Keep in mind that we are now in a period of economic expansion, yet planned salary increases are still low. In fact, for the second consecutive year, company budgets for pay raises declined. Planned increases are expected to be 4.3 percent in 1995. We have already seen a rather dramatic shift in the collective bargaining strategy of the unions from pay increases and improved benefits to job security. Fewer Promotional Opportunities for Managers.
Flattened organizations result in less promotional opportunities.
In the decades prior to the mid-80's, professional employees expected to move up the organizational ladder every 3 years or so. If professionals and managers do not clearly see a next step in their job it probably means that it isn't there. The result is a skills-based compensation approach that rewards employees for learning new skills or enhancing the skills they already possess. Approached in the right way, skills-based compensation can be an extension of employee empowerment and could result in front line involvement by all employees. Initially about 20 percent of a team members pay is determine by peers but eventually 50 percent or more will be subject to peer review.