Year End Salary-Adjustments: Everything You Need To Know.

As we move toward the end of the year, it’s important that you begin to think about your employee’s year-end salary adjustments and bonuses. After all, while they may be awarded largely on merit, this is something that many employees have come to expect. For example, a survey from Total Jobs found that 3 in 10 employees are planning to leave their jobs if their salary expectations aren’t met this year.

Why are salary adjustments important?

There are many reasons why salary adjustments are important. Firstly, they reflect an increase in an individual’s skillset and capabilities, ensuring they are paid in line with the talent they bring to your team.

Furthermore, merit-based adjustments incentivize hard work and dedication throughout the year, which improves productivity and efficiency throughout your business. 

Finally, salary adjustments and bonuses also go a long way toward improving employee morale. After all, it means that they feel as though their contributions to your firm are appreciated, which can help you combat high turnover rates.

What influences salary adjustments? 

In an ideal world, there would be no barriers when making salary adjustments. However, this is rarely the case, as there are many different factors that could influence the salary adjustments you make. 

For example, your firm’s financial performance over the past year will likely dictate how much or how little salaries will be increased. Issues such as poor cash flow or inaccurate record keeping could mean that bonuses are significantly lower than in previous years, leading to widespread frustration. Conversely, if your firm has enjoyed great success in the past year, then you may be able to be a little more liberal when awarding bonuses or offering salary increases. 

Best Practices for Year-End Salary Adjustments

• Talk to your team ahead of time. Talking to your team ahead of time means that you can manage your expectations somewhat when it comes to raises and bonuses. You should ensure that any points you make are backed by evidence, as this can reduce their frustration if they don’t receive the news they’d hoped to hear. 
• Start each year by discussing benchmarks. If you run a firm wherein salary adjustments and bonuses are awarded based on merit as opposed to tenure, this is also something that should be communicated clearly ahead of time. For example, you could start by setting specific goals for each employee so that they have an idea of what to work toward.
• Get your finances in order. Getting your finances in order, such as by ensuring that all of your records are up-to-date, can also help, as it means you’ll have a better idea of the funds you are working with going into 2025. If this is something that you’ve always struggled with, consider outsourcing an accountant. 

For example, the team at FinOp Group would be happy to help you improve your firm’s financial standing so that you’ll find it much easier to give your employees the raises or bonuses they deserve.