Why annual pay increases aren't enough

Annual pay increases may seem more than enough for some organisations but one leading CEO has suggested it may be beneficial to review salaries several times a year.

“We used to have an annual salary review but now we have what we call ‘connect conversations’ eight times a year,” says Darren Linton, CEO of digital agency Yellow.

“People are connecting and talking about their performance much more regularly so there’s no surprise at the end of the year, they know how they’re tracking and they’re getting constructive feedback from their manager so that makes it much easier.”

Linton – who’s been in the top spot since September last year – also says it’s good for the business to reward employees when they deserve it, rather than because a certain amount of time has passed.

“I think it’s important to reward people whenever is right for them, when they’ve achieved something or they’ve met some objectives they were set a few months ago,” he says.

While pay can be bumped up on a regular basis, Linton says the company has actually become much stricter or robust in why a salary increase is given.

“It’s not just because they’ve gone around another year and it’s an inflationary rise,” he tells HRD. “It needs to be connected to two critical things – one is their output in the role and the other is how they meet our organisational values.”

The firm has three simple values – do the right thing, make a difference and build great relationships.

“We do look at people across what have they achieved in the year but we also look at how they’ve gone about it in line with our values,” says Linton.

“We will reward people both with recognition in front of their colleagues but also with pay rises which reflect how well they’ve done across those values.”