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The subject of pay and wages has been a hot topic in recent years, with many discussions around fair pay and the gender pay gap. Subsequently, it’s more important than ever before that organisations carry out regular and fair pay reviews to ensure their staff are paid appropriately. Not only does this help ensure a happy workforce, but it contributes greatly to the recruitment and retention of employees. If your company is planning to carry out a pay review, we have outlined factors to consider, looking at contracts, fairness and sufficient training.

Planning Stage

Planning is a vital part of the pay review process, ensuring you are prepared for any potential hurdles that could occur, for instance, dealing with union contracts and reviewing available budgets so not to overpromise employees a wage that cannot be delivered.

Outline the pay review process

Before starting the pay review process, HR departments or administrators in charge of the pay review should review the current process in place. This includes the length of time estimated for the pay review and proposed budgeted spend. You will also want to consider how the pay review will be carried out, including whether to use a software platform such as Paydata’s PayReview in order to maximize efficiencies. By agreeing on objectives prior to starting the pay review process, it keeps everyone involved in the pay review process in line and gives them a goal to work towards.

Training for individuals involved in the pay review process

Whether pay review decisions and/or employee feedback is given by managers or supervisors, individuals need to have sufficient training in the processes required for the pay review. Proper training results in managers that are confidently able to make decisions and provide impartial staff feedback for those that are performing well or those that are underperforming in their role.

Double check contract terms

If your employees are part of a union, there may be union clauses in place that affect your upcoming pay review. Should your business recognise a union that your employees are a part of, check the union terms for mentions of “pay review” and/or “pay freeze”.

Confirm job descriptions

A job title isn’t sufficient for cross-comparing industry wages, and before exploring an industry-specific salary survey it is good practice to detail your employee's job descriptions exactly in order to compare like for like. Two assistant managers from different firms may be paid vastly differently on paper, but in reality, this could be a combination of vastly different employee responsibilities in addition to a difference in the size of firm and location of the business.

Remember, when comparing your internal job roles to those in an industry salary survey, you want to be comparing like for like in both job description and role responsibilities; comparing only titles will lead to incorrect market rates and potentially leave you over or underpaying employees.

Obtain market pay data

A pay market survey is necessary to gather data to benchmark internal salaries against the market. Such survey data is best sourced from impartial data providers, such as Paydata, who collect and compare wages, bonuses and benefits from employers within the same sector. Several different surveys may be required to gather necessary information across multiple categories; it’s important to keep this in mind when allowing for the resources and budget required for salary surveys.

Agree to a budget and deadline

With the necessary data gathered from industry salary surveys and internal records, budgets can be agreed for working to. This can be broken down into team reward budgets, responsibility pay brackets and a set budget for the overall pay review. In addition, a final submission date should be distributed to managers to ensure all necessary employee reviews are returned in good time. Avoid general phrases like “on completion” or “ASAP” and instead set a hard deadline of a specific date to avoid late submissions delaying the pay review process.

Performance Review

With the planning phase complete and managers/line managers trained accordingly, it’s time to start carrying out the pay review process and actively gathering staff reviews so to make remuneration decisions in time for the pay review deadline.

Issue self-evaluation forms

Looking at what your employees believe of their performance and salary expectations can be extremely useful for a pay review, before requesting manager reviews, issue a series of self-evaluation forms to your employees with a set deadline. At this time, you can ensure that all employees have been made aware of the upcoming pay review and have been given sufficient time to raise any grievances.

Target transparency

Transparency throughout the pay review process is key, and all employees should be made aware that a pay review is taking place. Any responsibilities they have that haven’t officially been recorded should be advised, either through direct communication or the employee self-evaluation forms. Ensure employees are advised, preferably in writing, exactly what of their role is to be evaluated for the pay review, for instance, their responsibilities and the quality to which they perform their role. In addition, let employees know what will not affect their pay review, for example, working hours, sickness and care responsibilities, where applicable.

Establishing an employee rating system

To formally give employee performance reviews, a system must in place for managers or line-managers to efficiently record necessary information. For example, detail exactly how or why an employee should be considered for a pay review by offering a category score across several areas, i.e. customer service, job effort, results, response; where employees must reach a target of at least “good” across every area to be considered for a review, whereas an individual who receives “outstanding” in each category is automatically eligible for a pay review.

Alternatively, performance reviews could consider if employees provide a higher level of performance than their responsibilities denote, going above and beyond for other members of their team and carrying out roles that while not expected, bring more value to the workforce. If managers need necessary examples, supply a who and why break down for the pay review process, providing areas for managers to assess including;

  • What does the individual job description require of the employee?
  • Are they working within the expectations set by the pay review process review?
  • Does the way they conduct themselves align with the company values?
  • Have they overcome any difficulties or issues in their role?
  • Are they meeting personal or team targets and goals?

Examples of rewarded behaviour include;

  • Going above and beyond their job role expectations
  • Assisting other team members during high levels of activity or during peak periods
  • Improving existing services or procedures in the workplace
  • Consistently providing excellent levels of customer service
  • Continuously receiving positive feedback from staff, managers or customers
  • Tracking and exceeding targets and goals, either personal, team or company-wide
  • Teaching and guiding other team members who are struggling
  • Applying themselves and seeking out extra training or guidance so to provide a higher level of experience in their role or take on increased responsibility

Double check employee contracts

Although contracts largely tend to contain the same information and clauses, it’s important to double check contracts of some employees that may have negotiated on their confirmation to join the company. Check that there are no clauses that could potentially affect the pay review process, for example, if there is an employee who has an agreement for a pay freeze or pre-agreed percentage pay increase.

Ensuring pay reviews are fair and non-discriminatory

When employee performance reviews have been submitted, the information must be vetted to ensure the process carried out is fair without risk of discrimination. This includes ensuring employees have been well informed during the pay review process and there is no risk of an employee feeling discouraged or discriminated against. By keeping the process of performance reviews transparent with open communication between managers and their teams encouraged, no individual should feel unfairly treated and they will have clear expectations on how they can further improve themselves for the next pay review.

Accounting for exclusions

Exceptions or exclusions are often made for new starters to a team to ensure that long-standing employees don’t feel unfairly treated during the pay review process; check that any pay awards that are intended to be rewarded follow the exclusionary procedure. Additionally, exclusions may be in place for employees who have entered the disciplinary process during the pay review procedure.

Final review check

Before signing off on employee feedback and pay reviews, companies should perform a final review of all the data gathered, managerial notes and the reviews to ensure feedback given is fair and non-discriminatory and that all employee factors have been taken into consideration. Make sure to check suggested pay reviews fall within the competitive market to contribute to the retention of current high-performing staff.

Finalise, Inform and Review

The final part of any pay review is around communicating pay review decisions and reviewing the pay review process as a whole.

Notify and implementation date

Staff should be notified of the outcome of their pay review in writing, either through mail or email. Necessary details should include the new salary amount, what they are being rewarded a pay review for and the date their new salary will be paid from or alternatively, where they need to improve to be considered for a pay review in the future. At this time, you might want to ask employees if they feel the process has been transparent and fair and ensure they remained informed during the pay review procedure. Consider any dissatisfactions employees had with the pay review and where necessary, use these to make changes for any future reviews.

Reviewing the pay review process

HR and management need to evaluate the pay review process for the future, to ensure all staff were kept informed and believe the agreed reviews were fair. At this time, solutions can be considered for improving the review process next time, whether this is using a different system for accepting managerial feedback or finding a comprehensive all-in-one system which can make the pay review run smoother.

In Conclusion

Pay reviews are a necessary procedure for companies wishing to remain competitive and have the best opportunities available in order to retain hard-working and dedicated staff members across all levels, rather than solely executive or managerial. Pay reviews can improve the workforce, motivating staff to remain productive and helping staff that underperform to reach goals and targets in the future to be considered for an increased salary. While there is an internal resource required to carry out a pay review, companies that fall behind may find they see an increase in employee turnover as their staff chase fairer wages, so it’s advantageous for organisations to implement pay reviews, ideally on an annual basis.

If you have any questions about the pay review process, would like assistance with your pay review or would like access to pay market data, get in touch with our expert and friendly team today on 01733 391377 or via our online contact form.

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