Five Tips - Planning Pay on a Tight Budget
"Show me the money!" When a towel-clad Cuba Gooding Jr. made this demand in Jerry Maguire, he wasn't talking about a 2.8 percent increase to a base salary. But it's all relative,right?
Federal Reserve Chairman Ben Bernanke has spoken and he says that the recession "is likely over." The surveys have spoken, too, and they're projecting merit increases around 3 percent. Both WorldatWork and Watson Wyatt are projecting overall merit increases of 2.8 percent for 2010.
As a self-admitted skeptic, I just want to point out that projected increases for 2009 started out at 3.5%. According to both Watson Wyatt and WorldatWork, actual increases for 2009 came in at 2.2 percent.
The economic tsunami may have lost most of its muscle, but the collateral damage is here for awhile. As a consumer, and a conservative, I'm ambivalent about what some would think are fairly basic, low risk decisions. Should my husband and I trade in his 12 year old gas-gobbling SUV and have two car payments? Or should we stall for a bit? After all, even with 165,000 miles, she still gets the job done.
The comparison may seem trite, but both consumers and businesses are reluctant. So if you have 2 or 3 percent to spend, how do you do it? Here's my shortlist of basic considerations and some simple approaches.
Consider your pay strategy. How does your approach to salary management support your organization and its goals? What do you want to pay for? Is your base pay competitive with the market? Get some competitive data. Can you find and keep the level of talent that you need? Do employees view annual salary adjustments as an entitlement - or do they view them in the context of the value of their role in the organization and the contribution it makes?
1. Identify your key players - these are the people you can't afford to lose. Who do you have to keep and develop in order to succeed? Determine if they're paid at least in line with the market. If not, get them as close as you can as fast as you can.
2. Take a look at your solid performers. If their base pay isn't competitive, consider a phased approach to adjusting their pay to where it needs to be.
3. Realize that pay adjustments aren't required. If you've got average performers whose base pay is in step with the market, the adjustment could be minimal. If you've got people whose performance falls short, why throw good money after bad? Forego any salary increases for employees whose pay is above market. If one of your high performers falls in this category,give them a lump sum.
4. If you have an incentive program in place, shift your pay mix. Put more opportunity in an incentive that pays out only if the organization meets some threshold based on specific measures.
5. Communicate! Help employees understand your approach and show them the value not only of their base pay but their total pay: salary and benefits. Even though they're not "tangible," benefits and other ancillary programs are meaningful to employees and are a critical part of the entire compensation package.
Authored by Sandy Turba
Federal Reserve Chairman Ben Bernanke has spoken and he says that the recession "is likely over." The surveys have spoken, too, and they're projecting merit increases around 3 percent. Both WorldatWork and Watson Wyatt are projecting overall merit increases of 2.8 percent for 2010.
As a self-admitted skeptic, I just want to point out that projected increases for 2009 started out at 3.5%. According to both Watson Wyatt and WorldatWork, actual increases for 2009 came in at 2.2 percent.
The economic tsunami may have lost most of its muscle, but the collateral damage is here for awhile. As a consumer, and a conservative, I'm ambivalent about what some would think are fairly basic, low risk decisions. Should my husband and I trade in his 12 year old gas-gobbling SUV and have two car payments? Or should we stall for a bit? After all, even with 165,000 miles, she still gets the job done.
The comparison may seem trite, but both consumers and businesses are reluctant. So if you have 2 or 3 percent to spend, how do you do it? Here's my shortlist of basic considerations and some simple approaches.
Consider your pay strategy. How does your approach to salary management support your organization and its goals? What do you want to pay for? Is your base pay competitive with the market? Get some competitive data. Can you find and keep the level of talent that you need? Do employees view annual salary adjustments as an entitlement - or do they view them in the context of the value of their role in the organization and the contribution it makes?
1. Identify your key players - these are the people you can't afford to lose. Who do you have to keep and develop in order to succeed? Determine if they're paid at least in line with the market. If not, get them as close as you can as fast as you can.
2. Take a look at your solid performers. If their base pay isn't competitive, consider a phased approach to adjusting their pay to where it needs to be.
3. Realize that pay adjustments aren't required. If you've got average performers whose base pay is in step with the market, the adjustment could be minimal. If you've got people whose performance falls short, why throw good money after bad? Forego any salary increases for employees whose pay is above market. If one of your high performers falls in this category,give them a lump sum.
4. If you have an incentive program in place, shift your pay mix. Put more opportunity in an incentive that pays out only if the organization meets some threshold based on specific measures.
5. Communicate! Help employees understand your approach and show them the value not only of their base pay but their total pay: salary and benefits. Even though they're not "tangible," benefits and other ancillary programs are meaningful to employees and are a critical part of the entire compensation package.
Authored by Sandy Turba
Labels: Compensation, pay increase, salary adjustments, The Human Resource Department, THRD
posted by Sandy Turba at
1:19 PM
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