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Archive for May, 2014

Minimum Wage Increases and Pay Compression

Many states increased their minimum wage this year and state minimum wage increases will continue over the next couple of years edging close to and even above the potential federal increase to $10.10 per hour.  This is creating a concern regarding pay compression and the cost of maintaining equitable pay differentials among all employees and their supervisors and managers.  A minimum wage increase not only raises the wages of workers in entry level positions, it also can create pay compression issues as entry level worker wages creep closer to the wages of more experienced and tenured employees. Many organizations are already experiencing pay compression due to several consecutive years of modest annual salary increases between 2 and 4 percent, while salaries of new hires are often exceeding that of incumbents.

Pay compression is when only a small difference in pay exists between employees regardless of their skills, seniority or experience or when employees in lower-level jobs are paid almost as much as their supervisors and/or managers. Pay inversion is the result of extreme pay compression, where the new or entry level employee is paid more than the current employees or supervisors. The most common reason for pay compression is when the market-rate for a given job outpaces the increases given by an organization creating a situation where new hires must be paid at a rate close to, equal to, or even higher than current long tenured employees.  Pay compression can also occur as a result of a newly promoted manager who is no longer eligible for overtime is now paid very low compared to employees being managed who continue to earn both base salary plus overtime. 

Pay compression creates pay differentials that are too small to be considered equitable and can lead to widespread dissatisfaction among employees causing salary and pay levels to change from motivators to demotivators.  This can impact productivity and lead to increased turnover. Pay compression can become a significant internal equity issue, from the individual level up to a large portion of the employee population.  It can even lead to pay inequities that violate equal pay laws.

Some organizations conduct periodic or regular compression studies to achieve certain levels of internal equity.  Below are some of the other actions organizations can take to minimize and correct the impacts of pay compression:

  • Revisit the salary grade structure, which may be structurally adding to pay compression.  Pay ranges may be too narrow from grade to grade.  Ensure that your ranges are keeping in step with the external marketplace.
  • Make “equity adjustments” to accelerate pay levels of long tenured, high performing employees. Perform periodic equity analysis and identify employees whose performance level and rate are not in the proper relationship.
  • Consider promoting employees only if the employee qualifies for promotion and could contribute in a job with higher responsibility.
  • Consider freezing compensation of employees whose performance contribution is less than it should be.
  • Review and rewrite job descriptions as duties, roles, and responsibilities change then re-access the salary grade and range for the job.
  • Consider lump sum increases in lieu of merit increases.
  • Ensure Compensation Manager over-sight of new hire salaries.

To maintain internal equity and avoid pay compression, it is important to stay current with the market by consulting with professionals.  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. 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.

Posted in Uncategorized on May 29th, 2014 · Comments Off on Minimum Wage Increases and Pay Compression

BENEFITS AND PERKS TRENDING

According to recent surveys, the majority of employers remain committed to providing benefits to active employees.  Offering health care benefits remains important for market competitiveness and employee satisfaction.   However, with the implementation of ACA and the rising cost of healthcare plans, many employers are focusing on restructuring their health and benefits strategies over the next three to five years.  Whether employers continue to choose to offer group health insurance or send their employees to the health care exchanges, voluntary benefits and employee perks will continue to emerge as solutions to maintaining a competitive employee benefits package.  There are a wide array of voluntary benefits and perks to select from when designing your company’s benefit offerings.  Well-designed benefit packages should be based on the desires and needs of your employees.

 The 3 top employee benefits offered by employers are healthcare (includes medical, dental, vision, life insurance), retirement plans (401k plans), and paid time off (vacation, sick, holidays).  Other common benefit offerings are short and/or long term disability plans, gap coverage, cancer, critical illness, prescription, employee assistance programs and hospital supplemental policies. With voluntary benefits, employees can customize their benefits package and choose what suits their individual needs. Some non-traditional voluntary benefits are employee purchase programs, financial education, pet insurance, legal plans and identity theft policies.  Financial education and financial wellness programs are becoming more popular to help employees with their spending and saving behaviors and increase their financial literacy, including on-site money management, and financial planning seminars.

 Perks can supplement an employee’s salary and benefits package. They may sway an employee to value one company’s employment offer over another.   Some of the top perks offered are remote office (work from home or anywhere), paid or subsidized gym or health club membership,  free food (during the work day, free meals, snacks, treats), concierge services such as dry cleaning drop off/pick up, car drop off/pick up for cleaning or servicing, tuition reimbursement and on the job paid training.

 Some impressive examples of company perks are those offered by Google that include physicians on-site, and even death benefits to surviving spouses. Also Zappos.com is reported as having a program where each employee is allocated $50 per month to give to another employee performing above and beyond.  Many companies don’t have the budget for expensive perks, but there are other more affordable, innovative perks to consider such as movie gift certificates, on-site massages, mentoring programs, bring your pets to work and onsite haircuts.

 Employees spend the majority of their waking hours during the week at the office.  Many companies understand this and offer perks not only for the competitive advantage but to also have happy employees which can also translate to higher productivity and better output.

 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.

Posted in Uncategorized on May 21st, 2014 · Comments Off on BENEFITS AND PERKS TRENDING

MID-YEAR 2014 STATE MINIMUM WAGE INCREASES

Minimum wage continues to be a hot issue in the states for the 2014 legislative session. Thirty-eight states have considered minimum wage bills during the 2014 session and thirty-four states are considering increases to the state minimum wage. Connecticut, Delaware, Maryland, Minnesota, West Virginia and D.C. have enacted increases so far in 2014.  West Virginia is raising the state’s minimum wage to $8.00 an hour in 2015 and $8.75 in 2016.

 More than a dozen states increased their minimum wage rates effective January 1, 2014.  Delaware is increasing it’s minimum wage to $7.75 on June 1, 2014.  California, Maryland, and Washington DC have increases effective July 1, 2014 and Minnesota is increasing it’s minimum wage effective August 1, 2014.

In Iowa, a bill would hike the minimum wage from $7.25 an hour to $10.10. A Rhode Island bill would raise it from $8 to $9.  And a year after New York approved a multiyear minimum wage hike, another bill was introduced for 2014 that would accelerate the increase.

 Washington state and the District of Columbia will increase their minimum wages rate to $11.50 by 2016 and there is legislation pending in Washington state for another increase to $12.00.   Hawaii is the latest state to have legislation pending to increase the minimum wage to $10.10 over a four year period. 

 Follow this link http://www.wagewatch.com/resources/Minimum_Wage_Chart_May_2014.xlsx

to the WageWatch Federal and State Minimum Wage Chart with details of state and local minimum wage and pending increases.

WageWatch, Inc. is the leading compensation survey provider for the lodging and gaming industries with over 7,000 properties in its database. WageWatch also consults routinely with management companies on their pay structures and pay rates. 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.

Posted in Uncategorized on May 15th, 2014 · Comments Off on MID-YEAR 2014 STATE MINIMUM WAGE INCREASES

HR IN HOSPITALITY CONFERENCE – HR TipsNTrends

While at the HR in Hospitality Conference last week in Las Vegas, we attended a panel discussion on HR Tips and Trends.  The panel consisted of senior HR executives from 3 major hotel companies, the founder and managing partner of HCpartners and a professor from Cornell University.   These five respected industry leaders provided innovative ideas and viable solutions for many of the challenges facing today’s Human Resource professionals.  Topics included the potential increase of the federal minimum wage, maintaining competitive wages with minimum budgets, performance reviews, engagement and job loyalty.  Below are some of the top tips and trends from this session.

If the federal minimum wage is raised to $10.10 an hour, the concern among the panel members is compression.  A study done in Seattle, WA was sited during the discussion.  Results of this study showed minimal employees below $10.10 an hour, and even most tipped employees in the industry make at least two times their hourly base rate.  The issue of compression however was a concern among the panel members.  Substantial increases may be needed in order to maintain healthy distances between new hires and longer term employees as well as between managers and supervisors and their subordinates.

 Another compensation challenge discussed is maintaining competitive salaries with limited budgets.  Recruiting top talent, especially from other industries, but also from within the hospitality industry was seen as a top issue.  Top talent demand top salaries which adds to budget concerns and internal equity issues.  The HR Executives on this panel stressed they are looking for more variable compensation opportunities and inexpensive rewards with high impact.  One HR Executive mentioned sending employees to international locations that have training needs which acts as both a developmental tool and a reward.  The advice was ‘Be Creative’.

 Employees’ well-being was among the top issues with the future of social security threatened combined with the fact that the lower wage earners generally don’t save.  Therefore negative enrollment 401(k) plans are seen by the panel as a necessity today.  While few low wage earners will voluntarily enroll in a 401(k) plan, once they are passively enrolled, very few will opt out.

 The panel discussed the performance review process and some were in the process of surveying, researching, redesigning and piloting new innovative approaches to this age old problem.  Training for both managers and employees was seen as key to a successful process.  An approach that is gaining popularity is limiting the core competencies in the performance review.   Thorough research and surveying managers and employees should be done to determine what competencies are most valued.  Another approach being piloted is ‘anytime feedback’, where feedback can be given anytime anywhere and it becomes the culture to do so.

 The panel members felt that engagement and job loyalty required strong leaders who genuinely connect with employees and show that they care.  One example was given where a housekeeping department had a 97% job approval rating and this was completely due to a housekeeping manager who connected with her team on a personal level.  One way she connected was ‘Happy Mondays’ and ‘Happy Fridays’ where she asked each team member their plans for the weekend and subsequently what happened over the weekend.  A small gesture that went a long way to make these employees feel valued and cared for.

Other topics that were discussed were labor shortages with large numbers of boomers preparing to leave the workforce and smaller numbers of millennials entering the workforce.  The panel members agreed strong succession plans must be in place.  Work-life balance initiatives with flexible schedules and restorative time off are seem as imperative.   Millennials value work-life balance more than any other generation.  Work-life balance initiatives are also seen as a way to keep women in the workforce long enough to promote.  Though about 57% of new hires are women, only 7% become General Managers.

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 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 market compensation data, benefits survey data and salary reports, please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on May 8th, 2014 · Comments Off on HR IN HOSPITALITY CONFERENCE – HR TipsNTrends

Intern Program: Rules and Best Practices

Hopefully you have your summer intern program ready to launch but whether you do or not, here is some important information to help make your program a success.  First ensure your program is compliant with Department of Labor regulations regarding internships.  In the last couple years, both the federal and state governments have been cracking down on the use of unpaid interns.  The use of ‘free’ interns has been significantly reduced since 2010 when the Department of Labor issued new criteria for employers using unpaid interns: 

In general, the internship should be structured as a training experience, similar to a classroom as opposed to the employer’s actual operations.

  • The training given to the interns must be for the benefit of the intern, and not the employer.  Employers should see no immediate benefit from the intern’s work.
  • The intern cannot displace regular employees but they should work under close supervision.
  • You need to establish in advance that the internship is for a fixed duration of time and the intern is not necessarily entitled to a job at the conclusion of the internship.
  • There is a clear understanding by both the employer and the intern that the intern is not entitled to wages for the time spent in the internship.

 If your program includes unpaid interns, consult federal and state wage and hour websites or legal counsel regarding regulatory compliance.  In addition to the regulations, many universities and colleges have specific requirements for the internship program up to and including providing educational credit.  If your intern program does not fit the regulatory criteria for unpaid interns, the same wage and hour guidelines that you follow for your hourly (non-tip) workforce will apply.  Interns are often paid at rates comparable to entry level positions within the department or discipline in which he/she will be working.  Local market or industry salary surveys can assist you in setting competitive pay rates for your interns.

In addition to the compliance component of your intern program, below are some best practices you may want to consider integrating into your program.

Recruit the right candidates by having a clear and thoughtful internship description and get referrals.

  • Designate a program manager and a manager as well as a mentor for each intern
  • Provide structure, even when they aren’t paid.
  • Hold orientation sessions for all involved.
  • Provide interns with a handbook and/or website.
  • Provide interns with real work that is related to their major, that is challenging, that is recognized by the organization as valuable, and that fills the entire work term.
  • Consider offering flex time for the interns
  • Host social events and activities for the interns
  • Encourage team involvement.
  • Conduct exit interviews.

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 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 market compensation data, benefits survey data and salary reports, please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on May 1st, 2014 · Comments Off on Intern Program: Rules and Best Practices