Salaries are always an issue inside any company. Every manager believes he or she has the best performers who need more money. Every HR manager is trying to keep salaries within the equity constraints of the company’s compensation plan and budget. For CEO’s, salaries can be one of their biggest headaches.
Managers often believe that it is imperative to pay their best employees outside of established parameters to keep top performers happy and on the job. They worry about losing critical employees to competitors because of a lack of competitive compensation practices. It’s fairly safe to assume the information being shared by managers is coming from employees within their department. Most managers don’t have time to investigate the salary plans of competitors. But they do find time to run to the CEO with their fears. Without solid compensation goals and plans for staying in line with or above the competition, it’s difficult for your CEO to discern fact from fiction.
HR can be a real hero for providing your Senior Executives with a regular comparative analysis of salaries from your recruiting areas, what is currently being paid, and how your salaries compare with the competition. Utilizing this data, your executives can establish the company’s position on wages/income for your employees in relation to the competition. Do you want to be at par or perhaps in the upper range of the recruiting market? Once the company communicates its position to everyone within the organization, staying on target and compensation management becomes much easier. Everyone is working from the same blueprint and understands the goals and objectives.
In this economic environment, it’s not just salary that attracts talent, however. Your compensation program should consider benefits that are outside the box like parking fees, toll tags, annual guaranteed educational experiences, sign-on bonuses, project completion bonuses, or even use of a car for driving around during the day, to name a few. Employees are becoming savvier about the “total compensation package”. So, companies can look for innovative programs with a high ROI to attract talent without always spending compounding salary dollars.
The key is finding the right information from the best source within the timeframe that it is needed. If you can’t afford to buy a survey, you can build your own. It’s not that difficult and there are several excellent resources, including free information at www.bls.gov . Once you’ve built your survey, you can use the data to build a competitive compensation model.
A strategic position in the labor market is best driven by a dynamic compensation program based on external competitiveness, internal equity and the company’s financial ability to pay.