The Importance of Restructuring Salaries and Bonuses for 2017
With the arrival of the New Year, it is the perfect time to look ahead and evaluate your employee’s compensation and how it can be worked into the overall company budget.
January is a common time for companies to conduct salary reviews with their employees, and employers should be prepared to evaluate and restructure as necessary. Here are a few tips for planning employee salary and bonuses.
Consider the Reasons for Giving an increase or bonus
The most common reason for giving an increase is to keep up with the cost of living. The standard is typically around 1.5%-2%. There are several other factors to consider such as:
- Employee milestones – they’ve been at the company for some time and are due for a salary increase.
- Internal promotions – the employee has recently moved into a new role or has taken on greater responsibilities.
- Valuable employees who may be at flight risk – Some skills are scarce in the marketplace and a raise may be needed to keep them from going to the competition.
Compare salaries to the current marketplace
Depending on the industry, the average pay may have changed in the last year. Check out what the average salary is for your industry to determine if your company’s current compensation is in line with the marketplace. Ensuring your salaries are within the average will decrease employee flight risks.
Budget salary increases and bonuses for the year ahead of time
It’s important to determine what increases or bonuses will be given out prior to holding the employee reviews. Having a predetermined increase or bonus will help you to stay within budget for the year. Keep in mind that some increases, promotions, or bonuses may come along later in the year as employees reach certain milestones or achievements.
Be prepared for employees who ask for more
Consider the conversations you will have with each employee in the workplace. Be prepared in how you will answer each one of them should they ask for a larger increase than what they are being given. Your answer for a valuable, productive employee might be different for an employee who has been doing the bare minimum.
This annual assessment is a time to review and recognize the achievements of your staff, preparing them for future advancement, success, or transition this new year. Plan salary adjustments and review time discussions carefully in order to successfully restructure your staff’s compensation for the New Year.