{"id":9026,"date":"2023-02-08T19:55:59","date_gmt":"2023-02-08T19:55:59","guid":{"rendered":"https:\/\/affinityhrgroup.com\/?p=9026"},"modified":"2023-09-21T15:32:08","modified_gmt":"2023-09-21T15:32:08","slug":"compensation-planning-basics","status":"publish","type":"post","link":"https:\/\/theworkplaceadvisors.com\/compensation-planning-basics\/","title":{"rendered":"Compensation Planning Basics"},"content":{"rendered":"

Understanding compensation is critical to staying competitive in today\u2019s volatile labor market.\u00a0 Real wage growth is a concept that is particularly important.<\/span><\/p>\n

Real wages\/income is calculated by dividing the current wage by 1 plus the current inflation rate.\u00a0 For an employee currently making $40,000, the individual\u2019s real income is reduced to $36,866 when the current inflation rate is considered.<\/span><\/p>\n

Staying competitive requires both short and long-term planning. Some of the things you\u2019ll need to think about include:<\/span><\/p>\n

Salary Administration<\/b><\/p>\n

Organizations frequently spend a lot of time (and money) setting starting salaries for new hires, developing salary ranges to accommodate new positions, and even developing and implementing formal salary structures.\u00a0 All of these are positive steps, but often they are implemented and abandoned.\u00a0 To remain competitive, ongoing salary administration is required.\u00a0 This includes:<\/span><\/p>\n

SALARY REVIEWS<\/b> should be performed annually, more frequently when recruiting and\/or retention issues occur.\u00a0 Hopefully, you\u2019ve done some market pricing during the year to give you a baseline understanding of salaries in your competitive market(s).\u00a0 Combined with market pricing information, regular salary reviews will help to identify pockets of salary compression (e. g. new hires making more than long service employees doing the same work), the range of pay for employees performing the same work relative to performance and length of service, and other potential pay equity issues.<\/span><\/p>\n

SALARY RANGE AND SALARY STRUCTURE REVIEWS<\/b> are also a critical piece of successful salary administration.\u00a0 If you\u2019ve developed salary ranges or more formal salary structures, you\u2019ve most likely based them on market information.\u00a0 But the market can change quickly.\u00a0 It is important to review and update those ranges and structures regularly. Affinity HR Group usually recommends this review be done every other year.<\/span><\/p>\n

SALARY BUDGETS<\/b> are the third important component to successful salary administration.\u00a0 Many organizations don\u2019t prepare any type of salary budget, but those who want to anticipate future salary expenditures often prepare an annual salary budget that includes:<\/span><\/p>\n