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September 24, 2011
Compensation Administration Issues: Budgets

Compensation budgets have faced a squeeze in recent times. Merit increase budgets continue to be modest, and companies face a continued challenge to differentiate pay based on performance. In a BLR webinar titled "Compensation: How To Effectively Align Your Compensation Strategy with Market Demands," Paul R. Dorf outlined some issues employers face in their compensation budgets.

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Salary structures may now show signs of age. Employers should ask when their market competitiveness was last examined. Here are some issues to address:

  • Not all companies are in dire straits (some companies are doing seemingly well).
  • Demographics are shifting (people will retire when they can; employees will jump ship when the job market opens).
  • Companies will continue to expect more with less (budgets will continue to be tight).
  • Reliance on survey data is a concern (there is a lag in data).
  • Compensation budgets are still being cut.

Here are some of the things employers should ask themselves:

  • Who are the best employees?
  • What employees can you least afford to lose?
  • What are your strategies for retaining them?
  • Is your compensation program correct?
  • Is your mix and amount appropriate?
  • Are you getting the biggest bang for your buck?
  • Here are some other things employers need to consider:

  • Look beyond compensation – total rewards
  • Need to be creative with fewer resources
  • One size does not fit all
  • Place greater value on communication
  • No mixed messages

Paul R. Dorf is the managing director of Compensation Resources, Inc. (CRI). (www.compensationresources.com) He has over 40 years of human resource and compensation experience and has held various executive positions with a number of large corporate organizations. He specializes in providing comprehensive compensation and human resource consulting services. Dorf is responsible for directing consulting services in all areas of executive compensation, short and long term incentives, sales compensation, performance management programs, and salary administration programs. Since 1972, he has provided compensation consulting expertise to various law firms, and qualifies as an expert witness in compensation and related matters.

Need help staying on top of critical HR and Compensation issues? See all the webinars BLR has to offer.


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