Salary Increases

For many businesses May is the month that they are looking to finalise their budgets for the next financial year. Ironically this often coincides with renumeration and performance reviews and this may include salary increases.

But that begs the question – when do I give someone a salary increase? Does it need to occur at the same time as their Annual Performance review? Or can I award it when I can afford to do so and I think the Employee deserves it?

The answer to that depends on how your Employees are engaged!

There is this myth that Employees automatically receive a salary increase each year for being with the business. We are here to explain this a little further.

Automatic increases might be on the cards if you have Employees who are paid per the Award rates. Obviously, each year the Award rates increase, so if that’s what you are following then you need to apply these increases to stay compliant. Hence why it might seem like a yearly increase.

There might also be an EBA in place that stipulates a CPI uplift and in this case the increase would be awarded, but that doesn’t necessarily mean they go up a level in their classification. The business is simply compliant with the relevant legislative document.

For those Employees however that a paid above Award, there isn’t necessarily a ruling or piece of legislation that states they will get an increase just because they’ve reached a work anniversary. Part of being above Award does take this into consideration.

So, for Employees that fall into this category, what are some effective ways to determine whether or not they should be granted this increase? Here are some suggestions:

• Previous 12 months performance
• Have they changed roles/upskilled or taken on more responsibility?
• Are they managing team members?
• Have they contributed to the business in a positive way?
• Do they bring and continue to bring new ideas to the table?
• Have they hit KPI’s?
• Has the employee introduced a new product/service into the business?
• Have you compared their current salary to what the market is paying?
• Replacement cost if you were to lose them?

All in all, there is a certain stigma around salaries. Our advice is always to be reasonable and fair. Listen to what your Employees say or ask for and be open for discussion. You may not be able to grant what they are seeking straight away, but it’s a good starting point for negotiation and work out a way to get them there. It’s easy to think that it’s going to cost you an extra $5,000 here, but what is the real value of that Employee?

As always, if you’d like help with a strategy and renumeration structure, please reach out to us – Act Now – We are here to help – Call Now Actually 1300 605 305