x27;d like to know the thought process of anyone in the owner &#x2F; upper management position who decided to reward employee performance across the board with &quot;merit&quot; raises that only&#x2F;barely match the cost of living increase.
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ddelt
I'm assuming you mean management who has the latitude to determine an overall
raise % irrespective of how much money that costs until it's implemented for
their team members. In other words, management who gets to define how much the
raises affect the budget.

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.

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mytailorisrich
It usually means that business is hitting a rough patch and budget for salary
increases is reduced, and/or that they think that they have been "over
generous" with salary increases over previous years.

Money does not grow on trees, and companies also need to decide if they need
to pay significantly above average.

