Last month, President Barack Obama addressed that he will increase the federal minimum wage for federal contract workers from $7.25 to $10.10 per hour. In the long run, Obama hopes this will encourage Congress to vote to apply this minimum for all workers, changing the lives of more than 12 million Americans who count dollars and cents every day to pay their bills, according to NBC News.
This first move may only affect about 2 percent out of the 2 million contractors in the United States, but his decision brings up the question about compensation: should employers readjust compensation packages? It may be hard to tell at this point of 2014, where the unemployment rate is decreasing, and the number of open positions remain below expectation. Instead of solely looking at the broader picture, consider what’s happening in-house.
Entrepreneur Magazine contributor Brian Himmel explained that determining pay requires factors that goes beyond the shape of the American economy.
“Pay and recognition are two of the most important factors that impact employee morale, performance and growth,” he wrote. “If your business isn’t keeping up with market trends, you can run the risk of losing talented employees and turning away top prospects.”
Determining raises and compensation packages requires a collaboration with human resources, accountants and executives, but with the use of HR software solutions, this information is readily available for review and execution. If your business is deciding to implement a company-wide bonus, raise or pay freeze, consider these factors:
- Competitor salaries: If the company is private, then it may be harder to access this data, but HR professionals can find similar information on the internet. Websites like PayScale, Glassdoor and Indeed all provide average salary figures on specific positions. If your organization is below the market’s standards, consider giving other perks that will offset the difference or readjust these salaries—otherwise, you’re missing out on the opportunity to hire strong prospective candidates.
- Review balance sheets: Did the business stay within the intended budget? If not, was there enough revenue to offset these costs? Now, take these figures and compare it to 2014’s estimates, is there a significant amount of readily available resources? If so, start looking into the HR software to choose which staff members should be considered for a raise or bonus,
- Performance evaluations: How each department chooses to go about distributing raises and bonuses may differ, but remind managers to reward workers who went above and beyond their work expectations in the past year. Salary increments usually go anywhere between 0 to 12 percent higher, depending on how well he or she did during the previous fiscal year.