Since so many organizations are skipping or delaying salary increase these days to save money and try to ride out the recession, the question keeps coming up as to whether they should also forgo adjusting salary ranges. It appears logical that skipping one is consistent with skipping the other. This is not so.
Granting raises and adjusting the ranges are two entirely separate and unrelated acts. Raising a salary is a function of an employee's performance, acquisition of new skills, and the company's ability to pay. Adjusting salary ranges is related to the external market for comparable jobs. While it is true that the economic slowdown has also put the breaks on the market as a whole, recent analysis of compensation surveys suggests that overall salaries have increased 2% to 4% in the last year and may well do so again this year (for those fortunate enough to still have a job).
Failing to adjust the range will result in your employees falsely appearing better paid relative to their colleagues in similar positions elsewhere. Over time, this could lead to them becoming vulnerable to being picked off by the competition. In addition, once you finally decide to adjust your ranges, it is likely you will need to make a large jump, perhaps as high as 10% or more depending how long you wait.
It is far better to continue in a business-as-usual manner with annual range adjustments even if you aren't willing or able to grant salary increases at this time. By communicating your intentions to employees, and explaining the separateness of the two acts, you will avoid confusion that might stem from increasing ranges in tough times.
Remember, just because you choose to ignore the market and make believe salaries elsewhere aren't increasing doesn't make it so. You are better off confronting the reality of what is happening around you and making sensible choices based on what is best for your business. Ignoring data is never a sound business practice.