Nearly two months ago, SHRM published an interesting article.

Base Salary Rise of 3% Forecast for 2015

U.S. workers can expect a median base salary increase of 3 percent in 2015 across all main employee categories and most industries, still below pre-recession levels, according to separate research findings by pay consultancy Hay Group and WorldatWork, an association of total rewards professionals.

The limited growth indicates no major change in the degree of upward pressure on wages — for now.

Rich Uncle Pennybags cheers when he reads that the economy can sustain a high level of job vacancies with low wage increases. It means that he’s winning the war against talent. He doesn’t have to rush to hire people AND nobody gets a decent raise. Doesn’t get much better than that.

He passes go and collects $200 from the pockets of his workers!

But Rich Uncle Pennybags is a dick. He’s a short-sighted CEO who relies on a shoddy advisory board to get him through the fiscal year. He needs a great talent advisor — HR professionals who do more than just administer labor budgets — to help him understand the value of investing in his workforce.

Great HR professionals understand how politics works. If you control how money is spent on labor, you control the world. The best HR leaders I know are the ones who work hard, educate themselves on compensation and governance, and extend their influence into finance.

When great HR leaders broker a deal to advise and consent on all compensation and labor expenses, the workforce wins. So get yourself schooled on compensation strategies and executive compensation issues right now. This is your biggest imperative as a human resources professional. World at Work is a great place to start.

I would also challenge HR professionals to think beyond their own paychecks. At what point does it become despicable to offer a 3% merit increase? When will HR say something about the impending collapse of the consumer economy? I know so many human resources people who want the proverbial seat at the table. If people can’t afford to buy the products and services sold in America, there is no table.

And if there’s no table, there is no need for HR.

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1 Comment

  1. Rich Uncle Pennybags may be a dick, but he’s not an idiot. That is, after all, how he and his ilk got rich.

    I support your notion that HR professionals need to be much smarter about compensation strategies and governance. And, I believe that doing so will not solve the wage stagnation that ails us.

    Old Pennybags is likely getting his information from a comp consultant who was hired by someone in HR. But changing the way you look at compensation only makes sense if it results in increased productivity so that products and services are competitive in a market with unlimited competition.

    Compensation is a relative number that is based on scarcity and desirability of talent. That is why LeBron James gets $23 million per year to play basketball in Cleveland while some other player receives the minimum.

    The way to permanently raise wages is to raise the talent level. Pennybags will pay more for talent in the U.S. when he sees an opportunity to leverage the extra productivity and performance into greater profits.

    So yes, get smart about compensation and governance. And then really help the workforce win by giving them the knowledge, skills, and tools to make it impossible for Pennybags to ignore the fact that paying them more is in his best interest.

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