Visualizing where your team stands to tackles the salary raise period

Problem

Salary raises are always a hard topic, as there will always be someone who doesn't get one, and if someone doesn't get a raise, they're guaranteed to be disappointed. At my current company, we go through salary evaluations once a year and I have developed a method of my own to approach this period peacefully.

Actions taken

Backing up your decision is key and so it's important to ensure you are well prepared before talking with your team members. To do so, I have a graph of each person's salary, based on their seniority and their market value. Benchmarking is really important and it is my main data point reference. I try to take into account my team members' seniority, industry, location and other parameters to ensure I have a good estimation. I plot the graph as salary = f (seniority) and then add each of my engineers as a dot on that graph (with their seniority and current salary). I can then see who is paid over, below, or at their market value. I review each individual and if they are performing above my expectations, I underline their name to signal I want to raise their salaries. When someone asks why they didn't get a raise, I can bring up this graph (without their peers' placements) and tell them that I have worked out that their seniority matched with how much they were being paid. This message is generally positive, as you want your team to grow and improve over time. For the individuals who don't receive a raise, I prepare materials to discuss areas of improvement (e.g. technical skills, or behavioral skills), and I provide a plan to get there (i.e. coaching, resources, or objectives).

Key concepts

I believe engineers are not motivated by salary. While they want to be paid fairly, and not being paid fairly acts as a demotivator, engineers are motivated by learning opportunities, having an impact, and recognition. As a result, you shouldn't raise people's salary to make them work harder but to be fair and to prevent them from leaving. An engineer's salary should reflect their long-term value, so I will also sometimes use bonuses to reward exceptional work on a project.