Schuster-Zingheim and Associates, Inc.- Pay & Rewards Tips

The SZA Pay & Rewards Bulletin, June 2004

Pay & Rewards Tips

Patricia K. Zingheim and Jay R. Schuster

Here are answers to questions that we're frequently asked. These may help you and your organization:

Q: We are projecting a 3% pay adjustment budget for this year. What if hiring picks up and that turns out not to be enough to keep the best people we have?

A: Wise companies are taking care of people with key skills and top performance—the top 20% of the workforce. If your company doesn’t have the ability to identify these people, you may need to seek additional budget later in the year.

Q: We are contemplating implementing variable pay below the supervisory level. Is this a good time to consider this move, or should we defer until business gets better?

A: Opinions vary on this, but we believe implementing variable pay when business is improving is the best time to make the change. It communicates key goals to employees and gives them the chance to participate in business improvement monetarily.

Q: I have read a lot about paying for skills. What’s needed for this to become practical and useful for a manufacturing company?

A: Skill pay is a sound concept and something that will be part of our future. We need to have a way to determine the market value of skills. And we need an Internet solution to help us translate the skills and their market value into a simpler solution. These tools are probably going to begin to appear next year.

Q: Our base pay system is like many others, it pays more for supervisors and managers. This is often encouraging great engineers, financial analysts, scientists, and administrators to become less-than-excellent managers. Any way to address this?

A: The best way is to provide a "dual-ladder" pay system. This provides that people can earn as much pay by being excellent individual contributors and team members as they can by becoming supervisors. Being a manager or supervisor should not be the only way to success in an organization.

Q: We have had a series of layoffs, pay cuts, and pay freezes over the last few years. Now things are getting better. How do we give some positive messages through rewards for our workforce?

A: Consider some way to share the results of the turnaround with your people. Maybe some kind of recognition and celebration program. Also, it may be time to consider a variable pay plan that shares some of the improvement with the employees who make it possible.

Schuster-Zingheim and Associates, Inc. Home Page

FOR FURTHER INFORMATION CONTACT
Schuster-Zingheim and Associates, Inc.
1541 Bel Air Road
Los Angeles, CA 90077-3021
Phone 310-471-4865 FAX 310-471-4859
E-mail: contact@schuster-zingheim.com
Web Site: www.schuster-zingheim.com or www.paypeopleright.com

All material © 2004 Schuster-Zingheim and Associates, Inc.

Q:	We are projecting a 3% pay adjustment budget for this year. What if hiring picks up and that turns out not to be enough to keep the best people we have?
	A: Wise companies are taking care of people with key skills and top performance—the top 20% of the workforce. If your company doesn’t have the ability to identify these people, you may need to seek additional budget later in the year.
Q:	We are contemplating implementing variable pay below the supervisory level. Is this a good time to consider this move, or should we defer until business gets better?
	A: Opinions vary on this, but we believe implementing variable pay when business is improving is the best time to make the change. It communicates key goals to employees and gives them the chance to participate in business improvement monetarily.
Q:	I have read a lot about paying for skills. What’s needed for this to become practical and useful for a manufacturing company?
	A: Skill pay is a sound concept and something that will be part of our future. We need to have a way to determine the market value of skills. And we need an Internet solution to help us translate the skills and their market value into a simpler solution. These tools are probably going to begin to appear next year.
Q:	Our base pay system is like many others, it pays more for supervisors and managers. This is often encouraging great engineers, financial analysts, scientists, and administrators to become less-than-excellent managers. Any way to address this?
	A: The best way is to provide a "dual-ladder" pay system. This provides that people can earn as much pay by being excellent individual contributors and team members as they can by becoming supervisors. Being a manager or supervisor should not be the only way to success in an organization.
Q:	We have had a series of layoffs, pay cuts, and pay freezes over the last few years. Now things are getting better. How do we give some positive messages through rewards for our workforce?
	A: Consider some way to share the results of the turnaround with your people. Maybe some kind of recognition and celebration program. Also, it may be time to consider a variable pay plan that shares some of the improvement with the employees who make it possible.