Blair and I have noticed that some of our clients are not adjusting their salary ranges and this is creating some internal problems which could be avoided. When organizations don’t adjust their salary ranges or salary steps, then department managers start getting creative with modifying job descriptions and job values with the desire to obtain an increase in base salaries for their department positions. Once this starts to happen, then everyone gets on the bandwagon to do the same thing. By adjusting your salary ranges every one to two years, you keep your salary ranges or salary steps close to market as well as you avoid the need to mess with changing job descriptions and job values for the sake of increasing base salaries. Let’s keep the salary ranges near market whether you have the budget or not to adjust employees’ base salaries.
We have partnered with Equias Alliance, a nonqualified benefits plans and BOLI company, on a few compensation projects and one of its principals, Ken Derks, wrote a recent excellent article titled, “Compensation Strategies to Attract, Retain and Motivate Millennials.”
One of his statements summarizes well where the millennials are financially. “While millennials have essentially the same financial needs as the generations preceding them, their time horizon to retirement can be 30-plus years or more, which is too far into the future for them to focus on when faced with immediate financial planning decisions, like retiring student debt, purchasing a home and providing for their children’s education.” Ken offers a recommendation to meet the financial needs of the millennials by stating, “For the next generation of leaders, managements and boards should consider nonqualified benefit plans that allow for in-service distributions timed to coincide with events such as a child entering college or to pay off college debt. Plan payments made to the participant while still employed can be made at some future point such as three, five or ten years.”
As companies are transitioning their work forces from the baby-boomers to the millennials, the importance of providing a competitive base salary coupled with performance-based incentive and retirement plans will help to attract, retain, and motivate the millennials and other generations to follow.
Johanson Group has worked with all types of companies and organizations for the past 44 years in the areas of compensation management, strategic planning, training and development, and management consulting. We have taken our copyrighted job design and compensation methodologies and created software that is licensed through another company we own, DB Squared. DBCompensation and DBDescriptions provide the front-end of the total rewards equation. Please contact us to learn more about our consulting services and software products. If you would like to contact one of our partner companies, Equias Alliance, their website is www.equiasalliance.com
Compensation and Benefits Highlights from
the 2017 Annual Surveys Completed by Johanson Group
Employee pay adjustments for 2017 will average 3% and merit pay budgets will average between 3.1% and 3.4%.
- The average employee base pay adjustments for 2018 will increase slightly due to increasing employment demand.
- Employee average merit pay budgets in 2018 will range from 3.2% to 3.6% but employers are moving forward with increasing variable pay options.
- National variable pay averages have increased to new levels as employers reward top performers.
- Employers are beginning to utilize compensation and benefits strategically to attract and retain competent employees.
- Above average retirement plan matching contributions by employers and profit sharing distributions are effective employee retention tools.
- Employers will help employees with student loan debt through creative compensation and benefit packages.
- Health insurance premium increases are partially mitigated by High Deductible Health Plan (HDHP) options with increasing deductibles and out of pocket maximums.
- Employers are using HSA contributions to help new employees with minimal personal savings to be prepared for unexpected medical expenses.
- Paid Time Off (PTO) plans are becoming more popular with employers over traditional sick and vacation time off plans.
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