Is tough economy a signal to increase compensation?
August 15, 2008 by Bill MeltzerPosted in: Compensation, In this week's e-newsletter, Latest News & Views, Work-life programs
With many employers in a pay-scale holding pattern, some firms have found success by taking the opposite approach.
According to a World at Work survey, a significant percentage of employers have decided to provide at lease a cost-of-living increase in 2009. Some are going beyond, both as a means of improving productivity and retention as well as being a means to offset recent increases in health-cost shares.
But with inflation at 3.9% this year and the economy still in a slowdown, many firms find it tough to stretch their budgets. Instead, companies are looking for ways to help employees cut their own expenses, especially commuting costs.
The No. 1 strategy has been an increase in telecommuting and flex-time programs. After years of declining reliance on such programs, there’s been a 40% jump this year in the number of organizations offering flexible schedules, either as an incentive program or a standard method of staffing.
In many cases, these programs are more valuable to employees than cost-of-living raises. The reason, of course, is that there’s been almost a 20% increase in food costs and a 30% increase in the cost gasoline. Offsetting at least some of the gas cost from commuting to work is often worth more in real dollars than a raise — and the money doesn’t have to come out of the employer’s budget.
August 21st, 2008 at 2:39 pm
Previously, until one year ago, I was in an Administrative position. Now I have been moved down to a less demanding position. My salary was not reduced because of my experience and job responsiblitiies, but it has been frozen for over five years. Is this normal and is legal ?
Thank you,
IM Wagner
August 21st, 2008 at 4:19 pm
Regarding flextime scheduling, anyone have any suggestions as to how to handle vacation days, etc. when an employee who normally works Monday – Thursday wants to change one week and come in Tuesday – Friday. What about holidays that fall on a Monday? Do the Tues – Friday employees get ane xtra day to make up for the Monday “holiday”? I would love to hear from other companies who have put flex-time into place.
Thanks.
August 22nd, 2008 at 8:57 am
Barbara-We handle the Monday holiday like this. If the employee is normally scheduled off on the day a company holiday falls on then they get a floating holiday to schedule like vacation or they can change their schedule for that week back to a 5 day/8 hour work week. Only about half of our department participates in a 4 day work week so someone changing their schedule doesn’t really affect anything (20 person department). Also, if the employee works 10 hour days, they still only get 8 hours of holiday pay. They get the same number of paid hours/days as the employee that works a traditional 5 day/40 hour schedule. Just fyi…my employees approached me about a 4 day/10 hour work week and I said “Give me a proposal”. They had to stay within preset parameters such as telephone coverage time, current service level agreements and defined critical processes, etc. but they did a great job (better than I could have done it, stricter too).
August 22nd, 2008 at 10:39 am
We are currently using an optional 4 day/1o hour workweek. We continue to pay all paid holidays to all full time employees regardless of their schedule. We only approve schedule changes that are made two weeks in advance provided that coverage can be found in the department.
August 22nd, 2008 at 10:44 am
Hi IM Wagner;
We have had situations in our organization where employees have moved from a more demanding position to a less demanding position without a change in salary and we have frozen their salaries. Without knowing the difference between what you’re earning and what others in your current position are earning I don’t know whether a 5 year freeze would be considered reasonable.
As far as legal, at least in the state of NJ, there is not a requirement to provide wage increases to employees each year. It is a good practice, otherwise you stand to lose people to other employers, but not required by law.
I hope this helps,
Kathy
February 11th, 2009 at 11:47 am
As we all know the economy is having a devasting effect on a lot of businesses and thousands are loosing their jobs. Here is my question the owner of the company I work for is requesting that all salaried personnel take a 10% cut in pay. Are we required to accept this and what sort of rights do we have to protect our jobs in the event that we do not wish to accept this salaray reduction? He is not putting anything in writing with regards to re-instatement or original wage base. Some are saying if this is needed than instead of reducing my salary I will offer to take a day off a week without pay but once again how does that play into the laws and rights of the employees.
Any help would be greatly appreciated.