CONSULTATION : A Toolkit for Setting Remuneration

I am having difficulty working out what to pay people. I believe people should be paid fairly for the work they do but our remuneration policy limits salaries to maximum 120 percent of the salary range for the job. I don’t think this is fair.
Remuneration setting is key role of management and an essential part of any manager’s toolkit. To do this well you need to know the size and scope of the job and its relationship with the other roles in the organisation. That is, is it bigger or smaller? This lets you match the job with an appropriate salary compared with other roles. Then you need reference base for attaching an appropriate salary level. You also need some flexibility to be able to set an appropriate salary for new and as yet unproven recruits and yet also, at later date, be able to recognise and reward their growth and development in the role.
There are some essential tools that are required for this to work. First you need job evaluation system that enables you to “size” each job in your organisation. The second tool is suitable salary survey appropriate to your industry. This needs to be in format that enables you to use your job evaluation results to identify similar roles in the salary survey. This gives you ballpark salary for the job and helps you see the movement in the market since the last survey. Then you need remuneration policy, which is usually signed off and overseen by the board in their governance role. The policy will describe the salary range for each evaluated role and explain how the organisation intends to implement the policy and what the boundaries are. The final tool is to have good performance management system in place that enables assessment of the accomplishments of an individual which can then be used to determine salary change based on performance.
To address your concern that there is finite limit to how far someone can go in the salary range for their job, the point here is that you do need to be able to reward performance in the role, but once person is doing the job well and has been doing so for some time there needs to be top-end limit to their salary otherwise you will end up paying too much for the role in question. Equally, if the person is at this top end, it is very likely that they will be getting bored with the job and need more challenging role. So although you may think this is unfair, hopefully you can now see that that there is good common sense reason for setting these limits in the company’s remuneration policy.

I am carrying out performance reviews with my staff and want to document some development actions for each person for the coming year. Do you have any advice on how to approach this?
Development planning works well if it is linked to good performance management process and involves someone else who can act as coach or mentor and help the staff member recognise for themselves the best development areas to focus on. If person has good development plan, they feel more engaged and motivated as the planning process gives them sense of real recognition and reward.
So first have look at how you are carrying out your performance reviews. Are you acting as coach and helping the person identify for themselves what their strengths are and also which areas they need to focus on for development and enhanced performance? It is important to aim to help the person identify actions to build on the strengths they already have and to reinforce any areas of weakness.
Sometimes development activity can be something person doesn’t really want to do and yet, if they are able to address it, it could open door for them. That is where it is valuable to have someone else involved in the process.
Also in the performance review you should be searching for development needs under three headings. Their current role, their next potential role, and their long-term goals – which could cover both their work and personal development needs. Once you have had good discussion around what is going well and not so well, and what could be some good areas to focus on for development, then you can help the person document their development plan. But don’t do it for them – it is important they do it themselves as they then internalise it and own it.
The plan just needs to identify each development goal, how the person is going to achieve it, and an estimated date for completion. It can also be helpful to document any resources or support required. The development plan should be owned jointly by the employee and their manager and incorporated in regular performance reviews to keep track of progress.

Kevin Gaunt, FNZIM, FAIM, is CEO of NZIM Auckland and has been senior executive with, and consultant to, some of New Zealand’s largest companies.

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