As we begin 2010, most of us are feeling the burden of greater demands at work while at the same time we are less hopeful about improving our compensation package. Many of us are in the difficult position of recommending pay policies that will not be favorably received. What can we do? Stay informed, be as consistent and objective as possible, and look for new ways to motivate and inspire workers.
Does anyone else remember 1983 when the unemployment rate was 10.2%? The rate today has not been seen since 1983. At the time I was a recent college graduate, so my job career began with high unemployment as the “norm”. I took a job that paid well below what others were paid that were hired only a few years ahead of me. Sometimes I don’t think I ever really recovered and perhaps this experience contributed to my preference for working as an independent consultant. Experts say graduates today will likely lag behind others in their compensation for years to come. They will also be more likely to become entrepreneurs. So today, I bring you some resources to keep you up-to-date about compensation issues and wish you much perseverance and steadiness as you traverse the road ahead.
Salary Budget Increases are Less Than Anticipated
The compensation professionals’ main go-to place for salary budget information is the World At Work, and they have recently updated their annual salary budget report. According to their most recent research, actual salary budgets have decreased from 2.8% (anticipated) to 2.5% for 2010. Employers are continuing to conservative in their outlook and this is influencing pay policy and rewards.
Some of the ways that employers are motivating their workforce is to increase training and career development opportunities, non-cash rewards (such as recognition programs), flexibility in leave and other benefit programs, monetary rewards for high performers and other high demand employees.
1.4% Increase in Civilian and Military Pay Proposed for Federal Budget
The President’s budget is proposing a modest increase in pay for civilian and military workers for 2011. This follows a 2% increase for Civilians and a 3.4% for Military in 2010. Although it is early in budget discussions, this suggests a fairly hard line. Read more here
Where do you go for fast compensation data on the market?
Although an in-house custom compensation survey is ideal if you have the time to conduct one, sometimes you need data on only one position, or you need market information fast. If you want to know where compensation professionals go to get up-to-date market data, check out these three sites. All three are fairly easy to use, but each has different strengths.
- My colleague in executive compensation recommended www.Salary.com and I have to agree that the customer support was very good with this company. They provide the smaller organization with the option of purchasing database for a smaller period of time, for instance, a month instead of six months or a year.
- In the past, I have also used www.payscale.com. The database is user friendly, but I found it to be more expensive and it required a longer subscription period. Here is a sample report on City Manager’s pay: City Manager Pay
- Another site that I have introduced to clients and they have gone on to use quite successfully on their own, is the Economic Research Institute, at www.erieri.com . This site is worth visiting even if you don’t subscribe as it contains a plethora of current economic data that is critical when making compensation decisions, such as a cost of living index and an index on changes in salary structures. It is a fairly expensive service but rigorous and once you establish a report and data template (which a consultant can help you with) it is extremely easy to use and can provide excellent real time pay data.
When do you need to hire a compensation consultant?
As a general rule, a consultant is best when you don’t have the time or the in-house expertise to get the job done. Even if you can access and understand the compensation databases on-line, the learning curve is fairly steep and requires intensive focus to create meaningful interpretations of data. If you would like to develop these skills in-house, it is a good idea to hire a consultant who will help you train an in-house staff person on the use of compensation databases.
If you focus on transferring skills in house, a consultant can save you money in the long run. If your need is to produce a compensation study, but the ongoing compensation skills are not essential to the organization, then the consultant can save you money in the short run.
Will our country be able to create enough jobs to meet the rising number of people looking for work?
One of my colleagues in human resources turned me on to an interesting article which examines how long this downturn is likely to last. This is a critical question for business but from an HR perspective requires foresight and thought about future pay strategies.
Hans Wagner, in the Case for Jobless Growth, writes:
The U.S economy is facing a huge challenge to create enough jobs to overcome the unemployment problem that currently exists. If we take the best four years since 1999, the economy generated 8.9 million jobs, slightly over half of what is needed to reach a 5% unemployment rate. If the economy achieves this level of job growth, the unemployment rate will remain over 10% until 2014. The does not count any change in the number of discouraged workers or workers working part time.
Hans points out that within the growth sectors, employers will need employees with higher levels of education and skill, so the challenges for HR in managing increasingly disparate pay levels will be great. Also, it follows that if pay growth is slowed for the less skilled labor force, employers will likely see more union activity.
So thank you Mark for this article reference and here is the link if readers would like to read more.
Coming up….in my next blog post I will address testing and selection tools used for hiring. Although they can be extremely valuable, employers need to carefully consider how and why they use these tools. One recent article, in particular, points out why this a matter of urgency. Read ahead and stay informed on this re-emerging issue.
Civil Rights Division Announces Plan to Target Public Employers
