Salary reviews and the alternatives

almost 8 years ago by Ali Kimmorley


Salary reviews have historically gone hand-in-hand with performance appraisals, and conventional wisdom is that financial incentives influence productivity. But just as the efficacy of traditional performance management is being challenged, so too is the understanding of what motivates workers.

As SEEK found in a survey of 4400 Australian workers, many employees are more interested in having a good work environment and facilities than monetary rewards or promotions. The most appreciated perks included nice lunch rooms and larger desks, but also improved work culture with better team work, more respect and more open communication.

A 2014 University of Warwick study, cited extensively in business press, has drawn a direct correlation between happiness and productivity. The study found happiness led to a 12 per cent jump in productivity, while unhappy workers were 10 per cent less productive. With Google leading the way, astute managers have begun to think creatively about how non-monetary rewards can influence happiness and wellbeing.

Creating a culture which values non-monetary rewards can also be handy when economic conditions are less favourable and salary increases or bonuses are hard to fund.

Future proofing your business

Experienced recruiters know that poor workplace culture, the employee-manager relationship and/or a lack of professional development are overwhelmingly the reasons why people leave their jobs – salary does not tend to top the list.

Being willing to discuss these types of issues in performance reviews, in a genuinely open and transparent manner, can be vital to staff retention. The cost of replacing key staff – whether it’s lost productivity, external recruitment fees, or onboarding and training – should be a component of all workforce planning.

Performance reviews provide an opportunity to assess, apart from salary, what else your employees’ value. You may find an extra week’s annual leave, leave to volunteer or study, additional training or offering long service leave entitlements prior to 10 years of employment, may be more attractive than a small salary increase or bonus.

As SEEK spokesperson Kendra Banks noted, "The most appreciated perks in the eyes of employees are relatively low-cost, particularly when compared to the cost of back-filling a role if an unappreciated employee chooses to resign. A few work perks could translate to long term company loyalty and future business cost savings".

Preparing for reviews

If you are preparing to conduct salary reviews in the lead-up to the end of financial year, there are a number of resources and tools that can assist.

The FairWork Ombudsman’s Pay and Conditions Tool is made up of four calculators for:

  • pay rates - includes penalty rates and allowances

  • shift calculations  - a sum of pay rates for up to four weeks of shifts

  • annual and sick leave

  • notice and redundancy entitlements.

The larger, international recruitment firms Hudson and HAYS also publish salary guides.

All employers are responsible for keeping up-to-date with the modern awards, any associated transitional arrangements, and future changes, for example, to the annual minimum wage. This information can also be sourced from the FairWork Ombudsman website.

Wage Price Index and Consumer Price Index data is available from the Australian Bureau of Statistics.

Pertinent to our region is the Hunter Research Foundation’s Economic Indicators which are published quarterly. The December 2015 edition pointed to improved business expectations in relation to hiring intentions and reported a recovering labour market.