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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.

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 in 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, listed 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.

 

GET MORE OUT OF YOUR TURNOVER METRIC

Most HR departments miss an opportunity when it comes to measuring and reporting turnover.  The goal of any HR metric is to provide information on how to improve the measured item.  As Peter Drucker said, “what gets measured gets done.”  Reporting turnover as simply a percentage of the workforce can be made more meaningful and more useful by diving down into the detail and adding data and information that quantifies the cost and provides insight on root causes and how to make improvements.  Some examples of this are:

  • Along with your company’s turnover rate, add the turnover rate of competitors, giving a baseline or something to compare against
  • Add the percentage of turnover that was top performers or top salespeople, the percent of turnover in each department and for each manager, the percent in high impact jobs and hard to fill jobs
  • Add the percentage of turnover in the first year of employment, which can be linked to possible employee dissatisfaction
  • Add how long it takes to fill positions, the recruitment cost of filling the positions, and how long before they are up to the minimum productivity level
  • Add exit interview information such as how many went to work for competitors and which competitors. Exit interviews may also indicate whether turnover was preventable, which may, in turn, provide managers with information needed for improvement
  • Add the dollar impact of lost sales where applicable, i.e., sales turnover, which can be directly linked to revenue and economic impact to the company

The involuntary turnover metric is also important.  It can indicate that the company is keeping low performers which can also be costly.  With this additional information, conclusions are now more easily drawn and the cost of turnover is more tangible (i.e., the cost of losing individuals in key positions is likely higher than losing individuals in low-impact positions).  If losing hard to fill jobs, the job market may be tight and replacing these employees could be expensive.   Losing individuals with strong reputations within the industry can impact stock analysts’ assessments of your firm.  It can also send negative signals throughout your firm and the industry, which can, in turn, lead to more turnover.

Some additional information that can be helpful when included with the turnover report, include:

  • Leading causes of preventable turnover
  • Satisfaction or frustration levels of those who left which could impact the company’s external image
  • Lowest turnover rates within the firm which can provide a target for managers to aim
  • The likelihood that the person that left will take others with them.

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 salary survey reports and pay practice 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.

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, the focus is on monetary rewards. Motivated employees make a difference in the workplace.  They affect the work 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 provide 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 two to three percent, studies show that increases lower than five percent are unlikely to have any impact on employee performance.  What can help is applying behavioral principles to your pay for performance programs 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.

Change can be challenging and demanding.  At WageWatch our consultants can assist with your organization’s compensation needs and help ensure your wages and salaries support 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 at www.wagewatch.com/contactus

COMPENSABLE TIME

Employers need to ensure they count all worked hours as paid hours for their non-exempt staff.  For example, when an employee eats lunch at their workstation or desk and their lunch is interrupted by work such as answering phones or email, the employee is working and must be paid for that time because the employee has not been completely relieved from duty.

If the employer has a policy that is expressly and clearly communicated to the employee regarding a specific length of time for a break, any unauthorized extensions of that break time do not need to be counted as hours worked.  Bona fide meal periods (typically 30 minutes or more) generally need not be compensated as work time.  However, the employee must be completely relieved from duty for the purpose of eating regular meals.

The federal Fair Labor Standards Act (FLSA), doesn’t require employers to provide meal or rest breaks, though some states do require such breaks and the rules can also be different for younger workers.  You can find a list of state meal and rest break laws at the Department of Labor’s website address: https://www.dol.gov/whd/state/meal.htm  and   https://www.dol.gov/whd/state/rest.htm.

Employers that fall under the federal guidelines do not have to pay for meal or rest breaks unless:

  • The employee works through or during their break, or
  • The break lasts 20 minutes or less, or
  • The break is interrupted by work

Some other compensable time under the federal rules can include waiting time, on-call time, attendance at meetings and training programs, travel time and performing work outside of work hours such as checking emails.

Waiting time may or may not be hours worked depending upon the circumstances.  If an employee needs to wait before a duty can start, such as a firefighter waiting for an alarm, then the employee is ‘engaged to wait’ and this time is considered worked time and must be paid.

On-Call time is paid time if the employee is required to remain on the employer’s premises.  In most cases, the on-call time does not have to be paid when an employee is not required to remain on the employer’s premises.  However additional requirements put on the on-call time that further limits the employee’s freedom could require the time to be compensated.

Attendance at meetings or training programs is paid time when any of the following conditions are true:

  • It is during normal hours,
  • It is mandatory,
    • If the employee feels that they should or need to attend, then it is mandatory
  • It is job-related

Travel time may be paid time or not depending upon the kind of travel involved.  Regular commute time to and from the work site is not paid time.  When the employee works at a different work site location then any commute time that is greater than the employee’s regular commute time to their usual work site needs to be counted as paid time.

Travel that is part of the regular work duties, such as travel from job site to job site during the workday, is work time and must be counted as hours worked.  Overnight travel is work time and must be paid time

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 and that your pay practices are fair, equitable and non-discriminatory. 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, call 480-237-6130 or contact us online.

SUPREME COURT DECISION–PUBLIC UNIONS CAN NO LONGER ENFORCE PAYMENT AMONG NON-MEMBERS

In the case of Janus v. American Federation of State, County and Municipal Employees (AFSCME), Janus, an Illinois child support specialist, filed a complaint challenging the $45 monthly fee he had to pay to the union that represents him, despite not being a member.  His charge was that his First Amendment right was violated when money is taken from non-consenting employees for a public-sector union.

On June 27, the Supreme Court ruled that public-sector “agency shop” arrangements, which mandate union fees from non-consenting public-sector employees, violate the First Amendment.  The 5-4 decision overturned a 41-year-old decision that allowed states to require public employees to pay some fees to unions that represent them, even if the workers chose not to join.

The Supreme Court decision from 1977, ruled in the Abood v. Detroit Education Association case that unions may impose fees on nonunion government workers for nonpolitical expenses including collective bargaining, administration of union contracts and internal grievance procedures.

Justice Samuel A. Alito Jr. wrote for the 5-4 majority, “We conclude that this arrangement violates the free speech rights of nonmembers by compelling them to subsidize private speech on matters of substantial public concern.”  According to Justice Alito, workers like Mr. Janus were charged about 78 percent of the dues paid by members of the union.

After concluding that the imposition of fair share fees violate the First Amendment, the Court noted that “Abood” failed to appreciate the conceptual difficulty of distinguishing in public-sector cases between union expenditures that are made for collective-bargaining purposes and those that are made to achieve political ends” and that “Abood does not seem to have anticipated the magnitude of the practical administration problems that would result in attempting to classify public-sector union expenditures as either ‘chargeable…or non-chargeable.”

This decision impacts how public-sector unions work and may have implications for private-sector labor issues.  Currently, there are 28 states that have right-to-work laws which forbid unions and employers to enter into agreements requiring employees to join a union and pay dues and fees to it in order to get or keep a job.

The Supreme Court’s ruling could affect about 5 million public sector workers in 22 states that don’t have right-to-work laws that already ban forced union dues.  The impact may further erode the power of public sector unions and/or lead unions to be more responsive and attentive to its current members.

At WageWatch, our expert evaluators provide businesses in a large range of industries with accurate and beneficial benefits survey data, compensation surveys, and salary reports to ensure that payment and benefits plans are on par with those in the industry. For more information on market compensation data, please call WageWatch at 888-330-9243 or contact us online.

MINIMUM WAGE UPDATE – JULY 2018

The U.S. Federal minimum wage has not increased since July 2009, as such, many states, cities, or counties have decided to vote into law, their own increase in the minimum wage.  Some states have decided to gradually increase their minimum wage to $15.00/hour over the course of several years.  While the majority of increases occur at the beginning of the year, others wage increases begin mid-year, starting July 1.

An overview of the states, cities, or counties which have minimum wage increases beginning July 1, 2018 include:

  • California – Not statewide; increases in the following cities:
    • Emeryville
    • Los Angeles City
    • Los Angeles County, Unincorporated
    • Malibu
    • Milpitas
    • San Francisco
    • San Leandro
    • Santa Monica
  • Illinois – Not statewide, two local jurisdictions:
    • Chicago
    • Cook County
  • Maryland – Not statewide; one county:
    • Montgomery County
  • Minnesota – Not statewide:
    • City of Minneapolis
  • Oregon – State law change; varies by area: General, Urban, and Nonurban
  • Washington D.C.

For more detailed information click here:  MINIMUM WAGE CHART.  Review the tab for California to review specific city increases.

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.

WAGE AND HOUR POTHOLES

Every company should perform wage and hour audits periodically; minimally once a year and twice a year if possible.  It is easier for you to catch and correct errors than to risk discovery from employees or in the event of a DOL audit.  To remain compliant with wage and hour regulations it is valuable to have the appropriate checks in place, such as up-to-date written policies and procedures, periodic training for supervisors and managers, the establishment of effective complaint mechanisms, and a regular audit process should be established.

Wage and hour violations are not only costly from the standpoint of back pay and penalties but can also lead to serious employee relations issues if employees feel they are not being fairly compensated.  Below are a few of the many wage and hour potholes of which you should beware.

Overtime Pay

Many missteps can occur regarding overtime pay, a few include:
•    Misclassifying workers as ‘exempt’ from overtime
•    Not paying ‘unapproved’ overtime
•    Failing to count all hours worked, including pre and post work activities
•    Failing to count certain activities as work time including working through a break
•    Checking emails or performing other duties during time off
•    Travel time and meeting and training attendance

Bonus or commission payments to nonexempt employees may impact overtime pay.  A bonus should be included in the calculation of the regular rate of pay for the weeks which the bonus is earned.  This will increase the overtime rate for these weeks.  The weeks for which the bonus is earned includes all weeks covered by the bonus period.  For example, if it is a quarterly bonus then all weeks in the quarter will apply.

Another consideration for computing overtime pay is when an employee works two or more jobs with different hourly rates at one or more facilities for the same employer in the same work week.  The employer must use the weighted average of the rates to compute the employee’s regular rate of pay for the purpose of calculating overtime pay.

Exemption Status / Salary Basis Test

Do you examine the duties of your salaried employees and not just their titles or how they are paid in determining whether they are exempt?  Your exempt employees must pass one of the FLSA exemption tests in order to be exempt from being paid overtime.  These exemption tests are based on actual work performed and do not test based on the job title nor what is written in the job description.

For a job to remain exempt it must pass the Salary Basis Test which ensures that improper deductions to exempt employee’s salary are not made.  There are very specific rules to follow when making any deductions to an exempt employee’s salary.  Also, a job that is exempt can lose exempt status when the duties and responsibilities change due to things such as staff reductions or organizational changes.  Therefore it is advisable to retest jobs that are impacted by these types of changes.
Meal and Rest Period Compliance

Many state wage and hour laws require employers to provide their employees with meal and/or rest breaks. These laws specify the circumstances under which such breaks must be compensated. In some cases, state laws impose different requirements than does FLSA.

A few more potholes worth mentioning:

We have mentioned just a few of the many potholes HR professionals need to be aware when classifying jobs as exempt or nonexempt, overtime pay calculation, and rest period compliance. Here are a few more to keep in mind:

  • Failing to pay employees on day of termination
  • Failure to follow rules for On-Call pay;
  • Improper use of ‘Comp Time’
  • Unlawful deductions from employee paychecks.

Be sure to consult your federal and state wage and hour resources and/or your wage and hour counsel to ensure a thorough and correct understanding of wage and hour rules.

Remaining compliant with wage and hour regulations is an important task that Human Resources and Compensation department performs for an organization.  Another important task performed is to ensure fair and competitive pay practices.  For the good of your employees, it is helpful to analyze benefit survey data, compensation surveys and salary reports.  Having this information at hand allows you to plan a budget, including competitive employee salaries and benefits, which will help you hire and retain a happy, talented team.

At WageWatch, our expert consultants provide businesses, across a large range of industries, with accurate and beneficial benefits survey data, compensation surveys, and salary reports to ensure that payment and benefits plans are on par with those in the industry.  For more information on market compensation data, please call WageWatch at 888-330-WAGE (9243) or contact us online.

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 in 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 in 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 in your job description template.  Generally, the data  will include Job Title, Immediate Supervisor, Department, Pay Grade, Working Hours, and Travel Requirements, FLSA Status, Mission/Summary, Essential and Non-Essential Tasks and 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 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 an 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 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 to three sentences; 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.

INTERN PROGRAM BEST PRACTICES

Is your summer intern program ready to launch?  A review of some important information will help to make your program a success.  First, ensure your program is compliant with the Department of Labor regulations regarding internships.  In the last couple of 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:

  • Internship needs to 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 benefit the intern, not the employer
  • Employers should see no immediate benefit from the intern’s work
  • The intern cannot displace regular employees; they should work under close supervision
  • In advance, establish that the internship is for a fixed duration of time and that the intern is not necessarily entitled to a job at the conclusion of the internship
  • There should be 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 the intern will work.  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 to consider integrating into your program:

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

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 monthly or quarterly incentive payments, rather than annual payments.  A good incentive plan should be easily understood by the employees including 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.