Annual HR plan – with a focus on reward processes
A new year, new opportunities and the perfect time to put internal structures and support systems in place. We have compiled an annual plan showing the most important activities during the year for those of you who work in HR and are responsible for Compensation & Benefits processes. This is designed as a support and guide for the work ahead of you. The dates on which the various processes take place during the year may obviously vary from one company to the next. It is therefore important that you check this and align the plan to match the general annual plan for your company.
Q1 – Bonus and salary review
This is an intense period for those companies that have bonuses, STI, variable pay based on the annual performance. Individual achievement of targets must be assessed and bonuses based on the company’s annual performance must be calculated, approved, communicated and paid out.
In Q1, most companies commence their salary reviews. HR supports pay-setting managers in this process with information about the parameters for the year’s salary review, existing agreements, the steps of the process, pay-setting policies, review meetings, etc. HR may support the managers with models, tools, checklists and also training where necessary.
Q2 – The salary review process continues and ad-hoc analyses
Most companies are still conducting salary reviews at the beginning of Q2. The managers decide how they want to allocate the merit budget among their employees. HR summarizes the managers’ pay proposals which are then often approved according to the “grandfather principle” which means it is subject to the approval of the manager’s manager. If there are collective agreements, negotiations are held in accordance with what is stated in the agreement. An evaluation of the salary review process is performed once it has been completed to identify success factors and areas that need to be developed.
Ad-hoc analyses of various kinds may be required. For instance, it may be necessary to assess new roles and determine salaries for new employees.
Q3 – Pay survey and budgeting
A pay survey can be conducted at any time during the year. We have decided to conduct the survey in Q3 to allow sufficient time for it to be completed before the next salary review period. The results provide an important basis for salary adjustments and priorities.
The work of preparing next year’s budget also commences in Q3. HR supports the finance department with calculations of employee numbers, salary totals and a budget forecast for the next salary review.
Q4 – Preparation for the salary review process and remuneration of senior executives
Before the start of next year’s salary review process, it is important to know what level the employees are at compared with the market and internal salary structure. HR conducts various pay analyses, reviews role values/occupational categorization, salary ranges for different professional groups, etc.
A review of the overall remuneration package of the company’s senior executives is often conducted in Q4. HR is usually tasked by the Board and the Remuneration Committee to produce a report on how the managers’ remuneration compares with relevant market data. Along with the performance of the managers during the year, this report provides a basis for taking decisions on salary adjustments.
This is an example of an annual plan. Contact us if you would like help with reviewing your salary review processes and putting together a detailed annual plan that is right for your specific business.