Great Workers Deserve Great Pay. But How Do You Approach Salary Negotiations?

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HR Insights for ProfessionalsThe latest thought leadership for HR pros

Wednesday, July 14, 2021

Salary and benefits are key to staff satisfaction and retention. Here are some steps you can take to ensure you're approaching pay negotiations correctly.

Article 4 Minutes
Great Workers Deserve Great Pay. But How Do You Approach Salary Negotiations?

Many elements have to come together for you to deliver a high-quality employee experience that will help you attract talented job candidates and retain your most valuable staff.

For many businesses and workers, the most important factor of all is pay. According to the latest employer brand research by global recruitment and HR consulting firm Randstad, attractive salary and benefits are the most important reasons to choose an employer for 57% of employees around the world, followed by:

  • Work-life balance (45%)
  • Job security (44%)
  • A pleasant work atmosphere (42%)
  • Opportunities for career progression (35%)
  • Financial health of the organization (34%)

It's safe to say that pay will always be an important consideration for workers, so the HR department should have a clear plan in mind when it comes to negotiating salaries and pay rises.

When is the right time to increase pay?

The answer to this question will depend on your company and the position it's currently in, particularly with regards to your current financial situation. For many employers, the subject of pay comes up in annual staff performance reviews, but this doesn't necessarily mean you have to stick to a rigid 12-month schedule for negotiating workers' salaries.

You can link remuneration directly to employee performance by discussing the possibility of higher pay for teams or individuals who’ve made a direct contribution to recent success for the business.

If you've just landed a major new client thanks to excellent collaboration between your marketing and sales departments, for example, starting conversations about raising salaries is a good way to reward those involved. You could also consider raising wages for people who’ve shown dedication to the business and been willing to take on new responsibilities, even if it required them to step out of their comfort zone.

Showing your appreciation for valuable workers in this way increases the likelihood they'll stay with you and continue to deliver great results in the future.

If it's been more than a year since you last discussed pay with individual employees, you should consider broaching the subject as soon as possible. Even if the company isn't in a position to raise salaries right now, it's important to be transparent with your staff and to show your appreciation for their efforts.

Another crucial factor to bear in mind when you're planning salary negotiations is what the data is telling you.

Be ready with the right data

Having access to up-to-date, relevant data on the labor market and current pay trends will help you go into every salary negotiation fully prepared and informed.

One thing you should know is how companies comparable to yours - those of a similar size and in the same industry, for example - are remunerating their employees, how frequently they're raising pay and by how much. Armed with this information, you can make sure you're paying your people fairly and not putting yourself at risk of losing top talent to competitors.

As well as looking externally to gauge trends in the jobs market and the wider industry, you should be aware of how your business is performing and what sort of position it's in to be offering salary increases. This will mean talking to the finance department about your current fiscal health and potentially presenting a case to senior management about why raising pay for certain staff is justified.

It's also important to collect data about teams and individual employees, with a focus on answering questions such as:

  • How much do your workers think they should be paid?
  • What sort of a raise are most people hoping for in their next salary review?
  • Does current performance at an individual and team level justify an increase in pay?
  • Is it fair to increase salaries for some workers but not for others on the same team?

Preparing for pay rises

Once you've considered all the relevant factors and decided how you want to proceed with salary increases - whether you'll be awarding them or not - you need to plan how to take the next steps.

Think carefully about how you'll communicate your decisions to employees. If you're not able to increase pay for some or even all employees, make sure you're ready to explain why this is the case.

You might also want to think about other ways you can reward staff and thank them for their hard work that don't involve increasing salaries.

It's also important to be completely transparent about your decision-making process and why some people may have received raises while others haven't. Give anyone who has questions or issues they would like to discuss the opportunity to come to you directly for a conversation.

As well as making sure the salary review process is as healthy and productive as possible, this focus on openness and communication will help you build a positive workplace culture, which is crucial if you want to retain your most valued employees for as long as possible.

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