How To Deal With Salary Negotiations.

Peninsula Team

March 12 2010

Salary concerns go to the heart of any employment relationship. Your employees want to know that you recognise their contributions and that you value them. If your employee believes that they are being paid less than they should receive, either generally or in comparison to a colleague, then they will be de-motivated. Employees who feel undervalued are also likely to start looking for work elsewhere.

As an employer, you are trying to balance competing demands. You want to keep your employees happy but you also want to reduce costs wherever possible. You want to ensure employee retention to avoid the costs of recruitment as well as the risks of litigation. In order to resolve this you need to maintain a clear, transparent system for setting and increasing salaries so that you reward those that deserve it without facing arguments in respect of equal pay.

Your employees, on the other hand, are interested in their own situation. They will have no objection to being paid more than their colleagues, generally believing that they deserve to earn more, and so they will try to persuade you that they should be the exception to your rules.

If an employee approaches you about increasing their salary then the first thing you need to do is listen to what they have to say. See if your employee puts forward a good argument as to why their salary should be reviewed and increased at this time or if the review should wait until the set date for reviewing all salaries.

When you review an employees salary you need to be sure that you are treating them and their colleagues fairly. You should have clear, transparent salary scales for different roles and you should make sure that those scales are comparable across different departments. Consider an individuals position within those salary scales.

Do they have any skills or qualifications that havent been taken into account which would justify an increase?

When employees have different salaries for carrying out the same or similar job there is always the danger of an equal pay complaint. It is, therefore, important that you can clearly demonstrate the reason for any differences in pay. Be sure you know the difference between the salary for a role and a salary adjusted through incremental increments when you are carrying out comparisons.

Remember that instead of increasing salary you always have the option to recognise hard work by giving a discretionary bonus. This has the advantage of retaining the salary level while rewarding specific performance. This sends the message that you will reward people who put in the extra effort which is often lost if salary reviews are the result of across the board decisions.

Suggested Resources