Salary review season: it pays to be strategic

The end of the financial year is a popular time for employers to conduct salary reviews for their employees. As such, it’s likely your HR department is in the midst of one of its busiest times of the year – and many managers are facing the often stressful challenge of annual performance reviews.

But deliberation over employee remuneration is not just a straightforward equation of escalating costs for employers – as with any other area of your business, investment in pay packets is one that should be geared towards generating a good return.

Successful organisations develop a remuneration strategy that best fits their objectives and values, and these adopted strategies strongly influence the commitment, loyalty and performance of employees, and how they view the organisation they work for – a very significant contributor to staff retention.

So what will you be using to guide your salary reviews this year?

In Ai Group’s just-released Salary & Benefits Survey 2015, which captured remuneration data for more than 14,300 employees across 223 jobs and multiple industry sectors, we asked our survey respondents to indicate the criteria they relied upon in making decisions around salary movements. Individual performance was the most common determinant (39.5%), followed by company performance (13.2%) and market rates (12.3%). The performance of an employee’s team was the least utilised measure (2.7%).

The survey found that the expected average salary increase for employees in 2015 is 2.7% – the lowest rate in four years. In 2013-14, average salary movements amounted to 2.9% – less than the projected figure of 3.3% provided by respondents to our 2014 survey.

But do low pay rises necessarily have to lead to the loss of staff? There are many ways in which employers can reward employees, and your organisation can look at performance-based bonus schemes, profit-sharing or the availability of further benefits such as additional paid leave as part of a more effective strategy for staff retention.

Find out more about Ai Group’s Salary and Benefits Survey Report 2015.

Does your organisation have a staff remuneration strategy? And do your efforts at staff retention incorporate rewards for employees outside of their pay packets? Share your experiences and ideas below.

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Graham Turner is the former Editor of Ai Group's Industry magazine, which ceased publication in 2014. He now edits (and moderates) this Blog, together with Ai Group's weekly Email newsletter.

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