Esther Derby has a great post on an alternative to the yearly performance review.
She also gives a great suggestion for dealing with what most employees want out of a review, money. I'm sure if it wasn't for the salary tie-in, employees would revolt at the notion of going though the typical annual review.
I wonder what would happen if salaries were treated like mortgages and you could choose a base salary plus a fixed annual increase, say 2% or an adjustable rate salary, say median salary + 5%.
Ken Auer of RoleModel Software told me once about the system he uses at his company. New hires can choose to have a market rate salary and minimal/no bonuses or a low salary and a proportionate percentage of revenue sharing. So a programmer could sign on for a $90,000/year salary with no bonuses or a $30,000/year salary + 10% of annual profits.
The only issue I have with either of these systems is that the rest of your life dictates which of these is acceptable, and some people will need to switch at some point. Allowing people to renegotiate their employment agreement would allow that, but doing it to often leads to people speculating on the business climate. I'm not sure if this is good or bad for the employee, but I can see it being an administrative and budgeting challenge for the employer.
Has anyone participated in a salary scheme such as these? How did it work and what did you like and dislike about it?
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