A Sophisticated Merit Increase Grid

Yesterday’s CED featured advice on variable performance pay from consultant Teri Morning, MBA, MS, SPHR, SPHR-CA. Today, her salary increase grid—which is a little more complex than most.

Morning says her grid takes into account three factors (market and business performance, individual performance, and position in range), plus there’s a lump sum option.

Pay increases are based on three main factors, says Morning, president of Teri Morning Enterprises. She made her suggestions during a recent webinar sponsored by BLR, CER’s parent company.

In the table below, these three factors are expressed as follows:

1. Base increase potential: 2 percent based on market movement of wages AND profitability (Adjust this part of the equation as needed to reflect your compensation philosophy. For example, make it 4 percent if you want to pay above the market.)
2. Performance factor potential: 2 percent
3. Position in range: Plus or minus 2 percent as a catch-up or slowdown factor (for red/green circles)

So employees have a potential of 2 percent for base, 2 percent for performance, and then an adjustment of plus or minus 2 percent for position in grade expressed as a comp-a-ratio (see top line of grid).

The figures in parentheses are what a lump payment would be if given instead of a base raise. (You can give a higher lump sum payment because it is not in the base—and the salary won’t keep spiraling out of control year after year, Morning says.)

Winning Compensation Scorecards—webinar coming Monday! Learn more.

Morning’s Merit Increase Grid

What, exactly, should you be measuring in your compensation program—and how?

If you’ve been asking yourself these questions, we’ve got a webinar you won’t want to miss this coming Monday, May 12.

Winning Compensation Scorecards: What and How to Measure for Effective Results

Webinar coming Monday, May 12, 2014

10:30 a.m. to Noon Pacific

Are you applying accountability and logic to back up your compensation decisions? Without an effective compensation scorecard in place, you run the risk of having to strong-arm your organization into making responsible and equitable choices.

Compensation is probably one of your organization’s largest expenditures, and probably one of the hardest to manage. Why? Because there is no “one size fits all” answer. Trouble spots include over- or underpaying for positions relative to the market and inflated salaries that aren’t in line with the revenue the organization is generating, and the list goes on.

Compensation scorecards are a highly effective tool for improving transparency and holding managers accountable for how they apply financial resources. To ensure that merit increases and incentive compensation align with departmental performance and your organization’s overall compensation strategy, attend our upcoming webinar. Seasoned professionals will explain key steps and proven methods for creating a winning compensation scorecard.

Participate in this interactive webinar, and you’ll learn:

• Why a compensation scorecard is so important for every organization, regardless of its size
• The three essential steps in creating a winning compensation scorecard
• How to incorporate base pay and incentive actions into your scorecard for the most meaningful results
• How to connect the scorecard to other factors such as performance management, promotions, turnover, and hiring to provide rich context
• How to introduce a scorecard to get buy-in and accountability
• Case studies about what to avoid when introducing a compensation scorecard
• And much more!

Don’t miss it—claim your spot today!

Download your copy of Paying Overtime: 10 Key Exemption Concepts today!