What support can HR give managers in the salary review process?
To ensure that the annual salary review process goes as smoothly as possible, it is important that managers feel confident about the review procedure and the pay decisions that they make. The tips below explain how HR can support managers before and during the salary review.
It is important that the managers take ownership of the process and responsibility for what is communicated to the employees. A common cause of dissatisfaction among employees is that the manager passes the responsibility on to HR or management.
A sensible way of dealing with employee attitudes and expectations is to be open and transparent about how the company views compensation and salary setting, what performance the new pay is based on, and what the employees can expect in terms of monetary and non-monetary rewards. HR can support the managers in this area to ensure clear communications.
HR can also help the managers to view compensation in a broader perspective and reward the employees in more ways than just salary.
2. Work with compensation and rewards throughout the year
Helping managers to shift the focus from the annual salary review meeting and the review process and start making compensation and rewards part of day-to-day work routines will make the pay-setting process easier for the managers. The employees will be more satisfied too.
Managers gain a better insight in employee performance when they work closely with their direct reports and have regular check-ins. It also gives the managers greater confidence when assessing performance. The employees feel that the manager is able to make a fair assessment and that they have received continuous recognition and feedback throughout the year. They have realistic expectations of the salary review and it also minimizes surprises.
3. Clearly explain the parameters
HR needs to be clear about the parameters impacting salary setting. HR also need to analyze if part of the overall budget might need to be targeted for specific employee categories.
It is important that managers who set salaries feel confident about how a salary review is conducted, the steps of the process, existing agreements, union negotiation procedures, pay-setting policies, etc. Assess the needs of your managers and consider whether training might be beneficial.
5. Salary review meeting checklist
HR can compile a checklist that gives the managers structure and support for the salary review meeting. The checklist is likely to enhance the clarity and quality of the meeting. It is also more probable that the meeting will take place on the same basis for all employees, regardless of who the pay-setting manager is.
6. Useful tools and models
Explaining the company’s overall pay structure and its policy on pay grades/salary ranges to the managers will contribute to a better understanding of the pay-setting process.
HR can encourage the managers not to be afraid to differentiate more. The model below can be used to help them do so. This correlates the current salary (compa-ratio) and the performance levels. Employees who are performing well but already have a high position in the salary range should be given a small rise in pay. Employees who have a low position in the salary range and are performing well should be given a large rise in pay. Employees who are performing as expected should be given a rise in line with the budget. Employees who are underperforming should not perhaps be given a rise at all (unless the collective agreement specifies a minimum increase). What is needed instead is a development plan that will enable the employee to perform better thereafter.
7. Create a basis for dialog
Creating forums for discussions and encouraging the managers to talk about how they interpret the criteria for pay, assess employee performance and how they link salary increments to this will facilitate the work of the managers and contribute to a more harmonized approach among the managers.
8. Clearly explain expectations
HR can assist to clarify different expectations in connection with the salary review to ensure the level of expectations is reasonable (the employees’ expectations of the organization and the manager and the manager’s expectations of the organization and him/herself) and that salary growth is guided by a long-term strategy. Communication is the key!