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better to cut cost of living increase or bonus?
Benefits & Compensation
better to cut cost of living increase or bonus?
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
We were planning on a 3% market adjustment for all of our salary bands in 2009. However in light of the economy, we are now wondering if we should be making cuts to our variable bonus program that al
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Forums » Topic Forums » Benefits & Compensation » better to cut cost of living increase or bonus?

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Forums  »  Topic Forums  »  Benefits & Compensation  »  better to cut cost of living increase or bonus?

better to cut cost of living increase or bonus?

posted at 12/10/2008 7:23 PM EST
Posts: 154
First: 1/16/2001
Last: 2/18/2011
We were planning on a 3% market adjustment for all of our salary bands in 2009.
However in light of the economy, we are now wondering if we should be making cuts to our variable bonus program that all of our employees receive.

Which makes more sense: reducing or eliminating the pay band increase or the variable bonus from a compensation perspective?
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better to cut cost of living increase or bonus?

posted at 12/11/2008 2:52 AM EST
Posts: 1783
First: 11/11/2003
Last: 5/13/2010
Does the variable pay cover the entire employee population, or just a particular group?

Are any of your staff covered by a union contract?

How much does the annual cost of the variable pay program compare to the annual cost of the general base pay increase?

How do your pay ranges compare with your industry/local market?

In other words, you need to consider:

Whom you're going to pi$$ off, and how to communicate whatever action the company takes.
What's most cost-effective.
How you will stay competitive.
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better to cut cost of living increase or bonus?

posted at 12/11/2008 9:39 AM EST
Posts: 2442
First: 2/12/2000
Last: 9/14/2011
We were planning on a 3% market adjustment for all of our salary bands in 2009.

* Are you adjusting the bands or the actual salaries?

* Is any portion of the variable pay piece tied to the companies profitability and therefor in jeopardy?

To me it makes more sense to eliminate the pay band increase and leave the variable pay alone as long as you are going to pay it out. This program, if working correctly, will give more money to your highest productivity staff and that should remain in place.
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Forums » Topic Forums » Benefits & Compensation » better to cut cost of living increase or bonus?

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