Are annual updates to compensation the best response to the achievements and needs of employees?

This is the question that is being debated and reviewed by executives of General Electric Co, a pioneer for management for corporate. The longstanding and much-imitated system of rating staff on a five-point scale may also be scrapped by the company. Spokeswoman Valerie Van den Keybus said that decisions on both issues may come within the next several months.

“We uncovered an opportunity to improve the way we reward people for their contributions,” Janice Semper, GE’s head of executive development, said in an e-mailed response to questions to Bloomberg. “Being flexible and re-thinking how we define rewards, acknowledging that employees and managers are already thinking beyond annual compensation in this space” would be involved in the process, she said.

A broader shift in benefits is already under way in the upper reaches of the U.S. labor market. Businesses are competing over senior employees looking for more flexibility as they near retirement and younger workers for whom other perks may be as important as pay. From parental leave and paid time off to when and how performance is rated are al being reconsidered to lure and retain talent by the companies.

Many companies including Adobe Systems Inc. are offering at least six months leave for child care while the highest leave is given by Netflix Inc. when it announced last year that employees can take a year off. An overhaul of performance review systems in the past year has been announced by companies like Goldman Sachs and Microsoft Corp., as well as GE itself.

However till now there has been little talks about ending annual raises. Ranjay Gulati, a professor at Harvard Business School said that when GE considers something like that, “other companies will do it too.”

“People are looking for more flexibility, not more pay necessarily,” he said. “Relying on annual rhythms makes it artificial,” he said.

At the bottom end of the labor market something opposite is happening where temporary or contracted-out jobs with limited benefits make up a growing share when compared to America’s most-skilled employees who can increasingly order up bespoke packages from their bosses.

In the US only about 44 percent of workers qualify even for guaranteed unpaid leave while less than a quarter of all companies in the U.S. offer parents any paid time off. Rather than leaving it to the whims of employers, Democratic presidential candidates are backing efforts to enshrine longer parental and sick leave in law as the gap is fueling concern about rising inequality.

According to this year’s compensation survey by Mercer LLC, only 1.2 percent of U.S. companies use a discretionary timescale for increasing base pay. While about 5 percent make the change for each employee on the anniversary of their hiring or move to their current job, about 90 percent of companies have a fixed date when everyone receives their raise, assuming one is granted.

The trends in HR and management have been set by the 124 year old GE. Simplifying the company and streamlining decision-making are the aims of the current CEO Jeffrey Immelt. Centered around a phone app called PD@GE that employees use to assess both subordinates and superiors, GE recently introduced a new method of performance review. It aims to replace a once-a-year conversation with rolling feedback.

“The fascinating juxtaposition today is, big companies want to be like small companies,” Harvard’s Gulati said. GE is “willing to take on what may look like some sacred cows” to get there, he said.

(Adapted from Bloomberg)