Promotions and
Salary Adjustments
Purpose of process (see below how HRSource™ can help):
To provide recognition and reward in the form of greater pay and job responsibilities, to those whose work performance warrants it. Also, to maintain pay equity relative to individuals performing the same function, both inside the company and with other companies.
Recommended Steps in the Process:
- A possible pay inequity is perceived. Several events can
create this perception:
- Human Resources conducts a salary survey and determines that the pay rates for a particular job family has increased more rapidly at other companies than your own company.
- Human Resources or a manager observes that the job contributions of a particular individual is similar to others in the work group, but his/her salary is significantly lower.
- A manager hears complaints from several employees about being underpaid relative to other companies and/or a manager is experiencing high turnover.
- A manager observes that an employee is qualified for a promotion to a higher level position based on his/her job accomplishments and job performance.
- An employee applies for a position inside the company that is at a higher level than his/her current position.
- A regularly scheduled performance review reveals the
inequity.
- Discuss the perceived inequity with the manager and verify the
information:
- Has the employee's performance and contributions been consistent and over the long term?
- Is the turnover caused by pay or is there another problem (e.g. poor communication, working conditions, recognition, etc.)?
- Can the salary survey results be confirmed by a second salary survey?
- Does the employee meet the qualifications of the higher
level position as stated in the job description?
- Decide on a plan of action with the concurrence of the
manager.
- Situations "D" and "E" above call for a possible promotional salary increase. The amount of the promotional increase should be based on the employee's current salary and the salary of others in the higher level position. Promotional increases are typically in the 3% to 10% range and should place the salary of the employee being promoted below the salary of those who have been in that position for a period of time.
- Situations "A," "B," and "C" above call for a possible salary adjustments. If several employees are involved in the salary adjustment (situation "A" and "C"), develop a salary adjustment budget. The budget will equal the average salary adjustment (e.g. 5% of pay, 10% of pay, etc.) multiplied by the number of employees involved in the adjustment.
- Implement the plan of action. It's best to implement these
salary increases during the normal salary
review process. It is less disruptive to the
organization because these special salary increases blend in
with the merit increases that most employees in the
organization are receiving. This will not always be possible
(especially in situation "C" and "E").
- Communicate the plan of action.
- Minimize communication on salary adjustments. Explain to those receiving the salary adjustment, that this action was the result of the company's commitment to maintain competitive salaries in a market where the salaries are moving rapidly at the moment. This way they won't expect this high level of salary increase during the next salary review. It's best if the manager communicates this with employees on a one-on-one basis.
- Announce promotions to employees as a way of providing recognition. Do not announce the amount of salary increase. The best time to do this is during a department meeting.
Process Tips:
Try to de-couple salary increases from inter-company transfers (see Transfer process). Consider transfers to be lateral in pay. Otherwise there will be pressure from managers to upgrade their positions so they won't loose employees to another department due to transfer. However, if the job to which the employee is transferring clearly requires more skill and responsibility, then a promotional increase at the time of transfer is warranted.
Also see the section entitled A Classic Approach to Compensation.
HRSource™ can help administer promotions and salary adjustments:
