Every CEO knows the importance of attracting and retaining employees. One of the major parts of doing this is to review the compensation that you’re paying to your present employees and giving them raises according to the business/market demands.
But as a manager, the review time can be pretty challenging. On one hand you need to face the challenge of offering an honest and fair performance review. And on the other, you also have to give a “well deserved” pay raise.
This balancing act can be tough but it’s important because it greatly contributes to your commitment towards employee appreciation It’s what ultimately matters. Given below are a few tips to help you understand how you should give a pay raise the right way…
First and foremost, you need to be clear on how much money has been allocated for you to work with. However, this can be challenging if you’ve got a bigger staff and you have budget constraints. So see to it that you have an open mind when you’re budgeting.
Remember that allocating a budget is not only this, but it also depends on your company’s overall earnings last year. This increased productivity that you experienced was only met because some of your employees worked harder, and they deserve to be recognized and rewarded accordingly.
2. Performance Rating
Being a manager, you should realize the importance of performance rating, and allocating “merit increases” in proportion to performance. In other words, you should allocate a bigger pay raise for your stronger performers (usually a 3 percent to 5 percent pay rate is right).
As for your weaker performers, who have shown a considerable amount of improvement compared to the previous year, but still need to improve, you can allocate a pay raise between 1 percent to 2 percent.
3. Top Performers
Without forgetting the basics, you should focus on honoring your top performers in the best possible way. Make sure you keep them happy and give them a raise they truly deserve so that they stick to your company. It’s a way of showing that you appreciate great work.
In case you have a leftover of your budget, even after giving out the merit increases, you can use this remaining amount as a performance bonus for each of your top performer. This will instill more confidence in them and motivate them to perform better.
Every company wants to hire the best talent, and retain it. The employees that are so loyally working for your firm are an important part of your success, so follow the tips that we discussed above and give pay raises that they deserve.