1. Anchoring to outdated benchmarks
Market data has a shelf life. Relying on a benchmarking report from two or three years ago — or worse, on what a role “has always paid” — means your review is calibrated to a market that no longer exists. Regulatory change, economic shifts and competitor movement all reshape market rates, often within a single year. If your benchmark data predates your last review, refresh it before you allocate a dollar.
2. Treating the review as purely a budget exercise
When the review starts and ends with “we have 4% to spend,” the conversation becomes about distribution mechanics rather than reward strategy. The budget matters, but it should be shaped by your remuneration philosophy: where do you want to position against market? Which roles are critical? Where are your retention risks? A budget-first review optimises for cost control and little else.
3. Ignoring internal relativities
External benchmarking tells you what the market pays; it doesn’t tell you whether your own house is in order. Reviews that focus solely on individual increases can entrench internal inequities — including gender pay gaps — that accumulate quietly over multiple cycles. Before finalising outcomes, test them: are employees in comparable roles, with comparable performance, paid comparably? With WGEA gender pay gap publication now a reality, the annual review is the moment to find these issues before your reporting does.
4. The multi-year catch-up jump
Deferring reviews to “save money” is a false economy. Skipping a cycle or two often forces a large corrective increase later — and big jumps attract attention. For listed companies, pay increases of 10% or more for directors and executives are likely to draw close scrutiny from shareholders and proxy advisors, and the Corporations Act requires public company director remuneration to be reasonable against market comparable roles. Smaller, regular adjustments are easier to defend, easier to afford, and far less likely to feature as a red flag in your Remuneration Report.
5. Uniform increases dressed up as fairness
Applying the same percentage to everyone is administratively easy and strategically expensive. It tells your highest performers that their contribution is interchangeable with everyone else’s — a message they will eventually act on. Differentiating pay increases for performance, applied through a transparent and consistent framework, is not unfair; it is the point of a performance-based review.
6. Deciding everything before the data arrives
We occasionally see reviews where outcomes are effectively settled in advance — the benchmarking exercise is commissioned to validate decisions already made. This wastes the analysis and, more importantly, removes the opportunity for the data to surface genuine issues: roles drifting below market, compression between levels, or emerging retention risk. Let the data inform the decision, not decorate it.
7. Communicating the number without the narrative
The final red flag arrives after the review is done. An increase delivered without context — no reference to market positioning, performance, or how the decision was made — invites employees to fill the gap with their own assumptions, usually unfavourable ones. Managers should be equipped to explain not just the outcome, but the basis for it. A well-communicated modest increase often lands better than a poorly communicated generous one.
The common thread
Each of these mistakes shares a root cause: treating the remuneration review as an annual administrative event rather than a strategic process. The organisations that get it right treat the review as the moment their remuneration philosophy becomes real — informed by current data, tested for equity, differentiated for performance, and communicated with care.
Frequently asked questions
How often should a remuneration review be conducted?
Annually, as a minimum. The market never stands still — wage movement, regulatory change and competitor activity reshape pay levels within a single year. An annual cycle keeps adjustments small and defensible, and avoids the large catch-up increases that attract shareholder scrutiny.
What is a reasonable annual salary increase in Australia?
It depends on market movement in your industry and the role’s current position against market — there is no universal number. Increases that track broader wage movement and are supported by current benchmark data are readily defensible; increases of 10% or more, particularly for directors and executives of listed companies, will typically invite closer stakeholder scrutiny. Our Remuneration Pulse tracks current movement across the Australian market.
When should we commission benchmarking data for the review?
Before the budget is set, not after. Benchmarking data should inform the size of the pool and where it is directed; commissioned late, it can only validate (or quietly contradict) decisions already made.
How The Reward Practice can help
We support organisations across the full review cycle — from refreshed benchmarking data and budget design through to pay equity testing, calibration and outcome communication. If any of the red flags above feel familiar, the lead-up to year-end is the right time to address them.
Run a review you can stand behind. Contact us now.