Tough Times May Demand Centralized Pay Inventory

Many employers have worked diligently to decentralize pay management, pushing that responsibility out to HR professionals and even line managers in different business units.  This is a good thing, from many and even most angles, allowing compensation design to be tailored and pay decisions to be made "locally" by those closest to the situation and the impacted employees.  It enhances flexibility and fleetness-of-foot in the application of rewards to support business success.

Tough times, however, may demand a little more centralized control - or, minimally, centralized information gathering and assessment.  When salary increases, incentive payouts and even jobs themselves are in jeopardy, it is critical that those making the decisions have the information necessary to see how and where compensation dollars are being spent throughout the organization. 

In good times, it may be acceptable and appropriate for individual departments to have their own separate stashes of cash, whether negotiated with a senior management patron, grandfathered from an earlier arrangement or simply allocated as part of a decentralized reward initiative.  When crunch time comes, however, all cards need to be laid on the table.

I recommend a simply inventory spreadsheet where all reward programs can be noted and tallied, something like the following:

     

I've been in enough conversations recently where we are having a tough talk about salary freezes (or worse) in one part of the organization and somebody slips in an observation about the entitlement reward spending that's going on in another department/division.  If this is happening where you work, it may be time to make an organization-wide inventory of rewards a top priority, so that any difficult decisions that must be made can happen with full accounting of all reward plans and spending.

Comments

[E James (Jim) Brennan]

Rewards are sticky, so be aware that such an inquiry may bring severe negative consequences to the unwary reporter.

[Ann Bares]

Point taken, Jim. Probably easier for an outside consultant to do than someone from the inside, but not every organization is in a position to hire a consultant to do this and I still stand by it being necessary in times when pay levels and jobs are at risk. It may, in some cases, be best to engage the endorsement and protection of senior leadership.

Proceed with caution, care and with the right support in place, I guess.