In a BLR webinar entitled "Pay Grades and Salary Increases: How to Build a Competitive, Equitable Compensation System in Your Workplace This Year," Dan Kleinman, principal of Dan Kleinman Consulting explained that a promotional increases policy should establish guidelines for awarding higher pay based on an employee's promotion with the organization, determined in part by how many pay grades the worker is jumping to take the new position.
A sample promotional increases guideline (assuming salary ranges) might correlate as follows.
One pay grade above the current position:
- Minimum promotional increase: 5%
- Maximum promotional increase: 10%
Two pay grades above the current position:
- Minimum promotional increase: 7%
- Maximum promotional increase: 12%
Three pay grades above the current position:
- Minimum promotional increase: 10%
- Maximum promotional increase: 15%
Your green circle/red circle employee policies should specify how you will handle workers who are already sitting at salary levels below the minimums in their range (green circle) or above the maximums (red circle).
Dan Kleinman is the principal of Dan Kleinman Consulting (www.dankleinmanconsulting.com), a California-based compensation and human resource consulting firm. For the past 18 years he has served a broad spectrum of regional, national and international companies providing compensation, performance, organizational planning and reward-system design services.