Boyd Davis, CEO Payfederate
Let’s talk about the thing no one has time for but everyone’s still doing.
Every year, compensation teams head into battle — assembling spreadsheets, herding managers, interpreting budgets, and pushing the same hill of merit increases up the same mountain. And for what? Most cycles leave employees underwhelmed, managers confused, and HR exhausted.
At the Total Rewards conference in Orlando this year, I co-led a session with Sam Reeve and Liz Carver on how comp teams can do more with less. We talked about AI, outsourcing, and smarter tools — but one conversation kept coming back: why are we still dedicating months to a process that barely moves the needle?
It’s time to ask a harder question:
What if the merit cycle is the problem, not the process?
A Broken System That Looks Polished
Even in the best-run companies, the merit cycle is a time sink.
Managers are asked to distribute increases with limited context, juggling performance ratings, outdated market data, and often vague guidelines. Comp teams create frameworks, only to watch them get reinterpreted a dozen different ways. Debates break out over microscopic differences in percent increases, while meaningful equity concerns get kicked down the road for “next time.”
The cycle has become an annual ritual — familiar but flawed.
And the worst part? Even when everything “works,” the outcome often fails to motivate, retain, or reward the people who need it most.
What If We Did It Differently?
Let’s rethink who owns what.
Instead of making managers responsible for allocating every dollar, what if we gave them clarity and structure — a recommended model that they could refine based on real insight into their team’s performance?
In this new approach:
HR leads with insight, not admin — designing models that reflect market changes and internal fairness.
Managers weigh in where it matters, using their role as talent developers to flag exceptions or high-potential individuals.
The process is faster, cleaner, and more consistent.
You shift from reactive decision-making to intentional planning. And suddenly, the merit cycle doesn’t have to feel like a crisis with a deadline.
Fewer Touchpoints. Better Outcomes.
What used to take six weeks can be done in two.
Imagine this: the comp team presents a structured proposal with logic built in. No chasing data. No version control spirals. No last-minute escalations over marginal changes. Managers spend their time evaluating team progress — not updating spreadsheets they don’t understand.
And with fewer manual inputs, there’s less room for bias. Patterns become clearer. Decisions get more consistent. Pay stories become easier to tell — and defend.
This isn’t about removing people from the process. It’s about giving them better tools, better visibility, and better purpose.
This Is Already Underway
We’re not alone in thinking this way.
More companies — especially those navigating lean teams or ambitious growth curves — are moving away from rigid, manager-led compensation cycles. They’re embracing centralised frameworks and more agile review periods. In fact, some industry consultants are now questioning whether managers should own pay decisions at all — a conversation that’s starting to resonate across HR and leadership circles.
This isn’t just a provocative idea — it’s a timely rethink. The traditional model was built for an era of slower business cycles and longer timelines.
That’s not the world we operate in today.
The Bigger Question Isn’t How — It’s Why Wait?
If you’re leading comp in a scaling organization, time is your rarest resource. You need a process that delivers impact without draining every ounce of bandwidth. One that drives trust and fairness — but doesn’t burn out the very teams trying to build it.
At Payfederate, we believe compensation planning doesn’t have to be painful. It can be smarter, leaner, and far more strategic — if we’re willing to rethink the traditions we’ve outgrown.
So ask yourself:
What would your team do with six extra weeks back every year?
Maybe the real question isn’t whether we should reinvent the merit cycle —
It’s why we’re still waiting.
