Tips for Effective Salary Reviews

Ange Connor

It’s only 1 week until the end of financial year! For many workplaces that means it’s time for annual reviews and salary reviews. Love them or loathe them, many businesses tell me that come the annual performance review, their employees automatically expect a salary review. While some businesses have moved away from the annual performance appraisal (which I encourage you to do), many still roll out the ‘tick the box’ process. They navigate through the motions of a review, often failing to gather meaningful feedback, sometimes further disengaging the employee, but at least they can say the review has been completed.

Salaries are the hot topic of conversation right now. Every business I talk to is struggling to find talent. With the reduced number of international workers entering Australia, combined with the apprehension of people hesitant to move jobs because of the unknown, as well as the strong economic recovery for businesses post-COVID; unemployment numbers are low. That means if you are trying to recruit, you probably don’t have the talent pool to select from. This then leads to people being headhunted / poached and high salaries being offered to secure talent.

Many businesses are starting to realise that they have fallen behind with what they pay their employees given the current and continued growth in salaries. If you want to retain your best employees, it might be time to take a good look at their salaries and how you compare to the market.

Here is what we encourage you to do before you start the salary review conversation this year:

Dig out and dust off the position description (PD) for each role

If your PD’s are well written, they’ll be a great resource in ensuring clarity on what the role’s purpose is; what are the key responsibilities, and what qualifications and skill sets are required. Over time, especially with the growth of a business, a role can evolve and get bigger or become more specialised, hence it’s a good time to assess if your PD still matches the actual role being performed.


Once you have the PD’s dusted off and up to date, it’s time to benchmark them and check where they sit if you were to have to go to market to recruit for the role. Doing some research on what others are paying in the market for similar roles and skill sets is a good place to start. It’s not always all about the dollars, so checking out how your employer value proposition compares to your competitors is also important. What else, other than just the money, can you offer your employees?

When benchmarking, in addition to comparing salaries, it is also worth calculating the cost to hire, if you had to go to market in a candidate short market to recruit for a particular role. What would the cost be to the business by not having someone in a role for a period of time? What cost would there be for your time and energy to manage the recruitment process? What advertising costs would you have? If using a recruitment agency what would those costs be?

Better Off Overall Test (BOOT)

If you pay all-inclusive annual salaries, now is also a good time to do a BOOT to ensure you are meeting the Better Off Overall requirements under the relevant award. It’s important to factor in overtime and/or additional hours, and the penalties and allowances that an employee would be entitled to that you have built in to the salary. Sometimes that all-inclusive salary may not be as generous as you thought.

Start the conversation

Engaging with your employee is the most important step. Understanding what is important to the employee is critical. Money is not always the number one motivator. Chances are your employees’ motivations and priorities might have changed over the last 12 months. Your employee might value finishing early one day a week to be able to do school pick up much more than what they would value having a $2,500 pay increase.

A salary review doesn’t have to be all about the dollars. Start the conversation with your employees and find out what is important to each and every one of them; they will all have different priorities and motivations, so where you can, take a tailored approach.

Preparation, planning and research is key to a successful salary review. Being armed with the right information will help you reward and recognise your talent appropriately, while giving you the best chance of retaining them in a candidate short market.

About The Author
Ange Connor

Ange is the Founder and Director of Inspire HQ, one of regional Victoria’s leading recruitment, human resource (HR) and careers agencies. Ange is an ‘ideas’ person and a ‘big picture’ thinker. She loves to challenge the status quo – in fact, that’s how Inspire HQ began.

Ange has supported hundreds of businesses across Ballarat and regional Victoria to attract, engage, motivate, develop and retain their greatest assets; their people. Ange’s unyielding passion and invaluable knowledge of the recruitment and HR industry ensures she delivers the best solutions for her clients.

Ange has held various board positions and regularly volunteers her time to share her industry and market knowledge. She was recently a Councillor for the Victoria and Tasmania region of the Recruitment Consulting and Staffing Association (RCSA) of Australia and New Zealand, and she is a current Board Director of the Committee for Ballarat.

For more useful information, follow Ange on LinkedIn.

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