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Salary review process tips

These salary review process tips can help you define and deliver your salary-setting and benchmarking activity. This is important because salary is a key factor in engaging and motivating employees. Inflation and market changes mean it’s fair to increase salaries to keep pace with living costs, but there’s also a performance or merit-based element to consider.

Here are six tips:

  • Benchmark – make sure you know what similar organizations pay for similar roles. Employees may well do their own research, so use trusted, verifiable sources to get a clear picture of the market.
  • Set a budget – salary increases need to be part of your organization’s financial plan. It’s the role of People leaders to champion employee engagement and ensure the workforce is fairly rewarded, to maintain performance and retention. But don’t promise what you can’t afford to deliver.
  • Publish a process – transparency is key, so employees know what they need to do to receive merit-based pay increases, how they’ll be assessed and what the organization aims for in terms of general annual increases.
  • Connect to performance reviews – workers should be able to earn the merit or performance element of a salary increase based on their delivery of well-understood objectives. They should understand what level of achievement or outperformance will trigger different levels of increase.
  • Be clear about banding – if an employee is promoted or takes on extra responsibility, you should have a framework that defines salary bands and criteria for different roles.
  • Train managers – consistency and objectivity are vital, to make sure that there’s no unconscious bias or subjectivity. Managers should follow and document a clear process and dialogue with their employees at regular or requested salary review meetings. HR should monitor this to ensure a totally transparent and fair approach throughout the organization.

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