5 Tips to Survive 'Salary Review Season'

We’re coming up to end of financial year - can you believe how fast the year is going?! (We have all been saying to each at least fortnightly since February!) – and for many businesses this is the time for performance reviews, and likely conversations about those dollar, dollar bills!! 

1.   Put some space between your salary reviews and performance reviews

You may have heard before that it’s best practice to separate your performance conversations from your salary review conversations. There are a few reasons why this is recommended:

  • employees who receive positive review feedback may then expect a pay increase to be associated;

  • performance of the individual is likely only one consideration when looking at increasing pay; and/or

  • you don’t all spend the whole conversation distracted by the potential discussion about pay rise at the end.

2.   Communicate!  

If you have a formal process for salary reviews and this occurs once a year (for example), make sure people are aware. If you have previously always had your salary review and annual review conversations together, but you read a great article that gave some compelling reasons why you should change it up this year (Hint: refer tip 1), communicate with your team! Let them know why the change is occurring and also make sure both reviews are booked in, so they don’t just think you are doing a sneaky and just trying to save yourself from awkward conversations and spending more money. 

3.   No guarantee*

A review doesn’t mean an increase. You might have written in your employment contract or employee handbook that salaries will be reviewed annually (hopefully you don’t have it written too concretely so that you always have some flexibility as the business owner), but an annual review does not mean an annual increase! Committing to look, not committing to give!

4.   *Unless there is a guarantee 

The decision to provide an annual increase may be taken out of your hands if:

  • your employees are paid at or very close to the minimum Award wage (as there are usually annual increases to this in July each year);

  • an employee (or group of employees) are moving from one classification in the Award to another (either based on tenure, experience or new qualifications); and/or

  • your team are covered by an Enterprise Agreement (EA or EBA) that has agreed annual increases included within it.

5.   Fit your oxygen mask first

Some key considerations relating to salary increases across your business are:

  • Did the business make a profit? I.e., is there actually any extra money to be spending on staff salaries, or at least a plan for extra income this year to compensate?

  • Did an individual/s take on additional responsibilities (e.g., people management) or gain qualifications that should attract a higher salary?

  • What is the CPI increase this year, or what was the % increase to minimum wages? (There is no requirement to increase according to these if not paying in line with the minimum, but they can help to guide decision making and meet expectations).

  • The cost to replace – both financially, mentally and culturally – and decide whether an increase to support retention is an appropriate, or necessary, strategy.

6.   Bonus! – Consider Bonuses

If you are concerned about your wages going up and up each year and are unsure about what the future might look like for your business or industry, you could consider whether a one-off bonus might be a better way to show your appreciation and reinforce the behaviour and performance that has been demonstrated, without locking you in to a higher salary ongoing. 

 

As always, if working with Modern Awards, spreadsheets and lofty staff expectations are not your favourite things (especially in combination) then please give us a shout!

If you’d prefer to dive into your Modern Award yourself, check out our blog about getting acquainted with your industrial instrument here.