How to reward high performers who are already at salary band maximum

A line manager books an urgent meeting with you.

One of their best employees – consistently high-performing, always taking on additional work, furthering his knowledge – is a retention risk. His wife is telling him to look elsewhere. He hasn't had a raise in years.

The manager is prepared to fight to give him a significant salary increase.

But when you pull up the data, the employee is already at the top of his salary band. 

You explain the constraints: approving this would create inequity, set a precedent you can't sustain, undermine the framework you've spent months building – and you know it won't get past leadership as a budget ask.

It's a conversation Reward leaders dread.

But it doesn't have to end with your best people walking out the door. 

Here's how Matt McFarlane (Director at FNDN) and Ekaterina Potter (Global Director of Total Reward at commercetools) think through rewarding top performers who already sit at band maximum.

First, check your compensation foundations are sound

Before you assume you have a "top performer at band maximum" problem, make sure you don't actually have an "unclear or outdated salary bands" problem.

"If you find that your framework is starting to limit your ability to hold on to high performers or incentivise high performers," Matt McFarlane, Director at FNDN, says, "then you potentially need to rethink the structure of that framework. Your salary framework needs to serve the business.”

What is the purpose of your bands?

Salary bands should reflect market competitiveness at your chosen compensation philosophy percentile – whether that's 40th, 50th, 60th, or another.

If your bands are set correctly and your employees are banded correctly, then an employee at band maximum is already paid competitively for their role against your philosophy. 

Many companies use salary increases to reward performance. But when this becomes the default, it's easy to lose sight of what bands are actually for.

This is also why Matt, and many other compensation experts, argue against merit increases that adjust base salary for performance. 

"I don’t love base salary merit adjustments generally," Matt explains. 

"If Joe has had a good two or three years where he’s received the highest rating for performance and compounded salary increases, but then Mary in another team performs equally well and hasn’t seen those increases, you start to see real disparity.”

When were your bands last refreshed?

It’s also common that salary bands haven't been updated in years.

Bands only reflect your market-competitive compensation philosophy, if the underlying salary benchmarks used to define the band midpoint, minimum, and maximum, are regularly refreshed.

Otherwise, the market moves, your bands become out of touch with market reality, and your high performers start seeing higher salary offers elsewhere. 

This is also a common cause for salary compression. Up-to-date benchmarks are used to define a new hire’s starting salary, but not to update existing salary bands, which means new hires are paid higher than experienced performers. 

Benchmarks and bands should be updated at least once a year – tools like Ravio can streamline this by allowing you to refresh bands against real-time benchmarks instantly, rather than manually rebuilding them.

But refreshing doesn't mean blindly following every market movement. 

Matt points out that companies need to make strategic choices: "Each company needs to decide whether to reflect market dips or 'hold firm.'”

“You can absolutely take a stand and say you’re comfortable maintaining that band for now, because we think this is a short-term shift rather than a long-term change in the value of that skill set. But that decision should be made intentionally, with current data, rather than letting bands drift out of date by default.”

Then check the employee's promotion readiness

Once you’ve accounted for structural issues, the next part of the interrogation is career progression.

If the employee has been a high performer for several years, receiving top performance ratings and significant merit increases so that they hit band maximum, it’s a strong signal that they might be ready to progress to the next job level – and, therefore, next salary band. 

It might be that they’ve already grown into next-level responsibilities without receiving a formal promotion. If this is the case, consider a promotion as soon as possible to recognise their contributions – at your next compensation review if soon, or out-of-cycle if not. Some companies, like commercetools, support promotions at any time of the year (not just during the performance or compensation review period) for this exact reason.

Or it might be that they’re almost there, in which case supporting their development goals can be a brilliant way to recognise and reward the individual, without having to issue a salary increase that will make them a band outlier. 

This is something that Ekaterina Potter, Global Director of Total Reward at commercetools,  has designed into the company’s performance and pay review process.

“High-performing employees can also be recognised through a faster track to promotion,” she explains. “They’re supported to meet promotion requirements more quickly, through access to executive coaching, premium learning platforms like their Coursera subscription, or additional project leadership opportunities."

But, Matt does point out that a fast-tracked promotion isn’t always as easy as it sounds, and it’s important to prepare for that too. 

"The expectations as you reach more senior levels are normally about increasing scope of impact,” he explains, “and that often requires very different skillsets.” 

Being a great senior engineer doesn't automatically mean someone should be promoted to a staff engineer – the scope and impact required at the next level might be different from what made them successful at their current level.

In this scenario, clear communication on career progression and promotion requirements is the most important tool you have. 

Consider forgetting the band range maximum

Some compensation leaders argue that salary bands should be seen as guidelines for consistency, not hard limits.

“Some companies choose not to have a strict upper band limit because, realistically, very few people consistently perform right at the top,” Matt explains. “Those who do are truly exceptional and are exactly who compensation programmes are designed to retain.”

But, this requires strong calibration to ensure the exception is warranted, checking overlap with the next range, and being clear on business value.

Make the business case of losing them to leadership

If bands are current, the employee is at the right level, and promotion isn't appropriate, above-band salary increases go against your compensation principles – and their manager is adamant that they can’t lose them – then building the business case is the next best step. 

For Ekaterina, it’s often this thinking that brings clarity. “Normally the message I get from managers is that it’s counterproductive not to reward high performers,” she says. “And they’re right. These people do bring their best to the company. They do go the extra mile. They are the top performers. We're almost penalising them for our own decision to bring them into the company at the top of their band."

Matt emphasises that you bring the full equation to your leadership decision-makers: "What's the unique value this person brings? What would we pay to hire someone new for this role today? What's the risk if they leave? What are competitors paying for this role?"

The holistic costs compound quickly:

• Direct hiring costs: recruiter fees, time spent interviewing
• Vacancy cost: lost productivity during the search (often 3-6 months)
• Training and ramp time: typically another 3-6 months for the new hire to reach full productivity
• Risk the replacement won't be as good: you're replacing a proven top performer with an unknown
• Institutional knowledge loss: relationships, systems understanding, tribal knowledge that can't be transferred
• Team morale impact: other top performers watching how you handle this.

Finally, if they're truly at a salary ceiling, explore other options to reward performance

If bands are current, promotion isn't appropriate, and an exception on salary increases isn’t an option – you still have options. 

Both Matt and Ekaterina emphasise you need to think of compensation as multiple levers that can be pulled to recognise and reward employees.

“You can't rely on base salary alone to reward your true top performers,” Matt says. “You need a blend of monetary incentives and experiential or non-monetary Rewards, tailored to the individual’s goals and priorities.”

• Lump sum performance bonuses. Ekaterina explains that “at commercetools we prefer to allocate one-time bonuses to reward high performers to avoid the same top-of-band problem compounding year-on-year” – their approach is to set the bonus as a percentage of base salary, and increase that percentage based on performance rating, but this could be based on individual or team KPIs.
• Discretionary spot bonuses. Rather than tying bonuses to KPIs or performance expectations set at the start of the year, "you can say to someone, hey I'm gonna give you a discretionary bonus because I think you just absolutely crushed it at this one thing,” says Matt. This brings a "surprise and delight element" that tends to resonate with employees.
• Equity refreshers. Higher equity grants for top performers work well in tech and startups, though Matt does note that equity is having "an interesting moment" – with high cost of living, "employees are very much preferring to focus on cash."
• Creative non-cash incentives tailored to your talent. Matt shares an example: "I know a startup that gave Azure credits to high-performing engineers – they loved it because they could go and build their own projects. It’s such a clever example of something unique to the type of person they're trying to reward."
• Career development support. "Dedicated career coaching, mentorship from senior leaders, sabbaticals, visibility and influence opportunities," suggests Ekaterina. 
• Flexible working or additional holiday days. Matt highlights that "the only thing people value at work remotely as much as their money is their time" – so flexible working options, additional PTO, full remote work, freedom to attend appointments without using PTO, can all be powerful rewards for the right employee.

Both Ekaterina and Matt emphasise that, whatever type of reward you choose, it has to be meaningful. 

“For your small percentage of very top performers to feel the efforts they’ve demonstrated are appreciated, it has to be a really meaningful reward,” says Ekaterina. "This applies to 5-10% of the population who have significant impact. We need to measure that and then really, really reward that."