Salary formation (info for HR)

The main principle is that salary formation helps KI to reach the goals of the organization. KI is a government agency, and the government agencies as a whole must not set wage standards in the Swedish labor market which means that KI is not totally free to set salaries for our employees. The rate of wage growth must be decided by the competitive sector, mainly the export companies, whose cost development must be adjusted to the outside world. Otherwise, the employment and socioeconomic stability in Sweden is threatened.

Salary setting

The bases of salary setting are performance and skill in relation to business objectives, and responsibilities and severity. Supply and demand on the labor market for various professions may affect the salary as well as significantly change of job assignments according to responsibility and severity. The purpose of the salary setting is to reward performance and provide optimal opportunities to retain and recruit staff. Salaries are set upon:

• new recruitment (the salary should be reviewed every time you enter into an employment, i.e. when you prolong a fixed-term employment).  
• periodic salary reviews

In some special cases the salary can be reviewed outside of the periodic salary reviews.

The president is ultimately responsible for the salary setting at KI but the departments have a huge responsibility for salary setting at the department.

The salary must be objective and there must be equal pay for equal work. Gender, country of birth and other personal circumstances cannot be considered when setting a salary.

Setting salary when entering employment

It is important to set salary based on the task assignments, responsibility and expected performance when setting a new salary at employment. The salary must also be in line with the market. A new salary is set at KI when prolonging a fixed term employment but no more than once a year.

Salary review

Salary reviews at KI is conducted in line with central collective agreements, for more information see Salary review.

A salary review is a huge cost for KI. It is one of the biggest investments during a year. The wage costs are also a long-term expense. The work surrounding the salary review should therefore be thorough and well prepared to achieve the most successful outcome as possible. A less successful salary formation may lead to high costs, less satisfied employees, and an organization that is not optimal.

Before the salary review it is important to discuss the points below in the management team.

• Analys the organizations needs
• What competence is needed? Do employees quit? Is it hard to recruit new employees? Do we need to redistribute resources?
• Are the salaries supporting our goals for the organization?
• How does the salary formation look at our department and at KI?
• Analys of the economic conditions
• How do we design a salary formation with a clear connection to the goals of the organization? Do we need to change anything for example in the relation between salaries or outcome for different groups? Usually, a change takes more than one salary review to achieve.

The goals and priorities of the management must be based on a joined analysis of economic frames, actual salary structure, need of competence and the situation of the market.

The department must have a clear view of what actions they need to take to recruit and retain the right competence and what costs this may entail. The department also needs to priorities what actions to take and what actions need to reject due to de economic frames.

Performance management dialog 2

Performance management dialog 1 is usually conducted after the goals of the organization is set in the beginning of the year. In this dialog the manager and the employee discuss goals, expected performance, competence development, the focus for this year etc.

Performance management dialog 2 is usually conducted in the fall, always in connection to the salary review and focuses on performance in comparison to salary criteria and the goals set in performance management dialog 1.

The purpose of performance management dialog 2 is to get a clearer dialog between employee and manager on salary setting in connection to the performance during the year. The employee should get a clear idea of how the manager assesses performance and ability. The dialog will focus on the employee's objective achievement, results and how the assignments were performed. The dialog gives clarity in the grounds for the salary and is therefore a part of the leadership in the same way as performance management dialog 1.

The salary setting must reflect the difficulty and responsibility of the work. Other factors as salary situation (löneläge) and need for the competence can be important in salary setting. In the dialog the employees should get an opportunity to account for their work and their efforts during the year. It is important that both the manager and the employee are well prepared before the meeting to achieve a good dialog.

A continuous dialog during the year between the manager and employee is important to achieve a clear connection between goals, assignments, performance and results.

For members in Saco-S and for unorganized members salary review is conducted through a dialog in which the manager presents a new salary based on KI:s salary criteria’s. The employee accepts the new salary or if the employee is a member in Saco-S the employee can disagree.

Regarding members of OFR / S, P and O and Seko; The performance management dialog 2 is to be conducted the same way as for other employees. However, the salary is not to be agreed in the dialog. It is set in negotiations between employers and unions.

Preparations before performance management dialog 2

Before the manager conducts his or her performance management dialog 2 it is important to prepare. This must be considered:

• Think through what you want to achieve for every employee and for the group
• Think through facts and arguments for your assessment and your distribution. The assessment must be objective, concrete and equivalent and based on KI:s salary criteria.
• Ask for more information about the performance if the employee has other managers, project managers or supervisor. Make a balances assessment.
• Ask for support and advice from your manager colleagues.

For support and aids and to connect the salary setting to KI:s salary criteria there are templates for salary setting. You can find them in the salary policy Salary as a policy instrument.

Salary setting for doctoral students

For doctoral students the salaries are set due to the so-called doctoral latter why they should not take part of performance management dialog 2.