Managing pay raises in manufacturing companies
Strategic and responsible management of pay raises in a manufacturing company is an essential element of HR strategy. A properly planned pay raise system has a real impact on employee motivation and retention. What is pay raise management and how does it work? How to create a consistent remuneration strategy based on clear salary ranges in a manufacturing company?
What is raise management?
Managing pay raises in manufacturing companies means that the process is conducted in a thoughtful and standardized manner in accordance with pre-established criteria. Jacek Jędrzejczak, author of the book Praktyczne sposoby zarządzania wynagrodzeniami (Practical Ways to Manage Salaries), describes in detail the characteristics of the so-called basic salary scale. According to the expert, it is only possible to define the rules of the salary increase system in a workplace when:
As can be seen, wage policy in manufacturing cannot be left to chance. Careful management of wages in a manufacturing company should be an important part of the company’s business strategy.
Why is effective raise management important?
According to the State of the Global Workplace 2025 report prepared by the Gallup Institute, global employee engagement fell to 21% in 2024, the lowest level since the pandemic. At the same time, as many as 50% of employees are actively looking for a new job, and only 33% of respondents are satisfied with their professional life. This is a worrying sign for employers, especially in industries that are struggling with high employee turnover, lack of loyalty, and an overall decline in productivity. Effective management of pay raises is not only an important element of remuneration policy, but above all a strategic tool for increasing engagement and building a healthy organizational culture.
How to manage pay raises in a company?
Managing pay raises in a manufacturing company has a significant impact on employee motivation and engagement. A properly tailored system not only improves morale, but also strengthens the company’s competitiveness in the labor market. However, this process requires a conscious approach – both in terms of budget planning and defining criteria.
Defining the wage increase policy model
The aforementioned book Practical Ways to Manage Salaries describes in detail how to define a pay raise policy model. This model is influenced by external and internal factors.
- External factors include the company’s market position and the remuneration policies of its competitors. Focusing on the company’s current role as an employer will help determine the size and pace of potential raises.
- Internal factors include the company’s mission, vision, and values. At this stage, it is important to consider why employees choose our company and what skills and attitudes we intend to value most. This is also a good time to determine the preferred model for building human capital – whether we rely mainly on competencies and potential, or whether we focus only on results.
It is worth remembering that the pay raise policy model should be an individual matter for each company.
Ustalanie budżetu na podwyżki
Budżet na podwyżki płac w produkcji powinien być realny i adekwatny do możliwości finansowych organizacji, a także ustalany z odpowiednim wyprzedzeniem. Pomocne będzie przyjęcie założonych widełek procentowych oraz segmentacja budżetu w zależności od grup stanowisk
Criteria for granting raises
Creating a fair pay raise system requires defining clear, understandable, and practical criteria.
- Work performance (standards, annual evaluations). Regular employee performance evaluations should have the greatest impact on the decision to increase an employee’s salary. Achieving individual (e.g., quantitative or qualitative standards) and team goals is the basis for a raise or bonus.
- Benefits to the company. Not every position needs to be remunerated using the same model. For example, for machine operators, the fixed part of the remuneration, i.e., the base salary, will be the most important, followed by variable parts, such as quality bonuses. On the other hand, in the case of managers whose work has a direct impact on the company’s results, a different percentage distribution of remuneration can be applied, allowing for high bonuses to be achieved after specific results, e.g., KPIs, have been achieved.
- Professional experience and length of service. Many years of experience working in a production plant translates into excellent knowledge of the company’s processes and mission. It is worth rewarding employee loyalty appropriately – it is an excellent way to build a stable team.
- Unique competencies and potential for development. Taking into account the importance of competencies in the company allows you to determine the impact of individual positions on the company’s results. When determining this impact, you should take into account, among other things, the difficulty of acquiring and developing a given competency and its availability on the market. The more valuable specific skills are, the greater their importance in the raise management model should be. noSilo’s interactive competency matrices enable career path planning, thereby increasing employees’ chances of acquiring skills that are more valued within the company.
Managing pay rises in manufacturing companies is a well-thought-out measure that supports the long-term development of the organization. A consistent remuneration policy, based on clearly defined criteria, strengthens employee engagement and retention, and also contributes to strengthening the company’s position on the market as an employer.
Bibliography:
https://ridero.eu/pl/books/praktyczne_sposoby_zarzadzania_wynagrodzeniami/freeText);
https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx;
https://business.linkedin.com/talent-solutions/global-talent-trends.
For years, he has been working on how technology can genuinely support people at work—especially in production environments. He develops technologies and content that help companies shorten the onboarding time for new employees, better manage team competencies, and more effectively transfer knowledge.
In his writing, he combines the language of practice with an accessible style, showing that digitalization in factories is not just a trend but brings tangible benefits: lower turnover, higher quality, and greater efficiency. He draws inspiration from everyday conversations with clients and observations from production plants, ensuring that each article is grounded in the real needs and challenges of the industry.
