03 May How to Avoid Freezing Pay for Long-Term Employees: Alternative Reward Design Process
HRsoft research shows that nearly two-thirds of all employers freeze or cap base pay. While it is becoming a widely practiced way to control costs in a multigenerational workforce, freezing pay can have a demotivating effect on long-term employees. For this reason, it may benefit your organization to explore alternate reward programs which, which can support engagement and retention in spite of salary caps.
Before making changes to how you reward long-term employees, you must first assess what’s already in place. Begin by evaluating how you currently recognize long-term service, and whether there are already any special pay, benefit, or time off programs in place in your organization. If so, how successful have they been?
For your reference, here’s a step-by-step guide many companies use for designing an alternative rewards design process:
- Audit current recognition programs and meet with senior management.
- Review potential alternatives available to current systems.
- Form a “Recognition Program Development” committee.
- Identify a purpose for the program.
- Define award themes and selection criteria.
- Determine award eligibility and award frequency.
- Select types of awards and publicity.
- Establish and monitor the program.
Although simple and straightforward in nature, following this type of program can help you ensure success in your design process. Additionally, by actively monitoring the program, your team can assess what’s working well, and whether or not the program is having the intended impact on morale among long-term employees.
While it is financially impossible for most organizations to continuously provide raises for long-term employees, there are still effective ways to reward this group outside of pay increases. In fact, by simply demonstrating your commitment to accommodating their needs and preferences, your organization can make strides in showing that long-term employment is valued and appreciated.
HRsoft is the trusted global leader in compensation management software whose COMPview solution is proven to control and simplify the full process and allocation of merit, bonus and equity awards to drive manager and employee engagement.