Not only can your bottom line take a serious hit when a top-performer leaves, but there’s also the cost (and time) involved in recruiting a replacement. Depending on how senior the role is, this can easily come to 5 figures all up!
Why performance reviews are the key to retaining your team
Let’s face it; the #1 motivation of any employee is to get paid! So the amount they get paid – and how valued you make them feel – has a big impact on whether they’re likely to keep working for you, or look for greener pastures.
So how do you decide whether to review pay rates?
There are a number of factors that can help you decide if your team (or certain members of your team) need a pay review:
1. Financial performance and goals
By now, you should have your accounts from your accountant for the last financial year and be able to identify how each department and each individual contributed to your business.
Additionally, you should have set SMART (specific, measurable, achievable, realistic and timely) objectives in the Job Description for each person, so that every team members knows what your expectations are as an employer.
So you’ll be able to compare the actual performance against the desired performance, and see who excelled (and who didn’t). If you don’t have these metrics in your business, contact us and we can help set them up for you.
How we can help you with performance reviews and pay reviews
The HR team from Consult NZ come in (yes it’s still Tanya and Mike from Recruit NZ, except we are under a new brand).
We tailor annual performance review documentation to suit the key metrics within your business, and issue them to all your staff. They then rate themselves on a scale, and the ratings cover a variety of areas, including their presentation, their ability to follow systems, as well as their actual performance.
The department manager then reviews and completes them, and we help in running the sessions with you and providing individual feedback.
2. Attitude, achievements and overall approach
Many businesses only look at the financial performance of staff when considering pay reviews, but those aren’t the only factors that matter. Attendance, attitude, presentation, any major achievements and promotions also matter.
After all, you don’t just want a high-performing individual – they must also tick all your boxes and fit into the company culture. And the annual performance review is the ideal time to identify this.
3. Market factors
Other factors to consider when reviewing salaries include what’s happening in the marketplace generally:
- Market rates
- Supply and demand, and skill shortages
- The current total fixed remuneration for all employees
- CPI index
- Cost of living.
What would you do if you lost your highest performer to a competitor? Valuing your staff, and paying them their value, hugely influences people’s motivation. To conduct pay reviews fairly, you need to consider the contribution individuals have made to your business (financially and in terms of their attitude). Market factors will also influence what’s considered a fair level of pay.
Because pay reviews are closely linked to staff performance, annual performance reviews are the time to do this. And the time to do the annual performance reviews is now – halfway through the year, when you have last year’s accounts at hand.
And if you need help or guidance with any of this, we are here to help you!
Next step: a FREE 30-minute consultation
If you’d like to find out more about how we can help you retain and reward your existing team, contact us to request a FREE 30-minute GTM or skype. We’ll discuss your unique situation with the decision makers in your business and recommend a solution that would work for you.
Call 0800 HRHOTLINE (0800 474 685 463) or email firstname.lastname@example.org – we’re looking forward to hearing from you!
What would you do if you lost your highest performer to a competitor?