Base Salary Flexibility

The base salaries are very dangerous compensation component. The base salaries are not flexible and the employees tend not to agree with lowering the base salaries, when the organization is not in the deep financial crisis.

Based on the principles of the market economy, the base salaries should fluctuate on the basis of the economic growth, but the base salaries are flexible just to grow.

When the organization meets economic troubles, the employees do not want to have their base salaries lowered, they accept no salary increase for the limited period of time.

The organization should always count on the inflexibility of the base salaries. The decision about the increase of the base salaries should be always covered by the excellent financial analysis and the sustainability in the future.

The growth of the base salaries is not improving the position of the organization on the job market usually as the main competitors can easily increase the base salaries as well. It can destroy the profitability of the organization and the employees are not motivated to work harder. The base salary has generally a very weak link with the motivation and performance.