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Reward strategy and design are essential facets of attracting and retaining the best-performing talent within your team.

There are multiple components that make up an effective reward strategy, including financial incentives. Whilst there is no legal obligation for employers to hold salary finance reviews, doing so could go some way to improving loyalty and boosting staff retention. 

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How often should pay be reviewed?

So, how often should you get a pay rise? It is customary for employers to hold performance reviews every six to 12 months. A salary review and a performance review are not the same thing, although they often go hand in hand – particularly in the case of yearly one-to-ones. 

Irrespective of how often employers conduct performance reviews, many employees expect to have a review of salary every year at the bare minimum. This typically correlates with yearly inflationary changes and the rise in the cost of living, but as mentioned, it is not required by law. That being said, those on minimum wage salaries or the national living wage may find that they receive an annual salary review to reflect governmental changes in the minimum amount employers are required to pay by law. 

When is a salary review warranted?

There are multiple occasions that will dictate when a salary review is expected outside of inflation changes, including when a person progresses to a new job role. In the case of promotions or asking an employee to take on more responsibility, they can reasonably expect to have a salary review and a pay increase to follow. 

Another scenario in which employees may expect a pay review is following a notable project or achievement. It could be that a big deal has been closed, a retainer has been increased, or at the end of a particularly busy business season which required extra resources and a show of leadership and initiative. If there has been a job well done, an employee may reasonably expect their pay to be increased. 

Changes in qualifications may also lead employees to expect a salary review. Some employers invest in their employees’ careers and send them on courses to improve their knowledge. Upon the completion of a new course, such as obtaining a master’s degree through work, an employee may then expect their salary to be reviewed. Typically, more qualifications correlate to more responsibility, but this is not always the case. 

Reward strategies aim to keep employees satisfied and morale up, with the hope of producing a more passionate, productive, and loyal team. For this reason, many employees expect to get a pay rise at least once a year when they have shown their loyalty to the company and their role. 

Finally, older employees may expect a pay rise when new members join the team, even if they are joining in the same capacity. This is because many industries are candidate-driven, forcing employers to be competitive in order to attract the best employees to their teams. This often means offering a higher salary, which could well exceed that of existing team members. Paired with the training aspect involved in hiring new employees, this is a time when many employees may expect a slight increase in their pay. 

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How to prepare for a salary review

It is not just about bringing up the notion of salary reviews; employers need to know how to give an employee a salary review. Preparing for a salary review requires research to ascertain whether one is warranted. This involves any number of things, including reviewing work the employee has recently completed and looking to see if their duties have changed since their last review. This can form the basis of a performance review, hence why the two are often delivered at the same time. Many employees find it difficult to ask for salary increases, which can lead to dissatisfaction, so it is the duty of the employer to initiate this conversation if they want to hold onto their top employees.

Another valuable tool in the pay review process is salary benchmarking. Paydata offers a comprehensive salary benchmarking service where we assess data collected from employers across a number of sectors to determine what the average salary and benefits package looks like for specific job roles. Looking at this data will allow you to see if your employees could earn a higher amount for the same role at a different company. If you want to retain your employees, you need to be competitive, making salary reviews all the more important. 

On a personal level, you can seek to identify any life changes that the employee has undergone which might influence their pay expectations, such as having children. Not all employees will expect a pay review upon starting a family, but it could be something you factor in when preparing for one. 

Finally, you need to review your employee’s contract. As mentioned, some terms of employment stipulate that pay must be reviewed within a specific timeframe. This does not mean pay needs to be increased, but it must be reviewed. 

Prepare for a pay review with Paydata

Paydata is on hand to help with the salary review process should you need it. If you would like advice on reward strategy and design, salary benchmarking, or pay review and analysis, we can help. Please get in touch to find out more. 

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