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Archive for December, 2012

Best Practices for Performance Review

One of the greatest challenges for companies in regards to their employees is the performance review process. Employees are evaluated on their performance of assigned job responsibilities, receiving feedback on areas they are doing well in as well as any areas that may need improvement. Reviews are used as a key component for career development, encouraging employees to work harder, reach higher and set attainable goals for the future.

Performance reviews can be a very helpful tool for both the business and the employee when done properly. A major problem with performance reviews is that often times they don’t accomplish what they set out to, leading to stress for both the employee and the employer. It may be difficult to know how to go about overhauling or tweaking your performance review process.

When giving a performance review, you must consider what your organization seeks to accomplish by completing the process. The following are a few of the best practices in regards to achieving beneficial performance reviews:

  • Employee performance reviews must be tied to business objectives. If your employees are consistently receiving high performance scores, but the business is not meeting its goals, then you may need to tweak your process.
  • Plan review performance dates strategically. As listed above, performance reviews should be tied to business objectives; therefore, you should align the performance review schedule with the company’s annual cycle instead of an irrelevant date, such as the anniversary of employment. Employees can be better evaluated after reviewing how the business as a whole performed during the fiscal calendar year.
  • Remember that the review process is always about the employee. As an employer, you must be direct in providing feedback. Be completely open and honest. Employees need to understand what they are doing well and what they can improve upon in order to set personal goals. There should be no question as to what is expected of them before their next performance review.
  • Performance review forms should only be used for a maximum of five years. Businesses are constantly changing and evolving, so it only makes sense for the performance review form to evolve too in order to achieve maximum efficiency.

If you would like to develop a more effective performance review process, consider the expert services of WageWatch. Using performance review data, we can help you to establish a budget for your company through the use of salaries surveys, compensation surveys and other data. With over a decade of experience working with industry associations and employer groups, we have the expertise to provide your business with online benefit, wage and compensation surveys. To learn more about how WageWatch can help you, please call 480-237-6130 or contact us online.

Posted in Benefits & Compensation on December 27th, 2012 · Comments Off on Best Practices for Performance Review

Best Practices: Balancing Internal and External Pay Equity

Whether in the context of real estate, common stock, equipment or wages, equity is a term that relates value between different choices, opportunities or investments. Studies into organizational behavior theorize that employees are continuously monitoring and evaluating their work and pay against those of their peers. Perceived unfairness can result in severe production problems.

In order for a business to operate effectively, the company needs to develop a compensation strategy that achieves the two goals of paying wages considered fair to employees, while providing a financial return on the investment for the employer.  Wage equity has two approaches. The first is externally driven by market forces. The second is an internal focus, driven by the employer’s valuation of the job.

Using market pricing to establish wages and salaries is called market based pay. WageWatch has found that market based pay is the best practice approach to designing compensation policy in competitive market segments such as the hospitality, healthcare, and not-for-profit. Every WageWatch salary survey is a market based strategy. Market based pay systems benefit from being inherently empirical, built from research, through surveys, reporting what similar jobs are paid in the organizations that one competes with in the labor market.

Committing to a market base pay compensation structure means that employees will be paid at a competitive wage when compared with rates offered to people in similar positions in peer organizations. The labor market, ruled by supply and demand, drives this approach. The WageWatch PeerMark ™ Survey and online report building tool is designed for custom selection of competitors from which to accurately benchmark job titles. Wage and percentile variances illustrate where you are positioned in the marketplace.

External equity is one side of the coin. There is also the employer’s perception of fairness called internal equity. Where external equity is a measure of market competitiveness forming its basis on job functions and duties, internal equity is a measure of internal worth with a basis in job autonomy and responsibility. If you have multiple incumbents in the same job title who are paid differently, the differences in pay are an expression of internal equity.

We analyze internal equity in a way similar to external market analysis in that we determine worth relative to benchmarked job titles, but different in that the benchmarks are internally established. Internal benchmarks are particularly useful in evaluating both unique and hybrid job titles for which external benchmarks do no exist. Variance analysis here looks inward at wage compression, organization structure, reporting relationships, and job families.

Managing external and internal equity is a dynamic process requiring human resources to stay vigilant on changes in market conditions and business demands. The market based pay approach to compensation gives the influence of the external market on wages precedence over internal equity. The WageWatch PeerMark ™ Salary Survey reports the most current data available which forms the basis of the external analysis. However, since both approaches have the aligned goals of attracting and retaining a talented workforce, the WageWatch Compensation Consulting Team is available to conduct internal equity audits to address employer concerns and add creditability to pay practices.

Posted in Benefits & Compensation on December 20th, 2012 · Comments Off on Best Practices: Balancing Internal and External Pay Equity

The Impact of the Affordable Care Act on Business

The Affordable Care Act is already causing much confusion for American companies as well as for the general public. The law, as passed, was over 2,500 pages long and will require thousands of additional pages of regulatory policy in order to be enacted.  As we enter the year 2013, there will be many more changes to healthcare as the new law and the regulatory policies surrounding it take effect. As the provider of employee benefits, business owners need to fully understand the impact that the Affordable Care Act will have on their business and their employees over the next few years.

The professionals at WageWatch would like to share the following refresher on some of the most important policies within the Affordable Care Act:

1. Small business owners will receive a tax credit on their contribution to employee insurance policies. For businesses with less than 10 employees, each with average wages under $25,000, they will receive a 50 percent tax credit on their contribution. These tax credits apply to all small businesses up to 50 employees with average wages of $50,000, although the credit is reduced on a sliding scale depending on the businesses size and average salary.

2. Beginning in the year 2018, the Affordable Care Act will impose a 35 percent tax on employer provided health insurance plans that exceed $10,200 for individual coverage and $27,500 for coverage of a family. The idea behind this policy is that business owners will aim to avoid expensive insurance policies known as Cadillac Plans, and insurance companies will be forced to modify coverage with an eye to keeping costs down.

3. If you are a small business with 51 or more full time employees, you will be fined $2,000 per employee, excluding the first 30 employees, if you do not offer insurance for employees that work an average of 30 or more hours each week.  For small businesses with 50 or fewer employees, there is no penalty. Small businesses of all sizes are also not required to provide insurance for part-time employees.

4. Business owners must offer insurance that is certified affordable to employees. The premium for each employee’s plan cannot exceed 9.5 percent of their total household income. If the insurance coverage doesn’t meet the affordability law, employees should be offered tax credits to purchase insurance on their own. Business owners will then have to pay whichever is less: $3,000 per employee that receives the credit or $2,000 per employee, excluding the first 30 workers.

5. Businesses with less than 100 employees that work an average of 25 or more hours per week are eligible for grants to start wellness programs. These programs encourage employees to take control of their health by living more healthy lifestyles, which helps to prevent harmful health conditions down the road.

It is clear from just the five points above, that much is still to be determined before implementation can take effect. Please stay tuned as we will continue to provide you with updates on ACA as more information becomes available.

The experts at WageWatch want you to know how important it is to be aware of the new policies under the Affordable Care Act and their effect on small businesses. Employers need to properly plan for the future by developing accurate budgets that take the changing costs of healthcare benefits into consideration for the year 2013 and beyond. For assistance with your budget, WageWatch offers cost-effective reports, including salary, wages and benefits survey data. To learn more about the services provided by WageWatch, please call 480-237-6130 or contact us online.

 

Posted in Regulatory & Legal Updates on December 12th, 2012 · Comments Off on The Impact of the Affordable Care Act on Business

Not All Salary Surveys are Created Equal

With traditional annual salary surveys, the process of data collection starts when the survey opens. The opening is followed by a window of time that is typically two to four months, and sometimes as long as six months. This survey window depends on the industry and number of positions surveyed, for which survey participants would report their payroll data for incumbents. At the end of the collection period, the survey closes and no additional survey participation can occur until the following year when the survey cycle is completed and the survey reopens. The date the survey closes to participation is referred to as the survey’s effective date.

Once the survey closes, the wage data is manually cleaned, analyzed, and the findings formatted into a compensation benchmark report. Building the report in this manner can take an additional two to three months and for some compensation surveys up to six months. Once the report is complete, it is made available to participants and is on sale until next year’s compensation report is published.

The traditional annual compensation survey, by design, reports last year’s data. Compensation professionals know the value of using the most update-to-date market data available to conduct their benchmarking and wage analysis.  WageWatch has responded to this need with salary surveys and benefit surveys that collect and report the most current data – never last year’s data. HR directors and compensation managers know the effective date for each participant. This approach creates a survey platform that is dynamic, never closes, and reports the most current market data available.

WageWatch uses the next generation methodology based on a 365-day subscription period that allows participants to continually update data and report findings during the year. WageWatch defines the effective date as the date on which wages are internally updated in an organization’s payroll system. WageWatch’s survey platform is dynamic and not static as are traditional annual salary surveys. While Wagewatch does have a close date for its compensation surveys, which would normally be referred to as the effective date in a traditional survey, this is a soft close date.

Because our surveys are dynamic compensation surveys, we continue to accept participants’ wage data after the close date of the survey.  Users can subscribe after the soft close date, enter their data and create their own custom reports all in the same day.  WageWatch reports allow you to select an entire market to compare your in house salary data, or you can select as few as five competitors you select to compare your salary data. This report is known as the WageWatch PeerMark™ Survey report.

Posted in Survey Reports on December 5th, 2012 · Comments Off on Not All Salary Surveys are Created Equal