Good questions. We normally use the merit system - no new innovative pay increases here.

We have frozen pay raises since Feb. We keep the employees in the loop about how business going and what they can do to help improve business. There are some employees having difficulty accepting no raise...I've talk with them, but, I can't expect 100 percent to accept or be happy just to have a job.

Good questions Andrew! We have gone through multiple derivations of a 'merit' system - and/or pay for performance system. The latest derivation involves each employee setting goals/targets for their next year's performance. The manager and employee assign percentage weights to each goal/target. At the annual employee evaluation/review, the manager and employee sit to review progress towards goals. Goal achievement is all or nothing. If you have achieved the goal - you are eligible to receive the salary percentage increase that was assigned the previous year. After all is said and done, each employees merit depends upon accomplishment of goals, position in the current salary range, etc. It's a pretty good system that gets employees serious and excited about setting goals - and working to accomplish each.

Additionally, we have lowered the possible percentage merit increases as a response to the current economic downturn and 'cautious' financial times. My organization has done an excellent job of marketing our response to the economic downturn ensuring that no one will be laid off (at least this FY), no one is being asked to decrease benefits, and we are still receiving salary merits. We are simply asking all employees to take a smaller salary increase than was previously available. When phrased and compared to what could be happening (layoffs, salary freezes, decreasing benefits, etc) - taking a smaller merit does not seem so bad!

We have decreased the allowable percentage of pay raises in response to the current economic downturn and 'cautious' economic climate. However, my organization did a fantastic job of marketing this change to all employees. The campaign centered around the fact that we will NOT be having layoffs, NOT be having salary freezes, and NOT be asking employees to pay for more benefits. When comparing taking a smaller salary increase to not having a salary at all - all the employees of my organization are HAPPY to take a smaller increase if it means we can all keep our jobs!

All non contract employees have had their annual cost of living adjustments - usually in the 3.0 % range frozen in Feb. They will get it if the org meets its 2% net margin in June. We are also now approaching unions when negotiations open, and despite their somewhat state of denial in asking for another 4%, we are offering 0% with a one year contract. So far two of two open contracts have agreed to our offer - reality is setting in and they are just happy to still have jobs. We just rolled out a concept where our 450 employed physicians will have 5% f their annual comp withheld, and paid out if we meet our net margin next fiscal year - the reactions are just starting - some with acceptance some with indignance.

I have worked with departmental merit increases.

This was an intersting process with positive and negative issues associated with it. As you guys said every one would get a cost of living adjustment, and then as the head of X department I would be assigned Y ammount f $ for merit increases. It was my job to distribute the ammount among the employees (not me) according to factors that impacted my specific department. Tools like performace management, buiness impact, competitivness, special know-how, and other life circumstances like graduation for grad school...)

Overall it was very subjective and inconsistent across the organization. In my own setting I tried to use data as much as possible and be honest with echa individual.