How to Write a Rationale for Raising Salary Rates

by Ruth Mayhew, Demand Media

Writing the rationale for raising salary rates is something human resources staff might have to do to ensure the company is competitive and on par with the labor market. Because human resources isn't a revenue-producing department, it often is a challenge pushing for better salary rates. You’ll need a well-constructed rationale for increasing salaries. Begin your rationale by doing your homework. Gather salary data for the labor market and consult resources such as geographic and occupational salary data the U.S. Bureau of Labor Statistics provides. In addition, review salary surveys published by professional associations and research competitors' salaries for similar job titles and positions.

Step 1

Draw comparisons to your organization's positions, titles and salary ranges. Calculate the differences between your company's current salary data and the salaries you believe are more appropriate for your industry, company size, employee skills and qualifications. Create projections based on two to three different scenarios. For example, construct a visual aid that depicts your organization's current salaries plus 5 percent, 10 percent and 12 percent across-the-board increases. Base the actual percentages to display on your salary research.

Step 2

Prepare a multimedia proposal for raising salary rates. Multimedia presentations satisfy audience members who need text as well as those who prefer visuals to interpret complexities such as wage-setting processes. It's likely that your audience consists of company leaders who don't have significant expertise in human resources. Therefore, you need to appeal to both types of audiences.

Step 3

Explain in text and with charts the differences between your current salaries and competitors' salary ranges. If you are lobbying for increases to both salary and benefits, estimate the cost of benefits and show how they affect projected total compensation. There generally are three scenarios for setting compensation levels: high salaries and low-cost benefits, competitive salaries and competitive benefits, and low salaries and high-cost benefits.

Step 4

Describe how salaries impact recruiting success. Your organization will be in a far better position to recruit the highest-qualified applicants if it offers more competitive compensation. Although salary rates aren't the only factor that attracts and retains employees, you could position your organization to increase employee retention with better benefits. Of the six top motivators identified by the American Institute of CPAs, compensation is right in the middle, above flexible work schedules and paid time off. The AICPA's "Employee Retention Guide" provides employers with strategies for increasing employee tenure. Attracting high-quality candidates and retaining employees longer will reduce your recruiting costs over time as well as your cost per hire. Cost-per-hire costs are reduced based on recruiting less frequently than you would if you were offering less attractive salaries and benefits.

Step 5

Weave employee performance into your rationale. Depict how employees who are compensated with more competitive wages often are motivated to strive for higher performance ratings. This is particularly true when a pay-for-performance element is incorporated into the compensation structure – through which workers are rewarded based on reaching their performance goals. In addition, employees who know their work is valued may be inclined to demonstrate greater initiative and motivation. Pay-for-performance also could make it easier to conduct performance appraisals, saving administrative time for supervisors and managers.

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