Dear Bob ...Do many companies have the policy of down-rating annual raises when the rate is close to the band cap? I understand that one part of that is to motivate the employee to do enough to get promoted (stop complacency).However, that backfires when there's no job band available to be promoted into. Then the employee is faced with acceptable reviews, with annual raises more like those given to employees wit Dear Bob …Do many companies have the policy of down-rating annual raises when the rate is close to the band cap? I understand that one part of that is to motivate the employee to do enough to get promoted (stop complacency).However, that backfires when there’s no job band available to be promoted into. Then the employee is faced with acceptable reviews, with annual raises more like those given to employees with sub-par performance ratings (mixed message there), and no where to go but out. – CappedDear Capped …Most do. It has nothing to do with motivation and everything to do with basing compensation on the labor marketplace. If a company were to continue to give salary increases for someone at top of band, the company would have a financial incentive to replace the employee with another who could provide equivalent services for less. The smart ones recognize the de-motivating aspect of having compensation fail to reflect strong performance, and provide a one-time bonus since a salary increase isn’t possible.For more on this subject (if you missed the original columns), see “Poor Joe” and “Comp logic,” Keep the Joint Running, 10/22/2007 and 10/29/2007.– Bob Powered by ScribeFire. Technology Industry