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Time for a Fresh Look at Your Base Pay System?

April 16, 2015

Time marches on. Conditions change. What worked once might not be so effective anymore. These truths apply to many aspects of life, and they are certainly true in the world of employee compensation. In fact, if your base pay system has been in place for 3 years or longer, it is almost certainly time to take a fresh look. And if your base pay system has been in place for 5 years or more, chances are pretty good that it has fallen behind competitive standards in the marketplace. If that’s the case, your company could be paying too much for your staff talent, paying too little to attract new hires, or simply be focusing on the wrong types of compensation that matter in your industry.

How can you tell if your base pay system – or your overall compensation program – needs an overhaul? And if it does, what is your next step? Read on for answers:

The first test for whether your pay and compensation systems need a fresh look is, again, the test of time. If you established your current pay and compensation programs 3 years ago, 5 years ago, or even longer, you should have been frequently monitoring industry standards and benchmarks and making any necessary adjustments. If your compensation systems have simply been static, however, with no real competitive monitoring or corrections, your organization may be seriously out of sync with your industry. That can hurt your company in terms of its financial position, employee retention and job candidate appeal.

On the other hand, if your base pay system has been maintained prudently, and you are benchmarking your roles every couple of years and moving your ranges at least that often, then you are probably in good shape. At Total Rewards Solutions, we recommend (per current market conditions) that most companies move their pay ranges about half of the percentage of your average merit budget. This methodology will allow your employees to continue to move through the pay ranges without having to look outside your company for reasonable compensation advancement opportunities.

The bottom line is this: Whether you need help updating your entire system or just need to do some current benchmarking to see where your organization fits within your industry, Total Rewards Solutions can help. We can work with you on a project basis to update or overhaul your system as needed. Or, we can work with you to benchmark individual staff positions as needed throughout the year. In fact, we can usually handle these “one-off” market pricing requests within 48 business hours provided we have all the information we need about that particular job.

So as you move through the year and work to keep your company competitive in your industry, contact us today at 317.589.8529. We’ll be glad to help you keep your base pay and compensation programs current and competitive.

Posted Under: Base Pay