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ArticlePublication Date
How to Age (Update) Survey DataMarch 2014
The Five Biggest Mistakes in Compensation and How to Avoid Them #1October 2011
The Five Biggest Mistakes in Compensation and How to Avoid Them #2November 2011
The Five Biggest Mistakes in Compensation and How to Avoid Them #3December 2011
The Five Biggest Mistakes in Compensation and How to Avoid Them #4January 2012
The Five Biggest Mistakes in Compensation and How to Avoid Them #5February 2012
Article: The Five Biggest Mistakes in Compensation and How to Avoid Them #3Publication: December 2011
This 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 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 3% per year (as it has been) and you budget anything less, you're losing ground.  Do that for just a few years and you find yourself in a deep hole that only LOTS of money will fix.  But that's not the worse ...read on!

Think About it:
It's 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 from now!

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.

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

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The annual average weighted rate paid for Receptionist is $24,602

Source: 2013-2014 Northeast Florida Salary, Wage & Benefits Survey

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