Do you give pay increases to poor performers? I bet you do. Sure, it might be fairly conservative amount but probably not that far off from what your better performers receive.
CPA firms tend to ask around (firms in other cities and states, usually in their CPA firm association) and check various surveys for the CPA profession before they give annual pay increases.
For a while (pre-2000 and up through 2007) firms were giving BIG increases to their seniors – - – because their competitors wanted them. A senior could walk down the street and automatically get a $5,000-$10,000 pay increase. So, an annual increase of 10-15% kept them at the firm. The rest of the team received an average of 5-7%.
Those times are gone. Last year, many firms gave no increases and even reduced some managers’ pay. Of course, partners took a hit, too. Now, things are getting some better and conservative increases are beginning to happen.
Be careful to not fall into the same “everybody gets X% trap.” When shouldn’t raises be a given?
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"Waste your money and you're only out of money, but waste your time and you've lost a part of your life. - - Michael LeBoeuf