The Important Role of Salary Evaluation for Company Success

Most employees would normally expect a raise after working for a certain period of time. Employees who are able to improve their performance consistently will expect to get a salary commensurate with their hard work and level of responsibility.

Employers can offer competitive compensation to maintain employee retention rates. For this reason, it is important to carry out periodic evaluations to ensure employees are properly compensated, especially if the skills required are specific.

The Importance of Salary Evaluation for Employees

Evaluating the salary compensation given to employees can have a positive impact. Give a reasonable raise if your employee meets the following criteria.

1. Exceeding the standards the company expects of its position
2. Loyal to the company, for example, having worked for a certain period of time
3. Demonstrate good professional development
4. Have the ability to produce high quality work
5. Able to drive sales and revenue for the company
6. Have unique skills and talents for business interests
7. Demonstrate a good attitude in communication
8. Responsible for the work given by the company
9. Actively take the initiative even though not a decision maker
10. Employee intends to leave the company (resign)

The Effect of Salary Evaluation on Company Success

Changes in the salary value given to an employee are not only made based on experience, but also changes in market value in the industry. The increasing adaptation of new technology has even had an impact on the formation of new professions.

Many jobs require a wider range of skills that require a higher level of compensation. Employees who have special skills such as automation, artificial intelligence, and cloud systems will be even more valuable because they provide efficiency to the continuity of business processes.

These developments are a response to technological changes that can have a direct impact on operational activities and business success. Carrying out periodic evaluations and providing appropriate compensation shows the important role of employees with special skills to contribute to the company.

How to Determine the Appropriate Salary After the Evaluation Process

As time goes on, keep in mind that the tasks employees perform for the same position also evolve. It is important to assign appropriate compensation within a certain timeframe to a role. Here's how to determine the appropriate salary through the salary evaluation process.

1. Be transparent about the company's budget

When it comes to negotiating a raise, be honest about what the company can offer employees. If the business budget only allows for a 3% increase, disclose that information in a face-to-face meeting with the employee concerned.

It is better for employees to understand that you are doing your best to compensate them accordingly. Employees can also feel satisfaction when they know that the salary increase received is a value that is in accordance with the company's situation.

2. Offer a bonus instead of a basic salary increase

One practice that can save a company's budget in the long run is to offer bonus opportunities instead of a base salary increase. Companies may base bonuses on performance, experience or other factors.

Offering regular bonuses can increase employee motivation. It offers instant gratification and can be an alternative way to reward productivity and success at work.

3. Taking lessons from business competitors

Keeping an eye on what competitors are doing is a good way to do business. This includes the type of salary given to employees, the intensity of the salary increase offered, and the budgeted amount for the average salary increase. This can help you compete for new hires and negotiate more effectively with your current employees.

4. Keep the increases consistent

Being fair and equal when distributing pay raises is an important part of employee compensation. Giving higher pay raises to higher paid employees or allowing bias can sway decisions and result in friction, conflict and dissatisfaction among employees.

5. Set clear criteria

Setting guidelines for determining pay raises can help reduce the influence of personal bias. Through this, you can ensure that management has the same criteria for evaluating employees based on the salary compensation they receive.

As an employer, you have the ability to give or withhold a raise to employees. Before starting to give each employee a raise, calculate the number first. Make sure that the company is in a financial situation that can provide a raise of reasonable value.