2014 Salary Outlook: A Repeat of Prior Years

Friday, November 22, 2013

 

About this time of the year, human resource professional organizations often disclose their salary and wage increase projections for the coming year.  In an 11/14/2013 article written by Jason Adwin, Vice President at Sibson Consulting and posted on The Society for Human Resource Management (SHRM) website, the author discusses salary and wage changes for the coming year and the last several years.  Adwin makes a clear and compelling connection between the continued high level of unemployment and the lack luster changes in employee compensation projected for 2014, as well as those experienced over the last two years.  With salary budget increases hovering at or just below 3% and salary-range adjustments near 2%, it is evident that most organizations feel no pressure to raise compensation levels.

 

With strong evidence there is little wage and labor market pressure to push salary budgets and ranges faster and higher, what is an organization’s alternative for rewarding and recognizing high achieving talent?  Variable pay plans, a.k.a., incentives, bonuses, and commissions is generally the response.  Stephen Bruce, Editor and HR Daily Advisor at Business and Legal Resources (BLR), quotes Teri Morning from a recent BLR webinar:

 

“Average performance is already compensated for in the base pay at the market rate.

Average performance doesn’t necessarily require a merit increase.

Variable pay programs should pay for themselves.

Incentive pay isn’t always applicable to every position.

Variable pay rewards outcomes—not good tries.”

 

The issue with many variable pay plans is they often fail to recognize and address that today’s workforce in not homogeneous.  Cohort members are going to perceive reward and recognition differently from their adjacent group associates.  What motivates a Baby Boomer may have the opposite effect for a Gen-Xer, even to the point of deceasing performance.  This phenomena means that how reward and recognition systems are designed and communicated, must include continuances for tailoring that reward and recognition to the individual employee.

 

When communicating feedback to a multi-generational labor force, reward and recognition messages have to be crafted to each group:
 

·         Traditionalists – you are valued for your experience,

·         Baby Boomers – you are valued, the organization needs you,

·         Gen-X’ers – have it your way,

·         Gen-Y’ers – you'll work with creative peers in a creative environment.

 

A variable pay plan which pays a 10% incentive for on-time on-budget project completion will be perceived differently by each generation.  A Traditionalist may expect a “pat of the back” and a “we could not have done it without your years of experience”.  A Baby Boomer would have been happy the check.  A Gen-X’er will want recognition that doing it their way was really the way to do it.  A Gen-Y’er will want to pick their next assignment and staff it with creative types just like themselves.