Game Plan for Best Salary Review

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‘Appraisal Time’ can be good for few and bad for others, especially in this economy recovery time. Performance reviews normally involve increased salary anticipations, and that’s a process you must handle carefully.

Low expectations may result into demotivated workforce. High expectations, on the other hand, may set the stage for dissatisfaction. As you work to retain your top talent and keep workforce motivated and engaged, your salary reviews process must be appropriate. Let’s discuss this with example:

Scenario 1

Angelina is a new hire. She came on board less than a year ago, getting less pay than she wanted for the assurance of raises as she came up to speed. She achieved all her goals, but didn’t go beyond them. When you tell her that she will be getting a two- three percent raise, you realized she was expecting at least five. She was demotivated which affected her performance directly.

Scenario 2

John is a team leader who is outstanding at leading a small team. His projects are done right at the first time and usually come in under budget. He is keen to move up, but there are no openings. When you tell him that he is getting a seven percent increment but no promotion, he sulks and resigns. “

In both scenarios employee was highly demotivated which results into low performance and exit from organization.  All this because salary review process was not planned properly. So, salary reviews process must be well planned and resourced and must not be left to the last minute.

Keep in mind Do’s and be careful about Don't


  • Be fair
  • Have one-to-one discussion with an employee
  • Define the salary hike range
  • Evaluate each and every aspect


  • No biasness
  • Do not wait for the next appraisal cycle, talk to the employee
  • Finalize the increase only after review meeting
  • Do not give false direction to employee

Approaches which makes salary review process easy

Here are few approaches which are valuable for managers to review salaries:

Consistent Communication

Do not forget to appreciate your employees timely. Make them comfortable as they hesitate talking about salary and indulge in activities. Have frequent conversation with an employee over the increments and goals, let’s you know the mindset of an employee that what they are expecting if they meet their target or not. Also, allow them to judge themselves by fitting them into your shoe role, evaluating with the fairer decision.

Self-evaluation form can help both the ways. It gives employee a chance to evaluate where they stand and how much competencies they have fulfilled with their additional task, if any.

Managing Employee Expectations

Before sealing the envelope, have a discussion with an employee. Define the agenda, generate the performance measure matrix and scale by assessing the objectives and goals defined earlier if have been achieved.

Categorize them under rating system defined as Unsatisfactory, Below average, Satisfactory, Good, Excellent and Exceptional. If employee lies under unsatisfactory/below average, at initial stage keep that employee under Performance Improvement Plan (PIP) giving the chance to improve and grow.

At times, review meeting can be emotion overloaded, managers need to be equipped enough with the economic context and take decision that is ‘better for all’ not ‘fit for all’.

If there is some negative feedback, it should be conveyed to the employee before review giving them a chance to fix it. Being a Hitler will take you one step back rather ahead with team.


There are mitigating factors (for example: company is facing financial breakdown) which does not allow company to have great grand financial budget. There is an hour of need to make things transparent between the employees and the management. Rather giving the false hope to employees, show them the clearer picture about the increments and budget along with the company performance in respect to competitors. “They might be a cog in a wheel but they have to understand the wheel,”.

Being given a very small pay rise with little explanation is worse than being given no pay rise with a good explanation. 

Performance Matrix- The Game Changer

Salary review and negotiation is not at all a sugar-coated task, it needs to be handled very wisely; if handled poorly, can lead to losing out your mindful assets. It is very important to define a clear performance matrix to evaluate and an open window for a pay rise request.

Parameters that need to be taken care of while reviewing:

  • Performance Matrix
  • Market Standard
  • Association with company
  • Peer-to-peer feedback
  • Salary benchmark

Market standard do play a vital role in setting up the salary benchmark. Know the difference between the value of the role employee performing and value of an employee as an individual. Manager need to benchmark the compensation and benefits both internally and externally.  If in case you are not able to facilitate a pay hike, then the finest positive way is to re-evaluate an employee’s contribution and hard work and make them believe to hike for sure in the near future but not immediately. Set a review date down the line. This is an approach that employees often respond to better than simply telling them that they are not entitled to a pay rise either now or in the future. Focus on developing an employee’s value to the company, rather than disappointing them by not increasing the salary which is their prime concern.

Accentuating the Positive

A positive approach is offer an alternative against money like by providing performance subjective bonus to employees and awarding them with various rewards like coupons or a small family trip and most importantly Promotions to the well deserving employees (who does not like being promoted).

Employees will definitely reach out either directly or via mails for pay rise request. One has to wear a corporate hat and deal the situation 

Beyond Salary Reviews…!!

The best manager is who support his team, take care of their needs, motivate them and guide them. Sometime it happens that managers become helpless and situation goes out of control, that’s the real time when you have to stand with them. Have a word with HR/management, whatever the extra dollars or allowances they agree to pay as an additional hike, distribute it among the deserving employees wisely.

Now once the Appraisal letters are out, do not just sit back and relax after the hectic one-month mix of full happiness and grudges. Start preparing for the next cycle so that the things which failed to happen this time should succeed in next!

Copyright @ PayReview 2024. Evoque Advisory Private Limited is a company registered in India operating under brand name PayReview.