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Three Ways to Address Salary Issues

August 31, 2016 - Posted to Job Interview

Content three ways to address salary issues

Running a business means having to face one of the most controversial elements, that is salary issues, at one point or even more. The usual culprits are the lack of a standard salary grade and the speculation that one employee is earning more than the other. Salary issues do not have to be the bane of both employer and employee’s lives and cause of upset to the team because these issues can be resolved or even prevented from the very start. Here are three ways in which salary issues may be addressed:

  1. Develop a standard salary grade. Small business or start-ups often make the mistake of making salary decisions case by case. Arbitrariness and the presumption of inequality are often the causes for alarm of applicants and employees alike. To avoid it, develop a standard salary grade. That is, identify all possible jobs necessary to run the business and define each one by outlining their job requirements – from qualifications of applicants to all the tasks they will be required to fulfill once they get employed. Of course, each item should have a corresponding salary grade from entry level to the annual increase. The annual increase can be subject to year-end performance reports or it can be granted automatically once an employee finishes a year in the business. Finally, make sure that prospective employees or applicants are well aware of this standard salary grade by incorporating it to the employment contract so this can be made a basis in case of future disputes.

  2. Impose a regular performance report. Every job in the business should have key performance indicators to be objective about the employees’ performance reports. After all, these reports will be the basis of whether these employees will be regularized (in case of probationary employees) or deserve an increase in their salary. Without these performance indicators, reviews can be deemed as discretionary, unfair, or even outright groundless. It is enough to have an annual formal review or report of the employees’ performances but it could help to have monthly or quarterly informal feedbacks so workers can track their progress or lack thereof. These monthly or quarterly feedback can justify the results of the year-end report especially because they have had ample time to improve their performance, as the case may be. These reviews can even be the basis of firing employees when they end up performing very poorly.

  3. Inform Employees of the Performance and Compensation System. Once the performance and compensation system of the employees has been developed and completed, make sure to communicate it to all departments and employees (for current workforce). A formal meeting can even be set up to discuss the system where the employees can also give their suggestions and feedbacks. Employers should be open about it and even consider incorporating these feedbacks to the system. After all, happy employees are shown to be directly proportional to profit increase. In this formal meeting, make sure to lay down the details of job hierarchy, job qualifications of each item, and the key performance indicators or criteria for each job level. It could also help to provide them with hard copies of this complete performance and compensation system for future references. Once this is done, it could finally go into effect and, hopefully, resolve current issues and prevent future ones.