Compensation Corner: Is Your Base Pay System Falling Behind the Times?
As a valued partner of Total Reward Solutions, it’s important for you to know this: If your base pay system has been in place several years without being reviewed or updated, your company could be falling behind your industry, your competitors, and marketplace standards. That means you could be paying too much base pay in your current total rewards system, paying too little to attract new talent, or simply be focusing on compensation components that don’t matter as much in your industry as they once did. Is it time for a fresh look to see how your base pay system measures up? Let’s take a closer look:
The Base Pay System Test of Time
It’s not uncommon for companies to leave their rewards programs largely untouched for a few years at a time. Often, they make token across-the-board percentage upgrades without really understanding – or even attempting to find out – how industry and market benchmarks are moving. While it is tempting to base compensation program changes on how your company is performing and what it can afford, what matters to current and prospective employees is what they are worth in the marketplace.
So if your current system has been in place 3 years or more; or if your industry has seen a lot of changes in recent times; or if your turnover rate has grown to a troublesome level; or if you are having trouble attracting new talent – you are probably overdue for a base pay system review.
You Might, However, Be On Solid Ground If…
…your base pay system has been maintained diligently, you benchmark your job positions every couple of years, and move your pay ranges at least that often. At Total Reward Solutions, we believe most companies should move their pay ranges about half the percentage amount of their average merit budget. This will allow employees to continue to move through pay ranges while your pay ranges also move forward.
Of course, you might be on shaky ground if your compensation systems have remained static, with no real competitive market monitoring or corrections.
The Bottom Line:
If your base pay system is falling behind the times – or falling behind your competitors – your company could suffer in terms of its financial position, employee retention, and job candidate appeal. But if your compensation and benefits staff is already overworked and can’t dedicate the necessary time to performing a comprehensive base pay system review, that’s where we can help.
At Total Reward Solutions, we can work with you on a project basis to update or overhaul your base pay system as needed. Our full base pay system analysis process typically contains 15 essential steps designed to cover critical aspects to keep your company competitive in the employee marketplace. Of course, we can also work with you to benchmark individual staff positions throughout the year. Whatever your need, we can deliver a compensation and total rewards solution to keep you operating from a position of knowledge and strength. To learn more, contact us today at 317.589.8529.
About Total Reward Solutions:
Have a referral for us? Total Reward Solutions is your trusted partner for compensation and benefit services. As you recall, Total Reward Solutions offers a broad range of compensation, benefits, performance management, and reward/recognition consulting services to help your organization attract top talent, motivate employees and retain top performers. We can partner with you on a project basis, on retainer, or as your total outsourced solutions provider for compensation services.
Call us today at 317.589.8529 to discuss how we can help your organization develop and implement competitive and effective compensation and total reward programs.