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Don't make these 5 mistakes when it comes to salaries and wages or else your business will regret it.

by , 25 November 2015
When considering wages and salaries for employees, a lot of employers complicate things for themselves by making various mistakes.

Don't let this happen to you! Know these 5 mistakes that employers make when negotiating employee salaries and wages:

Mistake#1: Not clarifying the salary review process with new employees

Many companies who employ new employees on probation, agree to a salary review process once they've complete their probation period.

But this can be a problem if:

·        Your administrative systems don't prompt you to review the salary;
·        The review doesn't result in an increase in salary; and/or
·         The review period takes the employee too close to the annual review and you're tempted to extend it.

All this can lead to your employee being disappointed, which in turn can lead to her morale decreasing.

Instead, give her a slightly higher market-related salary if you hire her in the quarter before your salary review. Let her know that you'll review her salary the following year, and not 2 or 3 months later.

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Mistake#2: Don't pay your employees much more than the market-related salary

If your employees earn above marker-related salaries, then your business might suffer later down the line.

Employees who earn much more than the market-related salary might not have many other options if they want to find another job.

Even with top performers, you should limit their increases according to a sustainable level, otherwise you'll find yourself between a rock and a hard place later on.

Mistake#3: Job titles that don't reflect job responsibilities

Don't give an employee a job title that reflects more than his actual responsibilities.

This has the potential to make him believe he's underpaid, which can  lead to a decrease in trust.

Mistake#4: Don't allow your salaries to drop below market standards

If you employ more than one person in the same role, ensure they earn the same salaries, unless, of course, you can provide justifiable reasons for the discrepancy, or you run the risk of going against the law.

At the end of the day, follow a policy of 'equal work for equal pay'.

Mistake#5: Not dealing with a staff member who's unhappy with his increase

Keep an open mind and make informed decisions.

Remember,  it's easy for a skilled employee to find work elsewhere for a pay he's happy with. 
*Do you want to learn more on salaries, wage negotiations and wage increases? Then get your hands on the Practical Guide to Human Resources Management today.

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