What’s that creeping up behind you? No, not a Halloween ghoul… it’s pay review time!
With the annual pay review coming up soon for many companies, I thought it would be useful to share a few tips from a ‘fly on the wall’ perspective.
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, 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 come from an analyst background; 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. It's a lot of work, but it’s essential to prepare your business case with the right level of information to engage the stakeholders. This makes life much easier when it comes to gaining agreement for the pay pot.
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.
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.
Hopefully you’ve now got 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 via email firstname.lastname@example.org or call us on 020 3457 0894.