What is

Salary Review


A process conducted by employers to evaluate the performance, compensation, and benefits of their employees. It is typically done on an annual or periodic basis.

What is a Salary Review?

In today's competitive job market, attracting and retaining top talent is crucial for the success of any organization. One of the key factors that employees consider when evaluating job opportunities is the compensation package offered by the employer. While the initial salary negotiation stage is important, it is equally vital for employers to regularly review and adjust employee salaries to ensure fair compensation.

A salary review is a process conducted by employers to evaluate the performance, compensation, and benefits of their employees. It is typically done on an annual or periodic basis to assess whether the current salary and benefits package is competitive and aligned with market standards and employee performance.

The Salary Review Process

During a salary review, employers may consider various factors such as the employee's performance, market trends, job responsibilities, and the overall financial health of the company. The objective is to determine whether an adjustment in the employee's salary is warranted based on these factors.

Employers may conduct market research to determine the average salary range for similar roles in the industry and region. This information helps them ensure that their compensation packages are competitive enough to attract and retain top talent.

The process usually begins with managers or human resources professionals gathering information on each employee's job performance, responsibilities, and achievements. They may also consider feedback from colleagues, supervisors, and any performance metrics or targets that were set for the employee. This information is then used to evaluate the employee's contribution to the company and their overall value.

Once all the necessary information is gathered and analyzed, employers make decisions on whether to increase an employee's salary, maintain it at the current level, or even decrease it in certain cases. The salary review process is typically guided by company policies and guidelines, as well as any budgetary constraints.

If an employee's salary is adjusted, the employer will communicate the decision to the employee during a salary review meeting. This provides an opportunity for the employee to discuss their performance, achievements, and any concerns they may have about their compensation.

Why are Salary Reviews Important?

A salary review is an important process for both employers and employees. It ensures that employees are fairly compensated for their work and helps companies stay competitive in the job market. 

It also serves as a means for employers to recognize and reward high-performing employees, motivating them to continue contributing to the company's success. 70% of employees find their sense of purpose in their work.

Here are some benefits for employers who conduct regular salary reviews: 

  1. Improved employee retention: employees stay motivated and feel like they are able to grow within the organization.
  2. Boosts employee engagement: salary increases from annual reviews help employees feel valued and appreciated for all their hard work and contributions.
  3. Ensures competitiveness and fair compensation: salary reviews maintain fairness and ensure employees are being compensated fairly for the quality of their work and that the company remains competitive with the going market rate. 
  4. Attract top talent: Salary reviews are an important step in managing top talent – salary reviews can attract and stop top talent from leaving your organization. It offers a chance for your organization to meet their needs.
  5. Good company culture: Fair compensation is a good foundation for a positive company culture.

How to Implement Effective Salary Reviews

To implement effective salary reviews, employers should develop a clear process that: 

  • Set SMART goals for the salary review process as well as frequency of salary reviews
  • Develop a transparent methodology for salary evaluation and market evaluation, this should include data on the current job market, requirements, and industry trends
  • Consider other factors that also contribute to the company’s success and any budget constraints
  • Communicate the process to the whole company and incorporate employee feedback 
  • Provide employees with clear feedback for any salary changes and follow up with another review in a timeframe