Raises are an essential part of safeguarding employee satisfaction and retention. However, it can be challenging to figure out what raises to give your employees. There are a number of factors you may want to consider when honing in on the perfect amount.
To retain employees, your wages need to be competitive within your industry. Statistics Canada has summary tables on the median incomes of workers in various industries, and you can get some clues from job listings or by speaking with colleagues. However, for detailed information on what professionals in similar roles earn, you may want to talk with a salary consultant.
You may raise your employee’s pay by a certain dollar amount or a percentage of salary. The exact numbers vary drastically depending on your industry, budget, and objectives. If you only have a few employees, you may want to decide increases on a case-by-case basis. With a large team, it’s more effective to have a system in place. A clear and detailed set of metrics to evaluate employees can help avoid disputes and save you time on payroll updates.
While it’s possible to give every employee a set increase annually, you may want to consider a tiered system instead. For example, you may use a checklist and assign a certain weight to each category to determine if an employee earns a 2% or a 10% raise. Alternatively, you may set goals at the beginning of the year and anyone who meets all of the goals receives a $10,000 annual salary increase, while those who only meet some of the goals receive a slightly lower raise. A tiered system allows you to give special rewards to your hardest-working, most ingenious employees, but it also helps you spread the wealth around. For example, instead of giving everyone 4% raises, you can give your average workers 2% raises and reward the superstars with 10% raises.
Balancing Performance and Tenure
To reward loyalty, you may want to consider both tenure and performance when deciding on raises. For instance, in addition to the regular annual raise, you may want to offer an extra percentage every three years an employee has been with the company.
Employers typically rely on sales data, managerial reports, and customer comments when reviewing when to give a raise. However, you may also want to see what the rest of the team thinks about the employee. You can gather this information from blind surveys. For example, you can use an online survey maker such as SurveyMonkey to send out anonymous questionnaires to your employees. Alternatively, during each review, you may want to ask employees if they want to give a shout-out to a co-worker who does a great job. This can be an effective way to identify the people who hold your team together and provide a lot of support. In addition to figuring out how much of a raise you want to give your employees, you also have to decide when to give them raises. Annual reviews are just the first option, and you may want to explore rewarding your employees during other times as well.