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Archive for April, 2018

LINKING PAY PRACTICES WITH BUSINESS OBJECTIVES

Compensation plays a critical role in organizations’ ongoing and increasingly challenging efforts to attract, retain, and motivate a talented workforce.  Compensation design and management play a vital role in aligning employee behavior with business objectives.  Human capital costs represent a significant part of most organizations’ cost bases and need to be spent as effectively as possible.  It is vital to understand the consequences pay decisions can have on your organization.

Salary structures are an important component of effective compensation programs and 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 while controlling overall base salary cost with a salary range cap.  Market pricing is the most common method companies use to design base salary structure ranges using external market data combined with a focus on internal pay equity.  The goal of market pricing is to keep the organization from 1) underpaying, resulting in losing talent to competitors, or being unable to attract the talent it needs and, 2) over-paying which wastes organizational resources and impedes desirable turnover.   The secret to effective market pricing is the ability to spot and adequately analyze and level the data anomalies and imperfections using both science and experience.

Some organizations elect to pay lower than market and offset lower than market wages with offers of ‘good’ benefits, meaningful work, and stability.  This practice can lead to employee disengagement and organizations risk losing people.  Also, the organization will likely attract people who couldn’t get ‘better’ jobs with higher pay.  One of the key determinants of job satisfaction or dissatisfaction is how employees feel their pay package compares to others.

Pay-for-performance programs are used to award employees for desired behaviors and outcomes and they take many forms, including cash bonuses, company stock, and profit sharing.  Pay-for-performance plans have a learning curve, and they require regular maintenance in order to be and remain effective.  Incentive compensation plans need to align with the company’s business strategy, mission, goals, and objectives.  They should address root causes of performance and the goals must reflect a balance of financial results and the key business drivers.  Payout opportunities should be both consistent with the performance value and meaningful to employees.

While pay-for-performance plans provide a financial incentive to employees, there can be disadvantages.  If not crafted carefully, they can cause employees to focus more on quantity over quality.  They may impede teamwork if workers view helping another employee as wasting valuable time that could be spent on reaching their own goals.  And just like base pay, incentive pay should be competitive with the market or it could fall short of motivating the employees.

Smart, successful organizations do the regular planning and evaluating of their compensation and performance rewards systems.  Compensation is visible and important to employees.  It is critical to have a solid and competitive pay strategy where pay decisions and policies match the objectives of the organization.  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.

INTERNAL PAY EQUITY COMPLIANCE

A company’s approach to internal pay equity is as important as the actual pay programs it implements.  Many factors can impact internal pay equity such as internal increases remaining low while new hires demand salaries that exceed current tenured employees.  Organizations should conduct periodic pay equity studies to keep on top of potential pay equity risks and ensure an understanding of the pay structure, as well as knowledge of and ability to explain pay differences among comparable employees.

When conducting your pay equity study, be aware of these five major federal laws that address equal pay:

  1. The Equal Pay Act – equal pay for equal work among women and men.
  2. Title VII of the Civil Rights Act prohibits discrimination on the basis of race, color, religion, sex or national origin in all employment terms and conditions, including pay.
  3. The Lilly Ledbetter Fair Pay Act clarifies that each paycheck containing discriminatory compensation is actionable under Title VII.
  4. Executive Order 11246 prohibits federal contractors and subcontractors from discriminating in employment decisions, including compensation, on the basis of race, color, religion, sex or national origin, when contracts or subcontracts exceed $10,000.
  5. The National Labor Relations Act (NLRA) protects the rights of most private-sector employees to join together, with or without a union, to improve their wages and working conditions.

Most companies keep a close eye on pay decisions, such as merit raises and starting pay and the processes that guide them.  Unfortunately, tracking individual decisions might not be enough.  The Ledbetter Act requires knowledge of past pay decisions that may have impacted a discrimination claim.  Pay today equals the pay at hire plus all subsequent changes in pay.  Comparing the current pay of employees who were dissimilar in the past means that more historical information may be needed to understand their pay differences.

Pay differences can be defended by differences in knowledge, skill, education, ability, effort or responsibility provided it is required to perform the job.  Pay equity studies typically rely on the data that is available such as job title or grade, time in the job, company seniority, performance ratings, increased percentages, geographic locations, education, and prior job experience.

A pay equity study may involve the appropriate legal counsel, an experienced analyst as well as HR information systems and compensation specialists.  Detailed analysis can point to employees who should be paid similarly but who are subject to large pay differences and will highlight additional factors that explain the difference or highlight inexplicable differences that merit adjustment.   Conducting a well-designed and well-executed pay equity study using well-maintained and complete data is a good business practice that serves as an important tool in managing the risk associated with allegations of pay discrimination.

Change can be challenging and demanding.  At WageWatch our compensation consultants can assist with your organization’s compensation needs and help ensure your wages and salaries are supporting your company’s business strategy and objectives.  In addition to our PeerMark Salary Survey for over 100 local lodging markets in the U.S. and Canada, we offer a National Benchmark Salary Survey.  With over 9,000 hotels and 200 casinos in our database, WageWatch’s hotel and gaming salary surveys are the most comprehensive surveys available to Human Resource professionals. For more information on our services, including consulting, salary surveys, benefit surveys, and custom compensation reports, please call WageWatch at 888-330-9243 or contact us online.

 

HIRING STRATEGIES IN A TIGHT JOB MARKET

It is becoming increasingly challenging to recruit top talent due to the relatively low unemployment rate, the increase in job openings, and the lack of experienced candidates.  These factors require that companies need to be more creative and aggressive in their hiring practices.  In addition, there has also been an attitude change; it is much less of ‘who do I want’ and more of ‘who wants me’ attitude.  Listed below are some tips that may help provide success in the search for new talent:

  • Use multiple forms of social media: LinkedIn, Twitter, Facebook and actively engage on them. Connect to a related industry and check the posts and comments.  If there is someone who stands out,  you may have found a new employee
  • Turn part-time positions into full-time positions
  • Provide training opportunities for current employees to fill open positions
  • Restructure work in ways that adapt to the new workforce; reduce education and other requirements
  • Review the list of job skills and keep the essential skills versus losing a perfect candidate
  • Partner with a local community college and offer to speak with students; provide internship opportunities
  • Participate in job fairs and get involved in the local community
  • Speak at professional organizations and/or special interest meetings to meet potential candidates
  • Offer incentives to current employees who refer new hires, post open positions for visibility to all employees
  • Post for positions that you may have no intention of filling to gain a supply of candidates when a job does open-up
  • Provide a sign-on bonus to new employees
  • Ensure company website is mobile-friendly; a high percentage of searches are conducted using mobile devices

Another important factor is to understand the current perceptions of your company.  It is much easier to keep current employees versus hiring new employees.  It may be valuable to consider the following tactics to retain your current talent:

  • Be more competitive in wages
  • Provide employees stock ownership and/or stock options
  • Offer training programs for current employees to enhance bench strength
  • Provide a sense of organizational purpose and mission (valued by Millennials)
  • Permit flexible work schedules and work at home opportunities (valued by Millennials)

During the interview process, it is more important than ever to ensure that the process is as quick as possible to not lose viable candidates; ensure ongoing communication throughout the process to demonstrate interest.

Change can be challenging and demanding.  At WageWatch our compensation consultants can assist with your organization’s compensation needs and help ensure your wages and salaries are supporting your company’s business strategy and objectives.  In addition to our PeerMark  Salary Survey for over 100 local lodging markets in the U.S. and Canada, we offer a National Benchmark Salary Survey. With over 9,000 hotels and 200 casinos in our database, WageWatch’s hotel and gaming salary surveys are the most comprehensive surveys available to Human Resource professionals. For more information on our services, including consulting, salary surveys, benefit surveys, and custom compensation reports, please call WageWatch at 888-330-9243 or contact us online.