Give top performers a raise as soon as they earn it
Clay raises pay within months when new hires beat expectations, using market data and clear results to keep it fair.
First Round · What Early Stage Founders Should Know About Comp: The Rules To Break (And A Few You Should Actually Follow)Varun Anand, co-founder of Clay, does not wait for the annual review to pay a star. When a new hire is already beating what was expected at hiring, even after only a few months, he raises their pay right away.
His rule comes from being on the other side. He asks, "Why do you have to wait for a performance review?" He argues the delay mainly helps the employer, which pays less while the person is already delivering more. Anand said, "You ask for it, they tell you to wait for the performance review and it leads to embitterment." He concluded that waiting was the wrong way to get the best from people.
To copy him, separate the raise from the calendar but not from proof. At Clay, every increase pairs outside market pay figures with concrete proof that the person outperformed prior expectations. Leaders also review standout contributors across the company on a regular basis, so they can act in the moment. Anand says the company can justify each decision because it is rewarding people for "exceeding the expectations of where they were before."
He says the payoff is loyalty and a stronger long term relationship with a high performer. Start with a simple habit: keep a running list of people beating their hiring bar, check it monthly, and when the data and results both say someone has leveled up, pay them like it now.
Questions people ask
How large should an off-cycle raise be?
Make it match the new level of work, not just a cost of living bump. As a general practice, HR advisers often point to 10 to 20 percent for a meaningful merit increase, and more if the person is truly doing the next job up. Check fresh market data for that higher role before you pick a number.
Won't this create jealousy if others find out?
It can, which is why documentation and consistency matter. Tie each raise to the same two tests, market pay for the role and measurable proof of exceeding expectations, and apply them to everyone. Explain those rules openly when questions come up.
Does this mean I should skip annual reviews?
No. Keep a regular cycle for feedback, leveling, and baseline adjustments, and use off-cycle raises only for clear outliers. The annual process keeps pay fair across the team, while immediate raises prevent your fastest growers from waiting months below their value.