Performance Management

Purpose of Process (see below how HRSource™ can help):

To allocate salary increases to employees in a way that will:

• Encourage and reward excellent employee job performance, and
• Maintain control of salary expenditures.

Recommended Steps in the Process:

1. After completing the salary survey, establishing or adjusting the salary ranges, establishing salary increase budgets, and completing the Performance Management reviews, you are ready to begin the salary review process. First, complete a salary review schedule and obtain management concurrence (see sample schedule).  Note in the schedule that the Performance Management and Salary Review processes overlap.
   
   
2. Obtain approval on the salary increase budget and merit increase guidelines.
   
   
3. Complete the performance management process.
   
   
4. Distribute salary increase instructions to managers (see sample) and salary increase worksheets (see sample).
   
   
5. Provide support and encouragement to managers, as needed, to generate salary increase recommendations for their employees.
   
   
6. Upon completion, review the managers' salary review recommendations to ensure that:
   • A spread in salary increase recommendations, appropriate to performance levels, exists (versus all employees receiving the same salary increase) (see sample spreadsheet).
   • Salary increase spending is within budget (see sample spreadsheet).
   • The highest and lowest increase recommendations seem reasonable and absent of bias.
   • No other individual anomalies exist.
     
     
7. Summarize the salary increase recommendations and obtain final approval from Senior Management.
   
   
8. Inform payroll of the salary increases.
   
   
9. Generate salary increase letters (see sample) to managers to present to their employees.
   
   
10. File the salary increase paperwork in the employees' personnel file.
    
    
11. Go home early the next day and rest.

Process Tips:

Two major alternative salary review processes exist:

• The focal review process in which all employees receive a salary review at the same time
• The anniversary review process in which employees receive a salary review on the anniversary of their hire date.

The focal review process is recommended because:

• Salary increase spending is more easily managed
• Managers can compare all their employees' performance at one point in time
• The salary review process can flow out of the performance management process

Also see the section entitled A Classic Approach to Compensation.

How HRSource™ Can Help:

HRSource™ can help manage the salary review process:

• Create the salary review worksheet
  
• Create salary increase letters
  
• Create documentation for the Personnel file as needed
  
• Transfer salary changes to Payroll via the payroll interface