I came across the term “peanut butter raises” recently and it stuck with me.
It describes the practice of spreading raises evenly across everyone. High performer, steady contributor, and even someone on a performance plan all receive the same percentage increase.
On paper, it looks clean. It looks fair. It’s easy to administer, easy to explain, and easy to defend.
But leadership isn’t about what’s easy.
It’s about what the organization hears when decisions are made.
And this decision sends a very specific message, whether we intend it or not.
Performance doesn’t really matter.
Not in a dramatic, headline-grabbing way. Not in a way that causes immediate disruption.
It shows up quietly.
The person who consistently delivers at a high level doesn’t complain. They don’t make a scene. They simply recalibrate.
The extra effort becomes optional.
The initiative slows down.
The “I’ve got it” becomes “someone else can take that one.”
At the same time, the struggling employee receives the same signal, just interpreted differently.
There’s no urgency to improve.
No clear line between expectation and consequence.
No reinforcement that performance actually drives outcomes.
And over time, the gap between high performance and low performance doesn’t close.
It disappears.
As IT leaders, most of us don’t control compensation strategy. Those decisions are made at levels above us, often shaped by budgets, policy, and the desire for consistency.
But we are the ones who feel the impact.
We are the ones responsible for delivering results through our teams.
We are the ones who see engagement shift before anyone else does.
And we are the ones who have to respond.
So what do we do when we can’t control the raise?
We control the environment around it.
We recognize impact in real time, not just during an annual cycle.
We call out excellence specifically and publicly so it doesn’t blend into the background.
We advocate for our top performers with clarity and consistency, even if the final decision isn’t ours.
We create opportunities that differentiate growth, giving high performers more ownership, more visibility, and more influence.
We make expectations clear for those who are struggling, reinforcing that performance still matters, even if compensation doesn’t fully reflect it in the moment.
And we stay honest.
Because our teams are paying attention.
They are watching how decisions are made.
They are listening for what is rewarded, what is tolerated, and what is ignored.
And they will align their effort accordingly.
This isn’t really about compensation.
It’s about signal.
Equal is not always fair.
Fair is not always equal.
And when leadership stops differentiating performance, organizations don’t fail overnight.
They level out.
If your top performer and your lowest performer receive the same outcome, what message are they hearing?
And more importantly, what are they going to do with it?