Every manager has been or will face this dilemma: how do I manage salary increase requests from my team? It’s not easy to find the right balance between keeping teams motivated, avoiding discrimination, rewarding individual efforts, and developing a compensation policy that is perceived as fair and equitable.

To help you in this complex process, we have prepared an article outlining the different approaches to responding to remuneration (salary increase) requests.

5 Steps to Calculate and Respond to Remuneration Requests

Step 1: Establish a Reliable and Objective Salary Grid

The first principle of a good remuneration policy is to establish clear and objective criteria for determining everyone’s compensation. This ensures fairness and transparency, while also complying with any relevant union regulations.

The benefits of such an approach are twofold: not only will it enable you to ensure pay equity within your company, but it will also enable you to meet one of the criteria of the Gender Equality Index. What’s more, you’ll have a tool that will help you in your salary revaluation process.

The first step to establishing a fair and compliant compensation structure is consulting your collective bargaining agreement (CBA). This document is the foundation for your pay scales, outlining fixed remuneration levels for different positions and experience levels.

To ensure these predefined levels are applied appropriately within your team, consider these key factors:

  • Changes in responsibilities: have there been significant shifts in an employee’s duties since their initial hire?
  • Increased responsibilities: has the employee taken on additional tasks or supervisory roles?
  • Acquiring new qualifications: have they attained new certifications or skills relevant to their position?

These factors, alongside the CBA guidelines, can justify adjustments to an employee’s fixed compensation within the established pay scale.

If you don’t have a CBA, you’ll need to build it. To do this, draw up a complete inventory of the different functions that exist within your company and then associate with them the set of skills and prerequisites that are essential to their successful performance, such as:

  • Level of experience
  • Level of education or training
  • Technical or managerial skills

Once you’ve assessed the situation, you must classify these jobs by assigning them levels, coefficients, or points. Based on this classification, you can deduce compensation levels by benchmarking what’s available on the job market.

Step 2: Differentiate Between Collective and Individual Increases

Generally speaking, as a manager, you are allocated a so-called individual increase envelope, but these are not the only increases to which your teams are entitled.

Usually, a general increase between 1% and 5% is awarded to all employees annually, regardless of their results and yearly performance. The teams often take this increase for granted and do not consider it a real increase. However, with the exception of minimum wage increases and contractual salary adjustments, an employer is not obligated to grant this type of increase.

Therefore, to make specific employees feel appreciated for their excellent work, you’ll need to separate collective and individual salary remuneration. By making a distinction between the two, you’ll have a double advantage. First, you can use the collective and general increase as a common motivational lever, emphasizing that everyone’s work has enabled the company to achieve its objectives. This will also nurture strong confidence in its employees, translating into an increase for all.

Second, it gives you greater leeway to allocate your increase envelope according to your team’s individual results. But even so, the criteria for distributing individual raises must be determined fairly and equitably, to avoid wage discrimination.

Step 3: Define SMART Objectives

To avoid numerous debates, protests, and complaints and to reassure your management when distributing individual increases, we advise you to base your decisions on pre-defined objectives. This can be done by assigning SMART objectives to your teams.

For an objective to be SMART, it must meet these five criteria:

  • Specific: it must be appropriate and personalized, for example, based on performance results or job level/position, and simple and easily understood.
  • Measurable or quantifiable: as a manager, you’ll need to determine a set of precise factors at which the objective can be achieved.
  • Acceptable or attainable: it must align with the employee’s skills and work and represent motivating challenges to win the employee’s support.
  • Realistic: when determining the achievement threshold, ask yourself: Does the employee have the resources needed to achieve the objective? Does he know? Does the employee have the autonomy to make the decisions required to achieve the objective?
  • Temporal: it must be defined in terms of time. The objective can be limited to monthly, quarterly, half-yearly, or yearly intervals. You can even add special bonuses if the goal is achieved before the deadline.

Step 4: Take Advantage of Benefits, Special Perks, and Vouchers

As employers, you are not obligated to allocate your increase envelope, whether collective or individual salary remuneration, in pure cash.

For example, you can lend a company car for one of your employees who needs to travel regularly or to retain them.

You can also set up various challenges within your department to boost individual and collective performance, which will be rewarded by the distribution of points, which can be converted into vouchers or discounts from various partners.

It’s up to you to identify the methods that will enable you to get the best out of your employees while increasing their motivation and well-being at work, thereby retaining your talents.

Step 5: Common Mistakes to Avoid

When it comes to managing and growing teams, there are several mistakes to be avoided at all costs. These include:

  • Deciding to distribute raises without having established precise, enforceable criteria
  • Refusing an employee’s request for a raise without justification
  • Thinking that a pay rise will keep an employee who doesn’t feel fulfilled or listened to

While pay raises are one tool used to retain employees, they do not solve all problems and are insufficient to ensure well-being and happiness in the workplace. Moreover, if poorly used or communicated, this tool can be a double-edged sword, potentially demotivating the company’s top performers.

Related:

Benefits of using HRIS management software

Digitizing Salary Review Campaigns with Crosstalent’s Remuneration App

Digitizing your pay rise policy can enable managers to automate some actions to facilitate these pay review periods.

Crosstalent’s Remuneration Management application enables you to conduct individual pay rise campaigns, carry out various simulations under constraint, and monitor changes in the wage bill within this framework.