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When should you give pay hikes?

There is a way to crisis-proof your system of providing salary increases.
By Max De Leon |

If you\\\'ve been an employee before you became an entrepreneur, you, too, must have looked forward to receiving your yearly salary increase, whether it\\\'s based on inflation rate or some other considerations. Now that the tide has been turned, and you\\\'re the employer, you might not be looking forward to tackling this issue, especially in the face of the economic recession.

 

However, enterprises should not look at the economic slowdown as a hindrance in the grant of salary increases to key personnel. Instead, the People Management Association of the Philippines (PMAP) said it should be viewed as an opportunity to engage the employees better and make them more caring for the company by simply tying their performance to revenue growth.

According to Gerry Plana, PMAP executive director, there is a thing in HR called performance-based increases. "In short, this is not the traditional across-the-board salary increase that is generally based on inflation. This one is tied to performance that translates to revenues," Plana explains.

He says this is similar to the "entrepreneurial pay" that the entrepreneurs get from their investments. "When you start a business, naturally if there is no income, you will not get any pay. So it depends on how you grow your revenues."

 

Set a standard to measure performance
Plana advises entrepreneurs to devise a system in which some standards will be set to measure the increase in productivity of the employees, and to indicate whether that performance has led to the growth of the company\\\'s income. For instance, if an employee was able to produce 500 pieces of products in X number of days, he can get an increase if his production would exceed significantly to allow the company to sell more.


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