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Setting branch-office salary
structures is an analysis exercise completed annually by most
multi-location organizations. These structures set the means by which both
internal equity and external competitiveness are maintained throughout an
entire organization. Determining how much one should pay an employee in
terms of base salary is a decision with far-reaching total compensation
and benefit impact. Taken it total, these expenditures are often the
greatest single expense category for an organization.
Base-salary strategy is the heart of
benefit and compensation strategy and management. Most organizations'
benefit plans and coverages are affected by the salary-level decision;
almost all benefit plans are nationwide. For example, salary reduction
plans (125 cafeteria plans reportable on Form 5500s) are benefit plans
with which every benefit consultant/agent works. Shaping these plans so
that individuals can realize sufficient take home pay is essential. 401(k)
and defined benefit plans leverage off the salary decision. Most pension
plans now utilize a "final years' average" salary base to calculate
benefits. Salary levels set the values for a host of coverages: Group
life, accidental death and dismemberment, long-term disability, workers’
compensation and short-term disability are all tied directly to the salary
levels paid to employees (salary levels that may be local in nature, but
with national benefit plans applied).
Not understanding salary
administration, the salary decisions as they relate to branch-office
salaries and the impact they have on total compensation cripples a
consultant's ability to serve his or her clients. And, a lack of
understanding of salary administration and the salary-level decision can
severely affect the internal management (staffing and payroll) of a CPA's
practice should it utilize branch offices. This course expires July 15,
2003. |
