If the issue of pay rises for your team is something that keeps you up at night, you’re not alone…
It might surprise you to know that your team members also find the topic stressful. People generally just don’t like talking about money!
There’s certainly no one-size-fits-all approach, but these tips will help you work out the best way for you to approach the daunting pay rise conundrum in your healthcare business.
Do you tie pay rates to responsibilities and contributions?
A really objective means for determining pay rates is to ensure that team members are paid in line with the performance of their role, tasks and responsibilities, and their contribution to the business overall. It’s about exchange – they provide their knowledge, experience and effort to get the agreed work done to a high level, and in return, the business compensates them.
Shifting to this approach of exchange for getting the needed work done, rather than one where the focus is on hours worked, will help your practice culture in a host of other ways too!
That’s not to say that years of service are irrelevant, but ideally, those who’ve been with your team the longest are also taking on higher responsibilities and contributing more.
Having clear position descriptions really helps with this. You might like to check out our resource detailing position description creation to get these in place if you haven’t already.
Should you cover pay at the time of performance reviews?
We strongly suggest you separate these out from one another. Why? Well, building pay review into your performance review/appraisal process can:
Distract from the opportunity that reviews present to focus on the specifics of the work being done, particularly if there are items to be raised that the team member hasn’t heard anything about previously.
Cloud both positive feedback and constructive criticism/areas for growth if the team member’s perception of what these might equal in $ terms differs.
Lead to the pay decision being perceived as ‘punishment’.
See our website for more resources to support you in performance appraisals, but where the issue of pay rises is concerned, we suggest you make it clear with your staff ahead of time that these are a separate item of discussion for another occasion.
Make sure your team knows when pay reviews will occur and what they’ll be based on
Given how much of a distraction this issue can be, it will serve you and your team well to have a set timeline for pay reviews. This might be:
On the anniversary of their employment.
In a set month, such as January or July.
A set period of time, like two or four weeks after your performance appraisals.
Make sure that when they will happen is clearly communicated to your team, for example, through a clause in their contract or a memo out etc.
Whenever your practice chooses, it’s really important to adhere to it, or you risk a lot of discontent, which is likely will be expressed in a range of undesirable ways rather than raised with you directly!
As far as what to base them on, we suggest you consider:
Responsibilities and contributions (as outlined above).
CPI – though this is really just about maintaining pace with increased living costs rather than rewarding for additional contributions.
An industry review to establish what is being paid for similar roles in other organisations. Be sure you’re comparing like with like, including role responsibilities, type of practice and local area.
Ensure you’re meeting your legal obligations at a minimum
The Award/s your team are covered by set out minimum hourly rates, plus applicable allowances and other details like maximum hours of work, penalty rates etc. It’s important that you familiarise yourself with the Award inclusions for your team, including when team members are required to progress from one classification level to the next.
Minimum rate increases apply to Award wages on the back of Fair Work Commission reviews, which are generally annual. To ensure you’re meeting these obligations, it’s a great idea to subscribe to the Fair Work Commissions updates for the relevant awards, in which case you’ll get an email when any changes are being made.
An industry review will, however, demonstrate that paying Award rates is unlikely to help you attract and retain quality team members. They might be appropriate for entry-level employees, but once they are up to speed in their role, a review to ensure they’re being paid in line with their contributions will help ensure retention.
The Augmentum team provides a broad range of consultancy and management services, supporting healthcare business owners and decision-makers in many key areas, such as strategy development and action planning, building effective foundations and teams, keeping your finger on the pulse, and driving growth and success.
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