Page 177 - Budgeting for Managers

Budgeting for Managers
160
erous but fair incentive program. Employees earn incen-
tives based on the real, objective value of the work they
do. That way, good performers earn and receive high
salaries. Moderate performers earn reasonable salaries
and know that they’ll get more if they do better. Poor per-
formers know that it’s up to them to do better and to
improve the results they deliver.
• Be fair. Even if salary information is supposedly private,
word often gets around. If some people earn a lot more
than others for the same job, for whatever reason, this is
likely to lead to tension in the office. There are good rea-
sons for differences in salary—more years of experience
in the field or in the firm, more education, or a stronger
work record. But be careful that the difference is not too
large, that it has a good basis, and that those who make
less money have a chance to take control of how they do
their job and be rewarded for their efforts.

Once you have job descriptions for each position, you need
to build a salary plan. This is a spreadsheet of salaries (annual
or hourly) and work schedules. It is very important to get it
right. An error here could lead to commitments and contracts
that you can’t easily back out of. And if those com-

Too Much Too Soon
The first time I was a manager, I had about a dozen student
employees running a computer lab and I was responsible
for hiring them and setting their salaries.When I started the job, it was
summertime and, being very young, I was a bit panicked about getting
good people.There weren’t very many students around at all. One of
them was excellent, but he already had another, high-paying student
job.To get him to work extra hours with me, I needed to pay him $11
per hour. I did it, because I was afraid that I wouldn’t get the lab start-
ed without help.When the semester started, I got other students, but
the usual pay rate was only $6 per hour.The first student’s extra skills
were worth a higher salary, but the gap between $6 and $11 was real-
ly too large. It created some strain, especially when other student
assistants learned their jobs and became excellent as well.