How it works

Many variables can impact salary adjustments, so in the end, they can come in diverse forms and timelines. There are jurisdictions where salary adjustments happen two or more times per year, driven by the jurisdiction’s typical market movement. In the case of public U.S. organizations that close their fiscal year on December 31, their employees know that some increase will come sometime in the subsequent four months based upon their company’s business results. At the same time, those employees have also come to expect that an underperforming year could imply a delayed timeline for salary adjustments, a reduction, or potential elimination of salary increases for that fiscal year. Therefore, every manager should understand all relevant implications and what employees expect regarding compensation management.

looks_oneDetermine the pay review approach for the organization

Most (international) jurisdictions would revise their minimum wage annually—although it has been 15 years since the U.S. last increased its federal minimum wage. Individual states and localities will raise theirs periodically, and collective bargaining agreements (CBA) impact the minimum pay rates in unionized organizations. Over the years, organizations have worked with one of a variety of the approaches listed below to review the salaries of their populations not covered by a CBA: