Compensation data is very important in any organization as it can be utilized for the organization to stay updated on matters pertaining to pay rates for individual job categories within their industry. It is important for every organization to be aware of the going rates for individual job positions as this can help a lot during the hiring process and also in retaining a top talent. Compensation market pricing analysis is basically aimed at reviewing salary ranges. Compensation benchmarking is supposed to be done every year so as to ensure that your organization ranges are matching with the industry trends and economic ups and downs.
A change in the salary range of any organization is mainly dependent on the external market. In most cases, this change does not take into account the internal goals of the organization for instance employee performance or any plans to improve employee longevity. Most companies will automatically move their compensation ranges as soon as the market moves. What if this does not happen?
Sometimes compensation market pricing changes do not necessitate a change in an organization’s compensation range. PayScale’s salary data collection shows that the market can become very unpredictable. The base salaries for some positions will decline, others will increase dramatically and others will remain as they were. Even when the market is unstable, there are jobs whose base salary will increase so much for instance jobs in the computer programming sector.
For this reason, it is important for an organization to wait and see how the salary data trend is going so they can adjust their compensation ranges accordingly. With that in mind, you realize that it is not really necessary to adjust your salaries in the same manner every year. When an organization adds a two or three percent salary increase across the board every year, it only shows that this organization is not following the market trends carefully.
A wise person will take some time to study the market activity before making any change. Some of the things that can benefit you include the kinds of skills or jobs that are on higher demand, from which you will adjust your compensation ranges accordingly.
Even with all the market pricing tools for compensation, you will still find it hard to decide when to act since markets change every day and sometimes hourly. Instead of making changes every day, pay attention to only those trends that will last for a while. Responding too quickly may give you negative results in the long run, the same as not responding at all.
Make sure that every change you make is uniform across all levels. Do not just move the salary range for employers at the top level of the organization and leave those at the bottom of the pay band. However, you have to be smart enough to only reward top performing employees and not everyone including those that are not doing so well. That is why experts will advise HRs to move carefully and go through salary surveys thoroughly before making any changes.
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