Chivas Performance Guidelines v.Jun 2018

Salary Review Process cont.

Possible Issues

The Company recognises that the majority of employees will fall within the Delivers Expectations each year whilst being at the same time competitively paid.

This presents 3 possible issues:

1. Employees who are competitively paid but sit at the lower end of their competitive range could become uncompetitive over time. 2. Employees who are competitively paid but sit at the upper end of their competitive range could become uncompetitive over time. 3. Limitations in how the Company rewards employees performing the same job but who are on different salaries. None of the above issues are conducive to employee retention and individual and team motivation. Our reward strategy is to address these issues in the following way. Employees who are identified as being competitively paid and who receive a rating of Delivers Expectations will – instead of all automatically getting the same percentage increase – receive an increase from the range (between 3.4% and 4.6% using the above example). This would mean employees who are at the lower end of their competitive range are more likely to receive an increase at or towards the upper end of the range and those who are at the upper end of their competitive range more likely to receive an increase at or towards the lower end of the range. Where employees sit in relation to their peers will also be considered, although it is worth noting that there may be valid reasons why some team members are paid higher than others such as performance, contribution or having increased levels of flexibility. The overall aim is to keep salary levels competitive and moving towards the mid-point of their competitive ranges rather than moving towards the extremes.

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