The problem is not 'pay for performance'. In fact, that's not what they're doing!<p>The problem is that no matter how good you are, the most you can get is 6% more than what you're currently making. Some people improve far more than that in a year, and provide far more value to the company than that.<p>In my dad's time, he quit jobs that refused to pay him what he was worth. If that meant a 10% raise, when the cutoff was 5%, he quit. He didn't argue with them. He just told them how it was and that he would leave unless they paid him what he was worth.<p>Guess what I did this year? Yup, same thing. When I started with the company, they were really, really good about paying me what I was worth. But after a few years, management changed a lot and they started the 'it's a recession and we're capping raises at 5%' stuff. I knew I was worth a lot more, and complained. They refused to do anything, and gave a vague promise about looking at the situation in a year. I quit and went elsewhere to get what I'm worth. Instant 40% raise.<p>I started there as a junior dev, and actually suffered with that situation for 2 years before I demanded compensation, and that's how I got 40% out of whack.<p>So no, it's not about 1% being beer-money each week. It's about getting paid what you're worth.<p>Oh, and btw, that's not $6.40 per week for a year. That's $6.40 per week for the rest of your life. Future jobs will be based on your current pay, and if you let them take it from you now, someone will be taking it from you later, too. Unless you demand it.
<i>If you are making what the average worker makes ($47,569.60 per year, a 1 percent difference in your pay is... about $12.81 net per pay period.... That's about $6.40 per week. And according to our research, that's what you'd pay for a six-pack of beer... You can't really believe that this nominal differentiation in pay is motivational and drives performance results. It doesn't.</i><p>So, "Gen-Y" doesn't realize that $500/year is worth something, or that <i>not</i> buying a 6-pack of beer every week is worth $500/year. In other words, they don't have a good appreciation for how much money is worth.