As the 2015 budgeting and salary increase processes are about to begin, I wanted to share a few compensation recommendations I have been offering to management groups across the southeast: “Three ways to keep pay competitive in a tight budgets era”:

· We see some thawing in the marketplace, with community banks returning slowly to growth strategies, but as you know it is still a time to manage expenses. Budgets have risen slowly but steadily since 2009 … a tough climb for most.

· The recession has also been tough on individuals with 65% of Americans “not fully satisfied” with their current salaries. As things begin to improve business owners do not want to be a risk of losing key staff to defections over pay.

· And 2015’s average Salary budget increase projections are still relatively low ….in the 2.5 to 3 % range … still below pre-recession levels

· That kind of budget makes it hard to differentiate between low and high performers using standard models … so we are suggesting using traditional salary increase models as guideline to insure you do not lose sight of market values, but then using deliberate override tactics like:

  1.  Keep your salary structures up to date so that you know where you are relative to “market”. For many it has been awhile and you should “Audit” your pay structures and control points at least every 2 to 3 years.
  2. We are encouraging clients to focus on identifying key roles and key performers, and in various ways making sure the increases you offer go there first.
  3. We are also recommending increased focus on performance based variable comp … in production roles … and smaller, team or bank performance based bonuses for support staff roles that are harder to measure. As you know, variable comp helps keeps fixed salary costs in line with market, while allowing you to offer rewards that focus staff on productive behaviors.

I hope these compensation tips resonate with you and aid your 2015 planning process. If these points raise additional questions and/or if you would like some assistance auditing your compensation structures, please do not hesitate to let me know. All the Best for a successful 2015!

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