Enterprise compensation managementBudgeting for base salary increases

Enterprise compensation management, and especially providing a salary increase to employees in one timeframe brings multiple levels of complexity. They are due to the following factors:

1. Multi-country
2. Multiple currencies
3. Different budgets for each country or line of business
4. Different market movements in each country

Design principles for building the merit salary budget:

Below we describe one way to build budgets for Enterprise compensation management and their salary increase cycles.

1. Research salary increases budgets in each country that your company operates in. This can be obtained from participating in salary budget surveys from companies like WorldatWork, Willis Towers Watson and many others.
2. Country level Budgets: Once you have the country-level budgets, apply to each one of those employees in each country. This is a preliminary step and you can start more granular definitions from there.
3. You can now set your exclusion criteria. Remove increases for
   1. All employees hired recently. You can define this as Q4 for a Q1 salary increase cycle.
   2. Certain countries have regulated increases made mandatory by the country local laws, you can exclude them from the analysis. Examples of this include Belgium, Luxemburg and Argentina. You can exclude them.
   3. Compensation Management in Enterprise often means that your executive team’s increases are managed by the board and run by different design principles compared to rest of the employees. You can exclude them from this analysis and add their budget later once you have clarity on the direction.
4. If you are a pay-for-performance company, you may have launched performance ratings. One way to build your budgets and forecast in a way that truly reflects your real budget needs is to factor in different salary increase percentages for different performance ratings and compa-ratios. An example if below: