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Salary Adjustments

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Compensation 101

  • Format: Self-paced
  • Course Duration: 1 hr 8 mins
  • SHRM Professional Development Credits: 1.0
  • HRCI General Recertification Credits: 1.25
  • Certificate of Completion (after passing quiz)

Compensation plays a significant role in an organization's success. A compensation strategy must be designed well to attract and retain talent. As the single largest expense for most companies, it's imperative to develop the right pay structure and appropriate recognition methods. This course is for HR Generalists who need to learn basic compensation principles and their application to the business. During this course, you'll learn about developing a compensation strategy, methods for conducting a job analysis, developing job descriptions, and setting up base and variable pay structures. Compensation is one of those topics you must understand to not only drive the success of your business but also build essential skills for a successful career in HR.

HR Jetpack is recognized by SHRM to offer Professional Development Credits (PDCs) for SHRM-CP or SHRM-SCP. This program is valid for 1.0 PDCs for the SHRM-CP or SHRM-SCP. For more information about certification or recertification, please visit

This activity, has been approved for 1.25 HR (General) recertification credit hours toward aPHR™, PHR®, PHRca®, SPHR®, GPHR®, PHRi™ and SPHRi™ recertification through HR Certification Institute® (HRCI®). For more information about certification or recertification, please visit the HR Certification Institute website at
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Title: Salary Adjustments
Module: Base Pay
Duration: 2:02

There are many reasons for adjusting an individual employee's pay. Pay changes must be tracked and retained in an employee’s file and appropriately communicated to the employee. The most common reasons for adjusting employees' pay include:

  • Promotions, demotions, and transfers
  • Merit increases
  • Market adjustments
  • Reclassifications due to changes in job responsibilities
  • Across the board increases
  • Cost of living increases (based on the CPI)
  • Mandated pay increases such as those required because of federal or state minimum wage rate increases

Merit increases are one way organizations link pay to performance. Typically, an organization establishes a merit increase budget expressed as a percent of payroll.

Many organizations provide managers with salary increase guidelines, such as the size of an increase based on the level of performance like the grid shown or based on both performance level and the position of the employee's pay within the pay range for his or her job.

Merit increases present many challenges. When salary budgets are small, it is difficult to distinguish increases for high performers and low performers. In addition, employees may view merit increases as an entitlement. It is also important that managers take the time to fully and fairly review an employee's performance before recommending a pay increase based on merit. Finally, when provided salary guidelines, managers may skew their performance ratings to stay within budget.

For these reasons, some organizations have considered delinking base pay increases from performance and use variable pay instead to recognize performance. Keep this in mind as we move to the next module: variable pay programs.

Instructor: Pamela Sande

Pamela Sande, CCP, is the Managing Principal of Pamela Sande & Associates, LLC. Pamela has over 25 years of human resources experience in both consulting and corporate roles, including as an HR executive and as a specialist in designing total rewards programs that drive organizational performance.

In her current role as Managing Principal, Pamela and...

Pamela's Full Bio

SHRM Recertification

HR Jetpack® is an official SHRM Education Partner recognized by SHRM to offer Professional Development Credits (PDCs) for SHRM-CP or SHRM-SCP.

HRCI Recertification

HR Jetpack® is recognized by HRCI as an approved provider to offer credit hours towards aPHR™, PHR®, PHRca®, SPHR®, GPHR®, PHRi™ and SPHRi™ recertification.

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