Annual compensation reviews can be stressful for both managers and employees. The process is often muddled, and it’s common for employees to feel confused about the criteria for receiving a raise in pay. Use these strategies to help make the process more transparent and less painful for both leaders and their team members.
Separate Performance Reviews From Compensation Reviews
When an annual performance review is tied to compensation, it’s difficult to keep employees engaged in meaningful discussion about their work. They are simply waiting to hear what their raise will be. Holding a separate compensation review allows performance reviews to be more productive.
Separating the two also helps create stronger feelings of objectivity. When performance reviews and compensation reviews are muddled together, employees often feel like their raises are based on politics or how well their manager likes (or dislikes) them. A standalone compensation review allows for the objective review of performance metrics and agreed-upon goals.
Conduct Monthly Performance Reviews For Clarity and Consistency
Annual performance reviews are long forgotten two or three months after the fact. Conducting regular check-ins to measure an employee’s performance and progress towards goals helps them to develop a clear understanding of how they are doing and how the company is measuring success. Employees that are not making prescribed progress won’t be surprised if they don’t get a raise, or if their raise is lower than they had hoped.
The key to a successful ongoing review process is to set clear goals and metrics for every area in which employees are evaluated. If soft skills like communication and teamwork are part of the compensation equation, include them in written evaluations alongside core technical competencies of the job. The more information you give employees regarding success measurements, the better.
Commit To Transparency
Employees can often feel entitled to a raise, assuming cost-of-living increases, at a minimum, are required of their employer. It is important to provide transparency to eliminate false hope. If an employee does not receive a raise, if the company is on a salary freeze or if future budgets look tight, keep team members in the loop. Attempting to avoid an uncomfortable conversation by making false promises or promises that cannot be guaranteed can have a negative impact on morale over the long run. When it comes to raises or lack thereof, honesty and transparency are always the best policies.
If you are looking for talented professionals for your human resources department, contact the professional recruiters at Contemporary Staffing Solutions today. Our recruiters can help you develop strategies to build an efficient, effective team.