Managing Compensation Costs
We are fielding quite a few requests for ideas on how to effectively manage compensation costs in light of the rough economic conditions. Below we’ve listed a few ideas we feel have merit and, in some cases, are a more strategic approach than simply cutting jobs. Feel free to comment or provide alternatives you’ve seen work.
1. Freeze Merit Increase Budgets - This translates to no base salary increases for 2009. Most surveys indicate companies have already revised their 2009 merit increase budgets downward from 3.6% to 2 - 3%. Some companies are taking this step further and freezing salaries altogether.
Presidio Pay’s Thoughts - Freezing salary increases is only slightly less demoralizing than a layoff, particularly for high-performing employees. We would suggest companies continue to provide some base salary increase to the top performers in the organization. This reinforces the importance of a
Treasury Department’s New Pay Restrictions
New restrictions on executive compensation have been issued by the Treasury Department in an effort
...to strike the correct balance between the need for strict monitoring and accountability on executive pay and the need for financial institutions to fully function and attract the talent pool that will maximize the chances of financial recovery and taxpayers being paid back on their investments.
US Department of Treasury (TG-15) , February 4th, 2009
Essentially, companies that receive assistance through programs that are widely available to most firms and have pre-determined terms and conditions will not be affected. The Treasury Department identified the Capital Purchase Program as one such program in which participating
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Recent Posts
- American Bar Association Annual Meeting
- The Changing Face of Executive Compensation in IPO Companies
- Issues & Alternatives For Underwater Stock Options
- Week of March 16th
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