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Archive for October, 2014

EFFECTIVE JOB DESCRIPTIONS

Job descriptions describe the major duties and responsibilities of a position or job and are an essential part of hiring and managing employees. They are tools to help your applicants and employees understand their roles and accountabilities.  They can be used to establish a training checklist for new incumbents, as guideposts in the performance appraisal process and as market benchmarks for compensation surveys.  Job descriptions are not required by law however, they can provide evidence of the essential functions of a job for purposes of complying with federal employment laws.   They can also be used for disability and worker’s compensation claims.  It’s good practice to get legal advice to ensure that your job descriptions are compliant. Below are some of the legal requirements to keep in mind while writing your job descriptions. 

  • Fair labor standards Act (FLSA): Exempt or Non-exempt classification should be included on all job descriptions.
  • Occupational Safety and Health Act (OSHA) and the Americans with Disabilities Act (ADA): Working conditions and any required physical activity should be noted on all job descriptions.
  • Equal Employment Opportunity:  Include, “we are an equal opportunity employer.” In all job descriptions
  • Age Discrimination in Employment Act (ADEA): Job descriptions should not indicate age preference.

The first steps in writing job descriptions are the data collection and job analysis processes which begins with questionnaires and/or interviews with both the supervisors and current employee incumbents to gather and determine the key facts about the job.   You will need to collect information that will later be summarized into your job description template.  Generally, the data you will need will include Job Title, Immediate Supervisor, Department, Pay Grade, Working Hours and Travel Requirements, FLSA Status, Mission/Summary, Essential and Non-Essential Tasks & Responsibilities, Supervisory Responsibility, Job Requirements (education, skills and experience required for the job), Working Conditions, Physical Demands, Equipment Usage, and Disclaimer for Management Ability to Modify. 

A job description should be practical and should summarize the key elements of a job in a clear, concise manner.  Be specific and avoid using subjective adverbs or adjectives such as “frequently,” “some,” “occasional,” and “several.” It’s important to build flexibility into a job description and ensure that it is dynamic and functional.  Flexible job descriptions will allow your employees to evolve within their positions as processes, technology and organizational changes occur.  A well written job description will require and investment of time and effort to accurately reflect your organization and unique jobs.

The duties list should contain each essential job duty or responsibility that is critical to the successful performance of the job.   The list should be prioritized with the most important listed first on down to the least significant.  Do not include tasks that comprise less than 5 percent of the overall time.  Each Essential and Non-Essential Duty should be assigned a percentage of time and all duties together should total 100 percent.  Each duty should be described in one – three sentences and the first sentence should begin with an action verb.  Generally there are one or two non-essential duties that total five to ten percent of the total time and are duties such as “Assist in special projects as required”’  or “Any other task assigned by the supervisor.”   This provides flexibility to change duties over time, and captures occasional and unforeseen needs that arise.

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 .

Posted in Uncategorized on October 29th, 2014 · Comments Off on EFFECTIVE JOB DESCRIPTIONS

2015 EMPLOYER BENEFITS PLANNING

Remaining in the top employee benefit offerings are:  Health Care (including Dental, Vision and Prescription Drug coverage), Disability Insurance, Life Insurance, Retirement/Pension plans, and paid vacation, sick and holiday leave.  Other common benefit offerings include Flexible Spending Accounts, Employee Assistance Programs, Paid Personal Leave, Financial Planning Services, Wellness Programs, Subsidized Commuting and Company Stock.

Employers Health care plans remain the most common employer benefit offering as well as the highest cost.  For 2015 healthcare cost increase projections for U.S. employers have been between 3.9 percent and 6.5 percent on average.  Many employers will make plan changes in order to offset the increases.  Changes to current benefits may include moving more of the share of the cost to the employee/participant, implementing and expanding consumer-directed health plans (CDHPs), and broadening wellness incentives. 

CDHPs continue to grow in popularity and according to a couple of recent employer surveys, CDHPs as the only health benefits option is expected to increase by nearly 50 percent next year.  There are several different types of CDHPs, most commonly paired with a group plan though an employer.  All CDHPs have a personal healthcare account used to pay for medical expenses.  This approach can significantly lower costs for employers.  However, the ACA requires that companies provide a minimum 60 percent of the cost of insurance, so although these plans may involve some cost-shifting to employees, companies still pay a healthy share of the health benefit costs.

Some of the more common plan changes that employers are looking at for 2015 include:

  • Consumer tools such as price transparency tools to help employees select care providers based on cost and quality ratings.
  • Adding or expanding wellness program incentives.
  • Reducing spousal subsidies or implementing spousal surcharges for spouses who can obtain coverage through their own employer.
  • Encouraging employees to use high-performance networks such as accountable care organizations or designated centers of excellence.
  • Specialty pharmacy benefits such as requiring step therapy; before authorizing high-cost specialty pharmacy medications, less-expensive medications must be tried first.
  • Coverage for surgical interventions and FDA approved medications for the treatment of severe obesity.

Change can be challenging and demanding. 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.

Posted in Uncategorized on October 23rd, 2014 · Comments Off on 2015 EMPLOYER BENEFITS PLANNING

PAY FOR PERFORMANCE PLANS

Pay for performance plans are a pay strategy where evaluations of individual and/or organizational performance have significant influence on the amount of pay increases or bonuses given to each employee.  When properly designed, pay for performance plans can be effective in aligning employee’s behavior with company goals and therefore benefit both the employees and the business.  Proponents of pay for performance plans believe they help attract and retain better employees and motivate improved performance.  

Pay for performance plans move away from the entitlement mentality of annual increases and can motivate employees to work harder and smarter toward achievement of specific team, department and company goals and allow employees the opportunity to attain increased levels of compensation.  An effective pay for performance (P4P) plan must link pay to performance.  The percentage of an employee’s salary that is based on performance can vary greatly and is an important consideration when designing a (P4P) plan.  Pay alone is not an effective motivator and is best when combined with other performance tools such as feedback, evaluations and increased management support.

Performance evaluation serves as the foundation of a pay for performance system.  Performance Appraisals must address core competencies that have a proven impact on the business.  P4P plan performance review measures may be different for different positions. Effective performance metrics can be obtained by surveying job responsibilities of current staff in various positions.  Performance evaluations should be conducted in frequent intervals so that behaviors can be addressed and altered when they occur.  When holding P4P performance reviews that determine compensation awards, performance measures must be consistent and accurate. Effective and fair supervisors who are properly trained and a system of checks and balances to ensure fairness will be essential.

Implementing a P4P plan requires major organizational change and can have serious challenges. The advantages can be increased employee motivation and incentive toward generating revenue and improving overall company success.   Also all business units work more in tandem and therefore reduce or eliminate conflicting departmental agendas.  P4P plans are complex and may take more than a year in development to ensure effective and appropriate performance outcomes with performance appraisal processes that are strategic and objective. P4P plans require sufficient funding to ensure that sufficient rewards go to top performers. There are often payroll complexities resulting from performance measures and outcomes that vary for every role and for every department. There can also be legal issues such as ensuring compliance with overtime pay requirements under the FLSA as well as real or perceived employee bias and discrimination. Base salaries are typically lower than average and since rewards are based on company performance, there will be lean times when the rewards are minimal to none.   This however, will be balanced in good times when rewards can be as much as 40-50%.

P4P plans require a substantial investment of time, money, and effort.  If you are considering a pay for performance plan, here are some key decision points:

  • Does your organization culture support a pay for performance plan?
  • Is Management committed to changing the culture?
  • What are the goals and objectives you hope to achieve?
  • Which employee groups should be included in the P4P plan?
  • Do you want rewards to be based on individual, team and/or organizational achievements? And should awards be short term and/or long term?
  • Will rewards be lump sum or add to base salary?
  • How much pay should be contingent upon performance?
  • How will the performance pay be funded?
  • Who will make the pay decisions?
  • Who will provide input on the performance ratings?
  • Will you have sufficient training support and resources to support the P4P plan?

Change can be challenging and demanding. 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.

Posted in Uncategorized on October 15th, 2014 · Comments Off on PAY FOR PERFORMANCE PLANS

ADVANCED COMPENSATION ANALYSIS

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

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

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

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

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

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

Posted in Uncategorized on October 8th, 2014 · Comments Off on ADVANCED COMPENSATION ANALYSIS

MARKET ANALYSIS: MEDIAN OR MEAN

Median and mean are useful measures of distribution that identify central values and tendencies of a data set.  In a WageWatch compensation survey, median is the middle wage in a set of ranked market wages which separates the data set in half. When an even number of wages are ranked, with no true middle value, the average of the two middle data points is the median wage. Median is also called the 50th percentile.

The arithmetic mean which is also called the simple average or mean is one of the most commonly used statistics in business. One of the reasons is that it is very easy to calculate. It is the sum of all values of a data set divided by the number of values in that set.

In a normal distribution of data, the median and mean wages will be within a few cents of each other. When the mean is greater than the median, this indicates the data set is skewed towards higher wages. Similarly, when the mean is less than the median, this indicates the data set is skewed towards lower wages. Skewing typically occurs for one of two reasons: either the data set is not normally distributed, or the mean is affected by outliers or errors in the data set. The first situation is not uncommon and occurs when there is wage compression or the data is bimodal, meaning that the job description may be too broad and need to be bifurcated into two job titles. The second reason for the mean and the median being significantly different, due to an outlier or data error, is much more of a concern

Here is an example of how data affects the median and mean differently when an outlier is added to the data set.

Data Set A:  $9.25, $10.11, $10.56, $11.98, $12.50, $12.88;                  Median $11.27,  Mean $11.21

Data Set B:  $9.25, $10.11, $10.56, $11.98, $12.05, $12.31, $125.00;   Median $11.98, Mean $27.32

In this example, it is clear that once the $125.00 value is added as an outlier, the median wage becomes the better indication of the central value. Comparing the median with the mean from Set B tells us that while the middle wage or median is $11.98, there appear to be employers paying at the top of the market, skewing the mean up sharply. The only way to know for certain if the difference between the median and mean is accurate or due to an error is a more thorough analysis of the data. If more data analysis is not possible, then the median is your better statistic to use.

WageWatch 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. The PeerMark™ Wage Survey is the only Web-based custom survey tool that allows individual survey participants to select their competitive set for comparison purposes.  Our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help you structure your compensation programs to support your company’s business strategy and objectives.   For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on October 1st, 2014 · Comments Off on MARKET ANALYSIS: MEDIAN OR MEAN