Handling appraisal and hikes like a boss
It's appraisal time and the tension is palpable. Employees huddled in groups eagerly discussing their expectations and management scampering about on a thin line between retaining the workforce and peaking attrition. Welcome to the awkward annual appraisal dance-off, where both parties usually tend to leave the dance floor unsatisfied.
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It's quite a pity as appraisal sessions can be used to judge where the company stands in terms of employee satisfaction. As roles expand and more responsibilities are assigned, it is only fair that employees are rewarded accordingly for the hard work. That is why, as an employer, you need to first get comfortable with broaching the topic.
Here are five steps to follow to do a companywide salary raise at a startup.
Talk to your partners and co-founders about your employees' salary-raise. Get answers to questions like - what percentage of raise would be appropriate for someone who has done a good job? This way you'll be in a better position to approach the topic more freely with your employees.
Create a compensation philosophy
Gather information on what rival companies are offering and design your standard for hikes. Talk to your finance team and find out how much you can stretch your budget. Ask yourself if you want to position your company at below, average or above industry standards. When you have the answers to these questions, start by determining who gets what.
Create a framework
Now that you know where you want to position your company, build a framework in the form of a straightforward excel. Decide the variables you want to base your raise on. Of course, there is no one-size-fits-all formula that can be employed here. The raise you offer can be dependent on variables like loyalty, level of responsibility, average industry increase and personal input.
Once you have your framework in place, make sure that the rich don't get richer and poor don't get poorer. You need to be fair to all your employees, no matter how long they've worked with you or what position they are at. You don't want people to stay at your company for the money, but you also don't want to lose good talent because of it.
Execute the increments
Besides the actual per cent, how you inform each employee's their hike is also important. Hold a personal meeting with each employee and explain to them why and how you narrowed up on the figure. Start by explaining your compensation framework, the different variables and the weight each variable carries. End the meeting by revealing the number and be willing to provide some more information to employees who ask for it.
Don't allow ego to keep you from acknowledging your mistakes if an employee points them out to you. Remember, rewarding good people is always cheaper than hiring new ones.