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Start a free trialFair compensation is key to success in your small business — but you can't stop there.
In my experience as CEO at a small company, I've learned that the way you talk about salary is just as important.
Having a salary increase letter ready to go, that you can amend and personalise as needed can have a big impact on your relationship with your team member whilst you deliver the news to them. It takes finding the right wording, and making sure all the correct information is there.
In this blog post, I’ll give you an overview of what a salary increase letter should include, a free template to get inspiration from and do’s and don’ts for when it comes down to writing it.
Let’s start with the basics – a salary increase letter is a simple way of letting your team member know that their salary has increased, and giving them written confirmation about the change.
There are three pieces of information you should always include when writing a salary increase letter:
Depending on the nature of the increase (change of role, promotion, etc.), you can also incorporate additional information about the role specification, expectations and why the employee has been promoted, but this is not necessary.
There are a few reasons why you should think about writing a salary increase letter:
At Charlie, we have a team of qualified HR advisors who help companies put together official letters and HR documents. This is what they recommend including in a salary increase letter:
This is just an example of what it can include – if that’s useful to you, you’ll find below a template written by our HR experts with the correct wording. You can copy and paste or even download in PDF if you’d like to use it.
Hey [Employee's Name],
I wanted to share some great news regarding the salary increase that was discussed. The whole management team has given it the green light as a way to show our gratitude for your hard work and dedication to the company over the past XX years/months.
We genuinely feel lucky to have you on our team, and we all agree that you've had a positive impact on our business performance. So, after careful consideration, I'm thrilled to let you know that:
We believe this raise accurately reflects the valuable work you do for us, and we hope it encourages you to take on more exciting projects with the company.
If you have any concerns or questions about the increase, please book a call with your line manager or our HR team.
Warm Regards,
[Your Name]
[Your Position]
[Company Name]
The concept of writing a salary letter may seem like a straightforward task from the outside, but there are a few do’s and don'ts you should think about before opening up your Word document and typing away.
In the past, I’ve made some of these mistakes myself and I’d like to share with you what I learned from them.
Although we would like to reward our employees whenever possible, small businesses often face one major issue: getting the funds to do so.
Whether it’s a bad economic downturn or revenue levels not up to your expectations, there are many reasons why you wouldn’t be able to give your team the salary increases they wish for.
At Charlie, our performance review process allows for team members to get three opportunities to get re-levelled each year.
While this doesn't guarantee a promotion or pay raise on every occasion, it does provide opportunities for growth within the company. This approach also plays a pivotal role in fostering employee retention since many individuals join startups to seek fast-track development compared to bigger businesses.
Before you even think about giving someone a salary increase, you need to have a reliable process for professional growth in place.
What does that mean exactly?
At Charlie, we have a standardised way of approaching progression and here’s how it works:
This gives our team a clear perspective when it comes down to improving their performance and knowing clear expectations have been laid out for them.
Once they’re ready to progress, there will be a conversation about whether this is time for them to get a promotion or raise. A progression framework and clear process ensure everyone is aligned on what the outcome is likely to be, and there are no surprises.
Another valuable tip, which I often use in my role as a coach, is to get team members to become their own advocates when it comes to promotions and pay rises.
So, on top of their progression framework, you should think about:
You see, getting your salary increase process right takes much more than just getting a template.
To ensure you do it properly, you need to have processes in place and know what the letter needs to include legally, as well as make sure it has a positive tone and all the information you need.
Want more HR templates? Simply have a look at these ones: