The Finer Points of Giving a Raise

Introduction

Whenever the HR practitioner mount a company-wide salary adjustments exercise, there are points to bear in mind. It is a matter of money management, that is managing the corporate purse.

Check the Position of the Pay within the Range

Divide the salary range into 4 quartiles. Given the person’s experience and educational or training qualifications, was he or she placed correctly on the range in the first place?

Was the new salary adjustments made using a compa-ratio?

Check the Job Title

Now that you are making a salary adjustment, is it part of a larger move to bring the employee from 1 job grade to another job grade?

If it is a change in the job grade, hence the salary range, have you reflected this in the job title?

Off Cycle Pay Adjustments

Off cycle salary adjustments are inevitable, even when there is an ongoing economic recession. However, it is necessary to be prudent to give another pay increase during the normal pay cycle when you already had given earlier.

It makes good business sense to have a HR policy that provide guidance on how often; how much and under what business circumstances those raises can be made.

Check the Pay History

Always keep a table of the base pay history of employees. This can be both a table of each employee, recording their change in:

  • Promotion / Demotion
  • Transfer between sections, departments
  • Salary adjustments, whether it is an increase or cut

It also can be a spreadsheet of employee names in 1 column and the months as the headings, with indication of the salary adjustments made.

Do You Need to Spread the Hike Over the Year?

You may have an overall plan to conduct a salary increment cycle once a year, but were there individuals who needs a greater percentage hike and you need to plan for the hikes to be spaced over the calendar year?

Round the Numbers

Making salary adjustments using percentages tends to give rise to awkward numbers (I am referring to the last digit), for example $36, $24, $18.

It is better to give salary adjustments in terms of $5 and $10 as they are easier to understand.

Remember that is a Cost

Remember that salary is a recurring business cost. The key question is can the business afford the increase?

Be Judicial about Giving Increasing Cost

It is a fact that not all businesses can pay well. You cannot tell by the overall revenues that the business is making. You will know only from the net profit margin.

It is commonly expected that in a non-profit organization, the organization will not be able to afford good pay increases, and even pay increases to everyone.

Where affordability is a concern, then pay increases should go to:

  • Employee who perform well.
  • Jobs that are difficult to fill.
  • Key jobs.
  • Revenue generating jobs (against support functions or roles).

Looking at Other Ways to Cut Business Costs

It is always wiser to look towards other ways to cut recurring business costs, for example through lease (of business premises) and automation.

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