If you’re an employer, what should you consider when thinking about offering raises to your employees? How do you determine which employees should get raises?
Who Gets the Raise?
Objectively looking at each individual is an important first step toward your decision-making process. Start with a pay grid, which can be a simple Excel spreadsheet. List individuals in the company and their current pay rates and how their income has risen over time. Next, focus on these six areas:
Quality of work.
Longevity matters less but the volume and quality of the work should be an important factor in your decision. Quality over quantity should reflect your appreciation for the employee and their efforts. Is the employee a mentor to others? Have they stepped up to lead teams? How does their salary compare to others in the company or even the market?
Have they met or exceeded expectations?
Has the employee surpassed their goals? How have they contributed to the overall effort of the team? Are they collaborative and helpful with everyone around them? Ask yourself these and other questions about the quality of the employee’s work.
How consistent is their effort?
Are they excellent regularly or is their work erratic? If the employee maintains a consistent level of effort day in and day out you know you can count on them. That reliability is worth a reward.
Look at their market value.
Research what other people are making in similar types of jobs in your area. An employee’s work performance is important but you should also make your salary or hourly rate competitive to the fair market value of the person’s level of education and experience.
How productive is the worker?
If your company tracks key performance indicators for the position (and you should), then you’ll learn how the employee has progressed in their role. This should be a pretty straight forward process, but you can also ask co-workers how their interactions with the employee have been over time.
How does the worker’s value generate value for the company?
Are they the “go-to” employee that steps up to train new workers? Have they consistently outperformed their peers? Giving them a raise gives them an incentive to keep pushing and doing good work.
Something else to consider is whether the job description also had a responsibility increase. Did the worker take on new things this past year? Consider the individual performance in light of the overall performance of the organization.
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