Total Reward Solutions in Print
I Have the Data; Now What?
By now you should have received your data back from the salary surveys you participated in earlier this year. But now... what to do with all of that information?
You will want to start by ensuring you review your compensation strategy for your company. Do you wish to position yourself less than market, at market, or above market? Do you need a different compensation strategy for various divisions or various segments of employees? Is it easy for you to attract talent or do you have pockets where talent is scarce? How do you want your pay mix (base to variable) to be relative to where the market is?
Once you have solidified these decisions, you are ready to take your market data and begin to apply it to your employee data. You will want to look at your employees' base data relative to the market position you want to be at as well as your employees' total cash data relative to the market position you want to be at.
(Excerpt from the Total Rewards Solutions Newsletter, Fall 2011)
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Survey Time
It is the time of year that some companies begin their salary survey submission process. Before you start downloading data and submitting it, you will want to consider completing the following steps:
- Review any job descriptions that have changed in the last year to see if the survey matches should change.
- Ensure you have job descriptions for all new jobs created since the last time you completed survey submissions so that you might match your new jobs against your survey matches.
- This is also a good time to get outdated job descriptions cleaned up so that you can do accurate survey matching. You may want to put each department, division, or even a few of each on a regular update schedule whereby job descriptions have to be reviewed and reapproved every 2 to 3 years.
(Excerpt from the Total Rewards Solutions Newsletter, Spring 2011)
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The Re-Engineering Delima
Dilemma:
In this tough economy, the leadership of my company set a target for desired cost reductions. Included in the equation are cost savings from “re-engineering” the workforce (meaning layoffs), such that the size of some executive bonuses are directly linked to the cost savings from layoffs. I would be curious to hear what others think about the ethics of this situation.
Response from Cassandra Faurote, CCP, SPHR, Total Reward Solutions:
I am not sure how you can continue to get employee engagement once the staff finds out that executives were paid bonuses based on the cost reductions achieved through layoffs. This is the kind of behavior that will cause employees to flee once the economy turns around. Staff will remember how they were treated, and more importantly, how executives acted and were paid during these tough economic times.
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Distributing Low Merit Budget Pools
What to do with low merit budget pools...
Many organizations have found themselves in the current economy needing to lower their merit budget pools. One of the challenges that come with a low merit budget pool is how to distribute those dollars from low to high performers. If you have a merit pool of less than 3%, it becomes difficult to distinguish between performers utilizing a grid based on performance rating with a percentage increase associated with it.
A new approach...
There is a different way to approach low merit budget pools. One option an organization might consider is to establish the pool of money associated with let's say a 2% merit budget. Then, rather than a percent awarded for a performance rating, a flat dollar amount could be awarded. If an organization has tracked overall performance ratings for a couple of years, then you can determine what your normal distribution pattern is so that you could model what a flat dollar amount for each performance level could be given and still come in within budget.
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10 Ways to Use Your Merit Dollars
There is certainly more than one way to award merit dollars, but how do you choose? What is the best fit for your workforce and your company’s culture? There is no right answer, but there are lots of options. Which option you choose could be based on your merit pool size, the amount of flexibility you want to give your managers in determining pay awards, if you want to award employees lower in range larger pay increases, how much you want the increase tied directly to merit, and what kind of message you want to communicate to your workforce. Following read about the top 10 ways to use your company’s merit dollars, as well as the pros and cons of each option.
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