A company must compensate its employees in a manner which will underscore and reinforce its values and beliefs:

• A desired future state will be obtained when compensation is viewed and used as a tool to achieve strategic objectives, and compensation programs provide ample opportunity for individual employees to receive total compensation that significantly exceeds the average total compensation in the relative job market.
• That said, at any point in time an employee would be expected to receive their current fair market value.
• Mutual setting of goals; fair, objective appraisal of individual performance; an open dialogue that includes both the good and bad about an employee’s contribution towards their own and the company’s goals, performance, and compensation.

The principles of a salary policy would include:

• Salary changes are not coupled with performance discussions (given at different times).
• Salary changes for individuals in a given wage pool shall be all determined at the same time and made effective on the same date.
• Compensation changes are compared against the best salary survey data available. Salaries shall be changed at the same timeframe as salary surveys are available, currently once per year.
• All salary survey data, company grade scales, and wage population compensation distribution information shall be available to everybody in that wage pool.

The activities of the salary policy are:

• Performance discussion shall be given in October and April.
• The October discussion format is based upon both manager employee answering four questions. (1) How do I think I did over the last six months? (2) How do I think you did over the last six months? (3) What areas would I like to improve over the next six months, and how could you help me? (4) What areas would I like you to improve over the next six months, and how do I think I could help you?
• The April discussion format is the same as the October format for questions, except the discussion shall include the employee, his or her manager, at least one person within their organizational peer group from within their organizational peer group, at least one of their organizational peers from outside their organizational peer group, at least one of their direct reports, and facilitator (preferably a trained human relations professional).
• Salary changes shall occur in July. No performance discussion takes place. Reference is the fair market value of the employee. Any employee who disagrees with the benchmark fair market value is based on compensation surveys is welcome to float their resume on the open market to determine their fair market value as long does their manager and human relations professional are involved in the process.