In the fast-paced world of manufacturing, finding the right talent can be a challenge. Companies...
It's been determined that most workers in certain regions are expected to see their biggest pay increase over the next three years. Whether it's due to inflation, legislature pushing for fair wages to match a rising cost of living, or businesses trying to keep good talent, you should be aware of the trends in wage increases and how that affects your company's compensation plans.
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Look at the Pay Scales within Your Industry
In developing a salary-increase budget, it's helpful to look at the industry's prior salary movements, the rise, and fall of. The Economic Research Institute released a report which indicated that an increased compensation budget usually accounts for wages 1-2 percent above the country's Consumer Price Index (CPI).
The primary factors that drive employee pay is:- Market price of the employee's worth in the industry
- Internal value - the employee's worth in the company
If you are unsure of what specific positions are paying in your local market, most staffing agencies will be able to give you some assistance or provide you with some typical salaries or hourly wages in your market. Call around and get a few estimates and it should give you a pretty good indication of what the local market is for specific positions.
Consider the Legal Requirements
In the United States, there are and minimum wage standards in specific regions. The Fair Labor Standards Act states employees must receive time and a half for hours worked over the standard 40-hour workweek.
It's a good idea to stay up to date on any pending regulations going into effect or new state laws that could inadvertently cut into your business' operating budget.
Try to Answer These Questions
Questions you should ask yourself and the business when adjusting pay rates include:
- What are the costs associated with the company when paying employees an increased minimum wage or salary range minimums?
- What are the mandated increase requirements from labor unions, contractual obligations or others that you should be aware of?
- Are there any particular needs for adjustments in job classifications, department restructuring, or government requirements?
- Are there any revised compensation plans or benefits that affect costs?
Consider Alternative Compensation Methods
Other items to consider when putting together compensation plans are to try to budget for promotions or bonuses, which will help retain employees and save money in the long run. Thinking of alternative compensation methods that your employees value more than money can also help you cut down on costs in meeting the minimum requirements.
Talk to your employees to find out what matters to them. Do they want more vacation time instead of pay? Things like that can help you maintain a payroll that makes sense for your company.
You should also consider hiring a staffing agency to help you with new compensation plans in keeping with the times.For more resources just like this one, subscribe to the Workbox Staffing blog today!