Compensation 2003 – Making it Work For Your Firm!
When you looked at the title to this article, did you cringe and say to yourself – “I don’t want to think about compensation again!” I can’t blame you; it is a very daunting subject when you are talking about partner and staff compensation. The subject becomes even more challenging as you look forward into 2003 and the economist are all saying that the economy will most likely be moving sideways well into next year. We have to look at compensation strategies that make sense to our firm and continue to motivate staff at the same time. So, what are some ways to deal with the compensation challenges you are facing in your firm? Here are some control methods that you might want to consider.
Reduce or Eliminate Merit Increases:
Most staff members have come to expect a merit increase each year. While the expectation might be there, the firm must take a close look at this area as a way to contain the increase in compensation costs. The firm must weight the advantages of cost containment to the impact that this will have on staff morale. Some firms are choosing to cut merit increases completely, while others are just decreasing the percentage of increase available to the staff.
Restrict Overtime or Limit Promotions:
This is a good time to take a close look at the amount of overtime produced by your firm for the past year and “budgeting” a lower amount for 2003. In order to make this happen, you might have to look at re-structuring a job or re-aligning some job responsibilities, but this is a major area of cost cutting for many firms. Along the same lines, if you are looking at promoting a staff member and subsequently raising their level of salary, this might be a good time to re-think that decision.
Hiring Freeze/Reduced Workforce:
Have you been thinking of hiring new staff for 2003 – think again? This might be the perfect time to focus on hiring part timers, temporary staff or using outsourcing options to meet your peak-time staffing needs. Part-time and temporary staff usage is at an all time high as we look at the quality of individuals that are filling these roles today. This might be a great opportunity for your firm to get high quality staff at a fraction of the cost for a full-time staff member. The same can be said for outsourcing opportunities that are presenting themselves to our industry. Don’t overlook new, non-traditional ways of staffing your firm.
Reduce Bonuses and Change Top Executive Pay Plans:
Take a close look at the compensation in your firm in 2003 that is centered on performance-based plans. While performance-based compensation is one of the best ways to drive the goals and objectives of a firm, it must be looked at each year to ensure that outside factors, like the economy, have not affected the intended results adversely. Make adjustments as necessary to ensure the results you are striving for are accomplished with the plan that is in place.
Institute Pay for Performance:
It is all about accountability and getting staff to set their priorities to meet the firm’s overall objectives. I’m talking about the new and improved Pay for Performance programs. These systems tie staff members overall job performance, attitude about work/firm, and attendance into primary consideration of the actual salary increase they receive. This system quite possibly could decrease the overall monies the firm provides for payroll, but also would potentially increase the time it takes for managers to complete the performance review process. Be sure to allow yourself adequate time, and possibly outside professional help, to set this system up correctly in the beginning and save your firm time and money in the end.
Change Bonus/Salary Mix:
Some firms are changing the mix of base salary and bonus structure to reflect fewer guarantees and more bonuses based on production. This type of change works very well for positions in the firm that can be tied to production and sales. Again, this type of change is intended to motivate the staff member to produce more in order to make more – which will be good for them and the firm. The focus here needs to be to get staff to buy-in to the reduced pay with a potential upswing for excellent performance. This will require extensive communication between the staff and management to ensure buy-in by everyone
While all of these ideas have the potential to have a positive effect on your firm, not all of the ideas are good for YOUR firm. Be cautious and thoughtful as you consider your firms compensation plans for 2003. Remember, your compensation model should always reward the behaviors and actions that will drive your firm to meet its overall goals and objectives.
Sandra Wiley is the Director of Marketing with the organization of Boomer Consulting, Inc. Sandra’s focus is in the area of marketing, training and sales.
She has published a number of articles in the areas of personnel, sales and marketing in the CPA Industry and is a contributing author for The Boomer Advantage...Successful Technology Consulting. Her awarded winning marketing plan titled Rebuilding the Community Bank was published with the Bank Marketing Association.
She is a graduate of Friends University, in Wichita, Kansas, with a bachelor’s degree in Human Resource Management and also graduated with honors from the University of Colorado School of Bank Marketing.
Biography for Sandra Wiley:
Sandra L. Wiley
Boomer Consulting, Inc.
Manhattan, KS 66502