About our Blog Post author: About our Blog Post author: Shawna Lake is the Vice President of Human Resources at that Indianapolis Symphony Orchestra. She is certified as a Senior Professional in Human Resources (SPHR) and currently serves as the Director of Volunteer Management for IndySHRM. Shawna holds degrees in Human Resource Management and Organizational Communication from Ball State University.

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Over the past 12-24 months, many of us have helped lead our organizations through some painful situations including but certainly not limited to reductions in pay and benefits, downsizing, and hiring freezes.  Now that it seems the pendulum is swinging the other way (slowly), what are you hearing and noticing from staff?  From people in and out of my organization, I’ve heard things like “Will we get some of our pay cut back this year?” Other statements have been “It might take 2-3 years to get my pay cut back” and “since they aren’t replacing those let go, I should get a raise for doing two jobs.”  I’m sure you have very similar quotes!  And, I’m sure you can attest to the fact that people have calculated the total value of their “sacrifices” including direct compensation and benefits.

How do you respond?  Each organization’s culture, policies, and fiscal situation will vary greatly.  I encourage you to first think about how the original pay or benefit reductions or layoffs were communicated.  Then, either continually re-state the plan, establish one now, or otherwise follow-up as you agreed.  This is a critical time to maintain respect and credibility for yourself and the entire organizational leadership.  I know of one business locally that took a pay reduction across the board and let everyone know from the beginning that they could not give an estimate as to when that would be reversed.  Later in the year, they took a smaller, second reduction but said it would be reinstated in six months and did do that as promised.  Not all of us had the good fortune to give that much detail to staff in advance.  Some employees in my organization understood a salary reduction to be a new starting point of compensation where any future merit increases would begin.  Others in my organization interpreted the salary reduction as indefinitely temporary and won’t consider any future increase a merit increase until they are back to their starting pay.

I hope that my HR career doesn’t see anything like this past recession again.  However, should that happen, my sincere wish is that I will have saved this writing to remind myself to over-communicate at the beginning of changes and set the tone for realistic expectations.  Since my crystal ball wasn’t polished enough at the time, I’m doing a lot of level-setting and having individual conversations on the back end.

Many of us are budgeting and planning for a new year that shows a glimmer of economic promise.  According to the Mercer 2010/2011 US Compensation Planning Survey, 98% of employers plan to award merit increases in 2011.  The average increase is projected to be 2.9%.  This seems like good news to most of us.  However, as previously mentioned, most staff members are carrying a number around in their head of the total comp sacrifice they’ve made, so be prepared for more conversations.  To read more about the Mercer report and SHRM’s take on this subject, check out the Compensation Discipline Article on Pay Increases.