Compensation, Part 2 - Planning for the New Year
Posted by Nancy Saperstone on Tue, Nov 30, 2010 @ 03:38 PM
In our last posting we discussed getting back to basics and developing your pay philosophy and compensation program. With the turn of the New Year and the holiday season upon us, now is the time many employees will be looking for answers about their compensation for the coming year and will also be looking for holiday rewards. Handling these compensation issues right will go a long way towards improving employee morale.
2011 Compensation Planning: The national HR consulting firms are projecting 2011 merit budgets of 2.7 - 3%. You should also consider the following to determine the 2011 merit budget for your organization:
- How much can the company afford to spend (What percentage can they increase their annual payroll?)
- How much "market exposure" do you have? If you’re "at market", you don't really need to spend much more than the market average merit increase percentage. Conversely, if you're "ahead of market" you don't need to spend anything, or if you’re "behind the market", you may need to spend more to get closer to market.
- Other internal/external factors: Are employee's engaged? How competitive is the current labor market, do you need to insulate yourselves from outside market pressure, etc.?
Communicate, communicate, communicate: Now, more than ever, is the time to communicate honestly and openly about current company business conditions. Do you have a big revenue opportunity that every employee needs to help support? Is there a critical project or product release that all employees need to be aware of? Employees only know what you share with them…prevent the company “grapevine” from growing by communicating honestly and openly with employees. This will also help build trust and employee morale which is a must in creating a positive working environment.
Say Thank You: The last 12 months have been trying times at work and home for employees and their families. A simple “Thank You” can go a long way to recognize the stress and difficult conditions all employees have endured. Consider hosting a company luncheon or ice cream sundae party where the Executives “serve” the employees; a personal “thank you note” to each employee from the CEO; or a small token gift (Dunkin Donuts gift card, Cafeteria gift card). The simple act of saying “thank you” can go a long way.
Start the New Year off right – with employees feeling valued and rewarded for their hard work!