Unlike the wage stagnation that marked the previous few years, 2016 looks to be a good one for employee salaries. Numerous institutions from the ERI Economic Research Institute to consulting firms such as the Korn Ferry Hay Group project real wages – salaries adjusted for inflation – will increase by 2.7 percent. With that being said, businesses need a thorough and detailed system and budget in place for rewarding employees. Ensure you have a set plan in your employee management system.
Planning for a raise
Performance-based bonuses and promotions are two tried-and-true ways of compensating your top talent. Also, bonuses and promotions that include pay raises can help your company retain employees as the job market and the economy bounce back from the recession. Landing as well as keeping good employees will get harder as the economy improves.
To formulate your bonus and salary raise budget for the year, you'll want to first examine the markets from the previous 12 months. Keep track of movements in the Consumer Price Index, the unemployment rates for both the country and your state as well as any fluctuation in the gross domestic product. Also, keep the current minimum wage in mind along with any mandated increases to pay by contractors or unionized staff members.
Keeping it clear
When coming up with a bonus budget for your staff, make sure your employees understand how to get from point A to B when it comes to receiving a bonus or a promotion. Don't keep them in the dark. You not only want to offer competitive salaries to attract and retain talent, you also want to use bonuses and promotions to reward them and raise morale within the company. Your employees, though, must know what kind of work you expect of them in order to move up the chain of command in your business.
Keep your staff members on track by checking in with each of them on a quarterly basis to go over questions, concerns, their job performance and what they need to do if they want a bonus or raise. Create an office culture of constant learning and development to maintain employee engagement and to keep everyone on the same page.
A good, solid plan for allocating your bonuses will strengthen the relationship between your staff and company and keep every happy.