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Increasing salaries for your employees? Avoid these four pitfalls

by , 04 July 2013
Wage negotiations in the mining sector officially commence next Thursday. While the approach to salary and wage increases differs across companies, each mine will consider factors like affordability and salary review processes before deciding on an appropriate increase or payment level. The same applies to you if you're considering salary increases. To ensure you do this right, here are some logical steps you can follow to avoid these four pitfalls that creep up during salary negotiations.

When increasing salaries, some employers fall into the trap of giving their employees job titles that don't reflect job responsibilities. The problem with this is that your employee may believe he's underpaid if he checks his salary against salary information elsewhere.

This is just one of the many pitfalls you need to avoid when it comes to salary increases as it may become a problem for you later on.

Find out what the other errors are so you can be mindful of them.

Four mistakes to avoid when increasing salaries at your workplace

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

According to the Practical Guide to Human Resources Management, many companies employ new staff on probation and agree to a salary review after they've successfully completed their probation. This is problematic if:

  • Your administrative systems don't prompt you to review the salary.
  • The review doesn't result in an increase in salary as expected.

These problems mean your employee will be disappointed and his morale affected.

#2: Paying your employees much more than the market-related salary

Your continued competitiveness is threatened if your employees earn above market-related salaries. Employees who earn much more than a market related salary don't have many options if they need to find another job.

If they're not happy, or feel there are no prospects, they can become a very negative presence in your organisation. If they're retrenched or dismissed, it'll also be difficult for them to find another position.

#3: Letting your salaries drop below the market standard

Don't give your employee a market-related increase each year if he's earning less than the person you've just recruited to do the same work. Make the correction! Morale will be negatively affected if your employee realises the discrepancy.

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

Keep an open mind, do your research and make an informed decision. It's easy for a skilled employee to find a position that'll pay him what he wants. You may find that you can't replace him for the salary he's currently earning.

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