Presidio Pay Blog Providing Thoughtful, Strategic Advice for Critical Compensation Issues

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