Tough Times, Tough Decisions
Just when compensation programs appeared to be driving towards stock based and variable compensation, the market has taken a major downward turn impacting all existing programs. Below is a list of how companies are responding to changes in the marketplace and altering their compensation programs in an effort to continue to compensate and reward their top performers within the confines of reduced budgets and an uncertain stock market. Some organizations have been very proactive in examining and repositioning their compensation matters to enable them to better compete in the next round of expected economic expansion, while others are taking drastic measures to survive. These are the most progressive and most painful trends:
Progressive:
Increased use of Options – no accounting charge (Keep eye on overhang!)
Increased use of Variable Pay Programs tied to Target Award Achievement
More emphasis on restructuring Sales Compensation Plans to motivate sales team
Retooling of Severance Packages and Stay Bonus Plans
Increased Communication of pay related matters
Painful:
Delaying Performance Reviews and corresponding Salary Increases
Reduced Budgets for Salary Planning for 2002
Hiring Freeze
Salary Freeze or Reduction
Cut back hours of employees or Forced Time Off (unpaid)
