WHEN TO EMPLOY SHORT-TERM AND LONG-TERM INCENTIVES

An employee compensation plan should provide a competitive wage and reward employees fairly and equitably for behaviors while accomplishing goals and objectives for the organization. Compensation is the reward an employee receives in return for his or her contribution to the organization. Basic components of a compensation package include base salary, incentives, and benefits.

Organizations implement incentive plans to help reach overall goals and objectives. Incentive plans range from variable pay plans to prizes and recognition awards. Incentive plans can motivate employees to go beyond expectations and produce results that contribute to business success. They also can attract new talent and encourage company loyalty. For an incentive plan to be effective, the goals must be obtainable.

So how do you determine whether a short-term or long-term incentive is appropriate? Short-term incentives are used to create a focus on short-term or immediate goals, and align rewards with individual and business performance. Long-term incentives are typically designed for executives who make strategic decisions for the company. They can ensure focus on what’s best for the organization’s future outcomes by placing importance on medium and/or long-term goals and creating a sense of ownership of those goals. Successful incentive plans can also help organizations align rewards with shareholder interests, and help retain key talent.

Short-term incentives can be for all employee levels from entry-level to middle management to the executive level and they can be large or small and can cover a week, month, quarter, or year of performance measurements and goals. Short-term incentives can create a better work environment and motivate employees to work to their greatest potential. Without short-term incentives, employees may feel that their work is unappreciated, and morale can be low. Short-term incentives align employees to work for the overall success of the company and can clearly define an employee’s specific role in contributing to that success. Short-term incentives such as prizes, free airline tickets or hotel stays, tickets to events, or a paid day off, can have high impact. Short-term incentives can be individual and/or team-based. Rewarding employees for clearly defined goals can go a long way to creating happy employees who work well alone and together striving for success.

It is important to use both short and long-term rewards to produce desired results. Incentive programs that are carefully and strategically crafted and aligned with company goals and timeframes should lead to more productive, motivated, and loyal team members. Retaining good employees saves organizations the expense of recruiting and training new workers.

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.

HOW ENFORCEABLE IS YOUR NON-COMPETE AGREEMENT?

Does your organization have a non-compete agreement in place? If so, has it been reviewed recently? Non-compete agreements are driven by state laws. Over the past year, there have been a few states that have changed their laws, with changes taking effect next year. The revisions that states are enacting move to restrict using unreasonable non-compete agreements with employees.

Washington, New Hampshire, Massachusetts, Maine, Maryland, Oregon, and Rhode Island have modified their non-compete agreements this year and are leading the way in non-compete agreement reform. These states have not adopted a uniform approach, but each state provides some direction to other states that may be considering reform. Reasonable non-compete agreements are helpful and often necessary for employers to hire individuals without risking that they will then lose their customers if an employee leaves and tries to take clients with them. However, some agreements go too far and have become unreasonable.

The Washington Statute, effective January 1, 2020, will be unenforceable for employees earning less than $100,000 in total annualized compensation or independent contractors earning less than $250,000 per year. Non-compete agreements are unenforceable for a period greater than 18 months and the terms must be disclosed to prospective employees no later the time the employee accepts an offer of employment. In addition, the statute has several employee protection mechanisms in place, such as requiring an employer to pay an employee’s legal fees and damages should they seek to enforce an unreasonable non-compete agreement.

Potential areas to revise with a non-compete agreement include:

A threshold for an employer’s salary, anyone making less than the stated amount are excluded from the agreement (i.e., employees making less than $75,000 are excluded from a non-compete agreement)

Length of employment; an employee could not be held to a non-compete agreement if they were not employed for at least a year by the employer or terminated or laid off without misconduct
Employees faced with an employer that seeks to enforce an unreasonable agreement should be penalized by having to pay the employee’s legal fees and a small number of damages. It may be a good time to review your non-compete agreement, especially to determine if your agreement is currently relative to any changes in the law that governs it.

WageWatch offers accurate, up-to-date benefit surveys, salary surveys and pay practice data that will allow you to stay current. 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, please call WageWatch at 888-330-9243 or contact us online.

INDEPENDENT CONTRACTOR LAWS – CALIFORNIA SIGNS BILL INTO LAW

An independent contractor is an individual who does work for another individual or company but is not an employee of the firm that is paying them. These individuals need to abide by a series of laws and regulations in their business transaction—following both federal and state-level directives.

Most states have regulations about the status of independent contractors. States have fines and penalties for not correctly classifying a worker for state employment and wage status. More states are tightening up the requirements to make it more difficult to call a worker an independent contractor.

Last year, the California Supreme Court issued a landmark decision in the matter of Dynamex Operations West, Inc. v. Superior Court of Los Angeles. On September 18, 2019, Gavin Newsom, the Governor of California, signed into law the California Supreme Court’s decision in Dynamex v. the Los Angeles Superior Court regarding the test to determine whether an employee is an independent contractor.

California joined Massachusetts and New Jersey in establishing the “ABC” test as the relevant standard for distinguishing between employees and independent contractors for purposes of applying California wage and hour laws.

The ABC test requires three tests to be met:

The worker must be free from control and direction of the hiring entity.
The worker must be performing work that is outside the scope of the employer’s business
The worker must be “customarily employed” in the same type of work as that being performed for the hiring entity.

The adoption of the ABC test by the three states has significantly narrowed the category of workers who can be treated as independent contractors. It is the (B) prong of the ABC test that in many instances, is problematic; it favors a worker-friendly standard that may upend the existing independent contractor labor market.

While this has been the law in California for over a year, the codified version expands the reach to non-wage order claims and holds harsher penalties.

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.

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 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 a 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 to their business goals including Google, Zappos, and Patagonia. These companies have not only developed a culture that supports their business but they have 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 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. The role of compensation in an organization and the compensation strategy need to be well-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 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 .

TRUMP LABOR BOARD PROPOSES EMPLOYEE FREE CHOICE ELECTION PROTECTIONS

In the middle of August, the National Labor Relations Board (NLRB) published a Notice of Proposed Rulemaking to amend Part 103 of the NLRB’s Rules and Regulations. The proposed amendment, published in the Federal Register, seeks public comment on amendments that will provide better protection to employee election rights to have a free choice on whether to be represented by a union for collective bargaining with employers. Three amendments are proposed:

Blocking Charges: The amendment seeks to replace the current blocking charge policy with a “vote-and-impound” procedure. Elections would no longer be blocked by pending unfair labor practice charges, perhaps for years. Rather, the amendment would provide for voting, and the ballots would be impounded until the unfair labor practice charges are resolved.
Voluntary Recognition Bar: The Board proposes returning to the rule of Dana Corp. (2007), which provides that for voluntary recognition to bar a subsequent representation petition-and for a post-recognition collective-bargaining agreement to have contract-bar effect- the unit employees must receive notice that voluntary recognition has been granted, and provided a 45-day open period within which to file an election petition.
Section 9(a) Recognition in the Construction Industry: The rule amendment proposes changes in the construction industry, where less-than-majority employee support bargaining relationships established under Section 8(f) cannot bar petitions for a Board election. To bar an election based upon an alleged Section 9(a) relationship, positive evidence of majority employee support will be required, and cannot be based on contract language alone, overruling Staunton Fuel (2001).

Board Chairman John F. Ring stated: “There are few more important responsibilities entrusted to the NLRB than protecting the freedom of employees to choose, or refrain from choosing, a labor organization to represent them, including by ensuring fair and timely Board-conducted secret ballot elections. We believe that the changes we propose today further the goal of protecting this vital freedom.”

Public comments must be submitted within 60 days of the Notice’s publication in the Federal Register. Please contact Spognardi Baiocchi, LLP if you would like to retain the firm to submit comments on behalf of your organization.

Contributed by guest author: Spognardi Baiocchi LLP, a law firm dedicated to partnering with companies of all sizes to find solutions for labor, employment, human resources, and general business needs. www.psb-attorneys.com.

WageWatch offers accurate, up-to-date benefit surveys, salary surveys and pay practice 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, please call WageWatch at 888-330-9243 or contact us online.

2019 U.S. HOTEL CORPORATE EXECUTIVE COMPENSATION SURVEY–NOW AVAILABLE

WageWatch conducted a National 2019 U.S. Hotel Corporate Executive Compensation Survey. Participants invited to participate in the survey included WageWatch U.S. Hotel Survey Customers as well as other U.S. Hotel Companies.

The final report is NOW AVAILABLE for purchase. The price of the report is $1,000, with a 50% discount to WageWatch Survey Customers. Survey respondents received a complimentary copy of the report in exchange for their participation.

The report is designed to provide you with current and credible compensation information for Senior-Level Executives. It is a useful tool that provides valuable information when making investment decisions tied to attracting and retaining high-performing executives. The survey report includes Hotel C-Suite, top Executive positions in all disciplines, and Regional Executive positions. All compensation elements were included in the survey i.e., base pay, incentives, stock, medical, and retirement benefits. Participant and proxy data included in the report is based on a total of 31 U.S. Hotel Companies.

The data in the report complies with DOJ anti-trust regulations. Compliance includes the information being aggregated to protect the identity of the underlying sources, and sufficient sources are aggregated to prevent competitors from linking specific data to an individual source.

WageWatch appreciates the opportunity to serve its customers across multiple industries including hospitality, gaming/tribal gaming, healthcare, golf course/country club, and higher education. Since 2001, our customers rely on WageWatch to provide them with consistent, reliable, and up-to-date compensation survey statistics for their industry on a local, regional, and national level.

To receive a copy of the report, contact us by phone: 888-330-9243, or by email: custserv@wagewatch.com.

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 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. In the end, 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 voice mail, 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 the 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.

PREGNANCY DISCRIMINATION STILL HAPPENING AND STILL ON THE EEOC RADAR

You would not think this would still be an issue in today’s day and age, but it is! The EEOC has recently settled two cases in August against employers (one in Florida and one in Arizona) for discriminating against women who were pregnant.

In the Arizona matter, Matrix Medical, a nationwide health care company headquartered in Scottsdale, Arizona, found itself in trouble with the EEOC after it rescinded a job offer to a candidate within a week of finding out she was pregnant. Matrix will pay $150,000 and issue a letter of apology to the individual. Matrix is also required to review and revise its equal employment opportunity policies and its personal leave-of-absence policy to include a provision that pregnant employees may take leave during their first six months of employment. As part of the settlement, it is also required to train its supervisors on Title VII and other anti-discrimination laws.

In another matter in Florida, the Glenridge on Palmer Ranch, an upscale retirement community in Sarasota, Florida failed to further interview an applicant for a position after asking her when she planned on having another baby. Instead, Glenridge offered the position to another female, an older one for whom it did not believe would or could become pregnant. Glenridge will pay $70,000, adopt and distribute an updated policy against sex discrimination, conduct annual training on sex discrimination for its hiring officials, and post a notice about the lawsuit in order to settle its matter with the EEOC.

This is a good reminder for employers to make sure that their hiring managers are asking appropriate, open-ended questions when interviewing candidates. It is also a good time to remind those same hiring managers that he or she should not rely upon or use inappropriate information revealed during an interview to make a decision on hiring.

WageWatch offers accurate, up-to-date benefit surveys, salary surveys, and pay practice 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, please call WageWatch at 888-330-9243 or contact us online.