Compensation

It comes as no surprise that one of the reactions to our past 18 months of economic turmoil has been an increased focus by organizations on getting the most value possible out of every dollar they spend. This practice also extends to compensation.

2009 is now behind us and 2010 is here in full force. Chances are that all of the choices regarding compensation for 2010 at your company have already been made and budgets are locked in. It’s now an interesting time to take a look at trends for the past year and where compensation looks to be heading in the coming 12 months.

Under any circumstances, retention strategy is always high on the human resources priority list. With today’s complicated market conditions, figuring out the best way to keep your star players is more difficult than ever. Traditionally, organizations hold on to their key talent by paying those employees above market rates, or providing compensation increases beyond the national average. In these trying times there are many companies who aren’t able to play by those traditional rules.

Transparency in compensation communication should start during the recruitment phase. Few organizations fully leverage their ability to attract quality candidates when making a job offer. Most offer letters will cover base pay and perhaps highlight a few of the benefits available. Can you imagine the impact your recruiting approach would have if you disclosed everything included in your total compensation package?

Is it time for your organization to overhaul its compensation philosophy? If you are like most employers facing a tough economy, the answer is an emphatic "yes!" You can't afford to keep using yesterday's strategies in today's business environment. In 2009, approximately 4 out of every 10 companies instituted salary freezes in a desperate attempt to stay afloat. The pain is likely to ease this year, but it is no longer possible to ignore one fact: employers need a higher return on their employee compensation investment.

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As an employer, you already spend a significant portion of your budget on total compensation for your workforce. Can you afford to invest in continuing education as well? If you do it right, the answer is probably yes. Many employees value tuition reimbursement programs. This type of benefit offers a way for workers to improve themselves and advance their careers. It also makes them feel that their employer believes in their abilities. However, you need to plan your program carefully to maximize your ROI.

Is your company practicing good compensation communication? You know that making employees aware of the value of their total compensation is important. However, there is one area where many companies are leery about being fully open. That’s when it comes to discussing actual salary amounts.

Employers are becoming increasingly aware that incremental salary increases don’t always offer the biggest “bang for your buck” when it comes to motivating and retaining top performers. Often, such pay raises are seen merely as cost of living increases that are expected. It’s hard to get excited about an extra 2-3% that will barely cover the rising price of gas or other necessities.

As an employer, you understand the value a talented team of employees can bring to your business. You can’t afford to miss out on attracting top job candidates from every cultural background. However, many companies do just that when they fail to create a welcoming atmosphere for a diverse workforce.

In an increasingly global marketplace, an exclusionist attitude is neither profitable nor desirable. Whether you are hiring workers from one of the many cultures within the U.S. or immigrants from other countries, here are some things to keep in mind.

It’s probably safe to say that not many of us would choose to relive the last few months of economic insanity if asked. In truth, the volatile nature of this year has forced organizations to think outside the box to survive. As happens frequently in difficult environments, the innovations and trends that have surfaced over the recent months will help us all build more effective organizations going forward.

In this week’s podcast, Brenda Perkins interviews Tim Davis from the law offices of Constangy, Brooks, & Smith. Davis has been with this prestigious firm since 1992 and is considered one of the top 100 employee relations lawyers in the U.S. With the passage of some form of the Employee Free Choice Act likely in the near future, Tim’s expertise is invaluable. Here’s some of the advice he has for HR professionals and employers who want to remain union free in the upcoming years.

The end of the calendar year is always known for a few things around the corporate world: the closing of the financial books, the planning of next year’s initiatives and the doling out salary increases or year end bonuses. For a majority of companies, raises and bonuses won’t be making an appearance this holiday season and employers in every industry are searching for ways to prevent a morale meltdown.

It was recently announce that unemployment in the U.S. has reached double digits at 10.2% nationally. The worst we’ve seen in about three decades. While this isn’t good news by any stretch, it also doesn’t have to have a negative impact on your business.

As with any challenging market, the impact this unemployment situation will have on your business will be determined by how you react to it. Here are some thoughts about the pros and cons of the current climate – and tips for how your company can navigate the situation the best way possible.

Salary benchmarking gives you the opportunity to take a balanced look at your company’s pay in comparison to that offered by other employers. Like any review process, this one is only as good as the data upon which it is based. It is possible to use free web tools to get a broad idea of the salary levels offered for comparable positions at other businesses. Since this free information is probably what your employees are looking at, it can be helpful to at least browse such sites.

When it comes to compensation planning, many businesses need to completely re-evaluate their current structure. The passage of the Fair Pay Act will no doubt provide some impetus for companies to take on this unpleasant task. In addition, the economy is continuing to present challenges. Paying attention to talent management is more critical than ever. Money is one tool among many that can be used to incentivize talented workers and increase productivity.

Lilly Ledbetter’s case will probably go down in history as the most successful failed pay discrimination suit ever. Ledbetter lost her lawsuit when the Supreme Court ruled against her in 2007. However, the subsequent signing of the Fair Pay Act in 2009 represented a more meaningful victory with far reaching consequences for all U.S. workers.

If you aren’t familiar with recent legislation related to genetic testing, you may be thinking “Who is Gina and why did she have a law named after her?” GINA actually stands for the Genetic Information Nondiscrimination Act. In November of 2009, employers will be required to comply with a number of new regulations regarding health data. For example, the law makes employment discrimination based on genetic profiling a violation of FLSA.

The economy is currently suffering from setbacks on a number of fronts. Credit is tight, the price of basic necessities is up, and the stock market is in a downward spiral. Steep escalation in salaries and the lure of generous stock options are probably off the table for the foreseeable future. Even a steady increase in compensation to keep step with inflation is becoming difficult for many companies to maintain.

Keeping employees informed about their total compensation is always a good idea. However, communicating effectively on this topic can be tricky. Should you simply calculate the company’s dollar outlay per participant for each benefit you offer? This approach may end up giving your workers a list of numbers that makes little sense to them. A more targeted approach that includes realistic scenarios can help people better visualize what they are receiving.