Communicating Low or Non-Existent Salary Increases
Average salary increases for 2009 are forecasted between 3.1% and 4.1% in separate studies conducted by HR consultancies Hewitt Associates, Mercer, and Buck Consultants. At the low end of the spectrum, the Hewitt study found that base salary increases at 411 large U.S. companies surveyed are projected to be 3.1% — the lowest base salary increase projection since just after September 11, 2001. How do organizations address lower-than-usual (or non-existent) salary increases and/or bonuses while maintaining a positive morale and an energized workforce? The answer is to COMMUNICATE.
The organizational compensation philosophy should be clear at all times, although this becomes increasingly important during challenging economic times. Is compensation performance based? Tenure based? Or dependent upon operational factors or some combination? Information should be communicated early and honestly to avoid surprises. Some organizations may hesitate to communicate compensation decisions that fall short of employee expectations for fear of attrition, but consistent, clear, and early communication will help to establish trust and prevent voluntary turnover.
Top management should first communicate any compensation-related decisions and the rationale for the approach being taken by the organization. This will lay the groundwork to make subsequent discussions between managers and their staff less challenging. If the organization has a bonus program directly tied to organizational performance, communication should be consistently provided regarding the status of progress toward financial targets. Read more