Most companies have an annual compensation review process where the salaries and other payments to employees are compared to internal and external benchmarks and adjustments are proposed, approved and implemented.
Many HR departments of larger companies have access to an online tool for salary reviews, but many smaller companies prefer to use spreadsheets like the one I am sharing with you today.
The basic principles for using this tool:
- You need to make sure to retain employees and avoid employee turnover by reviewing his or her salary on a regular basis. Typically once per year.
- Employees need feedback regarding job performance expectations and also their own performance delivered against the expectations. The compensation they receive should reflect not only the market value of the work they do for you, but also their own level of delivery against expectations for that role. 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.
