The advancement of an employee from one job position to another job position that has a higher salary range, a higher level job title, or a higher level of job responsibilities, is called a promotion. Decision making authority tends to rise with a promotion as well. But what if you decide to just increase the salary without all the other nice things? That is not a promotion. You still want a form of recognition for employees who make significant and effective work contributions that will stay in the same job.
Individual contributors must be eligible for promotions that recognize and reward their role as contributors. The problem is that in a small law firm there are not enough positions available to provide a promotion path. If the staff remains in the same position and receives pay increases beyond that of the cost of living you soon have a salary too high for the position. It is sometimes tempting to give big salary increases as recognition but is this a promotion or a recognition. If it is only recognition go with a bonus.
Many times we have visited law firms and found staff in the same position for many years being paid far beyond what that position calls for. Now you are in a bind. The economy slows down and what do you do? Do you fire the person and start over? Do you lower the salary? Neither of these solutions is fair if the performance has not changed.
I suggest that salary reflects the job description. Each job description should have a related salary range for it. Any salary beyond that range is a promotion into a new job description. So consider developing some job descriptions for your business. If you just want to recognize good performance, and the employee is already at the top of the salary range, consider a bonus or some other form of recognition. As for recognition programs, I have seen some creative ideas over my years. Consider a day off, a shopping spree, a trip to the Spa, or even a vacation trip. I have even seen the use of the corporate car for a year. The problem with salary increases beyond what is recognized for the job is that it is not fair to the employee or the business.
I would be interested in how you handle this at your firm.