Merit Increase Dilema

LFernandes

[font size="1" color="#FF0000"]LAST EDITED ON 10-30-02 AT 08:57AM (CST)[/font][p]Hi Everyone,

I'm having an internal struggle with myself on this one.

When an employee receives a merit increase, paperwork MUST be signed and approved by the supervisor, Department Head, VP and then our Finance Department before the increase becomes effective. Our normal merit increase runs between 2-5% with the 5% going to an outstanding review.

Here's the problem.

HR reports to Finance and I just received an outstanding review from my CFO for one of HIS direct reports. The merit increase is 15% which is 10% more than what we have been giving everyone else. Granted, the review is above average. But the paperwork is signed only by him (he reports to our CEO). The direct report is a person that he brought in from his previous company so I am also a little concerned with favoritism.

Should I put the increase through as is? Should I give the paperwork to our CEO for signature possibly incurring the wrath of my CFO who is ultimately my boss?

I'm in a catch 22 here. Help!

Rockie

I would think that the CFO would have to have this approved by the CEO since it is so far out of norm and outside of policy. Do you have any type of policy or approval process where increases are outside the norm and what the approval process would be?

If this is a market type adjustment, I would think the CFO would have to give some type of rationale as to why the increase is necessary and what he based the 15% on. On the surface, it smacks of favortism and will certainly be viewed this way by other employees.

Before I, as an HR person, would approve this type of increase, I would go back and ask the CFO to run it by his boss and if he refused, I think I would still run it by the CEO. It could come back to "bite" you as well as the CFO.

Theresa Gegen TX

You might want to consider going back to the source -- the CFO -- to discuss this. The CFO may not be aware that the company normally does not give merit raises over 5% and that this is an unusual request that may catch the attention of the the CEO. The CFO may have good reasons for the extra 10%, for example the employee may be taking on extra duties, in which case, a job title may need to be changed, etc.

The last thing you want your boss to think is that you went behind his back and reported his actions to his superior (and I suspect his superior would back him up).

Good Luck!

LFernandes

[font size="1" color="#FF0000"]LAST EDITED ON 10-30-02 AT 09:58AM (CST)[/font][p]The CFO is the last one on the approval process. In fact I just gave him a rating sheet where the increases are graded: outstanding between 4-5%; above average 3-4%; Average 2-3%. So he knows what we've been giving an increases. This person just received a promotion the last review period with a hefty increase.

Jessica

LFernandes,

Of course, without standing in your shoes and fully understanding the organizational structure of your company and power dynamics at work it is going to be very difficult to give you a cut and dry answer.

With that disclaimer, I think the consequences of processing an increase with only one signature, in a system that usually requires four, could be a not great choice. Would it be possible to dig casually for a little more information on how this particular situation works? For example, could you ask the CEO if s/he normally approves salary increases when they are initiated by supervisors at the same level as your CFO? Perhaps that would be a better question for another supervisor at the same level as your CFO, or someone in the finance department? Maybe you could express your concern directly to your CFO, "Hey Chris, what's the signing off process on this increase since Ellen reports directly to you? Does it go to the CEO as the "department head" or just straight to finance?" If the answer still doesn't mesh with what your gut tells you is right maybe someone else's answer here will help! xpray

Good luck!

Jessica

LFernandes

Hi Everyone,

Thanks for your input. The opportunity to speak to our CEO presented itself to me when he came to talk to me about something else. I used the hypothetical situation approach and asked him who should be signing the change forms.

He already knew about the situation (whew!). He told me to process the form as instructed so that I wouldn't get into hot water and also thanked me for speaking to him (he promised that I wouldn't get into trouble for doing so).

So now I wait and see what happens next. I have a feeling that this isn't the last of it. At least I don't have to worry any more. The powers that be were already aware.

Again, thanks for your valuable input.
x:D

Don D

Your post did not indicate that the signature or approval of HR is even in the process. Thankfully our process requires several layers of signoff on each and every increase. CEO/President is required on every one of them, ultimately, regardless. Supervisor, Vice President, Human Resources and CEO all have asignature line. Finance has no role other than to key it in timely. Perhaps since nobody has to sign off on the CFO's decisions for increase, he might give you one that large which requires no additional signoff. At best, the process you have in place has a pretty large weakness.

LFernandes

HR does have sign off, I just forgot to list myself in my state of tizzy this morning. HR reviews the paperwork and if everything is in order, we forward it on the Finance as the last approval for budgetary reasons. Unfortunately, we report to the CFO (Finance) so he skipped us altogether figuring (possibly) that he had final approval and would over-ride us anyway.

I agree that there is a weakness. We need a checks and balance system so that this doesn't happen again.