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Ask an Expert: Salary Caps | Theresa Adams, SHRM-SCP

​Employees who are earning the maximum compensation for their pay range are often highly valued top performers, and retaining them in today’s competitive market is a challenging business imperative. Because an employee hitting the pay ceiling can be anticipated, it’s good practice to discuss career paths with them well before they reach that point.

Start by ensuring that the employee understands the big picture. Being transparent with employees will improve trust, which can boost retention. Communicate the compensation practices of the organization, including how salary ranges are developed and how pay increases are decided. Review your organization’s compensation philosophy, as it is an important tool not only for guiding pay decisions but also for communicating the reasons behind those decisions. You might then segue to talking about the total rewards the company offers. 

While an employer can do several things to improve its chances of retaining an employee who has reached the top of the pay scale, it’s critical to have a thoughtful, strategic approach that aligns with the employee’s interests and values, as well as the company’s culture. 

Below are several examples of steps an employer can take in this situation: 

  • Provide a lump-sum bonus instead of a pay increase. This provides additional compensation and recognition but keeps an employee within the salary range. 
  • Provide opportunities to advance. Offer stretch assignments, cross-training, and learning…

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