Employee Compensation Adjustment

Pull up the employee's current compensation package from your HR system. Double-check the base salary, any existing bonuses, and benefits. **What to gather:** - Current base salary - Last adjustment date - Performance review scores - Market rate comparisons (if available) Make sure you're looking at the most recent data - outdated info can lead to awkward conversations later.

Determine the exact raise or reduction percentage based on your company's compensation guidelines. This isn't just about picking a number - it needs to align with budget constraints and internal equity. **Common adjustment scenarios:** - Merit increase: typically 3-5% for solid performers - Promotion: usually 10-15% bump - Market adjustment: varies based on industry benchmarks - Cost of living: often tied to inflation rates **Tip:** If you're reducing compensation, make sure you've got proper documentation and have consulted with HR and legal first.

Route this adjustment request to the appropriate approver. For most raises, that is the department head. For executive-level changes or large adjustments (over 15%), you will need VP or C-level sign-off. **Approval routing guide:** - Standard merit increases: Department head approval - Promotions: Department head + HR director - Market adjustments over 10%: VP-level approval - Executive compensation: CEO or board approval Make sure to include the justification document and any supporting performance data with your request.

Time to make it official. Update the employee's salary in your HR system with the new figure. Don't just change the number - you need a paper trail. **Required actions:** - Enter the new base salary amount - Set the effective date (usually start of next pay period) - Document the reason for the change - Note any approval signatures obtained **Before you click save:** Double-check your math. A misplaced decimal can cause serious payroll headaches down the line.

Create the official letter that confirms the salary change. This document goes to the employee and a copy stays in their personnel file. **Letter should include:** - Employee's name and position - Previous salary vs. new salary - Effective date of change - Reason for adjustment (promotion, merit, market, etc.) - Manager and HR signatures **Distribution checklist:** - Send to employee (email or hand-deliver for sensitive changes) - File copy in personnel records - Notify payroll department - Update any benefits tied to salary level

Send the approved compensation change to payroll so they can update the system before the next pay cycle. Do not wait until the last minute - payroll needs lead time to process changes. **Information to provide:** - Employee name and ID - New base salary amount - Effective date (must align with pay period start) - Any changes to benefits or deductions tied to salary level **Timing tip:** Most payroll departments need changes submitted 5-7 business days before the pay period closes. Check your internal deadlines.