There are many websites online like glassdoor.com,
Decide the Salary Philosophy for your Company:
Determine the salary philosophy of your company based on market standards. Whether you like to increase the level of base salary for your employees or do you want to increase the variable/flexible pay. If your company is a growing startup then you should control the base salary level and have more flexible pay based on employee performance. This will help in encouraging office morale and motivate employees to perform better. Also you won’t face budget crunches during touch market conditions as it’s not mandatory to pay the variable salary. Click here to learn how an advanced degree in management can help you determine the appropriate salary scale for your company. But if your company has been in business for long-term and has decent market share with regular profits, you can increase the base salary levels for employees and keep the variable pay to minimum. Usually companies offer a pay-per-performance or Flexible bonus which is 8% of base salary. This can be given to employees based on their performance and people who have contributed more will get the maximum bonus while underperforming employees won’t be paid any bonus at all.
Determine Salary Comparison Factors:
It’s always good to compare the market standards of salary with other companies in order to determine the competitive salary for your employees. You should check for salary range in different positions within your local market and compare the standards with competitor organizations to benchmark the salary range of employees within your company. If you don’t pay as per market standards, then employees will soon think about moving out and it will increase the attrition rate in your company. So, it’s always good to do a survey of salary range in other companies and try to increase your employee salaries on par with market standards.
Find out whether the salary range of employees in your company is competitive with similar positions in other companies of same market, products and size. You can also use online database and web resources in the research.
Determine the Criteria for Salary Increase:
When talking about appraisal or increase in employee salaries, you should decide the various criteria based on which employees should be rated and salary hikes should be given accordingly. Pay hike should be related to accomplishment of individual goals, handling customer queries and aligned with Vision and Mission of the company you can rate your employees based on various performance goals and determine the salary increase percentage accordingly. Suppose you give an average employee a 10% hike, then an outstanding employee should get a minimum 20% hike. Only if there is a considerable difference in salary hikes based on performance, employees will concentrate more on improving their productivity and overall company growth will be high. In addition, this may encourage employee growth in terms of skills and efficiency, as employees will likely take relevant steps to become more valuable employees and earn more money. Among the effective steps your employees will take are taking a skill development course, partnering with a mentor, and managing their time effectively.
Also, you should ensure that pay system matches the work culture of your organization. For employees who are into marketing or sales, the pay increase or bonus should be based purely on sales targets achieved. You can give incentives to employees who are aggressive and get new customers apart from achieving sales targets. Similarly the salary increase for employees within each business unit can be decided based on the business goals and accomplishments for that fiscal year or quarter. You should formulate a HR strategy and have separate payroll team to analyze the salary increase depending on above factors.