MERIT BUDGET ALLOCATION

A primary goal of any compensation program is to motivate employees to perform at their best. Most organizations have to 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 as a raise 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 the 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 the market level, 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 it 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 to their business goals including Google, Zappos, and Patagonia. These companies have developed a culture that supports their business as well as 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 which impacts 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 in sync 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 in 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 as 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.

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 how slow the market is moving, adjustments normally are needed every two to three years. During your annual salary range review relative to the market analysis process, make notes and keep a record of any changes or movement that you see with 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:

Median and mean analyses (to identify areas of OFCCP concern): In each pay grade compare the median and the mean of women and men and of minorities and non-minorities.
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.
Regression analysis: Any unit in which 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 the level, time in the job, department, education, and performance can be incorporated into the regression.
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 base salary from highest to lowest.
Outlier report: The average salary of a 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. In 2018 many states increased the minimum wage and, at the same time increased the minimum weekly salary of ‘exempt’ employees. 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 workweek 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 a 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 workweek
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.

EFFECTIVE NEW HIRE ORIENTATION

An employee’s experience during their first few days will affect the rest of their tenure. It is critical, to begin with, an effective, positive, and fun new hire orientation for the future success of your new employees. Even before the employee’s hire date, you can make a positive impact with a call to the employee two or three days before their start date, welcoming them, letting them know what time to arrive, and what they can expect during their first day and first week on the job. Studies show that a well-planned orientation can contribute to the length of employment, better work attitudes, more effective communication, and fewer mistakes. Your new hire orientation is your chance to set a positive tone for a long-lasting and mutually beneficial relationship.

A new hire’s early experience is highly influenced by his peers, managers, subordinates, HR team members, and the organization’s top management. Ensure that new hires are welcomed by their team members. Plan a welcome breakfast meet and greet for their first morning on the job. The new hire’s immediate supervisor should schedule daily meetings with the new employee at least for the first week, then at least weekly for the first month or two. Schedule informational meetings with key people in the department and in other departments to provide the new hire with the general knowledge that they will need to perform their job. Include an office tour in the orientation process that includes introductions. Be sure to include introductions to top Executives, Human Resource personnel as well as receptionists, administrative assistants, and copy/mail room attendants.

An effective orientation program will put emphasis on the new employee, their individuality and what they have to offer rather than focusing solely on the company’s culture and how the new employee can fit in. You are probably hiring in part to get new ideas into the organization. Make sure to capitalize on that. Make your orientation meetings fun and be sure to provide a meal or at least snacks. Keep it interesting and not too long. Too much information will be boring and will not be retained. Orientation should reflect culture through interactive activities. One way to make it memorable is to present the company’s goals, mission, and values in an activity-based form rather than simply providing the information. Allow the new hires to get to know each other on a personal basis, not just professional – go around the room and have them tell one professional and one personal thing about themselves. You can also turn this into a game by writing one thing about each person on a piece of paper. At the end of the game, state items one at a time, out of order, and have people guess who said what.

Promote communication with a team building activity such as learning the employee handbook through a scavenger hunt. For example, divide the orientation group into teams and see which team can answer the most handbook questions in a set amount of time. Cover company ethics to let them know what is expected, and also include ‘unwritten rules’. Don’t end there! After orientation, schedule follow-up meetings with each new hire to elicit their feedback and answer any follow-up questions they may have.

Don’t forget the basics. Provide them with all the office supplies they will need to start their job, include contact information they will need. And let them know how to get additional office supplies. Teach them how to use the phone, how to forward calls, set up and change voicemail, and how to do a conference call.

Today, many companies are adding programs such as flex-time, telecommuting as well as accommodating and encouraging alternative work styles in an effort to provide a work environment where employees are happier and thriving. Therefore don’t neglect or underestimate how impactful beginnings are, and provide your new hires with an orientation program that is effective and unique to your company and its culture.

Implementing the above suggestions will help your company to build a culture that encourages retention of employees, which in turn will attract top talent. In addition to providing a great work environment that respects employees and provides opportunities for learning and growth, it is also important that they receive a solid compensation and benefits package. At WageWatch we offer 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.

IT’S TIME TO ADJUST YOUR SALARY STRUCTURE

Maintaining a salary structure that aligns with the organization’s pay philosophy and is competitive in the labor market is imperative for any organization. Most organizations update their salary structure every one to two years, as budget permits. However, during the recent recession, some organizations chose not to increase their salary structures for cost containment and/or a lack of competitive pressure to do so. For 2018, the stronger U.S. economy and increased employer confidence should continue to bolster job gains, and economists expect the previously sluggish wage growth to accelerate. Whether or not you’ve adjusted your salary structure during the past few years, it is certainly time to do so now.

The review of your salary structure should determine whether it is still aligned with the company’s needs, pay philosophy and the labor market. Salary structure adjustments maintain the structure’s competitiveness with the external labor market and protect an organization’s ability to compete in the marketplace for talented employees. 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. Salary-structure issues are less expensive to address early on so it is best to review your salary structure annually for any needed changes. If you wait two or three years to review and adjust, the labor market can move significantly upward in that period of time and the cost of salary range adjustments and resulting salary increases can be substantial.

Other business changes and events may warrant a review of the salary structure, such as the company’s merger or acquisition, or a competitor opening or closing a facility that impacts the company’s operations. At times during the year, hiring managers may alert you to possible salary-structure issues and their insight can indicate that specific areas of the salary structure are out of alignment. But there may be other factors that the manager is not aware of, such as an organization’s strategic decision to set pay levels above or below the market median.

There are two basic methods for updating your salary structure and many companies will alternate the two methods, performing the ‘quick’ adjustment one year and the ‘in-depth’ adjustment the following year.

The Quick Adjustment method is where you collect and consider trend or annual merit increase information, then adjust your ranges by a percentage you view as necessary to remain competitive. Trend and annual merit increase surveys are published every year and most companies rely more on average or median salary increase figures.
The In-Depth Adjustment method is where you select a representative sample of benchmark jobs using currently published compensation surveys for your competitive market. Collect the competitive salary data, and then compare your salary range mid-points to the market medians or the percentile that you chose to compete with for the benchmark jobs. The results will help you determine the degree to which your ranges should be adjusted and also identify any jobs or job families whose pay is moving at a different pace than the rest of the market and may need re-graded. This methodology requires more data and time to complete.

Alternating annually between these two methods should maintain competitiveness, cost efficiency, and save time from performing the In-Depth Adjustment analysis every year. Any resulting increases from the structure movement should be minimal and workable within the current budget year.

It is also important to remember that established pay grades, the jobs’ placement within the pay grades and well-maintained job descriptions are the nuts and bolts of the salary structure. Companies change over time and job functions and duties can also change. Keeping job descriptions accurate and reflecting the core duties of each position will be essential to appropriate and competitive salary ranges and pay.

Companies should consider the reassessment of their salary administration programs, along with all of their compensation plans, as a vital and ongoing part of the program’s success. Assessing the program to ensure that it continues to meet your company’s needs is perceived as a credible and functional part of the Human Resources process, and will enhance your company’s ability to remain a competitive force in the marketplace. When was the last time your organization reviewed its salary structure(s)?

At WageWatch, we offer accurate, up-to-date benefit survey data, market compensation data, salary reports and consulting services 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. WageWatch, Inc. is the leading compensation survey provider for the lodging and gaming industries with 6,000 properties participating in its PeerMark™ Wage Survey. WageWatch also conducts compensation surveys for other business and industry segments including healthcare and non-profits. For more information on our services, including market compensation data, benefits survey data, salary reports, and consulting services, please call WageWatch at 888-330-9243 or contact us online.

BUDGET SEASON: ARE YOU PREPARED?

It’s that time of year again when companies are preparing their budgets for the upcoming year. For HR professionals, it is probably not one of your favorite tasks, but by embracing the process, it can be an opportunity to reinforce the HR function as a strategic partner.

Budgets are used to monitor progress toward goals, help control spending, and predict cash flow and profit. The challenge is predicting the future 100% accurately and in turn developing effective budgets.

It is valuable for HR to gain a strong understanding and appreciation for the value of good annual budgeting. In most companies, employee costs constitute the majority of fixed costs and therefore the HR budget contains key and critical elements of the overall company budget.

Here are a few things you can do to make the budget process a smoother one:

Throughout the year, ensure to include the CFO when reviewing such things as pay increases with the CEO. This can go a long way in developing a partnership with the CFO.
The credibility of the HR function is significantly improved when you can demonstrate real savings and value for HR projects and processes.
Empower your HR team. Every HR team member should own their line items in the budget. For example, recruiting is responsible for their search firm fees, recruiting tools, and relocation.
Link the development of your budget to corporate strategy. This gives a clearer understanding of strategic goals. And, in turn, should create greater support for the goals, and, a stronger companywide performance. The key to linking the two is communication. In order to communicate strategic goals, top management needs information about customers, competitors, technology, etc., and this information must come from support units such as Human Resources.

Budgeting requires the collection of many forms of data. From a human resource perspective, listed below are some items that would be included in the budget:

Recruiting

Advertising & agency fees
Employee referral program
Background checks/drug testing
Recruitment expenses
Applicant tracking system costs

Training

Training programs
Travel expenses
Consulting fees

Compensation and Benefits

Payroll costs
Salaries & overtime
Compensation surveys/benefit surveys
Incentive compensation
Health and welfare benefits
Retirement plan
Employee assistance program

Employee and Labor Relations

Recognition program/service awards
Employee Opinion Survey
Performance appraisal software
Employment and Labor relations expenses (attorneys, consultants)

Other

Strategic planning (data/consultants)
HR databases such as HRIS/subscriptions/memberships/books

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 surveys 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.

GET MORE OUT OF YOUR TURNOVER METRIC

Most HR departments miss an opportunity when it comes to measuring and reporting turnover. The goal of any HR metric is to provide information on how to improve the measured item. As Peter Drucker said, “what gets measured gets done.” Reporting turnover as simply a percentage of the workforce can be made more meaningful and more useful by diving down into the detail and adding data and information that quantifies the cost and provides insight on root causes and how to make improvements. Some examples of this are:

Along with your company’s turnover rate, add the turnover rate of competitors, giving a baseline or something to compare against
Add the percentage of turnover that was top performers or top salespeople, the percent of turnover in each department and for each manager, the percent in high impact jobs and hard to fill jobs
Add the percentage of turnover in the first year of employment, which can be linked to possible employee dissatisfaction
Add how long it takes to fill positions, the recruitment cost of filling the positions, and how long before they are up to the minimum productivity level
Add exit interview information such as how many went to work for competitors and which competitors. Exit interviews may also indicate whether turnover was preventable, which may, in turn, provide managers with information needed for improvement
Add the dollar impact of lost sales where applicable, i.e., sales turnover, which can be directly linked to revenue and economic impact to the company

The involuntary turnover metric is also important. It can indicate that the company is keeping low performers which can also be costly. With this additional information, conclusions are now more easily drawn and the cost of turnover is more tangible (i.e., the cost of losing individuals in key positions is likely higher than losing individuals in low-impact positions). If losing hard to fill jobs, the job market may be tight and replacing these employees could be expensive. Losing individuals with strong reputations within the industry can impact stock analysts’ assessments of your firm. It can also send negative signals throughout your firm and the industry, which can, in turn, lead to more turnover.

Some additional information that can be helpful when included with the turnover report, include:

Leading causes of preventable turnover
Satisfaction or frustration levels of those who left which could impact the company’s external image
Lowest turnover rates within the firm which can provide a target for managers to aim
The likelihood that the person that left will take others with them.

Today’s world moves fast, and as an employer, you should constantly be monitoring and adjusting your business operations to meet the ever-changing wants and needs of your employees. At WageWatch, we offer accurate, up-to-date salary survey reports and pay practice 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 market compensation data, benefits survey data and salary reports, please call WageWatch at 888-330-9243 or contact us online.

WHEN DOES SALARY MOTIVATE EMPLOYEES?

Studies have shown that salary can just as easily de-motivate employees as motivate them. In fact, salaries generally operate as negative reinforcement rather than positive. For example, an employee receiving a lower than expected merit increase or bonus payment can certainly de-motivate. On the flip side, receiving the status quo merit increase or bonus amount every year can create an entitlement mentality. However, when it comes to motivating employees, salary is always one of the top factors, and therefore, it has to be part of your total rewards strategy. Many believe that the amount of money that is needed is at least enough to satisfy basic needs which vary by person. Obviously, when salary does not, at a minimum, cover essential needs, this serves to de-motivate.

In this article, the focus is on monetary rewards. Motivated employees make a difference in the workplace. They affect the work environment positively as well as improve customer service, sales, or production. So, how can you determine if the salaries you are paying are motivating your workforce?

First, determine where to focus your compensation spending plan. This can vary depending on factors such as the current economy, the competitive environment, and where the company is in its life-cycle. For example, a growing company with variable sales and income may be better off focusing on base salaries. When business is good, it may be prudent to tie more bonus dollars to goals achieved.

Second, do your research, know your competition. Every organization can benefit from reputable industry salary surveys such as the WageWatch PeerMark™ and Benchmark reports, to determine competitive salaries. You should utilize salary survey data from the local market, your industry and from organizations of similar size. Work within your organization’s salary philosophy and the given financial situation to determine where to set salaries.

In addition to looking externally to market competition, look internally to ensure your internal pay structure and salaries are fair and equitable. Whether you like it or not, employees will discuss pay with one another. Ensure fair and equitable pay levels between employees in the same jobs, in the same departments, and jobs of comparable worth within your organization. Formal salary ranges within the organization where people with similar responsibilities and authority are grouped into the same salary range help to maintain internal equity. Set clear goals for what you want to achieve by setting salaries at certain levels. For example, you may pay an entry-level manager less than market if you are hiring inexperience and provide a training and growth opportunity in exchange. Open and clear communication regarding the company’s salary structure and pay philosophy can aid in employees’ understanding of the methods used in determining their salary level and assist in demonstrating fairness and equity.

Merit pay is one of the most frequently used methods to drive employee performance. To be effective it needs to be linked to performance in a manner that is consistent with the mission of the organization. Merit increases can become de-motivating when your performance measurement system is flawed and/or inconsistently applied or when the merit increase amount that is linked to performance is inconsistently administered. Also with merit increases typically averaging two to three percent, studies show that increases lower than five percent are unlikely to have any impact on employee performance. What can help is applying behavioral principles to your pay for performance programs such as giving employees a personal stake in the success of the company by showing a clear link between their efforts and results. Many companies base their compensation plan on time and not results. Of course, time is a factor and needs to be part of the equation. However, if you pay for results, you will get results.

Change can be challenging and demanding. At WageWatch our consultants can assist with your organization’s compensation needs and help ensure your wages and salaries support your company’s business strategy and objectives. In addition to our PeerMark™ Salary Survey for over 100 local lodging markets in the U.S. and Canada, we offer a National Benchmark Salary Survey. With over 9,000 hotels and 200 casinos in our database, WageWatch’s hotel and gaming salary surveys are the most comprehensive surveys available to Human Resource professionals. For more information on our services, including consulting, salary surveys, benefit surveys, and custom compensation reports, please call WageWatch at 888-330-9243 or contact us online at www.wagewatch.com/contactus

COMPENSABLE TIME

Employers need to ensure they count all worked hours as paid hours for their non-exempt staff. For example, when an employee eats lunch at their workstation or desk and their lunch is interrupted by work such as answering phones or email, the employee is working and must be paid for that time because the employee has not been completely relieved from duty.

If the employer has a policy that is expressly and clearly communicated to the employee regarding a specific length of time for a break, any unauthorized extensions of that break time do not need to be counted as hours worked. Bona fide meal periods (typically 30 minutes or more) generally need not be compensated as work time. However, the employee must be completely relieved from duty for the purpose of eating regular meals.

The federal Fair Labor Standards Act (FLSA), doesn’t require employers to provide meal or rest breaks, though some states do require such breaks and the rules can also be different for younger workers. You can find a list of state meal and rest break laws at the Department of Labor’s website address: https://www.dol.gov/whd/state/meal.htm and https://www.dol.gov/whd/state/rest.htm.

Employers that fall under the federal guidelines do not have to pay for meal or rest breaks unless:

The employee works through or during their break, or
The break lasts 20 minutes or less, or
The break is interrupted by work

Some other compensable time under the federal rules can include waiting time, on-call time, attendance at meetings and training programs, travel time and performing work outside of work hours such as checking emails.

Waiting time may or may not be hours worked depending upon the circumstances. If an employee needs to wait before a duty can start, such as a firefighter waiting for an alarm, then the employee is ‘engaged to wait’ and this time is considered worked time and must be paid.

On-Call time is paid time if the employee is required to remain on the employer’s premises. In most cases, the on-call time does not have to be paid when an employee is not required to remain on the employer’s premises. However additional requirements put on the on-call time that further limits the employee’s freedom could require the time to be compensated.

Attendance at meetings or training programs is paid time when any of the following conditions are true:

It is during normal hours,
It is mandatory,
- If the employee feels that they should or need to attend, then it is mandatory
It is job-related

Travel time may be paid time or not depending upon the kind of travel involved. Regular commute time to and from the work site is not paid time. When the employee works at a different work site location then any commute time that is greater than the employee’s regular commute time to their usual work site needs to be counted as paid time.

Travel that is part of the regular work duties, such as travel from job site to job site during the workday, is work time and must be counted as hours worked. Overnight travel is work time and must be paid time