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• Employment Resources
• Hiring Process
• Orienting New Staff
• Employee Relations Issues
• Partnering for Performance
  • Development
  • Performance Reviews
  • Salary and Rewards
  • Discipline Guidelines
  • LifeWorks Management Line
• HR Managers

Salary and Rewards

Salary decisions are another way of communicating to an employee his or her performance level over the past year. Carnegie Mellon does not provide Cost of Living Allowance (COLA) raises, and no employee is automatically entitled to a salary increase. Instead, a salary increase pool for employees is generally established with a recommended increase for individuals performing at expectation.

Salary increases should be based upon and supported by the information and feedback provided in performance reviews, feedback sessions and other documentation. Poor performers should receive a smaller increase than recommended or no increase at all, while employees performing at exceptional levels should be rewarded with larger raises. It is important that salary decisions be merit-based and that your employees understand this and the basis upon which your decisions were made.

Don’t just give employees an across-the-board increase at the recommended level for satisfactorily performing individuals. This contributes to the misperception that all employees get an annual COLA increase to which they are entitled. Rather, treat each individual’s salary decision as unique – just as your employees are all unique.

Other Factors in Salary Recommendations

In addition to the value of the employee’s contributions and performance to the department/group, other criteria to consider when making a salary recommendation include:

• Internal pay equity: Are employees with similar jobs, performance and experience making similar amounts? Have market conditions led to hiring new employees at higher salary levels while your more tenured high performers have stagnated salaries?
• External pay equity: Do the private sector and other competitors for highly skilled workers pay significantly more for similar jobs, including benefits and other rewards of working at Carnegie Mellon? Are you experiencing high turnover due to people leaving for other jobs?
• Employee potential: Does the employee have the willingness and ability to assume greater responsibilities? This should be rewarded and encouraged – we don’t want to lose motivated employees who have the potential to be university leaders.
• Criticality of skills: Does your employee possess skills, competencies or relationships that are critical to achieving your goals? How difficult is it to find someone with the necessary combinations of knowledge and abilities? Is this employee indispensable?
• Form of rewards: Good performance doesn’t need to be rewarded only with an increase in base salary. Consider whether other rewards may be more appropriate, such as: a gift or gift certificate, being taken out to lunch or having a recognition event in the department, nomination for an Andy Award, etc.
  

Communicating Salary Decisions

The performance review meetings that you conduct with your employees are not the right time to talk about salary decisions. Salary recommendations should not be discussed with individual employees until formal approval is received from the president and provost. This approval will be given in May. After approval has been received, and before July 1, all individuals should be informed of the salary decision made in their case, preferably in writing or at a private meeting. See Communicating Salary Increases Effectively (.pdf).

The salary decision should not come as a great surprise to your employees. Continuous feedback and their performance review should give them a good idea of what to expect. It is important that employees clearly see the relationship between their performance review and the size of their salary increase. They should also understand other factors that contributed to the salary decision.

The overriding goals in communicating salary decisions are that:

• The employee believes that his pay is fair, equitable and a reward for his performance
• The employee is told the thinking behind the pay decision
• The employee is told exactly where he or she stands
  

After the appropriate compensation conversations, future discussions should follow where you set goals, discuss ongoing actions and provide feedback.

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Performance related documents:

• Partnering for Performance - A Manager's Guide (.pdf)
• Performance Review Form (.doc)
• Provisionary Performance Review Form (.doc)
• Performance Review Guidelines (.pdf)
• Performance Review Checklist (.pdf)
• Performance Improvement Plan (.doc) - for a manager and a staff member to map out strategies for improvement
• Communicating Salary Increases Effectively (.pdf)

For more information:

• Job Classification Codes Table - Table of job classifications and salary ranges
• Fair Labor Standards Act (.pdf) - helps managers understand and follow guidelines set by the FLSA
• FLSA status
• Wage Determination Packet (.doc) - when hiring foreign nationals with H1B visas
• Nelson Motivation, Inc. - provides information on how to energize and reward your employees to increase performance

© Carnegie Mellon Human Resources 2004