A recent article in
On the surface, this approach feels fair. In reality, it's corrosive. In the middle of a persistent talent shortage, it can quietly undermine retention, engagement and long-term equity, particularly in professions like accounting where experienced talent is already in short supply.
As president of the Accounting MOVE Project, I analyze compensation equity in accounting firms. The "M" in MOVE stands for money for a reason: Pay is where leadership intent meets real-world outcomes. What we consistently see is that well-meaning egalitarianism is driving away the people firms need to keep most.
Why companies are defaulting to flat raises
Many businesses are not choosing peanut butter raises because they believe they're ideal. They're choosing them because they feel safer.
Too many managers have never been trained on how to evaluate performance objectively or how to make equitable pay decisions. They're asked to "use judgment," which often translates into instinct, comfort level or familiarity. And here's where the meritocracy trap shows up: The more confident leaders feel that they're being fair and objective, the less likely they are to question the bias baked into those instincts.
In busy, understaffed environments, that judgment tends to reward people who are most visible, most vocal, or most similar to the decision-maker. Even well-intentioned, experienced managers can fall into this pattern, especially when performance criteria are vague or undocumented. When the process feels subjective, leaders often default to avoidance rather than risk.
So, flat raises feel like the solution. They minimize complaints. They sidestep appeals. And in firms already stretched thin by recruiting and retention pressures, they offer the path of least resistance.
But here's what firms miss: Whether you distribute raises evenly or distribute them poorly, you're still making a choice. And that choice has consequences. Flat raises don't eliminate risk; they simply redistribute it.
The retention cost no one talks about
Accounting firms are already operating with fewer experienced professionals than they need. Managers are covering more clients, high performers are carrying heavier loads, yet client expectations haven't gone down just because headcount has.
When those high performers receive the same raise as colleagues who contribute less, or who are shielded from client pressure, the message is subtle but clear: Extra effort doesn't matter here.
That's when retention problems begin. Not because people are angry, but because they stop feeling seen and start feeling unappreciated or taken for granted. And in a tight labor market, people who feel undervalued don't disengage quietly, they leave. Peanut butter raises may reduce short-term friction, but they can accelerate long-term attrition, especially among the very professionals firms can least afford to lose.
Where pay equity actually breaks down
Pay decisions never happen in a vacuum. In accounting, as in many industries, women and people of color have historically faced unequal access to opportunity, visibility and advocacy, and those patterns become crystal clear under the scope of compensation data.
It's important to be clear, though: Women and people of color are not disadvantaged by performance-based pay systems when those systems are designed thoughtfully and applied consistently.
MOVE research consistently reveals that men are more likely to receive higher discretionary increases, bonuses or "off-cycle" adjustments, often justified with vague language like leadership potential or client impact. Meanwhile, women and professionals of color are more frequently described as dependable, supportive or steady, qualities that keep firms running but don't always translate into higher pay.
The problem isn't performance-based pay. The problem is performance-based evaluation. Men get rewarded for potential; women get rewarded for proof. Once these gaps are introduced, they compound. A slightly lower raise one year becomes a lower base the next. Over time, inequities become structural, harder to explain and more difficult to fix.
Flat raises are sometimes deployed as a corrective. But without addressing the evaluation system that created the gaps, they simply freeze inequities in place.
Why sameness isn't the answer
Here's the rub: Flat raises don't solve bias, and they don't reward performance. They just avoid the hard work of doing both.
When truly outstanding performance isn't recognized, especially during periods of high workload and limited staffing, high performers notice. They stop stretching, stop mentoring, stop raising their hands. This erosion shows up quickly in client service, burnout and turnover.
Equity doesn't mean everyone gets the same outcome. It means the process is fair, consistent and intentional. It means you can explain why someone earned more and that explanation holds up regardless of who's sitting across the table.
A better path forward in a tight talent market
The firms that manage compensation well don't rely on shortcuts. They build systems that reduce bias rather than ignore it. They define expectations clearly. They separate evaluation from allocation. And they review outcomes across teams to ensure consistency.
Most importantly, they recognize that compensation is not just a cost; it's one of the strongest retention tools they have.
Peanut butter raises may feel easier in the moment. But in a market where experienced talent is scarce, they risk pushing high performers out the door while leaving systemic inequities untouched. The goal isn't sameness. It's fairness with intention, especially when retaining your people matters more than ever.
