When was the last time your team reviewed employee pay? While it’s a question that every business leader faces, the answer isn’t always the same.
Is there a common timeframe at the moment?
Most organisations have an annual pay cycle that fits in with budgets and performance management processes. This structure provides the best framework for all pay-related decisions and informs employees of when they could be looking at a pay rise.
However, it is important to distinguish between how often pay is reviewed and how often pay should be monitored.
Although your review might be annual, you should be looking at pay-related issues all the time.
Should pay rises be made based on budgets or performances?
This is because in the modern employment environment, employees don’t want to be waiting for a pay review 12 months in the making. Today’s workers are eager to develop their careers quicker than previous generations and as such, employers need to be flexible enough to have a pay-related conversation anytime throughout the year.
If employers are monitoring pay regularly and something serious comes up, well then you’re ready to move and not scrambling around for the answers.
What are the best metrics for a pay review?
Often the pay review is the outcome of a wider performance review of an individual. This means that employers should have a range of internal and external metrics available to make a pay-related decision. These can also include restraints of the business itself, issues of budgets and affordability.
You have a sum of money to pay people and you have to work out the fairest and most appropriate way of allocating salaries between people. Pay review, in a sense, is an allocation mechanism. Business leaders want to get this balance as right as possible.
How can Strategic Pay support your next pay review cycle?
The most important factor to remember in the discussion around pay reviews is access to the most accurate data possible. Whether this is internal performance tracking and metrics or analysing what similar industries and businesses are paying their employees, the best decisions are always made with the right information on hand.
If you would like to learn more about how Strategic Pay can support your performance development or to gain access to our wide-ranging remuneration reports, get in touch with our expert team today.