Employer Cost Reduction: Control Pay Practices

January, 2009

Dear Members and Friends,
With labor being the biggest cost of doing business for most employers, I believe it is always sound practice to actively seek opportunities to control labor costs without adversely impacting your ability to attract, engage, and retain the right talent. 

Given the declining pay increases and rising unemployment levels, I’m hearing from some Cascade members that smaller pay increases and employment downsizing may be necessary for them to survive in this economy. If you are among those employers wondering how to make wise pay and staffing decisions, I want to suggest a few other practices that are proven to be effective in controlling labor costs in the long run, while supporting alignment with company performance.  Among these are:

  • Establishing a total compensation strategy and practices (base pay, incentives, and benefits)
  • Determining and controlling how your organization’s total compensation package compares to your competitive market for talent.
  • Introducing skill-based pay administration systems to support the development of a highly skilled and adaptable workforce.
  • Implementing variable pay plans that are designed to vary how competitively employees are paid based on organization and employee performance.

Whether you are currently impacted by the downturn in our economy or not, I believe Cascade can help you to achieve more effective, efficient, and adaptable pay practices.  Please call or e-mail me at your convenience if you would like to discuss the possibilities in greater detail.

Also, click here to review an article I wrote for the Cascade Quarterly, "Formal Pay Programs Link to Business Strategies".

Jerry E. Bumgarner, CCP
Director, Research & Compensation Services
Cascade Employers Association



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