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Salary Normalization
Human Resources » Compensation & Benefits


Chrm Message From: ArYaN Total Posts: 12 Join Date: 15/11/2006
Rank: Executive Post Date: 23/11/2006 00:50:35 Points: 60 Location: United States

Hello team,

I have been given the task of doing salary normalization but I am not much aware of the process and hence am seeking for few hints and ideas to carry out the same.

Regards,

aRyAn

Chrm Message From: bill Total Posts: 34 Join Date: 15/11/2006  
Rank: Executive Post Date: 23/11/2006 01:04:35 Points: 170 Location: United States

Dear Aryan,

The employee performance will be the key to do Salary Normalization. If he/she is giving x output while some other employee at the same level also giving x output too. You need to compare both the salary & if there is any gap to fill up, you will have to do salary normalization.

There are 2 ways to do the salary normalization:-
The first parameter will be the salary of peers at the same level with in the company
The second parameter will be the salary benchmarking in the market. Assuming you are going to hire new person so how much you will pay?

Employees often misunderstand salary normalization & they link it to appraisal kind of increment. HR need to educate to the employee that salary normalization does not mean always increment. Salary normalization takes place when there is yearly appraisal (April 05 to March 06) in the organization & no 6 monthly review is there but if some one joining in the month of January 05, he has to wait for 15 months for next jump so organization say that there will be salary normalization in a Oct. 05 for the group of the people who has spent atleast 6 months in a company.

Secondly, salary normalization also takes place when there is role change / grade change or transfer from one dept to another dept / one city to another city / one country to another country. It can be done immd. or after 6 months looking at his / her performance.

Hope this has helped ;)

Bill

 
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