is the third in a series of five 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
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.
is not at all uncommon.
it is a strategic recipe for disaster. Here's the deal - if
market moves at 3% per year (as it has been) and you budget anything
less, you're losing ground. Do that for just a few years and
find yourself in a deep hole that only LOTS of money will fix.
But that's not the worse ...read on!
just simple math: if an employee is 10% below market and your merit
increases are 3%, the employee will still be 10% below market 30 years
to Avoid It:
If the majority of your
employees are in the lower portion of the pay range, you have to budget
the average market movement to get employees where they should be.
That, combined with a good merit matrix, will help to correct
month, we'll focus on mistake #4 - poor pay delivery.