Tessara Smith, PayScale
If you read parts 1 and 2 of these three part series on comp budgeting, you now know how to handle compensation and inequities. Now that you know exactly how you are going to implement your comp plan there’s one last hurdle to surmount — you still need to convince your superiors of why this compensation budget is necessary. Asking for more money is not always an easy topic to bring up when approaching your superiors. In order to get your newly formed budget approved, you will need to get all your ducks in a row.
Creating your Budget Request Spreadsheet
You have calculated pay inequities at an organizational, job, and individual level, and then decided on whether you intend to give market or performance based increases, now it’s time to pull all of this together on a budget request sheet. This spreadsheet or report will be a summary of your compensation budget requests and should be sectioned off according to how you plan on implementing the increases.
In addition to outlining where you intend to give pay raises, it will also be important to explain the reasons these salary raises are needed. If there are issues surrounding inequities it should not be too difficult to explain that your employees are not being paid fairly based on the market ranges. However, backing up increases based on proficiency or performance may prove to be more difficult. Here you should emphasize that the new increases you are requesting are a key component of motivating your team members and developing your department.
Clearly communicate the importance of each line item with easy-to-read reports like the ones you get from PayScale, and the value it has in accomplishing organizational goals and your business objectives.
Backing up your New Budget
An additional step you can take when presenting your budget proposal, is to measure the proven success of your department. The best way to do this is to provide numerical evidence that your department is gaining momentum. If your department isn’t one that is focused on sales numbers or other measurements, it will be important to justify its value in other ways, such as a high employee retention rate. Depending on what method you are using to base your increases on, it may also be useful to present a market compensation report. By doing this you can show that your employees are not being paid correctly according to the market values for their jobs.
The most important point that you want to drive home in your budget request, is that increasing compensation will keep your team members motivated and help to company to rake in more revenue. Money can be a touchy subject for any business, but it is a critical conversation to have with your executives in order to insure that your department, and most importantly your company, will continue to succeed.
Want to learn more about budgeting and asking for money for your budget? Get the full story with PayScale’s complete complete guide to Compensation Budgeting. It’s free!