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January 28, 2010
Factoring 'Micro' Considerations When Awarding Pay Raises

In a BLR webinar entitled "Where's My Raise? How to Handle Tough Pay Conversations With Employees," Theresa Murphy of HR Partner Advantage and David Wudkyka of Westminster Associates stressed the need to take into account the "micro" considerations of individual employees when awarding compensation. When they ask you "How much will my raise be this year?" you will have to think about these criteria :

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  • The employer's overall financial situation
  • The department's or division's "budget" for raises
  • The employee's length of service
  • The employee's qualifications (i.e., the scarcity of certain talents in the labor market and the likelihood that the employee will be paid more for them elsewhere)
  • How much other employers in the local area are paying for similar jobs
  • What the employee requires in the way of incentives
  • General economic conditions: the inflation rate, changes in the cost of living, etc.

Theresa Murphy is the principal consultant for HR Partner Advantage, an independent human resources advisory firm based in Raleigh, N.C. She may be contacted at tmurphy@hrpartneradvantage.com. David Wudyka is the founder and managing principal of Westminster Associates, a Massachusetts-based human resource and compensation firm that specializes in pay, performance and productivity issues. He may be contacted at dwudyka@westminsterassociates.com .

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