Top tips for HR professionals on salary adjustments

Marlon Mai October 20, 2014 4 mins read

As one of the essential parts of salary management, salary adjustments, which on rare occasions may involve a salary reduction, usually indicate a wage increase.

Either way, it has never been an easy task to make salary adjustments since you need to be extremely careful and thoughtful as to how to broach this subject to managers and guarantee a happy result for everybody. Below are some practical tips from our experience which we hope will help HR Compensation and Benefits professionals :

1. Strictly enforce rules of salary management –four quadrant salary adjustments

Salary adjustments are usually considered annually, based on a 360 assessment of each employee, covering an adjustment scale of 5-10% on more than 200 salary levels. In a four quadrant model of capability and performance, positive assessment results of both factors will lead to a salary increase of 10% or even more whereas with only one positive result, the increment should be around 5%-8%. Salaries for employees with an average performance and ordinary capabilities will remain the same as the previous year while those who receive negative results in both factors will usually be made redundant.

2. Be flexible with special cases

For employees who have outstanding capabilities or have made special contributions or achieved an extraordinary performance, either the employee or his/her department is entitled to hand in a written application for an extraordinary salary increase. Such applications can only be accepted with the permission of the human resources manager of that department as well as verifications provided by other relevant departments.

3. Understand what’s on your employees mind – the wish to get a pay rise

Employees, regardless of their capability or performance, all want a pay rise, since it is quite embarrassing to have your salary leveling off or decreasing, so even a little increase is better than none. But if an employee fails to get a rise because of shortcomings of the performance appraisal system, this will have an extremely negative impact on their work motivation. So we cannot be too cautious when carrying out performance appraisals.

4. Respect department leaders’ opinions – share responsibilities to deal with problems

Generally, department leaders can “convince” their subordinates by referring to various factors, such business success, management style and personal charisma. In other words, those employees “agree with their leaders’ opinions” and will subject themselves to the management of their superiors. For department leaders, each team member’s voice will be heard, which means their suggestions regarding salary adjustments are of great importance to the company. It is therefore recommended that before a salary adjustment plan is made, the HR department should have a general idea about each department’s total salary amount, as well as its minimum and maximum adjustment scales. HR professionals should also ask employees for specific opinions. Only in this way you can draw up a relatively reasonable adjustment plan, and even if you face some unpredictable problems, it is up to all relevant department leaders to tackle these challenges. This in turn frees the HR department from having to resolve such issues on its own, which would make it look quite passive, an embarrassing situation.

5. Guarantee fairness of important positions – an influential factor for a company

When drawing up a salary adjustment plan, you should pay particular attention to those who are influential in terms of their impact on the company’s management or business. Such employees include middle management professionals, technical sales representatives, senior employees, experienced workers, relatives of company leaders, to name but a few. They may be small in number, but their influence can be so huge that will exert a decisive impact on the boss’ thoughts and opinions. In this regard, the HR department should pay equal attention to employees’ performance as well as company leaders’ attitudes. Try to be agreeable when deciding their pay rise, as long as it does not violate any rules or regulations of the company, so that those who you once helped will appreciate your kindness. Being able to see which way the wind is blowing will make it easier for HR departments to carry out their daily duties.

In short, the company’s regulations and the employees’ personal capabilities and performance are key criteria for salary adjustments planning, but opinions and attitudes of different department leaders are also of great importance if we want to make everyone happier about the results of salary adjustments.

Marlon Mai's picture
Managing Director | Finance & Accounting, IT, Sales & Marketing Recruitment
mmai@morganmckinley.com