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What is salary review? Tips to help businesses retain employees

admin March 16, 2023

Currently, most businesses apply the salary review process as a measure to bring peace of mind about the working environment and stable income level of employees who are attached to the business. To build a suitable salary review process.

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What is salary review?

Salary review is the process by which an enterprise negotiates and considers to determine whether an employee's salary fairly and accurately reflects the position, work productivity and value they bring to the business.

This process is carried out periodically to ensure that the company's compensation strategy is appropriate to retain talent and attract the best talent.

At the same time, an effective salary review process will help businesses consider the value and development potential of each employee compared to their position in the market, thereby planning an appropriate budget and building improvement strategies. improve work productivity.

What is salary review? Tips to help businesses retain employees

The salary review process depends on the following factors:

The position or title of the personnel.

Employee performance.

Value of employees relative to the market.

Fits the fixed budget of the business.

When is the right time to review salary?

Most businesses usually conduct periodic salary reviews or based on salary increase suggestions from employees. Usually, the salary review period is half a year or 1 year. However, time still depends on many practical factors such as revenue situation and revenue improvement rate suitable for salary review. Employees will be willing to accept a periodical salary review period of 1 year if the income level and the remuneration they receive are not too different from those of employees in other enterprises.

Employees can also proactively propose a salary review if the capacity and value they bring to the business are not worthy of the current salary. However, when proposing an employee salary increase, it is necessary to carefully negotiate and negotiate skillfully with the enterprise to ensure a balance of interests for both parties.

The meaning of the salary review process for businesses

Proactively plan appropriate training and development of personnel

The salary review process allows businesses to restructure their budgets and plan appropriate training for staff development. If an enterprise wants to change its personnel structure, it must reconsider its salary structure, so the salary review process can bring many benefits. Therefore, this process will help businesses recognize, capture and improve appropriate HR strategies.

Retaining and recruiting talent

Implementing the salary review process allows businesses to evaluate the capacity and work productivity of employees to make decisions about salary increase, promotion, salary reduction, etc., and make appropriate plans. At the same time, this process also helps businesses know how to build job descriptions of members in each department, department, group, ... and offer the most appropriate salary and bonus for each position and position.

Businesses will use this process to offer competitive salaries compared to the same market to attract talent. Conducting a salary review helps businesses research and understand industry trends, detect, compare and make necessary adjustments compared to the market, ensuring that the salary offered by the enterprise remains competitive.

What is salary review? Tips to help businesses retain employees

Improve employee productivity

The right salary review process will help businesses encourage productivity and motivate employees to actively contribute to the development of the business. Thanks to this process, the business will identify, reward and promote high-performing employees and encourage other employees to perform better.

Balance the expenses paid for personnel

Salary review helps businesses save costs by allowing employers to check if the salary paid to employees is too high and make necessary cuts. This helps businesses identify truly productive, productive people who contribute to the growth of the business and ensure that they are properly compensated.

Ensure salary standards are consistent with the law

Conducting salary reviews helps businesses align with salary standards based on legal guidelines, helping businesses operate within the scope of labor laws.

Encourage effective communication

During the salary review process, usually, managers will directly meet with employees in private meetings to exchange, feedback and answer questions or concerns about salary and bonus issues.

The salary review process helps businesses retain talent effectively

Here are the steps to conduct a salary review that is effective for businesses:

Check contract terms

Before conducting a salary review, businesses need to carefully check the terms of the employee's labor contract to confirm whether the employee is agreed to a periodical salary increase.

Consider your business budget

Review salary for employees must also be based on the budget and level of financial spending of the business. While reviewing salary, consider the financial status and financial projections for the next period in order to conduct an appropriate salary review policy.

Consider the goals of a salary review

Review and learn the evaluation goals for each employee so that managers can easily make decision criteria, avoiding any negativity during the salary review process. Before conducting a salary review, determine the goals that the business has achieved such as performance-based salary increases to improve work productivity or seniority-based to enhance long-term commitment to the business, etc. However, the focus must be on ensuring the competitiveness of employees' salaries and determining effective strategies for using employees.

Internal assessment

Enterprises need to ensure an internal assessment first by looking at the current salary of employees to capture, analyze, evaluate and correct the salary gap in the business. Depending on the size of the business, the HR department will be responsible for discussing the appropriate salary review strategy.

At the same time, leaders and HR managers should encourage employees to give feedback. Enterprises need to build self-assessment forms or links, information security software for employees to regularly share ideas and provide valuable inside information to the business. Moreover, employee participation in the salary review process shows that businesses appreciate the role of employees before making a final decision.

Confirm job description

Review each employee's job description to see how well they are performing in their role. Doing this also helps you understand the achievements and progress that team members have made. This allows you to see if employees make a positive contribution beyond their job description. When you review their job description, you can accurately gauge the employee's productivity.

Real market research

Before conducting a salary review, businesses need to research the market to ensure that the salary they pay to employees is in line with the trend. This is also a way to help businesses have a basis for a realistic salary review that does not make employees dissatisfied when compared to other businesses.

A periodic salary review process ensures that employees' salaries are paid in line with the value they bring to the business, while encouraging them to be more productive and productive.

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