Jul 30, 2025
While there is much to be said for the sheer satisfaction derived from a job well done, the reality is that mortgages and living expenses must get paid, and so must your employees. With the cost of living rising all across the country, people are having a hard time making ends meet. Some of your staff may feel dissatisfied with their current salaries and have started to look around for greener pastures. Before your valued employee finds another job, now may be the time to look at your company's compensation structure.
The first thing to look at is the criteria your company has in place for awarding increases. Criteria include:
If you have decided to increase an employee's wage, you will need to perform a salary increase calculation. There are two basic types, a flat wage and a percentage increase:
Former pay: $50,000 / 12 = $4,167
New pay: $55,000 / 12 = $4,583
The employee will realize $416 more each month in gross pay.
(Current pay / 100) * (100 + percentage increase)
Another consideration is how often employees' salaries should come up for review. Some employees may have entered the company with a contract that laid out how often they come up for review. You'll need to adhere to this. For new employees, you may want to specify that they remain with the company for a set period of time before they are eligible for an increase. If your company is on a fixed annual schedule for salary increases, the company may have to adjust and award interim raises if changing world or local events significantly alter the employees' cost of living. If the company can help ease this burden, that will go very far in bolstering employee loyalty and morale.
Salary increases offer greater financial stability for employees, giving them the opportunity to manage their expenses and improve their personal goals. Long-term benefits for the business include retaining talent, a positive working environment and increased productivity. Clearly, it is a win-win situation for both parties. Give serious thought to how you will manage raises at your company.
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