When you are a manager, review time can be a challenging task. Part of the challenge is not only giving a fair and honest performance review, but a well deserved pay raise. Here are some tips that can help in considering performance merit increase for your staff.
Things You'll Need
- Performance Report
- Senior management guidance and approval
Budget: Find out how much money you have allocated to work with. This is especially challenging if you have more than one staff and you can only work with a certain budget. Keep an open mind when budgeting. Allocating a budget is also based on the overall company's earning the previous year. The increased productivity is met when the employees work harder, so reward accordingly.
Performance Rating: You would need to allocate merit increases that are commensurate to performance. Allocate a higher pay raise to your strong performers. Normally a 3-5% pay raise is acceptable. For your weaker performers who show improvement from the previous year but still needs to improve to be strong performers, you can allocate between 1-2%. For your worst performers you do not have to give them a pay raise to give the message straight to their bottom line so they can make dramatic improvement next year.
Keep your strong performers happy, make sure that they get the raise that they deserve so that they will not leave you for greener pastures.
If you have any left over on your budget after giving the merit increases, try to see if you can use the remaining dollars towards performance bonus for your top performers.
In a big corporation, your allocation would go through a chain of approvals, make sure that you get their approval by documenting why you are giving that amount and provide a copy of the performance review if needed.
Tips & Warnings
- Do not talk about your employees pay raise allocation with other people.
- Do not divulge to your employees about the planned raise you are giving if you haven't received the final approval yet, even if you already got a verbal approval, you need a final written approval to keep your bases covered for there can be last minute changes. Your credibility will be at stake if you are not careful.
What Is a Merit Raise?
Merit raises are pay increases issued by employers based on an employee's performance, usually graded in relation to goals or benchmarks set...
How to Hold a Benefit to Raise Money for Someone
Holding a benefit is a way to help when someone you know is in need of financial assistance due to an unexpected...
How to Announce a Pay Raise
The owner or general manager of business has many responsibilities relating to employees and employee communications. Often it is the role of...
How to Tell an Employee That They Are Not Getting a Raise
It's a truism that just about any manager or business owner will be approached at some point by employees seeking raises. However,...
How to Write a Letter Declining a Salary Increase
Whenever you have to give bad news to an employee, it is important to get the point across clearly and concisely. They...
The Reason to Increase an Employee's Salary
Employers who routinely invest in their employees by giving them incentive bonuses or salary increases stand to make more money in the...
Is It Illegal to Have a Raise Freeze for More Than a Year?
When an employer does not give you a raise for more than a year you technically earn less money than the previous...
Salary Increases & Annual Raises
Companies often award employees salary increases on a yearly basis. These annual raises are meant to help account for the fact that...
How Often Should You Give a Pay Raise to Your Employees
Many companies, particularly small ones, are unsystematic about giving pay raises. They sometimes do it arbitrarily when the company is doing well...