How to handle staff salary increases

© iqoncept – 123RF.com

Although approaches to increasing salaries are different for every company, there are a few basic considerations you will need to take as you increase your staff's salaries.

First, your company must implement a performance and salary review. Usually companies review salaries on the anniversary of when an employee joined the company, but larger companies will have annual reviews set just after the company's year-end.

Second, consider both how much you can afford to increase salaries by and what kind of increase your employee needs, taking inflation, increase expectations, expenses, market-related salaries, and the average regional and industry increase into account. For the latter, you will likely find this information in newspapers around March after all tax returns are completed at the end of February.

Third, decide if you wish to link the increase amount to your employee's performance. Performance-linked salary increases are not mandatory but are helpful in companies with a lot of staff; however, a professional and official performance appraisal system should be put into place to ensure employees' performance is fairly judged and rewarded.

Fourth, you should tell your employees about the process you are following with regards to the industry, inflation, and the company's budget in determining increases in order to avoid grievances, disappointments, and disagreements.

Finally, tell your employees what their increases are on individual terms a week or two before you pay the new salaries to allow staff members to approach you if they have any complaints or queries.