Motivators you can use

Fairness is a value which constantly comes out top in whether people are engaged at work. In a realtively low inflation it is often difficult to give out big rises to your star performers. So how can you handle this

1. Firstly - don't take the easy route in apraisals, people see through it. The "I wish I could have given you more" is a sign of lack of leadership. You do have choices and although it is difficult you must use pay rise time as a strong sign of recognising superior performance and not praising mediocrity. The 3% rise across the board is far too damaging...reward superior performance and set your marker.
2. Secondly - use non financial items as a reward item. If the money pot is tight then use promotions, secondments to give reward. If there are no positions available then see if you can delegate a little more and give your high performers more exposure. Can a new member stretch their role a little more and learn a different area.
3. Use the bonus scheme to stretch people not as a way of giving people pay. If you are a mediocre performer and know that your bonus is safe, you will not get an improvement in their performance.

The biggest mistakes can make is by setting values and behaviour and then promoting people under a different premise. We have all seen this and it causes disengagement around the orgainsation - it is impossible to create a successful company with disengaged people. So make sure you pay and reward for the behaviours you want....