
Setting salary raises equitably requires a clear, structured approach.
Here's an example of some steps to consider:
◾ Gather Market Data
→ Use reliable salary surveys.
→ Compare your current pay levels to market averages.
[The assumption is that your organisation has performed job levelling, which is critical for correct benchmarking. If not, that is step 1. ]
◾ Identify Macroeconomic Factors/Budget
→ Consider inflation, labour market supply/demand, etc.
→ Set a budget also factoring company financial performance.
◾ Audit for Pay Equity
→ Check for any pay gaps based on gender, race, and/or job levels.
→ Flag any disparities for correction before applying raises.
◾ Factor in Internal Equity
→ Compare pay within the same job families and seniority levels.
→ Ensure pay raises do not create compression issues (e.g., new hires earning more than senior staff).
◾ Create a Salary Increase Matrix (optional)
→ Define raise ranges based on performance ratings and years of service.
→ Example: High performers get 4-5%, solid performers get 2-3%, etc.
→ This is optional, but may be useful to support line managers in their decision making. It also implies performance management inputs.
◾ Document and Communicate
→ Write down the criteria and reasoning for each decision.
→ Share the guidelines transparently with managers (and employees if you are at that phase of pay transparency).
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This step-by-step approach ensures you handle salary raises in a way that’s fair, consistent, and aligned with your company’s pay strategy.