23 Aug 3 Practical Tips to Prepare for Salary Planning
Salary planning typically requires an extensive investment of time and effort for compensation professionals. It requires collaboration among finance departments and other key stakeholders to determine salary budget recommendations, as well as input from line managers. To help you navigate the process successfully, we’ve compiled a set of practical tips you can use for your next planning cycle.
1 Look Beyond Salary Budget Growth
An average salary increase percentage estimate only tells one part of the story. To make precise pay decisions, you’ll need to put that information into context, filtering data by industry, geography, and increase type. According to an article in Employee Benefit News, companies can benefit from pulling data from a range of sources, such as crowd-sourced pay data from tools like PayScale as well as other outside surveys.
2 Rely on Variable Pay Instead of Fixed Increases
Awarding base pay increases is no longer the only way to reward performance. Many employers have shifted to variable pay for a greater percentage of their employee population in recent years. Variable pay is a fitting solution to meet the needs of the modern business environment, as it can evolve with the changing job descriptions and flexibility in skills of today’s workforce. It also allows employers to maintain fixed business costs while still rewarding their top performers, which brings us to our next point.
3 Make Sure Top Performers Are Rewarded Appropriately
The average salary budget increase has hovered around 3% in recent years, which has impacted pay increases. This has led employers to focus more on differentiating performance and distributing awards strategically. Linking pay to performance is an effective way to encourage specific behaviors that align with your organization’s strategy and goals. With that said, most employees respond best to a mix of extrinsic and intrinsic motivators. To that end, it’s important to maintain a balanced total rewards program that factors in both incentive compensation and intrinsic motivators, such as career development opportunities.
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