ompensation Focus

How to Sell Your Salary Budget to Finance
By Michelle Andolsek

In a typical organization, the payroll expenses are a large portion of the operating expense budget.  So, to plan on increasing this considerable expense each year is sure to be hard for your finance department to accept. They may want to try to talk you into “decreasing your percentage increase” — unless you have a surefire plan in place to convince them otherwise. 
 
One thing that you should make sure to do before presenting any data to finance is get a plan in place. Once you have decided the plan and the budget, and you have your cost estimates prepared, you will be ready to sell the idea to your finance department. This is not necessarily an easy task, but with the following tips, you should be well on your way to getting that budget approved.

  • Have valid data:
    • Whether you are doing across-the-board increases or are granting pay increases based on performance, it is important that you have accurate and detailed exhibits to bring to the table. Accountants are typically analytical individuals, so the more detail you can bring the better off you are going to be. Make sure your costing of the salary increases is accurate in all aspects and that you have made educated estimates where needed. 
  • Speak their language:
    • Be knowledgeable about the budget and about financial processes. In most situations, one of the major jobs of the finance/accounting department is to look out for the bottom line (net income) of the organization. Unfortunately, one of the things that can help the bottom line increase is to reduce expenses. In their minds (in most cases), all expenses must be justified. If you come into the meeting understanding the dilemmas that they are facing, they are much more likely to be understanding of your needs. 
  • Use the philosophy:
    • Your organization most likely has a compensation philosophy, and now is a perfect time to use it. For example, if part of the compensation program is to pay at the 50th percentile of market, it may very well be that these salary increases are going to help you maintain that status. Use this to your advantage by letting your finance department know that you will be compliant with the organizational objectives by adopting the proposed budgeted pay increases.
  • Refer to satisfaction:
    • If your organization held an employee satisfaction survey recently, use that data. Most surveys have either a section or at least a question regarding pay. If your scores increased last year, make sure you mention that you want to maintain the increase. If they happened to decrease, you can use that to your advantage as well by addressing that the pay issue should not be compounded.
  • Present market data:
    • There are several salary budget surveys available. Come to the meeting armed with one (or a few) of those. If the surveys show an average increase close to what you are planning, this should be a major help to you! 
  • Refer to goals:
If your organization has annual goals to meet, use these to your advantage as well. For example, maybe you have a goal of increasing your employee satisfaction scores on pay. Or, you could have a goal of reducing pay focused comments on exit interviews. Anything you can mention that will show that your budgeted pay increases will better the organization will certainly help you make your case.

About the Author
Michelle Andolsek is a Compensation Specialist for St. Mary's Good Samaritan Inc. She has background experience in accounting and management.  


Read the August 2010 edition of Compensation Focus.

Contents © 2010 WorldatWork. No part of this article may be reproduced, excerpted or redistributed in any form without express written permission from WorldatWork.

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