In addition to a great company culture, compensation is one of the most valued aspects of a job for employees. Although most HR managers do not have many bad compensation habits, the ones they do have are common and can be difficult to break.  When the time comes to take a look at compensation plans for both existing employees as well as new hires, check to see if you’re guilty of and of the following negative compensation trends.

• Wage freezes. Cutting salaries is usually not the best method for managing your company’s finances; however, that’s exactly what wage freezes will do over time. This may seem like a fair approach to saving money and offsetting costs, but it will actually hinder the long-term sustainability of your business. Wage freezes make it difficult for your employees to understand the total rewards strategy, and you will risk losing your top performers and highest potential.
• Geographic offset. Unfortunately, it tends to be rare that surveys will accurately represent the market for a given position. Although geographic offsetting is a relatively easy approach, many surveys lack data for rural areas or commuting.  While many workers will happily commute 50 or 60-miles to work in a city where wages are higher and still live where cost of living is down comparatively, surveys are unlikely to reflect this. On the flip side, as an employer, you may need to pay candidates more to considering living in rural areas even though cost of living is less expensive.
• Increases across the board. This may seem like a fair approach because everyone is treated equally and it will account for cost of living increases. The problem is that it is not sustainable. Salaries and cost of living need to be kept separate. Not all positions and job duties are created equally, therefore, compensation should not be approached the same. Across the board increases run the risk of overpaying certain positions while severely underpaying others. While national data can be helpful, localized data will also be needed to determine a fair approach for compensating different employees.

While the fair approach may seem like the right thing to do, it can actually have the inverse effect on employee satisfaction. Salaries vary based upon demand, local dynamics, and the responsibilities associated with each particular job. If you are searching for additional employee compensation information, contact Springborn Staffing today!