Annual Raise Question

[LivingAlmostLarge]

Okay, DH found out last night what his annual raise/bonus would be. This is our first year seeing such things, so we have no basis to compare against. When I worked for 3 years I saw large increases of 10-20% mainly because I was underpaid to begin with. So it's not the same comparison, plus I switched companies and got promoted as well.

First off he got two separate ratings individual/company. He got the higest rating for both and still ended up with a "generous" 4% raise. That's apparently high for the company, the ratings were 1-4 and he got a 4 = 4% raise. An average worker gets a rating of 3 and 3% raise. He seems upset/frustrated because he's working his tail off. Is this typical? He realizes that if people get ratings of 1, they fire them, typically about 5-10% a year.

But then he got a larger than expected annual bonus because the standard was 8% but he got 110% and 120% "extra" performance based compensation. So he ended up with a 11% bonus overall. Plus restricted stock bonus another 4% annually, so our bonuses are making up a huge chunk of income.

Is this typical? Should he be happy or disappointed? Overall the 4% raise is nothing, compared to his bonuses which amounted to about 25% of his income in 2006. Which is nice, but it's frustrating because I don't think we should always count on bonuses. He agrees and wonders how do you budget such stuff? How do you negotiate when looking for other jobs? What is your compensation? Salary and bonus or just salary?

Can everyone shed some light on how this works? What to think about bonuses and raises? And how to assess the value of such compensation properly.

[sweeps]

Re: Annual Raise Question

Yes, that is pretty typical. I know some people on here talk about getting 10%+ annual raises but that's not normal.

Companies like to play around with numbers to make them sound better. For example, giving a bonus range from 0% to 200%. Rating someone at 100% sounds a lot better than rating them at 50%, even though that's really what they got.

And of course manipulating bonuses are more preferable than manipulating people's salaries, because it's easier for people to accept a cut in their bonus than a cut in their salary.

[disneysteve]

Re: Annual Raise Question

I don't think we should always count on bonuses. He agrees and wonders how do you budget such stuff?

I can't help you with most of your questions as I don't work in a corporate environement. I'm in a small business and haven't gotten a raise for years.

I did want to comment on what I quoted above. You and your husband are absolutely correct that you should NEVER count on bonuses. You should do your household budget based on salary alone. Don't include the bonus at all because you never know how much it will be or even if it will exist in any given year. You don't want to spend that money in advance and then have it not materialize.

So what do you do with the bonus money when it doesn come? Use it to bolster savings - perhaps your IRA contributions or kids' college funds. Use it to pay down debt if you have any. Use it for fun stuff like vacations. Put it away as savings for when you need your next car. Stuff like that. Just don't include it as part of your regular spending plan.

[LuxLiving]

Re: Annual Raise Question

Very nice bonuses. I'd be very happy but wouldn't count on them coming every year.

[zetta]

Re: Annual Raise Question

There is strategy in the corporate side of this as well -- when they give a raise, they're locked in to paying that amount in future years, while when they give a bonus the next year they're not locked in.

I would suggest looking online to see if you can find a salary survey for the type of work your husband does. That'll give you the best idea of whether he is underpaid, overpaid, or right on target. I once discovered I was hugely underpaid for my area and years of experience. I took the salary survey info to my boss just before review time, indicated I'd leave the company if this wasn't fixed, and got a 14% raise.

[LivingAlmostLarge]

Re: Annual Raise Question

Yeah I hate the idea of bonuses making up so much salary. I'd rather have a big raise.

[Daylily]

Re: Annual Raise Question

How about being on a salary freeze? Four percent is not that unusual.

[safari]

Re: Annual Raise Question

4% is better than average annual raise, but a lot depends on the company and its financial situation. In the past I've gotten a 17% raise and a 13% raise, but I started with a low salary and the company was making good profits back then. The last few years my raises have been around 4%, which is considered pretty good. Most people are getting raises around 3%. Everyone is also getting yearly bonuses, which usually turn out to be about 3% of the salary. If your husband is getting a raise on the higher end of the scale at his company, then he shouldn't feel disappointed. It's unreasonable to expect a 10% raise when the company is giving only 4% to its best employees. He'd have a better chance asking for a promotion than for a big raise.

[Joan.of.the.Arch]

Re: Annual Raise Question

If you all think 4% is a good annual raise, then inflation must be lower than I thought. I thought the inflation rate was running around 3.5% per year. What do you all hear?

[safari]

Re: Annual Raise Question

If you all think 4% is a good annual raise, then inflation must be lower than I thought. I thought the inflation rate was running around 3.5% per year. What do you all hear?

I meant 4% is a good raise compared to most companies, but if you compare it with the inflation rate, it's barely a raise at all. In 2006 average inflation was 3.24%, according to this site http://inflationdata.com/inflation/i...tInflation.asp

[lrjohnson]

Re: Annual Raise Question

I'm in civil service. We get "step raises" within a title; start as a Worker Bee I, range A, then a 5% raise to step B, then 5 % to D, then E, the max. Once a person hits Step E, no more "regular" raises, unless they get a 10 year longevity raise, or promote to Worker Bee II. Sometimes the union will negotiate a 2 or 3% COLA for us now and then; not very frequent.

The good part? You are guaranteed to get the same as the next person.
The bad part? You are guaranteed to get the same as the next person.

[ren]

Re: Annual Raise Question

My company had a ceiling of 3.5% last year, no bonuses unless you completed a certificate. Come the end of March, we'll see what this year's cap is.

Can't complain too much; was talking to someone who works for another company in the building and she got 0.5% last year because she was such an excellent employee, otherwise she would have gotten bupkis.

[LivingAlmostLarge]

Re: Annual Raise Question

Actually DH was a bit worried. Because talking with others, 4% is the lowest most people at the company have seen. Usually average is 6% and going more around 8%. But the bonuses used to be a lot smaller. According to the guy he sits next to, the company is trying to change the pay by doing big bonuses and absolutely minimal raises.

[tinapbeana]

Re: Annual Raise Question

DH got a 1% raise last year. he told his manager that if things at the company were that tight, they could keep the 1% because they obviously needed the money more than he did...

[vsjhoc]

Re: Annual Raise Question

Actually DH was a bit worried. Because talking with others, 4% is the lowest most people at the company have seen. Usually average is 6% and going more around 8%. But the bonuses used to be a lot smaller. According to the guy he sits next to, the company is trying to change the pay by doing big bonuses and absolutely minimal raises.

You might tell DH not to worry so much -- coworkers are not always honest about these things.