Question

Our company prides itself on its merit-based pay system. One of my employees has done a tremendous job all year, so he deserves strong recognition. However, he's already paid at the top of the salary range for his job grade, and our company has too many people in the grade above him, so we can't promote him. What should I do?

A. Offer him a non-monetary reward.
B. Give him extra vacation days.
C. Create a special recognition program.
D. Consult with upper management for a solution.

Answer 1

When an employee excels but cannot be promoted due to their salary cap, alternatives like non-monetary rewards or extra vacation days can be effective. Efficiency wage theory suggests higher pay boosts productivity, so consulting with upper management may lead to innovative recognitions.

Step-by-step explanation:

In the scenario where an employee has performed exceptionally well and is at the top of the salary range without the possibility of promotion, several actions could be considered. An employer might offer non-monetary rewards, such as special recognition or extra vacation days. Additionally, efficiency wage theory supports the idea that higher pay can increase productivity and loyalty. Consulting with upper management could also yield creative solutions that align with the company's compensation strategy and respect the merits of the employee's contribution.