Pay increases LO5447

Roxanne S. Abbas (
08 Feb 96 11:01:45 EST

Yesterday, I was talking with a compensation specialist with one of the
largest financial services companies in the U.S. She told me a story of
how the compensation staff had been challenged by an employee in a meeting
where they were presenting next year's compensation plan which was based
on a 3% pay increase budget. They were asked how the voice of the
customer was considered in this plan. This question opened up a
discussion of identifying the real customer of the employee compensation
plan. The corporate compensation staff had determined their customer to
be the stockholders since this was the group who was paying for the pay
increases. And since stockholders have a clear goal that the company
maximize profits, the compensation staff saw their charge to be to
minimize payroll costs without causing too much turnover. The employees
felt they were the customers. My own mental model says that the employees
are "paying" for their own pay increases with their time and their labor.
A pay increase is not a gift that is given by the company.

Their thinking helps to explain the small increases that employees are
receiving even as dividends sore. I'm interested in how others view this
question: Who is the customer of the compensation staff? Who should the
pay plan be designed to serve?

Roxanne Abbas
Abbas Compensation Strategies
Internet:"Roxanne S. Abbas"<>

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