How to Manage the Annual Salary Increase

11 January 2019

Human Resources Column


“As a small tech business owner, I would like advice on how to handle salary increases. Certain employees have shared their expectations with me for 2019, and I want to be able to address this matter effectively by providing a clear response.” – Geneviève

At the beginning of the year, much like Geneviève, a number of entrepreneurs are faced with the same task, a subject that has to be approached very delicately. We have submitted this question to our HR columnist, Sylvie Lepage. Here are her recommendations:

Look at the market

For Geneviève, being aware of the current salary trends would be a great place to start. In Quebec, a summary of salary projections is made available by the Ordre des conseillers en ressources humaines agréés (CRHA).

Prepared by renowned consulting firms, this document sheds light on the average salary increase projections for a group of organizations in Quebec, and includes disaggregated data by business sector and annual revenue. This reliable source of information will help Geneviève compare her company’s salaries with the market average. I would suggest that she evaluate the salary conditions of every key role in her business. Certain wage research can be conducted online, however, consulting with a firm of human resources professionals allows you to acquire data that is more accurate and trustworthy.

Establish a budget

Based on her research, and her business’ financial situation, Geneviève will be equipped to prepare her salary increase budget. Taking into consideration the annual employee reviews she will also be able to decide which employees stand out for their continued efforts and performance, and justify compensating them additionally.


Prepare and deliver the message frankly

Before tackling the one-on-one meetings with her employees, it’s in Geneviève’s best interest to prepare a personalized document, combining all the elements, to hand out to each and every one of them: the calculation method used, the amount of the salary increase, the date the change will take effect. She can take advantage of this meeting to discuss with the employee and find out their point of view. If an employee is unsatisfied with the increase, Geneviève will have to stay calm and avoid confrontation by letting her employee voice their concern. When explanations are given with transparency, tact and honesty, the dissatisfaction reduces considerably and the water cooler conversations and rumors dissipate.

Reward them in other ways

If the business can’t afford to hand out competitive salary increases, other interesting options to compensate your employees can be explored. For example, offer career advancement, allow reduced hours or compressed work schedules, adjust work hours to accommodate family responsibilities.

By measuring the needs of her employees, Geneviève can propose a more customized remuneration option, all while staying competitive. Why not consider a few tailor-made options? An employee finishing a university degree part-time will welcome a tuition payment, while another who is mid-career, will appreciate a contribution to their personal retirement fund.

If paying your employees well makes them stay in the short term, here’s the key to fostering loyalty and longevity: listen to them, communicate salary information with transparency, and customize remuneration programs to suit their respective needs.

Do you have questions to be answered or a problem that needs solving. Contact our human resources specialist at

About the author

Sylvie Lepage

About Sylvie Lepage

Founding Chair of Innovation RH

Member of the Chartered Professional in Human Resources (CPHR) and Registered Corporate Coach (RCC), founded the consulting firm specializing in human resources management, Innovation RH, in 2004. Sylvie has a long history of carrying out strategic assignments in human resources management, business coaching, organizational development, talent management and compensation.