From the course: Human Resources: Compensation and Benefits
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Budgeting and communication
From the course: Human Resources: Compensation and Benefits
Budgeting and communication
- Employees may think their companies are stingy. But just like a personal budget compensation budgets require trade-offs in order to control costs. It's all about the choices that managers make and how they communicate those choices to employees. Sometimes, companies need to reduce labor costs. And there are a number of things they can do. They can reduce headcount through layoffs or incentives to leave. They can increase overtime instead of hiring more employees. They can reduce benefits by suspending matching contributions. Or controlling the costs of healthcare. Or by eliminating pay raises. Or tying pay more closely to increases in productivity, or profitability. When a company is profitable the key question is how much to budget for pay increases. The most common approach to doing that is top down. The budgeting process begins with top management setting an estimated pay increase budget for the whole organization. The first thing a firm needs to take into consideration is its…
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