Expectations need to be aligned, performance evaluated, and decisions clearly communicated. The salary review meeting is one of the most important conversations you’ll have all year – and one of the most preparation-intensive. What should you keep in mind as a manager? And how do you create a transparent, constructive dialogue? Here’s your step-by-step guide.
A salary review involves evaluating and adjusting employees’ compensation – typically once a year. The overall framework is often governed by collective bargaining agreements or company policy. These define the available budget for increases, which employees are included, and how the process should be carried out.
But salary reviews are about more than percentages and budgets. Ultimately, they come down to a conversation between manager and employee.
Once you’ve completed your overall performance assessment, the salary review meeting is where you explain your reasoning, justify the decision, and build understanding.
Read more: Four Steps to a Successful Salary Review – A Guide for Managers and HR
Clear Salary Criteria Make All the Difference
How familiar are you with your company’s salary criteria? And how well do your employees understand them?
As a manager responsible for setting salaries, these criteria are one of your most important tools. They clarify what influences compensation and support consistent, fair evaluations. In short, they define which performances, competencies, and behaviors your organization values and rewards.
For salary criteria to truly work, however, they must be clearly communicated. It may even be necessary to review key terms and definitions to ensure everyone interprets them the same way.
When it’s time for the salary review meeting, these criteria provide a solid foundation for explaining your decision. While there’s no guarantee everyone will be satisfied, employees are far more likely to understand – and influence – their salary when expectations are transparent.
Checklist: Preparing for the Salary Review Meeting
There are several steps to complete before sitting down with your employee. Starting early will help you feel confident and well-prepared throughout the process.
1. Align expectations before the meetings begin
Before scheduling individual meetings, coordinate with other salary-setting managers.
- What is the total salary budget?
- Are there shared priorities or focus areas?
- What are the boundaries?
Just as importantly, clarify your own decision-making authority. What can you decide independently – and what needs further approval? Clear mandates make the conversation more transparent and secure.
2. Give employees time to prepare
A good salary review meeting is a dialogue, not a one-way announcement. Send invitations well in advance so employees have time to reflect on their performance and development.
Plan for sufficient time – around one hour is often appropriate – to allow for both feedback and forward-looking discussion without feeling rushed.
3. Gather the right documentation
Clear salary criteria form the foundation of fair and consistent compensation decisions. Make sure both you and the employee are working from the same expectations.
Before the meeting, ensure you have relevant background information, such as:
- Applicable collective agreements and local guidelines
- The employee’s role, responsibilities, and scope
- Goal achievement and results during the year
- Completed training and professional development
If needed, involve HR early in the process.
4. Take a holistic view – and prepare your rationale
Compensation decisions should reflect the employee’s performance throughout the entire year, not just recent events. Consider how goals were achieved, how the employee has developed, and how they have contributed to the team and the broader organization.
Think through how you want to structure the conversation. What key messages do you want to communicate? What questions will you ask? And how will you explain your decision clearly and respectfully – regardless of how it is received?
5. Use a structured meeting template
Many managers find that a structured conversation template makes a significant difference. It helps maintain consistency and ensures all employees are treated fairly.
Make sure the template is tailored to your organization and updated regularly to reflect current goals and salary criteria.
When giving feedback, consider using “I” statements, such as: “I have assessed that…” or “My evaluation is that…”
During the Salary Review Meeting
Preparation is done. You’ve completed your assessment, aligned with colleagues, and gathered your documentation. Now it’s time for the conversation itself.
1. Set the framework
Start by outlining the purpose, structure, and timeframe of the meeting.
2. Present your assessment and reasoning
Explain the factors behind your evaluation and provide concrete examples. Present the new salary clearly and explain how you arrived at the decision.
Finally, clarify what the employee can focus on to influence future salary development.
3. Listen actively
A salary review meeting should be a two-way conversation. Encourage the employee to share their perspective. Ask open questions and listen carefully. Before closing the meeting, ensure they’ve had the opportunity to express everything they wanted to say.
4. Choose your wording carefully
Using “I” statements can help keep the conversation constructive:
“I have assessed that…”
“My experience is that…”
When giving critical feedback, always follow up with concrete suggestions for improvement or development.
5. Document the outcome
Summarize what you agreed on as soon as possible after the meeting. Save the documentation to support next year’s salary discussion.
During the Salary Review Meeting
Preparation is done. You’ve completed your assessment, aligned with colleagues, and gathered your documentation. Well done! Now it’s time for the conversation itself.
1. Set the framework
Start by outlining the purpose, structure, and timeframe of the meeting.
2. Present your assessment and reasoning
Explain the factors behind your evaluation and provide concrete examples. Present the new salary clearly and explain how you arrived at the decision.
Finally, clarify what the employee can focus on to influence future salary development.
3. Listen actively
A salary review meeting should be a two-way conversation. Encourage the employee to share their perspective. Ask open questions and listen carefully. Before closing the meeting, ensure they’ve had the opportunity to express everything they wanted to say.
4. Choose your wording carefully
Using “I” statements can help keep the conversation constructive:
“I have assessed that…”
“My experience is that…”
When giving critical feedback, always follow up with concrete suggestions for improvement or development.
5. Document the outcome
Summarize what you agreed on as soon as possible after the meeting. Save the documentation to support next year’s salary discussion.
Looking for a More Efficient Way to Manage Salary Reviews?
How does your organization handle the salary review process today? Is it manual, time-consuming, and dependent on spreadsheets and double work for managers and HR?
By digitalizing your salary review process, you can save both time and resources. The Salary Review module in Flex HRM Employee supports the entire workflow – from budget preparation and managers’ salary proposals to review, approval, implementation, and export to payroll.
