HR Compensation gets regional market data each year for each position and it's broken down by the size of the employer. Each position has the minimum, the 25th percentile, 50% percentile, 75% percentile, the maximum. HR Compensation will have a list of several departments to look at for potential wage equity adjustments when the market data come through. HR Compensation analyze their internal grids of what they pay for each position versus what the market data shows to see if we are remaining competitive with the market or if we falling behind.
After the research and analyzing been done, if it's been determined that people in these departments should be given raises, HR Compensation will do a cost report to show the higher ups how much it would cost the company to give these raises to the employees. Once the higher ups approve, then the manager will be contacted with a list of people that will be getting raises. The higher ups might get in the way of this by talking down some proposed raises from HR Compensation to lower amounts in order to lower the cost to the company.
The internal grids are based on experience. There is a starting rate for each position based on 0 years of experience. The maximum level on the grid is 20 years of experience. The more experience, the more money you get. Internally, HR do review people who been here for a long time to get them a equity adjustment to better reflect where they should be based on experience if they started out low and never got caught up.
Now here's the thing, when a HR Recruiter want to hire somebody, they work with HR Compensation on determine a salary for the employee. The Recruiter will tell Compensation the years of experience the candidate has, and the Recruiter will look at the grid and propose a number. Once Compensation is in agreement, they move forward. Sometimes the candidate might come back with a counter offer and if HR think the person's experience is that valuable and the position itself is really hard to fill or important to fill, they might work with the candidate on the counter offer and present them a higher proposed salary. If the position is easier to fill and the person's experience ain't so important, they might tell the candidate to kick rocks.
One thing that people do not know is that not all of your years of experience are counted as "whole". You might look at your past and say I got 10 years of experience. But if your experience isn't relevant enough to the job you're applying for or not directly tied, then either they won't count it at all, or they will count each year as 0.5 years of experience instead of 1 year of experience. So for example out of the 10 years of experience you think you got, depending on what that experience is, they might count 5 of the 10 as 5 whole years. Then count the other 5 as 2.5 total (0.5 x 5). For a total of 7.5 years experience. Because of that, you would fall lower on the compensation grid when your total experience is calculated.