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WHY ORGANIZATIONS ARE FINDING VALUE IN EMOTIONAL INTELLIGENCE (EI)

Emotional Intelligence (EI) is about being able to control your own emotions and the emotions of others.  Having emotional intelligence means being emotionally aware, able to identify, harness and apply those emotions to tasks like thinking and problem solving. Emotionally intelligent people will also have the ability to manage their own emotions and the emotions of others.  For example, having the ability to cheer someone up or calm someone down.

Emotional Intelligence impacts one’s attitude and outlook on life.  It can lesson mood swings, depression and ease anxiety.  People with high EI are better at conflict resolution and can be better negotiators as they are better able to understand the desires and needs of other people.  Relating to others in a positive way, understanding their motivations and building strong, sold bonds with co-workers ultimately allows those with higher emotional intelligence to be stronger leaders.

In today’s workplace, it is important to have open communication, team work, and a mutual respect among employees and their supervisors.  Employees do not check their emotions at the door when they come to work.  Interactions with people in the workplace will involve emotions.  Managers who possess emotional intelligence can better understand and motivate the employees that they supervise.  Employees with higher emotional intelligence can overcome minor indifferences and focus on what needs to be achieved for the greater good of the team.

Human Resources can help create a more emotionally intelligent workforce by hiring employees who exhibit a high EI, by evaluating employees using EI criteria, integrate EI into performance management systems and offer training to improve emotional competence.  During the interview process, employers can look for certain traits such as:  People Skills, Self-Awareness, Empathy, Self-Management, and Motivation.

Emotionally aware staff can assimilate into the workplace with greater ease than those who are simply competent at their job.  Emotional Intelligence can strengthen organizational culture, increase resiliency and flexibility, ultimately leading to a greater competitive advantage in the market.  An emotionally intelligent organization where employees share strong connections and are able to work more effectively with each other should result in greater productivity.

Managers and business owners can’t let themselves lose sight of the fact that their employees are people, with real lives and emotions that impact how they think, feel, and act. Managers with emotional intelligence understand that their staff members are people first and workers second.  Incorporating emotional intelligence into your personal and organizational management philosophy may be the best way to retain key employees and help with overall organizational success.

WageWatch offers accurate, up-to-date HR metrics, benefit survey data, market compensation data and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. The PeerMark™ Wage Survey is the only Web-based custom survey tool that allows individual survey participants to select their competitive set for comparison purposes.  Our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help you structure your compensation programs to support your company’s business strategy and objectives.   For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on October 18th, 2017 · Comments Off on WHY ORGANIZATIONS ARE FINDING VALUE IN EMOTIONAL INTELLIGENCE (EI)

JOB ANALYSIS AND JOB EVALUATION PROCESSES

The Job Evaluation Process consists of a broad spectrum of activities which begins with Job Analysis Process.  Though two separate processes, Job Analysis data will be needed and used during the Job Evaluation process.  Job Analysis is a comprehensive process while Job Evaluation is a comparative process.  Job Analysis is done to develop a job description, while Job Evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organization.  Complete scrutiny of jobs and their roles in the organization is done in both processes.

An organization undertakes the task of job analysis and evaluation for one or many purposes such as designing new organizational roles and jobs, aligning roles and pay to organizational changes, managing succession in an organization, reviewing existing pay structure, auditing legal compliance of pay policies or implementing benchmark pay structures.

During the Job Analysis process, an in-depth examination is performed to gather information about every minute detail of a job.  Information collected during the job analysis process will be used to write the job description.  You will need to collect data regarding the tasks performed by the job, the education and experience required, the working conditions, responsibilities and authorities, and the skills and abilities needed to perform the job.  Job data can be collected using an open-ended questionnaire, checklist, or by interviewing incumbents and/or supervisors.

Job Evaluation is the process of determining the importance of a particular job in relation to the other jobs of the organization.  Job Evaluation takes place early in the process of creating a salary structure for an organization.  Job factors such as skill, effort, and decision making authority are assigned a weight, or points, according to how much of that particular factor is present in the job.  This determines the relative worth of jobs and their respective position or grade in the salary structure.  Jobs with more worth are compensated more than jobs with lesser worth.  Ranking the jobs in order of worth after a thorough job evaluation creates a structure for the assignment of salary ranges.

Job Analysis and Job Evaluation are important to an organization to ensure a sound organizational structure, internal pay equity and external market competitiveness.  The data and analysis resulting from these two processes will be critical for other human resource processes such as recruitment and selection, training and development, performance appraisal, as well as various compensation processes.

WageWatch offers accurate, up-to-date HR metrics, benefit survey data, market compensation data and salary reports that will allow you to stay current with the times.  This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards.  The PeerMark™ Wage Survey is the only Web-based custom survey tool that allows individual survey participants to select their competitive set for comparison purposes.  Our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help you structure your compensation programs to support your company’s business strategy and objectives.  For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

HUMAN RESOURCES ROLE IN MERGERS AND ACQUISITIONS

Mergers and acquisitions are extremely challenging and even chaotic events.  Therefore, it is critical that everyone involved has a clear understanding of their role in the process.  Mergers and acquisitions have become the norm in the business world and are often necessary for survival.  Almost every major company in the US today has or will experience a major acquisition.  There is a subtle yet distinct difference between a merger and an acquisition.  A merger is when two separate companies merge into one new entity.  An acquisition is when one company buys the assets of another company.  A merger or acquisition can be desired due to many different strategic reasons including positioning in the market, acquiring another company’s areas of strength or expertise, acquiring capital, diversification and short-term growth.  There are several phases or steps in the acquisition process and human resources will typically be involved in at least 2 to 3 of these phases, including the due diligence and investigation process and the post-merger integration process.

The human resource role in the due diligence and investigation process is to perform a thorough review of all human resource contracts, benefit plans, plan documents, systems, personnel, employment records, all forms of compensation, policies and procedures, especially related to human resource regulations that relate to all human resource disciplines including compensation, benefits, recruiting, employee relations, training and development, and payroll and HRIS.  Human Resources will help to determine the organizational structure and staffing models for the new organization.  Some other important items that fall under the Human Resources umbrella are wage and hour or other compliance claims, employment litigations, collective bargaining agreements, any FMLA, OSHA, Workers Compensation, EEOC and OFCCP compliance issues.

Transition issues need to be discovered and addressed, for example, pay levels between the two organizations may be very different and a cost analysis may be needed to determine the cost of bringing pay levels more in line between the two merging entities.  Other transition issues that often need to be addressed are transitioning pay increase and performance review cycles, differences between benefit levels in health care and retirement plans.  Most items will need to be addressed immediately, and some items can be completed during the first or second year following the merger or acquisition.  For example, if the acquisition occurs in the first quarter and your merit increases are done in January, you may be able to wait until the following January for this transition.  Conversely, it will be highly desirable to transition the acquired entity employees immediately to your health and welfare plans rather than take on the administrative burden and ownership risk of additional plans.

Human Resources is also responsible for layoffs, stay bonuses, culture differences, and synergies and will play a key role in the orientation and welcoming of the new employees.  These are just a few key items on the Human Resources Acquisition Checklist.  And each item has its own list of key points and issues that must be addressed.  While most of the transition work will happen prior to the closing date, the job of transitioning employees into your policies, pay models, practices, procedures, and culture does not end at transition date and typically continues for 2 to 3 years following the transition date and requires continued review at the management level.

Change can be challenging and demanding.  With over 5,000 properties in our lodging compensation database, 150 casinos, and 125 hospitals and clinics, we regularly see properties being acquired, divested, and rebranded. Consolidations are occurring at a rapid pace in the healthcare industry as well with hospitals buying physician groups and primary care practices. There are numerous human resources concerns to address every time a property changes hands. WageWatch consultants can guide you through the process of integrating two or more compensation models, rebalancing grades and ranges, examining internal equities between plan documents, developing a market-based approach to resolving inconsistencies, and helping you along the way with all your transition needs.  For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

SALARY STRUCTURES: WHAT ARE THEY GOOD FOR?

Established salary structures aren’t mandatory.  There is no law that requires them, but they serve many useful purposes.  Having salary ranges in place can ensure that salary decisions, from new hires to promotions, are made with objective and consistent rules and parameters.  They provide at least a first line of defense against salary discrimination, intentional or otherwise, by ensuring that employees performing the same job are granted the same salary opportunity.  And formal salary ranges provide you with a tool for proactively managing and budgeting your salary dollars.

Salary structures help ensure that pay levels for groups of jobs are competitive externally and equitable internally.  A well-designed salary structure allows management to reward performance and skills development and control overall base salary cost by providing a cap on the range paid.

A salary structure enables employers to pay employees in a given position, consistently, for the work they do.  Salary ranges also offer flexibility enabling a company to pay higher in the range for an employee based on a greater level of education, experience or performance.  In the same way, it can potentially save on labor costs when hiring employees with limited backgrounds.

Having well documented and communicated salary ranges can minimize employees’ pay equity concerns and grievances.

A well-designed salary structure will help organizations:

  • Attract and retain suitable, qualified, and experienced employees
  • Build high morale with internal equity
  • Create more satisfied employees and thus reduce turnover
  • Minimize favoritism and bias
  • Provide a structure for career progression
  • Serve as a sound basis for collective bargaining and employee relations management

If the salary structure gets out of sync with the overall labor market, a company may find itself paying employees too much and needlessly increasing operating costs, or paying employees too little and having difficulty attracting and retaining talent.

A study of the current labor market will provide new information to determine whether the organization’s pay structure, policies and practices, job classifications and job titles are appropriate or needing adjustment.

WageWatch offers accurate, up-to-date HR metrics, benefit survey data, market compensation data and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. The PeerMark™ Wage Survey is the only Web-based custom survey tool that allows individual survey participants to select their competitive set for comparison purposes.  Our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help you structure your compensation programs to support your company’s business strategy and objectives.   For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

JOINT EMPLOYER LIABILITY

The use of sub-contractors, temporary staffing, leased employees and independent contractors can provide employers with quick temporary staffing and reduce benefits and payroll costs. However, the employer client can be considered a joint employer with the leasing or temporary agency when they share certain key employment terms such as the ability to hire, fire, or discipline workers, affect their compensation and benefits, and direct and supervise their performance.  When businesses use a temporary agency, leased, or contract workers, though the employer is the temporary help, leasing, or contracting company, the client business may be regarded as a joint employer under some laws.

The Family and Medical Leave Act have specific language regarding joint employer relationships. While the leasing or temporary help agency is the primary employer, the client company may be required to place the worker in the same or comparable position upon his or her return from FMLA leave.  Additionally, leased and temporary workers will count as employees of the client company for the purposes of determining whether a business is subject to the FMLA regulations.

In the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982, leased and temporary workers are the client’s employees for the purposes of qualifying retirement plans and certain fringe benefits such as life insurance and cafeteria plans (does not apply to health insurance benefits), if the workers have been engaged with the client company on a full-time basis for a minimum of one year and the client company primarily controls or directs their work.

An employer can face a charge of discrimination under Title VII anti-discrimination legislation brought by an individual who worked for the employer under one of these leasing or sub-contractor relationships.

It has also come into question with the National Labor Relations Board (NLRB) whether leased and temporary workers must be included in collective bargaining agreements that cover the client’s regular employees.

Some states have passed legislation on joint employer liability as it pertains to workers’ compensation regulation.  New York ruled that the client is the common law employer of leased employees and is therefore primarily responsible for providing workers’ compensation benefits. To date, there have been no guidelines for joint employer status under OSHA or other health and safety regulations.

Employers need to be aware of and have guidelines regarding the degree of control they have over these temporary, leased and contract workers. The greater the degree of control, the greater the likelihood that the employer could be determined to be a joint employer.

At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives. WageWatch also offers accurate, up-to-date benefit surveys, salary surveys and pay practices data that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

MERIT BUDGET ALLOCATION

A primary goal of any compensation program is to motivate employees to perform at their best.  Most organizations have pay for performance at least in the form of a merit pay system.  An accurate, reliable and credible performance-appraisal program that is aligned with company goals, core values and industry best practices is the foundation of a successful merit pay program.  Performance measures should be tailored specifically for the organization and its jobs with clear outcomes that minimize bias and misinterpretation.  Consistency, manager training, effective communications and a periodic review are also essential for success.

The merit pay budget has two aspects to it:  1) determining the size of the budget and 2) allocating the budget to organizational units and its employees.  Determining the size of the budget will be based on competitive trends, the organization’s financial situation and other factors that may impact pay such as minimum wage and cost of living changes.  For the past several years merit budgets have been small and therefore it has been a challenge to adequately reward top performers as well as those that are rated ‘Good’ and ‘Average’.  Employees with performance ratings of ‘Good’ and ‘Average’ can be the largest percentage of employees and therefore the backbone of the workforce.  These employees should not be overlooked but raises for these employees often do not keep up with the cost of living.  Also the differentials between performance levels may not be large enough to motivate and retain employees.  These factors reduce the motivational potential of the merit pay program.

Using a merit increase matrix may help to maintain internal equity but may not properly reward top performers.  You want your reviewing managers to be engaged in the merit award process and to give appropriate thought and consideration to their pay decisions.  A certain amount of guidance and training is needed but the merit matrix can be too structured and rigid as well as make it too easy for reviewing managers to simply follow the formula rather than spend the time and effort for a thorough review.  Greater rewards for top performers and greater deviation of awards between good and average performers can be accomplished by providing zero increases to employees whose performance falls below average.  Providing broad increase guidelines in lieu of a matrix to your reviewing managers using factors such as performance rating, time in position, and position in salary range can eliminate the rigidity of the merit matrix and drive a more thoughtful approach to the merit award process.  Once tentative award amounts are determined, reviewing managers should perform an analysis of the awards looking at the whole department and at each individual award using these and other factors as well as any unique or special circumstances.

Annual pay increases not only help keep employees’ pay at market, providing awards that are accurately linked to performance are important in retaining employees, especially your best ones.  Compensation frequently emerges as a driver of retention, and when pay increases aren’t provided regularly and fairly, it will negatively impact job satisfaction.

At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives and that your pay practices are fair, equitable and non-discriminatory. We can provide your business with compensation surveys and salary reports to help you establish a budget for your merit pay program, including bonuses and incentives. Our innovative company is a leader in the collection of data for surveys and salary reports, which allows us to provide services to a wide range of industries in both the private and public sector. To learn more about our compensation surveys, salary reports, and other services please call 480-237-6130 or contact us online.

ALIGNING COMPENSATION WITH COMPANY CULTURE

Many organizations today are focusing on their company’s culture including determining their culture, deciding what it should be, aligning with strategic goals and transitioning to the desired culture.  Culture is important because it reinforces the values of the organization, which in turn shapes team members behavior.  There are many success stories of companies with cultures that are aligned with their business goals including Google, Zappos, and Patagonia.  These companies have not only developed a culture that supports their business but has fully embraced their culture.

Organizational culture is the collective behavior of the people who are part of the organization and has important effects on the morale and motivation of the organizational members.  It includes the values, norms, systems, beliefs, attitudes, and habits of the organization and affects the interactions of the employees with each other, and with customers.  Even before you define it, you know it is there and that it has an impact on your business.  This is why it is so important to internalize the culture and understanding when company activities are in sync or not with the culture.

Once the company values and desired culture are defined, compensation can support and help drive the values and corporate culture.  It is important that the role of compensation in an organization and the compensation strategy are also defined.  For example, where does the organization want to set pay levels in comparison to the competitive market?  Perhaps the organization’s culture is strong on training and developing its employees, acknowledging their successes and offering advancement opportunities.  This, in turn, may allow the organization to set lower pay levels than what is paid in the market.  Of course, when recruiting it is important to align the compensation strategy to support the values of the culture through highlighting performance management, performance appraisals and the goal setting process for each team member.

Once values, business objectives and desired behaviors are determined then compensation plans can be put in place to support the culture.  For example, if the business objective is innovation and the desired behavior is risk-taking, then short-term incentives may be the compensation strategy.  If the goal is for a highly-trained workforce and the behavior is learning and upgrading skills, then skill or competency-based pay may be the compensation strategy.

Corporate culture is about people’s behaviors – how goals are accomplished – so to establish a culture that drives company success, organizations should link a significant component of their compensation systems to behaviors.

At WageWatch our compensation consultants can assist with your organization’s compensation needs and help you ensure that your compensation programs are supporting your company’s business strategy and objectives.  WageWatch also offers accurate, up-to-date benefit survey data, market compensation data and salary reports that will allow you to stay current with the times.  This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

 

AUTOMATION OF THE HOTEL EXPERIENCE IS THE FUTURE

(Note:  The following article was published in the June 7, 2017, Hotel News Now magazine; it was written by Randy Pullen, the founder and current CEO/President of WageWatch.)

Artificial intelligence and robots are here, and increasingly will be able to do much of the work in hotels. Coming to terms with that can help manage fears and uncertainty.

Hotels are on the edge of a new era driven by automation, artificial intelligence (AI) and robotics. Of course, I am not the first one to say this as there are many published articles extolling the virtues and sins of automation in the workplace and AI technology in the hotel industry.

Automation of guest messaging, mobile check-in and check-out, room assignments, motion detection, mobile key cards and facial recognition are already in service in many hotels around the world, and this is just the beginning.

A futuristic view is provided by Hideo Sawada, president of Sawada Holdings Co., which built the Henn na Hotel in Japan—Henn na is Japanese for “weird,” so this is the “Weird Hotel”—as a futuristic hotel and as a novelty add-on to an existing amusement park. The Weird Hotel is an automated limited service hotel, in operation though it has a few glitches that need to be worked out. Interestingly, it is not that highly rated by guests, but they keep coming to experience the future.

Tractica, a market intelligence firm focused on AI and robotics, forecasts global robotics market revenues to grow from $28 billion in 2015 to $151 billion a year by 2020. They predict the majority of the growth will come from “non-industrial” robots.

Tractica’s forecast does not include the future growth of AI and its impact on robotics. When you add AI to robotics what you end up with is a friendly robot that can learn and adapt to changes in the workplace. Both PricewaterhouseCoopers and McKinsey & Company have researched and written several white papers on the rapid advancement of AI and automation, and their coming impact on the workplace. In a study issued in March, PricewaterhouseCoopers estimated 38% of jobs in the U.S. would be automated by the early 2030s. For the accommodations and food service sector, they estimated that 25% of jobs would be automated.

While 25% of the jobs in the accommodations and food service sector amounts to more than 3.3 million jobs being automated, this is low when compared to other studies. A report issued by McKinsey & Company in July 2016 calculated that, of all industrial sectors, the potential for automation is the highest in accommodations and food service. According to that analysis, 73% of the activities performed by workers in accommodations and food service have the potential for automation. Essentially, up to almost half of the jobs in hotels and restaurants could be automated in the next decade and a half.

Both studies likely underestimate how rapidly AI and automation will transform the workplace and our personal lives. It is not possible to predict with accuracy the speed with which new technologies will advance. Disruptive technologies such as desktop computers and smartphones changed the workplace and our personal lives much faster than predicted when first introduced into the marketplace. I predict the assimilation of AI and automation into our lives will happen much quicker in what is now being called the Fourth Industrial Revolution.

Klaus Schwab, executive chairman of the World Economic Forum, stated in his address to the Forum in January 2016: “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work and relate to one another.” He goes on to say, “This will give rise to a job market increasingly segregated into ‘low-skill/low-pay’ and ‘high-skill/high-pay’ segments, which in turn will lead to an increase in social tensions.” I believe his is a linear projection of the future, not taking into consideration how human beings rapidly adapt to a changing environment.

As we have already seen, it is not just low-skill/low-pay jobs that are impacted by AI. Wall Street is going through a transition as financial advisors are being replaced by software programs with algorithms that make reliable, profitable investment decisions faster and with more accountability than humans. Speaking of accountability (note, I am a CPA), much of what accountants do is very susceptible to automation—audits, inventory tracking, supply chain automation and tax returns, just to name a few.

Hotels have already automated or are in the process of automating repetitive tasks for personal and work activities, and the rate of adoption is accelerating at a pace that was unimaginable just a few years ago. For the hospitality industry, all levels of the business—including the front of house, back of house and administration—are susceptible to automation in total or in part. Automation and AI are and will become the driving forces in the lodging industry, as management companies and team members learn to adapt and apply the new technology to improving the guest experience at their hotels.

As automation and robots with AI become the 800-pound gorilla in the workplace, the uncertainty of what people will do if their jobs disappear is always a fear. No doubt there will be a shift in jobs; however, new conditions create new opportunities. During the first Industrial Revolution, as people moved from the farms to the cities to work in factories, there was much turmoil; but in the long-term, the outcome was good as more jobs were created than lost. People learn to adapt to change and move from the old to the new as their expectations for the future change. We only need to look to our children to see the future. Kids say the future of tech is robots.

At WageWatch our compensation consultants can assist with your organization’s compensation needs and help you ensure that your compensation programs are supporting your company’s business strategy and objectives.  WageWatch also offers accurate, up-to-date benefit survey data, market compensation data and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

 

ADVANCED COMPENSATION ANALYSIS

In order to stay in line with industry trends and economic ups and downs, salary ranges should be compared to market each year.  Adjustments to salary ranges may not be needed every year.  Depending upon how fast or slow the market is moving, adjustments normally are needed every 2 – 3 years.  During your annual salary range to the market analysis process, make notes and keep a record of any changes or movement that you see with any jobs and departments from year to year.  It is prudent to avoid making changes to your salary ranges for temporary fluctuations or anomalies.  Look for trends that are long-lasting.

In addition to an external compensation analysis to market, an analysis should be performed to identify internal pay inequities that could potentially become the focus of an OFCCP audit.  Pay inequities should include women statistically paid less than men and/or minorities statistically paid less than non-minorities. Records should consistently be kept regarding all pay decisions to determine whether there are legitimate business reasons to support the pay patterns that exist in those areas.  The results of this analysis will not necessarily be used to adjust individual employee compensation.  Rather, the analysis results should be used to target areas where suspicious statistical pay patterns exist.

Since the purpose of the analysis is to anticipate areas potentially of concern to OFCCP, start the analysis with the salary grades or levels as these are most often used as the units of analysis by the OFCCP.   You will need to determine which unit or units of analysis most appropriately reflect how compensation is administered.  The objective is to find potential problem areas by targeting employees who would reasonably be expected to be paid on the same basis due to factors such as job grade, market location, and business unit.

Though the OFCCP will typically use median to perform analysis and determine pay inequities within pay grades or other units.  A thorough compensation analysis should include:

  1. Median and mean analyses (to identify areas of OFCCP concern):  In each pay grade compare the median and mean of women and men and of minorities and non-minorities.
  2. t-Test analysis:  This test will determine whether the observed differences in pay within the grade levels are statistically significant.  Results of the t-statistic (t-Stat) in the t-Test are considered to be statistically significant if they are 2.00 or greater representing differences of two or more standard deviations.
  3. Regression analysis:  Any unit where the differences in pay are statistically significant a regression analysis should be performed.  Factors that influence grade levels such as time in service, time in a level, time in the job, department, education, and performance can be incorporated into the regression.
  4. Cohort analysis:  Perform this analysis where it has been determined that the differentials are statistically significant, and where the regression analysis has not accounted for the differentials.  A primary cohort analysis would normally be completed on job titles within grades, across department designations and within departmental designations. Each of the various job titles within the database would be sorted by grade, job title, and then base salary from highest to lowest.
  5. Outlier report:  The average salary of protected class of employees is compared to the average salary of the non-protected group within a salary grade and/or job title.  When a protected employees’ average salary falls below a set percentage of the non-protected, this should be flagged for further review.  This analysis identifies protected employees who are at the lower extremes of the salary range.

At WageWatch our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help you structure your compensation programs to support your company’s business strategy and objectives.  WageWatch also offers accurate, up-to-date benefit survey data, market compensation data and salary reports that will allow you to stay current with the times.  This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards.  For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online .

DOCKING EXEMPT EMPLOYEE PAY

The application and rules for the federal FLSA salary basis test are often misunderstood and not administered accurately or consistently.

First, let’s understand what the term “salary basis” means.  An exempt employee that regularly receives a predetermined amount of base salary each workweek is paid on a “salary basis”.  This applies to employees who are determined to be exempt under the federal FLSA exemption tests including both the minimum salary test and qualifying under one of the duties tests (i.e., administrative, executive, professional, outside sales, etc.).  The minimum weekly salary that must be paid to ‘exempt’ employees under the federal rules is $455.  Please refer to your federal and state wage and hour for exceptions to the salary requirements.  The salary basis pay requirement for exempt status does not apply to some jobs (for example, doctors, lawyers, and schoolteachers are exempt even if the employees are paid hourly).

Now let’s talk about the Salary Basis Test.  An employee’s ‘exempt’ status can be jeopardized if the salary basis test rules are not followed.  The Salary Basis test provides rules regarding what pay deductions can and cannot be made to exempt employees’ weekly base salary.  Generally, the predetermined weekly salary cannot be reduced because of variations in the quality or quantity of the employee’s work.  Except for a few permissible deductions, an exempt employee must receive the full base salary for any work week in which the employee performs any work, regardless of the number of days or hours worked.  This includes any work done remotely such as checking email and voicemail.  An employer cannot make deductions from an employee’s predetermined base salary, because of a business slowdown or lack of available work.

The FLSA salary basis test applies only to reductions in monetary amounts.  Requiring an employee to charge absences from work to leave accruals is not a reduction in “pay,” because the monetary amount of the employee’s paycheck remains the same.

Full Day deductions from pay are permissible when an exempt employee:

  • Is absent from work for one or more full days for personal reasons other than sickness or disability
  • For absences of one or more full days due to sickness or disability, if the deduction is made in accordance with a bona fide sick leave or PTO plan, policy or practice of providing compensation for salary lost due to illness
  • To offset amounts employees receive as jury or witness fees, or for military pay
  • For partial week worked during the initial or terminal week of employment
  • For weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act,
  • Deductions in pay are also permitted for intermittent FMLA leave when the weekly base salary is reduced to coincide exactly with the reduced work week
  • When an exempt performs no work for a full workweek.

For the following two permissible deductions, you should have communicated formal policy(s) detailing disciplinary procedures:

  • For penalties imposed in good faith for infractions of safety rules of major significance
  • For unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions

It is important that as an employer, you have a clearly communicated policy permitting or prohibiting improper deductions from exempt employees’ base salary including a complaint mechanism and reimbursement to employees when improper deductions are made.  You should also have a clearly communicated policy for your exempt employees stating that under no circumstances should work be performed during unpaid time off.   The exempt status of your employees will be safe as long as you have clearly communicated policies in place, make good faith efforts to comply with the salary basis test and can show that willful violations have not been made.  For full details regarding federal FLSA, visit http://www.wagehour.dol.gov and links to your state labor department can be found at http://www.dol.gov/whd/contacts/state_of.htm.

At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives. WageWatch also offers accurate, up-to-date benefit surveys, salary surveys and pay practices data that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards.  For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.