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It is a challenging time to be an employer in the city of Chicago. Unemployment was expected to be 4.1 percent in July 2018, and costs of goods and services are increasing at some of the highest levels in the past 10 years. It is no wonder that compensation is on the minds of employees. A recent survey of more than 1,100 U.S. adults conducted by the Harris Poll confirmed that 67 percent of job seekers are focusing mostly on salaries when researching for potential jobs. In challenging workplace environments such as these, it is imperative for organizational leaders to review and potentially revise compensation strategies and programs. So what specifically should you do?

1: Ensure jobs at your organization are market-priced accurately.

If you do not utilize reputable salary surveys, such as those offered by Mercer or Willis Towers Watson, to evaluate jobs, now is the time to subscribe and utilize their valuable data. Accurate salary survey data helps to pinpoint market rates for jobs, as it can be separated by industry, location, size and many other factors. Survey data is inherently older by the time it is published, so it is important to “age” the data to the current date. Accurate survey data is crucial so leaders can see where employees are paid in relation to the market via a competitive and accurate salary range. It is good practice to utilize the salary range along with an employee’s performance evaluation to determine merit increase percentages and promotions to make the best use of budgeted dollars.

Lower paid, higher performing employees should be allocated larger increases than those who are paid higher and may not be performing as well.

2: Evaluate your merit budget.

If you have historically budgeted to “at market” levels, perhaps now is the time to set your merit budget “above market” or even “lead the market” if your organization is thriving. The 2017 World at Work Salary Budget Survey noted that the average actual salary budget increase in Chicago was 3.1 percent in 2017 and was estimated to be 3.2 percent in 2018, indicating only modest wage growth. In a rising cost environment, a larger merit budget sends a message to employees and managers that you are paying attention to economic conditions and want to retain them. Managers will appreciate the extra dollars to allocate to employees, especially those who are higher performers. Employees will notice a higher than average increase in their paychecks.

3: Review bonus metrics, targets and payout levels as a committee.

If you work in an organization that offers bonus programs, review key bonus criteria and ask yourself some key questions. For instance, how many of your sales employees are hitting their sales targets? Are bonus targets difficult enough to drive meaningful financial performance and results? Are bonus payouts enough to motivate employees to perform better? Reviewing key bonus criteria as a committee helps determine what may or may not be working in incentives plan as well as generate open dialogue and innovative ideas to improve them. Make sure to include employees from a wide variety of constituencies on the committee to get different perspectives, including colleagues from sales, legal, finance and HR.

4: Review long-term incentive plans.

Long-term incentive (LTI) plans are compensation vehicles used primarily to retain employees and help them accumulate wealth. With LTI plans, employers typically allocate a certain amount of stock shares, stock options or cash to employees as long as the employees stay with the organization, or in some cases if certain performance criteria is met. Long-term incentive benchmark amounts and eligibility criteria may be reported in salary surveys, but competitive data is generally tougher to find. Thus, it may be more critical to rely on internal fairness when determining eligibility and award amounts.

5: Consider implementing different compensation approaches to attract and retain employees.

Many organizations use typical compensation programs such as base pay, merit increases and bonus plans to reward employees, but now is a great time to think out-of-the box with these programs. Peer-to-peer recognition, electronic thank you notes and giving employees an experiential choice for achieving goals are all innovative approaches to rewards. According to Bob Nelson, Ph.D. in his book 1501 Ways to Reward Employees, a trend in incentives is the increased use of wellness and work-life balance programs. Examples include free exercise and nutrition workshops, massages, healthy breakfasts and ergonomically designed computer desks. Some organizations are paying for seminars to assist employees with financial wellness.

In summary, now is an excellent time to review and potentially revise your compensation programs. In an environment of low unemployment and increased costs, employees are watching their pennies and will be on the lookout for opportunities to increase their compensation. While these five suggestions are not a panacea for employment problems you are experiencing, they can help you attract and retain key talent and create a dynamic work environment when you may need it the most.