How to decide who gets a pay rise

8 key factors in determining salary increases
1. Consider each employee’s individual performance
A good place to start when evaluating and determining pay rises is to examine each employee’s individual performance. Have their successes added value and made a difference?2. Weigh up your employees’ responsibilities
Revisit each employee’s job description to clarify their responsibilities. Then take an inventory of any additional responsibilities your employees have that aren’t captured in these documents. You may find that certain employees are undertaking much more responsibility than their job description suggests.3. Understand typical market rates for each employee’s role
External market rates should also factor into your pay rise decisions. Employees want to know they are being paid a fair rate for their skills and expertise, so make sure you are aware of typical external salaries across your sector or industry.4. Evaluate your employees’ skills
The expertise and skills an employee holds can also factor into your decision – particularly if certain skills are universal requirements across your workforce. To set salary increases that reflect your employees’ skills, first set clear definitions of the job skills you intend to compensate employees for.5. Consider the seniority of an employee’s role
Employees’ salaries often increase with seniority for various reasons. Senior employees typically offer a high level of specialty knowledge, commercial acumen, experience and leadership talent.6. Length of service
High turnover is extremely costly for many organisations. When a staff member leaves, organisations incur various recruitment costs, including job ads, candidate interviews, onboarding and training. In addition, new hires often need time to perform at the same level as the employees they succeed.7. Skills gaps in your industry or sector
When determining the value of salary increases, consider the difficulty of attracting a new team member if this employee should resign.8. Consider non-financial rewards
Ultimately, your salary increase budget can only stretch so far. Yes, ensuring your salary offering is competitive is essential, however employees who are happy and productive aren’t just motivated by money.Communicating early is key to success
If the performance of your organisation has not been as expected this past year, flag this early with your employees. Let them know as soon as you can that the downturn in business might have detrimental implications for their salary increase. After all, they have their own cost of living considerations, so communicate the news as quickly and clearly as you can.Search for candidates
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