6 Methods to Determine Pay Raise for Your Employees

6 Methods to Determine Pay Raise for Your Employees


The ultimate goals of evaluation and assessment of individual employees are to determine the raise. You want the best talent in the organisation to remain loyal and serve for years. However, the right method to determine the pay raise for employees is often a tough nut to crack for the management.

You can use various methods to compare the performances of each employee to rank them. However, many other aspects involved determine the raise in their paycheque. You need to consider them to ensure the employees don’t leave the organisation because of a poor structure for increment.

Negative Impacts of Inefficient Methods to Determine Pay Raises

The major negative impact of an inefficient method to determine pay raise is the low retention rate. You will lose some of the best talents in the industry because of a small percentage of increment. Moreover, it will hurt the business more if there has been investment in nurturing those talents.

Some other negative impacts include disputes because of unfair increment. You cannot offer a better package to some inconsistent employees for their short burst of exceptional performance. The remaining staff with consistent performance may not take it positively, reflecting in their performance.

The financial stress of the increment may seem avoidable to cut cost amid a financial crisis. However, you should still offer raise to the employees to motivate them to regain stability. You can apply for You can get bad credit loans in Ireland to maintain the business in challenging times. 

Top Methods to Determine Pay Raise for Employees

You should learn from the industry to improve the pay raise structure in your business. Also, it is important to understand the requirement of the employees before holding the meeting with them. Here are the top methods to determine the pay raise for your employees without hurting the professional relationship.

Use the Industry Standards

You should know the average increment in salary offered in your industry before deciding the number of employees. It is important to follow the industry standard if you don’t want the competitors to steal your employees. You may already know the industry standard from your experience as an employee.

If not, it is still simple to get knowledge from your friends or contacts in the industry. The employees will understand the offered raise if it matches the industry standard. Though, you should prepare yourself for the exceptions if the best employees have a better offer from someplace else.

Account the Value

Each employee in an organisation brings some value to work. Some people measure the value with their productivity or profit from their sales. However, several more circumstances decide the worth of an employee to your business.

Loyalty and eagerness to learn are two important factors that determine the value of an employee. You cannot leave someone that has long-term relationships with the existing customers. Moreover, their commitment, skills, and politeness weigh in to increase their value for the organisation.

Consistency is More Important

As discussed above, it is unfair to trust someone with inconsistent performance even after a great performance in a project. A single quarter cannot determine the actual value of an employee. You should always prefer someone with consistency in their performance throughout the year.

You are investing in a reliable asset for the organisation by prioritising consistency. To check consistency, you should go through the attendance, sales, productivity, and quality records. The excitement may last for a few months, but the passion will last for a very long time.

Consider the Overall Performance

Productivity is only one aspect of the performance of an employee. There are numerous other factors to use to measure the overall performance of an individual. These include loyalty, tenure, and quality of work.

Moreover, you can find the performance metrics from the key requirements for your organisation. These key requirements change for different roles, responsibilities, and department within a business. Therefore, you need to find key performance metrics for individual profiles before determining a raise for the year.

Use Quality and Seniority

You should not treat the senior employees in your organisation as the new joiners. It is disrespectful, to say the least, for their loyalty over the years. Therefore, it is important to give incentive for their loyalty with a special raise for senior employees.

Also, the quality of work is more important in this environment to beat the competition. Clients are willing to pay more for better quality than cheap or early delivery of their product. Thus, it is important to keep quality workers in your workforce with a good enough raise for them.

Periodic Raise

An annual increment is a cost-effective solution for the organisations to increase the salary after a considerable time. The employees will remain with your organisation for a long time to get an increment in their salary. However, it may not work for every employee as they might deserve a raise over a shorter period than a year.

A small increment in a shorter period will motivate the entire workforce to put in extra efforts. It will act as an incentive for exceptional performances by the top individuals. Moreover, the increase in profits can easily cover the small raise for the employees.


To sum up, there are many ways to create an effective strategy to determine the pay raise for employees. Their performance metrics should have more columns than outputs and sales. It will help create a healthy company culture where the employees are supported for their contribution.

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