Page 176 - Budgeting for Managers

Budgeting and Human Resources
Don’t Reorganize on Your Own
When making changes to job positions, don’t do it alone.
Get expert advice from senior managers and HR.They
know a lot that you may not know. Even more important, work it out
with your team.The best theoretical plan will become a disaster if 159
your team doesn’t understand it or resists the change. People often
feel very insecure about changes in their jobs.You need to work with
your team members, explain the need for change, include their ideas,
and work together to come up with the best solution.When you have
a good plan and the trust of your team, it’s time to make the change.
complete, they’ll already be on board, making approval an easi-
er process.
Salary Planning
If you’re responsible for the salary budget for your department,
then you’ll need to think about the best salaries and incentives
for each job position on your team. There will be a number of
factors to consider and not all of them are under your control.
Here are the four most important points:

• Do not overpay your employees. When an employee is
overpaid and then underperforms, this creates an
extremely difficult situation. Even if the employee is
unhappy on the job, he or she is unlikely to leave volun-
tarily if it means a pay cut. And there’s little that you
can do to create an incentive for someone who’s already
receiving a high salary.
• Do not underpay your employees. If you do, you create
two problems. One is a revolving door where people do
not stay very long. As a result, they never become very
productive. As soon as they know their job, they leave
for a place that will pay more. The second problem is
that you will not get the best applicants to hire. You’ll
get people with poor skills or low self-esteem, who will
not be as productive.
• Use incentives effectively. One solution that avoids the
above problems is a moderately low base pay plus a gen-