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Our FM outsourcing provider has come to me with pay increases for 2011. He is suggesting the rate of inflation for all of them, both high and low performers.

In my mind, I would suggest starting off at inflation as a base, and then take into consideration:

  • Performance - did they just do their jobs or did they go beyond expectations
  • Roles & responsibilities - did the staff take on more scope that warrants a pay increase, i.e. before they were managing 5 staff and one location and now they are managing 15 staff and 3 locations
  • Market rates - if the market rate has increased for the position, then we should look to adjust the salary--all else being equal.

The only one I am not so sure about is performance. We have already decided bonuses based on performance. Should we include it in pay reviews?

Anything to add or am I off track here?

Regards,

Tony

Mark's picture

First off, what is FM?  I guessed Financial Management, but I can't imagine someone outsourcing that.  So, hesitant to give more guidance until I know that.

Further, are you saying that the manager who works for the firm to whom you have outsourced a process has come to you with pay recommendations?  it would seem to me that that would be based on a contractual agreement, which would allow the outsourcing firm to choose how to pay folks.  Are you certain that the pay you recommend they will give to whom you say?  Do YOU have the budget for inflationary equilibrium?

Regarding bonuses, are you saying that you've already paid these folks bonuses? Before you determined pay for the coming year?  Was there a joint discussion, and if so what were the context, parameters and outcome?

Finally, you don't have to take into account any of what you said.  Performance matters...it's certainly possible that an underperformer would get LESS than inflation.

Mark

tokyotony's picture

Mark,

FM = Facilities Management. And, yes, as a bank, we have outsourced this function to an FM provider--it's not our core business.

The contract states that annual reviews of fees are to be done and negotiated with the client (i.e. me). There is no stipulation on what that has to be tied to (e.g. inflation). And, yes, the manager of the outsourced team has come to me with these recommendations. And, while I cannot be 100% certain that the increments would indeed be given to the people we agree upon, we have rights to audit their records. And, yes, we have included a % for overall increase in costs this year, including the cost of the FM service.

And, yes, we did agree on the bonuses already based on performance review--some where I gave direct feedback (for those whom I deal with directly--not really feasible for me to assess those in the lower ranks that I don't work with). Bonuses are accrued throughout the year (we pay this on a monthly basis) and the outsourcing manager sat down with me with his recommendations based on performance.

Note - we have a cost-plus contract with this company.

Let me know if the above gives you further insight to allow for further comment.

Tony

afmoffa's picture

If I were the manager/owner/employer of the Facilities Management company, and you were my client, I'd feel weird having you say who got raises and who didn't. I'd welcome your input in terms of who the best (and worst) performers were, and how satisfied you were with the results of their labor, but that's about it.

Mike owns a bunch of Italian restaurants, right? He gives the raises to the staff. If you eat at one of Mike's restaurants and it's the best meatballs you've ever tasted and the friendliest waitress you've eve had, you can tip well and maybe write a nice letter to Mike, but it's still up to Mike to give out the raises.

Mark's picture

...but even if he did, I think that example isn't really on point.

More soon, but if these guys are providing FM services to ME, I'd absolutely like to have a say.

Mark

Mark's picture

Tony-

I think you have a GREAT deal of leeway with this vendor.  I would think you would compare his request and your budget, and first see if yours is bigger than his.  If so, I would start from his and recommend he differentially apply it, and perhaps agree to give him all of that which he requests if he does so.

If his request is larger than your budget, you need to immediately communicate that and start talking about less than inflation improvements for the low performers.

Bottom line: it's completely reasonable for you to give him guidance regarding his employees who deliver results to you.  Their performance is absolutely a part of the discussion.

Mark

tokyotony's picture

Okay, thanks for the advice. Very informative.

gregaria's picture

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Hydroponics

gregaria's picture

Interesting post, especially for those who are dealing with differing inflation rates for overseas workers.