How Often Should You Really Be Reviewing Salaries?
Many companies set salaries and forget them—but failing to review pay regularly can cost you more than you think. Outdated salary bands lead to employee dissatisfaction, pay compression, turnover, and even compliance risks. Just as businesses conduct financial audits to maintain fiscal health, salary reviews should be a standard practice to keep compensation competitive and fair.
Why Salary Reviews Should Be Routine
Salary structures are not set in stone. Economic shifts, industry benchmarks, and evolving job responsibilities mean that pay scales should be evaluated at least annually to stay competitive. Here’s why:
✔️ Market Rates Change Constantly – If you’re not keeping up with salary trends, your competitors are—and they’re attracting top talent as a result.
✔️ Pay Compression Hurts Morale – When new hires earn the same or more than experienced employees due to rising wages, frustration sets in, leading to disengagement and turnover.
✔️ Retention is Cheaper Than Replacement – Losing employees due to pay dissatisfaction costs more in rehiring and retraining than proactive salary adjustments.
✔️ Legal & Compliance Risks – Salary equity laws are evolving, and failure to adjust wages accordingly can open your business to legal challenges.
Warning Signs You’re Behind Market Rates
If any of these sound familiar, it’s time for a salary review:
🚨 You struggle to attract qualified candidates even with solid job perks.
🚨 Your turnover rate is increasing, and exit interviews mention compensation.
🚨 Long-term employees are making less than new hires.
🚨 Your Glassdoor reviews mention pay as a reason for dissatisfaction. 🚨 Employees request raises more frequently, or morale feels low.
How to Build a Salary Review Cycle That Works
A proactive salary review process ensures fairness, boosts retention, and keeps your business compliant. Here’s how:
🔹 Annual Salary Audits – Compare pay scales to market data at least once a year.
🔹 Review Job Descriptions Regularly – Ensure compensation aligns with evolving responsibilities.
🔹 Monitor Internal Pay Equity – Address pay compression before it becomes a bigger issue.
🔹 Link Performance & Pay Clearly – Employees should understand how raises and bonuses are determined.
Let’s Get Your Salary Structure in Shape
If you’re unsure where your company stands with compensation, it’s time for a strategic review. Ask me about setting up a pay review cycle that works—before outdated salaries start costing you talent and money.