Are your employees looking forward to pocketing larger income this year? Yes, they probably are, and they possibly have opinions on what this should be. As much as it would be great to give in and let employees have what they want, it may not be feasible. This is because employees may not understand the intricacies of budgeting for salary increases.

Every year at some point, companies need to set up their budgets for the next financial year, particularly factoring in increases. During budgeting season, the typical annual salary increase is best calculated using a software that can create a full financial picture. The reason the calculation of budget salary increases needs to be done carefully, is that it affects the resources that are available within the organisation.

Decisions made with a budget salary increase should be done based on strategy. This involves looking at the inputs in relation to the outputs that you want to achieve.

Creating a Budget Salary Increase Plan

There is an excellent way to go about calculating this increase, and that is by starting with the overall budget for the year. From the total budget, it is possible to look at what has been allocated to payroll, and then calculate how much each employee can receive as an increase in the year. HR software is able to provide results through an employee salary review. This review will determine whether increasing one’s salary will have a positive impact, especially if it will change their tax responsibilities.

Understand the Implications of a Typical Salary Increase Per Year

With HR software, one can look at the standard annual salary increase based on the perspective of the company, the employee and what is happening in the external environment. The company will be focused on the required outcomes. The employee will be considering what they value. Externally, one would need to review what the competition are doing. This is an extensive amount of information. HR software is able to store all this information, and then provide analysed results based on select criteria. This gives an HR manager an invaluable tool when reviewing an effective budget increase.

Employees often expect a salary increase based on performance. This means that once their contractual needs are met, they begin to focus on their experiential needs. This is where they look at career growth as well as well-being. Well performing employees will carry out tasks to meet goals for a promotion. Details of what needs to be done to get this promotion is often clearly outlined in their employment contracts.

Finally, their emotional needs or purpose determine what they want to be compensated. With these types of rewards, it may be challenging to use HR software for an assessment. This means that HR software can support with analytical data then a decision can be made.

Budget increases should be calculated carefully, with intricate attention to detail. An HR software will minimise any possible errors, ensuring for smooth implementation for the company.