7 Sins of salary reviews post C-19 - and how to avoid them
Unless you’ve found yourself with a $60 billion kitty you didn’t plan for, you may be facing a decision common to many other businesses in the months ahead: Do we give our employees a salary increase this year or not?
Only you can make that decision for your business – you know your business and its particular circumstances.
What we know, are seven key things to be aware of to help you make this decision – whether you’ve actually had a windfall, or you are suffering, the principles are the same.
Sin #1: Do nothing and tell no-one
We know that the longer a period with no information, the more people will make up their own stories.
By choosing not to have a pay review and not mention it to employees, you risk missing a wonderful opportunity for managing the message you really want to communicate – and there is a good chance the grapevine will be resounding with messages you don’t want.
Maybe the word will be that the business is really struggling (we’d better start looking for other jobs); or that the business is keeping all that stimulus money for itself (they don’t care about us); or that you’ve committed Sin #2…
Take the lead, engage and communicate – if you decide on no pay reviews, say so and explain why.
Sin #2: Do something for some and only tell some
Transparency is constantly rated as a critical factor in whether employees trust their employer.
Surprising at it may seem, employees usually recognise that some people and or some jobs may need their salary levels to be adjusted to keep up with particular external circumstances.
Explaining that the business is conducting a review of external relativities to help determine where the “pay review bucket” is to be spent in the current environment is a much better strategy than asking some people to keep their increase “a secret.”
Sin #3: Do the same thing for everyone
Our experience tells us that one of the worst things you can do is give everyone the same small increase and hope they’ll all be grateful. We know that employees can be more disgruntled by inconsistent internal relativities than external ones.
Unless your current salary system is well established and working equitably, it is likely you will have some anomalies with internal relativities. For example, two people doing the same job, and are comparable performers, are on different salaries. Or, the other extreme, an exceptional performer, doing the same job as a below average performer, is paid the same – or less. Or some jobs may have changed and the job holders are now being paid disproportionately to people in other jobs.
Should you have funds available, this is a good opportunity to address these discrepancies and correct internal relativities.
Sin #4: Leave it to each of your managers to do their own thing
Santa Claus or Scrooge? Should who you report to determine your pay review?
A fair and equitable system will have a transparent process for considering not only the business’s ability to pay but also internal and external relativities and recognition of individual performance. Each department may be different but all employees should have confidence the same process is being used for all.
Sin #5: Wait and see what your competition are doing, then commit any of Sins 1 - 4
What’s best for other businesses may not be best for yours.
By avoiding Sins 2 and 3 you will have checked out some critical information on what market rates are.
But for your business, you choose your own review plans, timing and messages.
Sin #6: Use C-19 as an excuse to “save money” on costs of employees
You’ll be found out!
This may have some short term gain but, in the weeks, months and years ahead, employees will remember this and take their own action.
(Please note, this Sin does not include any C-19 survival strategies the business is considering, or has already entered into, such as temporary pay freezes or pay cuts, which are well considered and communicated)
Sin #7: Use C-19 as an excuse not to discuss employee performance and satisfaction
Regardless of your position on salary reviews and increases this year, remember the primary purpose of the performance review should be to improve performance and satisfaction. It is a mechanism for managers to provide feedback to staff and continue to encourage increased performance and satisfaction. It also gives managers a chance to share key messages about how the business is faring.
For many, this may be even more critical to business performance and retention of key talent than any significant salary adjustments right now.
The performance review process should be cyclical, and help:
Each individual become more effective in their job;
Each individual gain greater satisfaction from their work; and
Improve organisation performance.
Unless none of these things are important to your business right now, it’s probably a worthwhile exercise – and maybe a sin if you don’t?
We trust this summary of sins helps you consider, or re-consider, your approach to post C-19 pay reviews. As always, if you need some more information, or help with implementing a workable and equitable salary system, please contact us at or visit our website for more information.