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Variable Pay

<i>Dear Workforce</i> How Do We Move Away from Across-the-Board Salary Increases and Instead Tie Them Back to Performance

June 30, 2005
As a nonprofit, we live and die by our budget. Recently, after freezing wages for two straight years, we managed to squeeze out a 3 percent increase for all employees. The fact that many people have waited so long for an increase made it difficult to slice and dice the relatively small amount of allocated dollars. Still, some employees are grumbling that flat increases aren’t fair. How do we get away from across-the-board increases and tie them back to performance, especially when dollars are scarce?
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Deflating Compensation

October 1, 2004
If your salary-increase budget for 2005 is much higher than 3 percent, you're probably overspending. New survey data indicate that increases at large companies will average 3.5 percent next year, marking the fourth consecutive year of increases below the 4 percent average that characterized budgets before the economic downturn. What's behind the trend? Soft labor markets that will continue into 2005 and well beyond, increasing the need for annual pay increases designed for optimal hiring and retention. "There's no war for talent," says Mercer Human Resource Consulting's Steven Gross.
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<i>Dear Workforce</i> How Do We Handle The Fallout When Our Secret Profit-Sharing Plan Gets Exposed

February 12, 2004
For the past year, our company has had a secret profit-sharing program that includes 30 to 40 percent of the employees. The program was kept secret by order of the company president. Recently, some of the employees not receiving the bonus learned of the program and are threatening to quit and go to work for some of our competitors. We would really like to keep most of our employees. How should we handle this? What are the potential pitfalls of having this kind of program, and what can we do at this point for damage control?
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