Salaries and Budgets

Subject: Salaries and Budgets
From: Bob Handlin/US/3Com <Bob_Handlin -at- 3MAIL -dot- 3COM -dot- COM>
Date: Fri, 4 Oct 1996 09:59:54 EDT

Tracy said:

>This is interesting. Your company can't justify paying you 150% of
>what you're getting now to keep you, but they'll have to pay that to
>replace you, won't they?

Most businesses do NOT understand this (or maybe they do, but they can't seem
to do anything about it). It's worse than just having to pay the same money
for a replacement, all of the expertise the person has acquired walks out of
the door with them.

The way it works here is: HR does a salary survey of like companies in the
same business, then uses this number to set salary ranges. Seems to make
sense, but there are two major flaws:

1. It's probably a closed circle (that is, all the same companies are all
checking each other).

2. It takes at least 18 months to reflect the effects of a "hot" market. HR
needs time to do the survey, and the ranges are in effect for at least a year.
As we know from earlier posts, 18 months is an eternity in this business.

Why does this happen? Large organizations need to have budgets that are
predictable. In a company with 5,000 employees, missing the salary target by
just half a percantage point could throw off the salary budget by more than a
million dollars.

Bob
Bob_Handlin -at- 3mail -dot- com -dot- com


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