Conducting a Salary Review

blog-publish-date

15 Aug 2018

blog-read-duration

There is no law stating that you must increase staff pay each year. If an employee’s annual salary is looming, there’s a good chance they’ll be expecting a pay rise. Learn how to approach salary reviews here, starting with:

What is a Salary Review?

A salary review is a meeting with an employee to assess their pay and decide whether to increase their salary. You will usually conduct employee salary reviews once a year.

What is the Purpose of Salary Reviews?

In most cases, the purpose of a salary review is to decide whether the employee deserves a pay rise. It’s also a meeting to discuss your employee’s achievements and shortcomings in line with their job duties. In some cases, such as sales roles, you should set out a plan for moving forward—including any changes to their role, their salary, or anything else, such as aspects they must improve on.

If you don’t have an annual salary review policy or process in place, here are the points you should consider:

A Typical Salary Review Process

Start by reviewing your budget. Some money needs to be set aside for the financial budget. Next, decide whether you’re going to give a pay rise, and if you are, how big it will be. In addition, set out any other objectives or discussion points that you have for the meeting.

Get your employee to self-evaluate their performance and skill progression, and to establish what they think their value is. This way, you know what they’re expecting in terms of a pay increase. By going through their work with them over the past year, you can remind yourself of what they’ve accomplished, where they might have struggled, what they’ve learnt, and to what extent they’ve added value to your business.

Analyse average salary benchmarks in your industry and region—both internally and externally—to make sure you’re keeping in line with typical salaries for particular roles.

When you conduct their review, make sure you explain the situation clearly and evaluate your employee fairly. Review them on the bases of attitude, performance, risk management, and alignment with your company’s values.

Finally, inform them in writing of whether they will receive a change in salary, and when the change will become effective.

Salary Review Letter

If one of your employees thinks that they deserve a pay rise, they have the right to quest a review in writing.

If you know you can’t afford to be issuing pay increases at this time, don’t automatically dismiss the letter. Review it, and determine whether their request is reasonable.

You might find that their request is justifiable, in which case, review your budget, and discuss your employee’s request with them in a formal meeting.

If you can’t afford the pay rise but think your employee deserves one, hold a formal meeting to discuss other benefits that you could offer them in lieu of a pay rise.

Such benefits might include a new commission scheme, or an end-of-year bonus, among other benefits.

If you feel that a salary review letter request is a complaint or victimisation letter, or compares the salaries of co-workers, you would be justified in dismissing the letter.

A salary review letter typically includes:

Talk to an Expert

If you need support with conducting salary reviews or pay benchmarking, speak to Croner’s employment law and reward experts on 0808 145 3385.

Free to Download Employer Resources

  • Pay Awards & Forecast (September 2018)

    FREE DOWNLOAD

    Pay Awards & Forecast (September 2018...

    Read Croner Reward's expert settlement and forecast report for September 2018

    Read more
  • Sample Health & Safety Policy Statement

    FREE DOWNLOAD

    Sample Health & Safety Policy Stateme...

    Here we’ve included a free sample Health & Safety Policy Statement that UK business owners can refer to.

    Read more
  • Pay Awards & Forecast (June 2018)

    FREE DOWNLOAD

    Pay Awards & Forecast (June 2018)

    Read Croner Reward's expert Settlements and Forecasts report for June 2018

    Read more
  • How Much Does Employee Turnover Cost Your Business?

    BLOG

    How Much Does Employee Turnover Cost ...

    A recent Glassdoor survey revealed that almost 35% of hiring professionals expec...

    Read more
  • Staff Turnover: What Do You Need to Know?

    BLOG

    Staff Turnover: What Do You Need to K...

    Having a high worker turnover can have mean two things: A negative impact on you...

    Read more
  • What is Wrongful Dismissal?

    BLOG

    What is Wrongful Dismissal?

    If you breach an employee’s contract, you could be liable for wrongful dismissal...

    Read more
  • bemrose-school-derby

    CASE STUDY

    Bemrose School Derby

    “Having Croner-i saves us a lot of time and money, as we do not have to use cred

    Read more
  • wmtr

    CASE STUDY

    WMTR

    “I’d definitely recommend the Croner OnSite services and I have done already, I

    Read more
  • certikin

    CASE STUDY

    Certikin

    “Our Distribution Manager had a particularly technical query relating to respira

    Read more

Ready to focus on what you do best?

Get your free consultation and speak to an expert today.