Here’s some things leaders are doing this year when it comes to salary reviews… it’s tricky and you should probably know.

Regardless of whether your business is doing well or not doing so well, certainty is not something anyone can count on for 2021.  Salary reviews this year are going to be tricky.  Here are a couple of things  some leaders are doing a little differently right now; in case you’re interested:

  • Many are taking the path of least resistance by deferring salary reviews until the end of Q1 2021 – just to give them a bit of breathing space.   If your company is under pressure people will understand.  If you do go down this path make sure you have a good plan as to what will trigger salary reviews and what you are going to do at the end of 2021 if you do move forward with a review in Q1.  Don’t go down this path until you’ve it well thought out and have genuine, realistic triggers in place.  Your people will give you the benefit of the doubt but if they feel they are being taken advantage of you’ll lose hearts and minds… things not so easily bought back.
  • Using hard salary benchmarking facts from the external market to inform their conversations – nobody should walk into a salary review without this base covered.  Salary inflation has been negligible in most areas in 2020 – that’s hard to argue with.
  • Premising the conversation with people around the value they create rather than the level of experience they have (beware the trap of confusing years of experience with value creation).  If the job someone is doing today is creating more value for the business than the job they were doing yesterday, then there is a conversation to be had.  If not then your starting point is the base rate of inflation (approx 0.4% in 2020) – value creation does not have a linear relationship with years of experience… it’s time people started to recognise that.
  • Where an increase is justified but company performance uncertain, some are tying increased compensation with company performance through a “company performance” payment separate to base salary. “Expecting a 10% increase that’s warranted?  OK, so your base remains the same but you will be paid 2.5% of your base salary quarterly in 2021 assuming the company hits an acceptable level of performance during each quarter.  When we come to the end of  2021 we can talk again using 2019 salary +5% as the starting point. “ This is only one example of how to apply this logic – there are many others.
  • Asking, ahead of time, who in the company might consider more flexibility (annual leave, reduced working week etc…) in exchange for monetary compensation – might free up a little more budget for you to use where you need it most.  Flexibility is currency these days.  Make sure you use it wisely.

These are just some ideas – in Barden we have many more.    Just drop us a line if we can help.  That’s what we’re here for.



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