We are currently reviewing our annual salary review process. Historically this has always been a mixture of cost of living rises and with increases for improved performance or additional responsibilities, based purely on the managers view rather than a formal appraisal.
Can anyone offer any advice on whether it is possible to combine the two elements, or indeed if they are best separated out?
We find cost of living increases have become expected by staff (even though clearly stated to be non-contractual) and results in an increased payroll without necessarily seeing improved performance.
Yet on the other hand we have always takent the approach that it is best practice to separate appraisal (and discussions around performance) from pay reviews otherwise employees are reluctant to discuss where their weaknesses and development needs are, for fear of not receiving an increase.
I would be interested in hearing about the experience and solutions from other organisations, particularly in the financial services industry. Thanks