Here is the third in a series of short articles addressing some of the more common compensation issues facing HR professionals today.  Not really a lot of new issues or resolutions, but maybe the timing is just right for solving one of your headaches.

The third of the Five Biggest Mistakes is Merit Budgeting.

Sound Familiar?

See if this describes your merit budgeting process:  (1) you research various surveys and document the average merit budget; (2) you tell the boss what you’ve found; (3) Finance tells the boss what the company can afford; and, (4) the boss tells you what the merit increase will be.

This is not at all uncommon.

Unfortunately, it is a strategic recipe for disaster.  Here’s the deal – if the market moves at nearly 4% per year (which it is) and you budget anything less, you’re losing ground.  Do that for enough years and you find yourself in a deep hole that only LOTS of money will fix.  But, that’s not the worst!

How to Avoid It:

If the majority of your employees are in the lower portion of the pay range, you have to budget more than the average market movement to get employees where they should be.  That, combined with a good merit matrix, will help to correct the situation.

It’s just simple math – if an employee is 10% below market and your merit increases are 3-4%, the employee will still be 10% below market 30 years from now!

Next month, we'll focus on mistake #4 - poor pay delivery.

Missed past emails? Go to www.SalarySurveyOnline.com and click 'Email Articles' in the Welcome section of the home page.

About SalarySurveyOnline.com

Since 1992, Effective Resources, Inc. has been providing salary, wage, and benefit data for the Tampa Bay Area.  Expanding on that success, the survey has been covering the entire State of Florida for the past five years via their survey website at SalarySurveyOnline.com.  This survey is unlike any other in that it’s put together by compensation professionals with the active support of the HR Florida State Council and its network of thousands of Human Resource professionals.  In other words, it's developed by professionals for professionals. The survey is an invaluable source of information for Florida employers of all locations and sizes, business owners, Human Resource professionals, and educational institutions with graduating seniors.