What is it?
A salary increase is an adjustment to an employee’s base pay, reflecting changes in performance, responsibilities, market conditions, or organisational policies. Salary increases may be awarded as part of a performance review process, where employees who meet or exceed performance expectations receive raises to reward their contributions and impact. Unlike standard cost-of-living adjustments, which apply broadly, performance-based salary increases are tied directly to an individual’s achievements or outcomes and are designed to recognise exceptional performance and encourage growth within the organisation. Salary increases can also occur due to promotions, skill development, or changing market rates for a given role.
Why is it important?
- Motivates High Performance: Performance-based salary increases incentivise employees to work harder and achieve greater success by linking their pay to their performance outcomes.
- Retains Top Talent: Offering competitive salary increases helps retain skilled employees by recognising and rewarding their contributions, making it less likely they will seek opportunities elsewhere.
- Supports a Performance-Driven Culture: By aligning salary increases with performance, organisations reinforce a culture where hard work, innovation, and goal achievement are valued.
- Encourages Skill Development: Employees who know that salary increases are tied to their performance and growth are more likely to seek skill development, improving overall organisational capability.
- Promotes Fairness in Compensation: Salary increases that reflect performance allow organisations to reward employees based on merit, ensuring top performers are compensated appropriately.
- Boosts Morale and Job Satisfaction: Recognising employees through salary increases fosters a sense of accomplishment and increases overall job satisfaction, contributing to a positive work environment.
