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Pay review: the dos and don'ts spotted by a fly on the wall

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Posted by Ben Rowley on 29 March 2016

Pay review: the dos and don'ts spotted by a fly on the wall

HR Reward | Reward Consultancy | Reward Intelligence | Pay Benchmarking |

The annual pay review; a time when many line managers’ schedules become dominated by one to one meetings with employees keen to highlight how much more their professional peers are being paid down the road at Megabucks Inc. It can be a bit of a headache, deciphering who’s shouting the loudest and who’s actually deserving of a financial boost. On top of that there’s the duty to balance the books, assess market rates, make sure you’re giving enough to retain your brightest and best, and reward those who have put in a real shift throughout the year.

Working as an analyst at Innecto, I’ve been a fly on the wall of many pay review processes. In this blog I share a summary of practices I know correlate with a slick pay review process and hope that some of the pain is eased.

1. Plan in advance

Nothing makes a process like this harder than the absence of time. Establish a comfortable time line and disaster plan, ensuring you make allowances for complications, hold ups, holidays, freak snow storms, killer bees etc.

2. Ensure the HR system is running and well-oiled

Hopefully your HRS has been well maintained and updated throughout the year; every performance review, P45, P46 and wage slip being tracked meticulously. If this is the case you’re in for an easier ride. If not, there’s no time like the present to get it sorted. The information it holds is going to form the basis of your salary reviews. It has potential to save the business time and money and let you track how every penny is distributed and why.

3. Collate the data

Okay, so this goes hand in hand with my last point. I’m an analyst and wholly biased; I work with data every day, love a trend and love to track change. However I can’t stress how important it is to make sure your employee data is complete, robust and well organised. Performance review results, out of cycle salary increases paid, an up to date list of employees, their roles, departments, locations, salaries and variable pay are all key to making informed decisions concerning the distribution of the annual pay budget.

4. Know your employees

It’s not possible to know the ins and outs of every employee’s working life, but you need to make sure you are aware of all the roles you have under your roof, how they fit into the business and an idea of how they add value. Up to date job descriptions, job evaluation and documented organisational structure go a long way in helping to achieve this.

5. Do your homework

Beyond understanding your internal demographic, gaining insight into the external market should be at the top of your ‘to do’ list. Taking into account economic factors and market rates is key to positioning how much needs to be spent in order to satisfy demand. How does your pay compare to your immediate and wider competitors? Will the salaries coming out of this year’s pay review put you in a competitive position? Benchmarking your internal salaries against the market will unlock this knowledge.

6. Establish where increases are most required

Are you at risk of losing top talent because they’re paid behind the market? Address them first. Those shouting the loudest might not be the ones most deserving of a boost. Once again, benchmarking against the market will help, along with performance management information.

7. Get the budget approved

You know your market, you’re aware of the board’s strategic motives; polish up a solid business case, getting the numbers in black and white so you’re clear how much you have to play with.

8. Future plan

It’s not over once the big red ‘Distribute Money’ button is pushed. The annual pay review forms only part of a wider reward plan. If you don’t already have one, get a reward structure in place that aligns to company aspirations and addresses recruitment and retention issues. It’ll ensure you’re able to track the key metrics of success and assess progress come next year’s review.

9. Self-evaluate

What went well? What cost the most in terms of time? What caused the HR vehicle to hurtle off a bridge? Although a bit painful, this will go a long way to ensuring you have a smoother ride next year.

I hope my fly on the wall perspective has given you some practical tips you can use to help make this year’s pay review less painful than the last. If you need help with your annual pay review process, we can help. Get in touch: 020 3457 0894

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