Salary increases generally need justification.
Raising salary rates requires careful thought and planning. According to Entrepreneur.com, too many entrepreneurs fail to connect employee pay raises with business objectives. This can be extremely costly for the company. Pay raises should occur in a systematic way and with a clear criteria. Writing a rationale for raising salary rates can help both employees and managers to clarify what's important and strive to achieve company goals. The rationale for a salary increase varies according to the type of business, but it often involves some measure that shows contribution to the company's bottom line.
Instructions
1. Create clear job expectations. You cannot tell which employees are doing a good job until you know exactly what their job entails. Write up job duties and expectations, and include measurable goals as much as possible. If an employee consistently exceeds the number of daily claims processed, for example, then justifying a pay increase is easy.
2. Create job standards. Develop "good" and "great" standards for every type of job within your company. Start your rationale by establishing that pay increases occur when employees consistently perform above "good" or "great" standards. Define how consistent an employee needs to be. For example, you can tell the waitstaff in your restaurant that if 95 percent of reviews from their customers are rated "excellent" or above, they will get a pay increase for as long as the percentage holds up.
3. Set parameters. Since every job cannot receive the same type of raise, determine which jobs will receive which type of raise. Base the pay raises in monetary performance or daily work performance, such as constantly being on time or receiving good work reviews. The parameters will determine the limitations of the salary rates. For example, one parameter can be that no employee can get more than two pay raises per year.
4. Write up how the employee raises relate to company goals. Include a section in your rationale that details the short- and long-term goals of the company, and how each job contributes to that outcome. According to entrepreneur.com, "The better workers understand the system, the less apt they are to believe raises are rooted in favoritism or arbitrary decisions." Giving employees the big picture can also help them feel like they're part of something bigger, and as they strive to get more pay raises, you will meet your company goals.
5. Keep the rationale short but concise. A clear and well-reasoned salary rationale can more easily spread through the work force. Try to make it one page or less, and have a small group of employees read it and give feedback. Make revisions and distribute among the rest of the staff.
Tags: company goals, salary rates, employee raises, good great, good great standards, great standards