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Archive for September, 2015

UNDERSTANDING SALARY SURVEY RESULTS

Every organization uses its own methods of analyzing and applying salary survey results.  Different surveys are used for different purposes.  Some emphasize industry data, while others look more to geographic competitors.  Some salary surveys look closer at organizations that match their size in in terms of revenue or number of employees.  Diversity, in analyzing survey results can reflect the flexibility of the compensation manager to adjust their analysis to deal with a variety of circumstances.  Important questions to ask are; with who are we competing with for the job(s), and to where and why are we losing good employees.  The answers to these questions may vary for different positions in your organization.   For example, you are probably competing nationally for your top executives, and will want to look for national executive surveys and compare to companies of similar size, and revenue.  You also may want to look at your own industry as well as all industries.  For your line level managers and hourly staff, you are most likely competing on a local market level and will want to select a survey with local competitors. 

While there may not be a standard approach to salary survey analysis, there are best practices to assist you with quality and accuracy.  A common first step is to ensure you are matching your jobs to the survey jobs accurately.  This is the foundation on which you will build your analysis and results.  Most surveys will contain only benchmark jobs that will be essentially the same across the participating companies and industries. If the job description is similar but not identical, and the survey data is not disaggregated by closeness of match, the data may be weighted according to the match.  This technique is called survey leveling.  If the job in the survey has more responsibilities, some analysts adjust the survey data by multiplying a percentage factor to bring its pay closer in comparability to the employer’s job.  For some hybrid jobs, you may be able to look at two or more survey jobs and adjust each survey job by a percentage factor, then combine for a total salary comparison of your hybrid job. The WageWatch PeerMark™ Surveys are designed for individual industries and the job descriptions will be for the industry for which it was designed.  

After you have matched your job descriptions, selecting competitors is an important next step.  First, you need to select as many comparable competitors as possible in your market.  Too few will not provide a good statistical output.  When you look at the survey report results and see pay data that looks surprisingly high or low, it is likely that you did not have a large enough sample and a low number of matches for the position may be the cause.  More than one survey report can also be helpful in analyzing data.  After selecting your competitors and running your report, if you find you are missing data for some key positions or simply finding low matches on many positions, you may want to run a second report.  If there are more competitors in or near your local market, rerun the report with the same competitors as your first report, adding additional competitors, select the same positions and you may find data for the additional positions.  To analyze this data, you will need to compare both report results for each position.  Understanding that your second report may have included competitors that may not be as close a match as your original competitor selection, the comparison of the two reports will help guide you with your analysis of the results. 

Make sure you are familiar with the statistics used in the survey.  For example, frequency distribution is the arranging of the data reported in the survey from lowest to highest.  From the frequency distribution, surveys report the varying percentiles of the data (i.e., 25th, median, and 75th percentiles).  The Median is often used by organizations as their baseline because it is the center of the data distribution. In distributions that are not symmetrical and or I which there are outliers, the Average maybe located somewhat away from the central tendency..  The median should be compared to the average.  This comparison will give you a better sense of the range of pay in the data reported. A close alignment of these two will give added weight to the value and usefulness.  Weighting the data is important especially when a significant amount of the data is coming from one or two competitors.  A weighted average will equalize the data and provide you a better statistical result of what the market is paying for that job.

Survey analysis is about studying and understanding the data, comparing the market data to your organization’s data, knowing your competitive market, and identifying anomalies and then finding the reason.  You should also include into your analysis what the survey does not give you.  For example, maybe the survey is telling you that the market is paying considerably higher for a position than you are.  While this is not something you want to ignore, you may find that you have long term employees in the position and have had no problems with turnover. Perhaps there are other perks or incentives that your organization provides that make up for the lower pay level. 

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 September 23rd, 2015 · Comments Off on UNDERSTANDING SALARY SURVEY RESULTS

KEY OBJECTIVES OF A COMPENSATION PROGRAM

Compensation can be defined as a reward earned by employees in return for their time, skills, effort and knowledge.  Compensation includes direct financial compensation, such as wages, bonus and commissions, indirect financial compensation such as health and welfare, retirement and leave benefits and non-financial compensation such as job training and development, recognition and advancement opportunities.  A large percentage of the company budget is compensation, and therefore is a key component of the overall strategic human resource management plan. 

A compensation package can include more than salary and bonus.  It can include health and welfare benefits, retirement plan, leave benefits and various other benefits and perks.  Companies that offer a mix of salary and incentives have the highest employee morale and productivity.  It is most effective to pay incentives as soon after goals are met as feasible such as month or quarter incentive payments, rather than annual.  A good incentive plan should be easily understood by the employees with no more than two to four performance factors.  How you train, develop and manage your employees will also drive retention and performance.

When developing your compensation program, primary objectives to consider are: 

  • To attract the best people for the job
  • Retain high performers and lower turnover
  • Reward performance on specific objectives by compensating desired behaviors
  • Motivate employees to perform their best
  • Improve morale, job satisfaction and company loyalty
  • Align with overall company strategy, goals and philosophy
  • Achieve internal and external equity
  • Comply with all pay and non-discrimination regulations

While compensation is not the only thing that motivates people, compensation that is too low will demotivate employees.  Studies have found a direct correlation between top performing companies and employees that are satisfied with their pay and benefits package.  Competitive and appropriate pay can positively impact customer service.  Employees receiving fair and competitive compensation packages are generally happier with their jobs and are more motivated to perform at their peak.  Motivated employees can add to the bottom line of the organization and contribute to growth and expansion. Studies show that motivated employees take fewer sick days and have fewer disability claims.

While there are many objectives to a successful compensation program, two key objectives are ensuring internal equity and ensuring external competitiveness.  Salary Surveys provide the necessary market data to build competitive pay structures.  Good Salary Survey data provides you with the information needed to ensure your compensation package is competitive.  Salary Surveys are an invaluable tool for the setting right compensation strategy and for following and monitoring the desired pay market.  It is important that you select the right salary and benefits surveys and market data for your employees based on where you are competing for talent in your industry and outside your industry as well as geographic location.

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 September 16th, 2015 · Comments Off on KEY OBJECTIVES OF A COMPENSATION PROGRAM

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 we will focus on monetary rewards. Motivated employees make a difference to the workplace.  They affect the working 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 providing 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 2 to 3 percent, studies show that increases lower than 7% are unlikely to have any impact on employee performance.  What can help is applying behavioral principles to your pay for performance program 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.

A well planned salary and total rewards package will motivate your employees, help your company maintain a competitive advantage and help retain key employees.  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 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 September 10th, 2015 · Comments Off on WHEN DOES SALARY MOTIVATE EMPLOYEES?

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. In the WageWatch 6/12/13 blog, Budget Boot Camp, we covered the fundamentals of the HR Budgeting process.  Now we will dive a little deeper into the specific elements of the HR Budget.

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:

  1. Throughout the year, ensure to include the CFO when reviewing such things as pay increases with the CEO.  This can go a long way to developing a partnership with the CFO.
  2. The credibility of the HR function is significantly improved when you can demonstrate real savings and value for HR Projects and Processes.
  3. 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.
  4. 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, 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 .

Posted in Uncategorized on September 3rd, 2015 · Comments Off on BUDGET SEASON: ARE YOU PREPARED?