Compensation distribution could present opportunities for innovative managers to shine in the next 12 months.
CHROs and CFOs may be feeling the need for austerity regarding compensation and bonuses going forward. The financial squeeze of a post-COVID business environment is heightened with rumblings of higher corporate tax rates and a rising minimum wage on the horizon.
Many are wondering how to massage a limited budget in a way that keeps workers dedicated and motivated to do their best.
Two Schools of Thought on Pay Raises
Most employees, when asked about their salary, seldom say they’re satisfied with their current pay. More is better.
How much more is enough?
Imagine your department’s overall payroll will be projected at +2% next fiscal year. Do you treat those funds like peanut butter and try to spread them evenly and meagerly over the entire department? In essence, you’ll be giving everyone a 2% COLA. While very egalitarian, your go-getters could be demotivated if they find out their extra effort gets rewarded the same as counterparts who only meet minimum requirements.
So, how do you keep top performers loyal when cash is tight?
If you have a rising star in your department whom you’ve tabbed for succession planning, the smart money is on retaining that person with a generous pay raise, even if it means no rate increase for non-productive employees. The Pareto Principle is at play. Reward the 20% of your workforce who are generating 80% of the productivity. Richly reward the one-percenter who is single-handedly responsible for 10% of the group’s output.
However, the other 80% of your census cannot be ignored; they provide a value to the company, too. This is where your innovation as a manager comes in.
Other Retention Tools
Competitors may match or beat your comp package, but no one can duplicate your leadership and culture. This is the year to develop a workplace that challenges and enriches its people. In lieu of salary increases for all, offer concessions in other areas under your control: flexible hours, more PTO, employee awards, community service involvement – anything that enhances the overall experience of working for your company.
Divert a small bit of your budget into Training and Development for everyone. If one of your company core values is to encourage everyone to level up in their careers, seminars on Energy Management and other personal development themes are great ways to do what you say you value. You will be equipping your people with skills for life and reaping a harvest off their new skills for as long as they’re with the company.
This next year will test your ingenuity in leveraging resources to motivate and reward all of your staff. If developing your people through trainings and seminars seems like a wise use of limited funds, it’s time to incline your organization. https://www.inclinehr.com/development