Salary Review Template

salary review2

Arguably the most contentious two processes in the HR world have to be performance feedback (part of Performance Management processes) and salary reviews (part of Reward and Recognition processes).  Most employees and managers and of course writers of trendsetting articles around these topics have strong opinions in all directions about what should be happening and how bad a specific approach is. I will refrain from picking sides at this time, but I will instead share a simple template with you for conducting a salary review for those reporting to you and who are most likely then a part of your budget.

Many HR departments of large companies have access to an online tool for salary reviews, but I know there are also many smaller companies who do not have the deep pockets and may have some use for a tool/template like this one.

The basic principles for using this tool are:

  • When you hired someone, some years earlier, his or her salary was X, let’s say that represents 30,000 EUR per year. Some years later there may have been inflation meaning the person’s buying power went down and perhaps to hire someone new for the same role the average market price may now be 32,000 EUR per year.  You need to make sure to retain the person you hired and avoid having to find someone new for the role by reviewing his or her salary on a regular basis. Typically once per year.
  • Your employee has been delivering work for you over the last year and he or she maybe did it better than others in the same role. That performance which exceeded your expectations deserves to be rewarded. You could do it as a discretionary bonus or you could review the person’s annual salary and consider an increase.
  • Some employees bring increase requests to their bosses on a regular basis while others may just be waiting for their bosses to realize how much effort they put in and how many good results they are achieving. Without a solid salary review process which is run uniformly on an annual basis (at least) you could run the risk of not treating all of your employees in the same fair manner when it comes to salary reviews. It could happen that only those employees requesting regular increases are receiving them while those who do not ask do not.

Salary Review Template

The template shows all of the current employees on your budget plus what they are earning now, what their last performance review overall score was, and some basic employment history in terms of experience years and last promotions. Hopefully you have budgeted for annual salary increases and you have planned for at least between 2 and 3% in overall annual salary increases.  (This could vary by country/region in terms of local labor laws, minimum wage adjustments, inflation, scarcity of resources as applicable to those working for you etc).

Giving everyone a standard increase may seem fair and easy to you, but it comes with some risks. If you reward those who work harder and achieve better results the same way as you do those who do not, you risk demotivating your hard workers and may eventually lose them to your competition. Those who are not working very hard or very smart are not motivated to change anything either since they know they will get their standard increase no matter what they do. So don’t go for the “one size fits all” approach. 

This template assumes that you will use all of your budget and you will distribute it among your employees depending on the factors that you have decided to take into account i.e. performance review scores, years of experience, specific role (if there is a scarcity and steep inflation in salaries for that role in the marketplace around you) etc. The sheet keeps track of your overall budget so you can see if you have overspent or underspent overall.

The difference between the types of increases are simple – merit increase relates to the performance of the person while equity increase relates to the person being basically too far below what that job pays at this given moment in time. This could be either because you hired the person in at a too low a salary or you have neglected to review his or her salary for too long and the current market pays much more for someone with the same sets of skills and abilities as the person in your group.

Performing a fair overall salary review is not easy to do since many factors will present themselves as you go through this sheet as a manager. You will wonder if person A would leave if you don’t give them the increase which he or she requested or demanded some weeks before. You will wonder if you can give another person a zero increase since he or she already earns so much more than the others. You will be worried that a lot of angry employees will want to talk to you after these increases are communicated (by private letter from HR or discussion with you).

Do talk to the most senior HR person in your region/location for support in helping you make sure you have made the best choices for each of the employees concerned. A best practice that can also help with fairness is to have a round-table review with other managers at the same level as yourself to ensure all of you are using the same principles for determining salary reviews.  I strongly recommend that you include the most senior HR person supporting these managers in the round-table review to help with guidance and support when there are opposing views or concerns.

Note: This template is a simple tool and could help you start up an annual salary review process, but beware that the topic and the best approach to use is a hot and touchy subject for most and it would take a lot more than just this template to ensure you have a solid and fair process in place.

Development Plan Template

I am a strong believer that everyone should be constantly looking for learning opportunities around them every single day. For leaders this is often in the form of reflection – with a coach or writing in a journal, it doesn’t matter how the learning takes place as long as it does. One can either approach learning from a passive perspective – hoping that the right learning will find you or cross your path. Or you can be more structured around it and plan for it. The latter gives you the opportunity to plan for the learning, track the learning and review the success of your learning actions and activities in order to update your planning or make a new plan.

The best way to have a structured learning approach is to have a Development Plan. The attachment is a good start to creating your own development plan. It is always a good idea to have someone who can work with you on your own learning goals and planning to give you a different perspective and help you with feedback as you aim to prioritize your planned actions. This could be your manager/supervisor or it could be someone assigned to you as a coach/mentor (some companies do this). A coach/mentor could also be someone whom you have selected and asked to meet with you on a frequent basis to help guide your learning.

Link to download the Personal Development Template

In the process shown above the reference is made to an employee’s supervisor, but a mentor or coach can also fill that role in the process.

Some tips:

  • Don’t choose too many development goals for a 12-month period. You typically have other activities which also require your attention during a normal day or week and this would be only one portion of your discretionary time. Too many goals may make you lose enthusiasm as you feel overwhelmed or failing in meeting your expected goals.
  • Be patient with yourself. If your development goals include soft skills and behavioral changes, this can take time. Choose maximum 3 goals and just work with those.
  • Celebrate successes to help motivate yourself to keep going. When you have completed a goal and have received feedback that you have learned something new and/or have successfully demonstrated new behavior – do something that you love doing.
  • Create an environment that helps you succeed by telling others (that you trust) about your development goals. Ask them to observe and provide you with feedback when they see you demonstrating new behaviors and/or skills.
  • Be active in your coaching. When you plan to meet with your manager/supervisor/coach/mentor… first review your own plan and update where you are with regards to actions you had committed to take the last time you met. Come prepared with specific questions or specific situations where you were not sure you had made the right choices given your development goals and learning how to do things in a new way.
  • Remember to thank others who are helping you on your development journey. Most of them may be giving you feedback and advice without getting compensation for that. A sincere thank you from you will go a long way to helping them feel that their investment in your learning is appreciated.

Happy learning!

Development Plan Template

Employee Happiness Score Chart – Smileys

Sometimes you don’t want to run a full employee engagement survey, but you just want to do a quick check to see how things are going. Call it a “mood meter” or a high level check to see if you can catch some underlying issues that may require further investigation.

Of course it is understood that a quick check is not meant for applications where the correlation between questions and outcomes require a statistically defensible position. HR folks and OD folks sometimes just need a quick tool that would help you see if there may be a trend that is worth looking into further at your location. Sometimes the trend you see can be as simple as a low level of responses to your quick check.

A few watch-outs:

  1. Don’t make this the ONLY tool you use to determine how happy your employees are. There are some very affordable and good tools available to drive a more in-depth look at your company culture or employee engagement. This is just for spotting any trends you may need to be aware of or take a look at.
  2. Don’t survey your poor employees to death. Don’t run this any more than once every other month – at most. Even that. If you do that too often, people will lose interest and you will lose credibility.
  3. You can plan to take some actions based on what comes out of this quick check, but if you really want to determine change management initiatives that will most likely take a while to implement and cost more than a few pennies – this is not enough. You would have to follow-up with something more solid for that purpose. Focus groups, a full employee engagement survey etc.
  4. Don’t give them too much time to respond or they won’t take you serious on the deadline and put things off until they forget. Don’t give them too little time either – be aware of their workload and other priorities when you decide how much time to allow. I would recommend 7 to 10 days as an average, but it does depend on factors such as whether it is a small group, are they all based at one location or spread around the globe/region?
  5. Be sure to be clear on why you are running it and what can be expected from the outcomes when you introduce the tool. People who are in some way distrustful or feel unhappy could easily read negative motivations into your introduction of this tool plus management and leaders whom you are trying to support by doing this could easily expect too much from this.

I am sure I could come up with more watch-outs, but for now, I will just post this tool for your use and wish you good outcomes! Feel free to let me know what your thoughts and experiences are/were with these kinds of quick tools.

Employee Happiness Smiley Chart