Compensation Articles

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.

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 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.

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.

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.