how do you calculate salary increase in excel

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Generally, most workers can receive a salary increase percentage for their well-executed work. Since ancient times, working is the most common way of earning money, which results in the human behavior of trading goods and services.

Every day, millions of people leave their homes to go to work and receive a salary, which is compensation for their services; It can be calculated weekly, biweekly, monthly, quarterly, or as agreed between the worker and the employer.

In consequence, in this article, you will find a short guide to use Excel as a method for estimating your salary increase.

What does salary increase percentage mean?

Before starting with the calculation of your increase, it is important to remember that a salary is different from an hourly wage.

Salary is the amount of money that a worker receives on a fixed basis as compensation for his services; the amount is calculated according to the conditions established with the employer.
An hourly wage is a monetary compensation that a worker receives based on the number of hours he will have to work.

In addition, sometimes your employer can increase your salary by a certain percentage. This can occur due to many reasons, among the most common we find: good performance, extra work, or increased production thanks to your efficiency in your workplace.

How to use Excel for this purpose?

Microsoft Excel is a very useful tool in terms of mathematical operations. Thanks to all the functions that the program has, it is possible to perform any calculation in minutes by using the pre-determined formulas or creating one of your own.

In this case, we will use it to show you what is the increase percentage after receiving a higher salary.

Step 1

The first step is to create a new document in Excel and identify the cells before writing the data for the formulas.

From cell A1 through E1 write the following: old salary, new salary, difference, decimal, and increase percentage.

Step 2

Then, in cell A2 write your salary before getting the increase or bonus. For instance, if your last payment was $50,000, then write 50000.

how do you calculate salary increase in excel

Step 3

In cell B2, you will write your new salary. For example: if you accept a new position that pays $65,000, write 65000.

Step 4

Then, the first calculation you need to do is subtracting your old salary from your new one. In cell C2 write: =B2-A2 and press enter. Automatically, cell C2 will show the difference between both.

Step 5

In cell D2, you will transform the difference into a decimal, so that you can use it later in the percentage formula. To do so, divide the difference by the amount of your old salary. Write: =C2/A2 and press enter.

Step 6

Now, you only need to turn the decimal into a percentage by multiplying it by 100. In cell E2 write: =D2*100 and press enter. Based on the example, if you got a $15,000 increase, this means that you received a 30% increase.

Gross salary vs. Overtime

In the same way that you can calculate the percentage increase in your salary, Microsoft Excel can also calculate the amount you can receive for overtime and the amount of your gross salary.

gross salary

The gross salary is what that the employer pays you without including deductions that are generally made, such as taxes or insurance.

In contrast, according to the U.S. Department of Labor, overtime is the number of hours an employee works outside of the legal 40 hours in a normal workweek. In that case, if you worked 45 hours, you should be paid 5 overtime hours.

The Fair Labor Standards Act (FLSA) states that all employers must pay their workers the amount of at least 1 regular pay rate for each overtime hour.

Cost of living

When inflation drives up the price of goods and services, currency has less value, and the cost of living increases. Because the cost of living is always changing, the wages you offer your employees should, too.

You might offer a raise so your employees can keep up with increases in the cost of living. A cost of living raise is widespread among your team, regardless of performance.

To determine the cost of living, you can look at the Social Security Administration. The cost of living adjustment (COLA) is an increase in Social Security benefits to adapt to the economy. For 2021, the COLA is 1.3%. Offering a 1.3% raise would match this annual cost of living adjustment.

Merit

You might also offer a salary increase based on merit. Maybe you have an employee who took on new responsibilities or added a new skill or title. For example, you would probably give a raise to an employee who becomes a CPA.

Merit-based raises might not be widespread. If you do give raises to all your employees, the amounts might differ based on performance. Carefully calculate raises based on merit. Determine which employees best met your company’s goals, who added the most value, and who went above and beyond their regular job duties. Keep detailed documents backing up your decision.

One benefit of merit-based raises is to encourage other employees to pick it up a notch. If an employee doesn’t receive a raise, they might wonder how they can improve their work.

how do you calculate salary increase in excel

Length of service

Raises can also depend on an employee’s length of service. How long have they been with the company?

You might give a raise for employees who reach milestones, like being with your company for five years. This shows employees you value their service and want to keep them around for years to come.

Retention

You can also dole out raises to prevent turnover. Turnover can have a negative impact on your business. It can cost you time and money. And, it can lead to a decrease in employee morale. It’s important to do what you can to prevent turnover from impacting your business.

Although giving out raises won’t necessarily prevent turnover, it’s a tactic many businesses use.

Some employees leave because of money, while others leave for personal reasons or to search for a new growth opportunity. To determine if finances are a reason an employee is disengaged or looking for other work, you should have regular employee performance reviews and meetings. Determine whether offering a raise makes the difference between retaining and losing top talent.

How much should a raise be?

Deciding amounts for employee raises can be a difficult process. To help you decide, use data.

Although amounts vary, the average pay raise is around 3.1%, according to one survey. The average pay raise for top employees is 4.6%. And, the average raise for workers with an average performance rating is 2.7%. You might decide to give employees more or less than these averages.

excel

Excel (computing) Excel (a Microsoft spreadsheet program) exceles From English Excel. IPA(key): /ɛkˈsɛlː/ Excel ? (genitive Excels) (software) Excel (Microsoft).

resource: wikipedia

how do you calculate salary increase in excel