- Data is a difference-maker. Pay budgets require a starting point, and panelists for a WorldatWork webinar concurred it’s in the form of quality data.
- Planning is truly a team game. Total rewards professionals that don’t effectively partner within their organization likely are limiting the success of their budget efforts.
- Think “multilingual” when messaging. TR pros need to speak the language of numbers, words and images to effectively communicate budget plan information.
Total rewards professionals are under pressure to plan salary budgets in a challenging economic and labor environment — all the while supporting strategies to acquire critical-skill talent, engage/motivate the existing workforce and maintain pay systems that are fair and equitable. To make all this happen, TR pros need to procure relevant data sources and understand how to balance contradictory informational requirements. With that data at hand, they must evaluate competitive market positioning and make recommendations to finance and other organizational leadership.
Needless to say, this is complex, difficult work.
WorldatWork presented “Dive into the Future: Salary Budget Planning for the Year Ahead,” a webinar held Tuesday, Aug. 13, to help attendees responsible for this work by sharing:
- Ideas on how to use salary budget survey data in the budget planning process,
- Fresh thoughts on how to synthesize data from multiple salary budget surveys, and
- Insights on how to forge strong budgeting partnerships.
(If you missed the live session, the webinar is now available on-demand.)
Event speakers included:
- Susan Brown, senior director of compensation, Siemens
- Elizabeth Crofoot, senior economist, Lightcast
- Connie Haney, director of total rewards, Acumatica (and faculty member, WorldatWork)
- Liz Supinski, director of research and insights, WorldatWork
Accounting for Supply and Demand
Crofoot began the session by outlining some of the economic factors putting downward pressure on wage growth (i.e., higher workforce participation and lower labor market churn) and additional factors (i.e., inflation and productivity growth) that are muddying the waters given uncertainties in their direction and resulting impact. Much of Crofoot’s message centered on the influence of supply and demand.
Research: 2024-2025 Salary Budget Survey
“There has been a lot of chatter and concern about economic recession and the weakening labor market,” Crofoot said. “The labor market is weakening, but it is not weak. We are still in a strong labor market or a relatively strong one. You can see that from the unemployment rate; this is a measure of overall supply in the market. While the unemployment rate is up compared with recent months, it is still historically low. Labor markets are still relatively tight. So, we do have this declined demand dynamic where we have less supply than current market demand. That’s going to increase wage pressures.”
This economic environment is making TR pros’ job of salary budget compilation and recommendation exceedingly difficult.
“The TR pros I’m working with are being asked new questions — like needing to explain concepts such as inflation, cost of labor and ‘soft landing’ to their HR teams, leaders and even finance partners, and then fully factoring these new concepts into budget planning,” Supinski said.
The webinar panelists shared two primary strategies to effectively take on this task:
- Use strong data sources to drive budget planning.
- Build and maximize strong cross-functional relationships to ensure vision, mission and financial alignment.
The Importance of Salary Budget Surveys
Pay budgets require a starting point, and the panelists concurred it’s in the form of quality data. Examining such data, Supinski shared, “is where due diligence happens.”
Salary budget survey reports created and offered by WorldatWork and other entities speak to geographic, industry and workforce trends and inform on the economic and societal factors shaping compensation in all its forms (base and variable pay, bonuses, promotional increases, and more) for exempt and nonexempt workers. (Workspan Daily recently published a news article summarizing data from WorldatWork’s new report.)
“For me, the salary budget survey is the foundation, the place to build from,” said Haney, who has been in her role at Acumatica for the past year after serving in TR leadership roles with companies such as Teknova, CoorsTek, GMAC, Cargill and GE Capital. “I really need that information to be able to level-set with my finance people. The most important thing, when I synthesize the data between the different salary surveys we leverage, is looking at and understanding the industry and other elements [that matter to and reflect the business].”
Brown, a compensation director at Siemens for nearly two decades, concurred, saying, “The data makes a huge difference. Salary budget survey information is the foundation for our decisions. We use multiple sources, and what I really look for is, ‘Is it robust?’ Does it give you industry or geographic cuts? But also, it’s got to have data on literally thousands of companies for my CFO to see that a company like ours is represented in that sample. Robustness of data, frankly, gives us the credibility to move forward.”
Besides independently produced salary budget survey reports, Crofoot advised TR pros to also access other sources, including top-index compensation and tax data from the U.S. Department of Labor’s Bureau of Labor Statistics and real-time wage information from online job postings.
“The sheer size of the [BLS] samples provides really rich data points, and they are very reliable during times of economic stability,” Crofoot said, adding that job-posting data is “high-volume, high-frequency, and this can be really good for identifying inflection points in the market and the magnitude of change, especially when economies and labor markets are moving so rapidly.”
The Importance of Partnerships
While data sources can serve as partners in your salary budget process, so too are your internal stakeholders.
“If you don’t effectively partner within your organization,” Supinski said, “you really can’t be successful [in the budgeting process].”
That means clear, direct, frequent, strategic communications with counterparts in finance, legal, operations and the C-suite, as well as with the general workforce.
Toward these relationships, the panelists shared TR pros must bring value and context that account for colleagues’ individual and collective roles — and their wants and needs.
“If you come in [to budget planning and recommendation time] thinking it’s a negotiation and a fight, it will be. But if you come in as ‘I’m a business partner,’ the experience is quite different.”
— Connie Haney, director of total rewards, Acumatica
“Those of us in the TR profession speak — or should be able to speak — three languages,” Haney said. “We need to effectively speak the language of numbers, because that’s what we do and that’s what we share and discuss with finance. Some of us need to effectively speak the language of words — plan documents and more — when dealing with legal and other departments. And, we need to effectively speak the language of graphs and PowerPoints as we communicate to employees in different scenarios.”
According to the panelists, partnership toward budget planning should be a year-round (and multi-year) proposition.
“I’m joined at the hip with finance, HR talent acquisition and others,” Haney said. “We are partners in this. When we go in to make our recommendations on budgets, I’ve already presold it to them and with them, or we’ve worked together. So, it’s not coming in [as a one-voice, one-time thing].”
Haney mentioned she moved her office closer to her financial planning and analysis (FP&A) partners to make that relationship more visible and actionable.
“Those relationships are critical,” Brown added. “There are also real year-on-year benefits in working with the same team [and corporate players]. You get to know what matters to them.”
To deliver “what matters,” the panelists said to keep stakeholders’ needs, vernacular and communication preferences front of mind.
“Be mindful of your audience and project [your data, recommendations, etc.] how they need or want to see it,” Brown said.
Some gravitate to visuals. “If they love pie charts and that’s how they best absorb information, adapt to that,” she said.
Some want the focus on context, back story and range of plan options. In these cases, “Don’t come in just saying I’ve got a 3.8% budget this year,” Brown said. “Base it on what the business is doing and what they [as individual stakeholders] are doing.”
If retention, turnover rate, churn and/or talent acquisition is the business’ storyline, make sure the budget plan speaks on/to those terms. “Provide ‘here’s our market position, here’s what’s going on in one of our major businesses and here’s what we’re doing to combat it,’” she said.
“Also, come in with some modeling you’ve done,” Brown added. “If they want [salaries] to go higher, what does that mean for your total spend? If they want to go lower, what does that mean for your ability to be competitive? Be ready with those.”
Haney may have summed up the importance of partnership best when she shared, “If you come in [to budget planning and recommendation time] thinking it’s a negotiation and a fight, it will be. But if you come in as ‘I’m a business partner,’ the experience is quite different. I had one business VP tell me, ‘Connie, it’s not your checkbook.’ I said, ‘No, it’s not my checkbook, but it is our business.’ He replied, ‘Yes, you’re right.’”
Click here to access top-level results from WorldatWork’s 2024-2025 report. In addition, the full report — covering base salary increases and merit budgets for 22 countries and in-depth salary budget insights for the U.S., Canada, India and the United Kingdom — is available for purchase. Report purchase also provides access to the U.S./Canada Online Reporting Tool to build customized reports based on industry, organization size and/or geographic area.
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