SeptemBER already! The last few months you’ve made progress on your KPI’s but now planning season is upon you. When the months start to end in “-ber” a few things start to happen for companies on a calendar year fiscal year. They may not all apply, but I’ll bet most of these priorities apply to you:
Seven Comp & Benefits Priorities
- Salary Budgeting–You must recommend salary increase budgets for each country. The big HR firms have numbers you can use, but keep in mind salary budgets will vary greatly within a country based on the specific economic and industry conditions and business strength of the company. Some companies are still in survival mode due to the pandemic and are budgeting far less than the norm, or are freezing salaries. Join our Asia PayPulse Survey, to get the report showing budgets by pandemic impact.
- Benefits Budgeting–You need to provide finance an inflation rate on your insured benefit premiums. Annual trends in Asia are generally around 10% in recent years, but check with Aon and WillisTowersWatson or MercerMarsh, they can provide the numbers, and may have free white papers on their websites. How will you manage rising healthcare benefit costs? Look at self-insurance if you have over 1,000 employees/lives in a country, look at multinational pooling if you have multiple insurance contracts across several countries, and look at employee cost sharing to start changing behavior. At the same time, ensure you are covering COVID-related costs as you are able.
- Annual Market Analysis–Your compensation surveys are being published in the next several weeks, with some coming out in September. Don’t wait until the last minute! It’s tempting to wait ’til late October when all your surveys have been published, but remember you need to confirm your matching, check the year-over-year market movement by job, to see if there are jobs where the market moved up more the expected, or perhaps moved downward, in which case you have to decide whether to accept the new market value or stick to the current market value (and see if it goes down again next year).
- Annual Pay Cycle Planning–Do you know who is running the annual merit/increment process? Who is responsible globally, regionally, by country? Who is working with the software vendor (if you use 3rd party software) for modifications and configuration? What are the milestone dates? How will the Lunar New Year impact milestone dates, manager deadlines, performance rating calibration and approval, etc.?
- Current year Incentive Accrual–One thing I recommend doing now is updating your forecast for your current year incentive payouts. Finance needs to maintain their accrual (provision) on the balance sheet for the bonus payment liability. If incentive-related business performance has been low, payouts may be lower than budgeted, depending on your plan design and funding formula (if any). If so, it’s bad news for employees, but good news for finance, who can make plans to earmark potential surplus incentive budgets for other needs. However, if business performance has been good, your incentive accrual may be insufficient and finance may have to increase that accrual to avoid a year-end cash flow crisis.
- Incentive Design–Again, don’t procrastinate. You think September is busy, it gets worse each month now through next March, so do yourself a favor and get some things out of the way now. For next year’s incentive plans, ask some business leaders if they have any input/feedback on the current plan design, likely payouts, etc. Update your accruals (see step 5) and have an informal chat with your head of HR and head of Finance and see if they have any sense about the richness of payouts, who’s getting low (or no) payouts, who’s getting bigger payouts, etc. Is the incentive plan doing what it is supposed to do? Will it help attract, motivate and retain the best performing individuals? Is it rewarding the best performing teams, units, regions, etc.? If you can confirm that the plan is working well, then you can plan on a lighter incentive design process for next year. If you get feedback that says something needs to change, then you should start more detailed planning now and make sure planning doesn’t get swept aside by merit and bonus planning, or other priorities in December and January. Ideally, new incentive plans/schemes should be issued in the first month of the new year, but no later than March, in most organisations.
- Finish your KPIs–it’s time to get realistic about what you can accomplish on your own time. What can you delegate? What do you need help with? If you (or your boss) have unspent consulting dollars, now is the time to get someone to help you get your KPI’s across the finish line. The only thing more tragic than not spending your consulting budget is not spending it AND failing to complete your KPIs!
One more priority applies only if you’re in the Philippines: it’s time to put up Christmas decorations!
Finish strong. How? Be healthy, eat well, rest well, get some exercise, spend time with friends and of course family. Have some balance. And don’t forget to be awesome.