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AUGUST 2010
Dollars & Sense Poll |
In This Issue:
- Controlling Compensation Costs is Critical ... Right?
- Salary Levels Are Declining - True or False?
- Free is Unbeatable!
- Dollars & Sense - July Poll Results
Controlling Compensation Costs is Critical ... Right?
By Jerry E. Bumgarner, CCP, Director, Research & Compensation Services
Cascade Employers Association
jbumgarner@cascadeemployers.com
Right! Compensation is the largest cost for most employers, so it should be easy to recognize that compensation cost controls are critical to ongoing organization success. However, as evidenced during our economic downturn, many employers apparently overlooked such controls and had to suddenly resort to pay reductions, pay freezes, and staff reductions to survive. Now, in an effort to minimize the future pain associated with such actions, many employers are rethinking how they pay their employees. Among the actions being taken are:
- Establishing a strategy that links cash compensation levels with the goals and performance of the organization.
- Monitoring how the total compensation package compares to the organization's competitive market for talent.
- Implementing incentive pay plans to vary the competitiveness of pay based on organization performance.
Whether your organization was adversely affected by the economy or not, preventative measures can be taken to avoid paying too little, too much, or inequitably. By maintaining current job descriptions to assure apple-to-apple job comparisons, establishing formal grade and range structures (applied by 68% of U.S. organizations) to maintain a competitive market focus (applied by 80% of U.S. organizations), and introducing effective administrative practices (e.g., starting rates, scheduled increases), organizations will be far better equipped to achieve appropriate pay practices and control related costs.
Reasonably competitive wages and salaries are needed to support employee recruiting and retention needs. However, while paying above market levels (e.g., top quartile of market) may be appealing at first glance, those with “lead” pay strategies will be stuck with these high wages and salaries in tough economic times ... resulting in the need for layoffs, pay reductions, and/or pay freezes.
As an alternative, more organizations are introducing variable pay or incentive/bonus pay components. With variable pay, organizations can literally vary or adjust how competitively they pay versus market practices. If business is good, they can pay upper quartile “total cash,” but when performance falls below expectations “total cash” can be at or below market norms. By including these pay practices, organizations will be better equipped to retain a competitive edge in any economic climate.
With reliable data and professional plan design support, employee compensation can be easily aligned with the efficiency and performance objectives of the organization. A number of reliable market data sources and qualified compensation professionals are available to serve you in Oregon and Southwest Washington. Contact Cascade for information about how we can help.
Salary Levels Are Declining - True or False?
By Jerry E. Bumgarner, CCP, Director, Research & Compensation Services
Cascade Employers Association
jbumgarner@cascadeemployers.com
The answer is False. Even though many Oregon and Southwest Washington employers have laid off staff, reduced or frozen pay, and given smaller increases in the last 12 months, average pay levels continue to rise locally and nationally. Based on Cascade's 2009/10 Salary Budget Survey, increases were projected to average about 2.3% of base pay - even after factoring in that 50% of the participants were planning to freeze or decrease wages and salaries.
Market trend data indicates that wages and salaries continue to move upward. While Cascade's actual 2010 and projected 2011 increase data is currently being collected and will be available in late September, other sources (e.g., WorldatWork) are reporting that actual 2010 pay changes averaged 2.5%. The WorldatWork survey indicates that increase projections for 2011 are averaging about 3.0% overall.
While some employers have been restoring pay reductions and lifting pay freezes, it is not clear yet how far or how fast employers will move to reinstate past pay programs. Some organizations are actually changing their pay strategies by placing more (or new) emphasis on pay systems that link the amount of pay directly to performance (e.g., incentive or bonus pay systems) and less on the wage/salary element.
To get fresh data to help with your pay planning, participate in Cascade's 2010/2011 Salary Budget Survey. Even if you plan to freeze or reduce pay in your organization, this survey will provide information you can use. All participants receive a complimentary report.
Free is Unbeatable!
By Tina Hamel, Survey Coordinator
Cascade Employers Association
thamel@cascadeemployers.com
Cascade Employers Association now has a local area market pay data base that is free to members who contribute data. Members who enter pay data for comparable jobs through SalaryTrends.com get a free annual subscription that includes access to an online custom report writing tool, three Oregon Regional reports (Non-Exempt, Exempt, and Executive), the National Executive Compensation report, and the National IT and Engineering report. This is truly an amazing membership benefit that every employer should take advantage of ... especially when you consider that non-members pay $3,995 for the full annual subscription when they do not submit data.
"I appreciate that I can now submit pay data and receive reports for a variety of jobs without having to respond to separate surveys."
Bill Nevell, Assistant VP of HR, Timber Products Company
Recruiting and retaining the right people requires accurate competitive pay data. SalaryTrends® is the answer for hundreds of Oregon area employers. This innovative online data base system is an excellent tool for employers to use in evaluating their pay practices compared to market. SalaryTrends® provides fresh, reliable, and carefully-scrutinized pay data on more than 550 jobs applicable to employers in the region. Whether an employer has one or 100 jobs, by entering pay data for comparable jobs they can help support the validity of SalaryTrends.com data and get access to free pay planning information as a Cascade member. Membership pays!
At just $995, non-members who contribute data also receive a significant SalaryTrends® subscription discount.
Dollars & Sense - July Poll Results
By Erin Doehring, Research & Compensation Intern
Cascade Employers Association
edoehring@cascadeemployers.com
Overwhelmingly, when asked “What are your organization's 2011 staffing plans?” 68% of poll participants answered “Maintain staff levels.”
If your organization would like advice on handling staffing-related matters, please contact Cascade for help.
Thanks to all that participated.
This month's poll asks, "What type of compensation plan does your organization use?" Please be sure to participate and send us your suggestions for a future poll.
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