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IT’S TIME TO ADJUST YOUR SALARY STRUCTURE

Maintaining a salary structure that aligns with the organization’s pay philosophy and is competitive to the labor market is imperative for any organization.  Most organizations update their salary structure every one to two years, as budget permits.  However, during the recent recession, some organizations chose not to increase their salary structures for cost containment and/or a lack of competitive pressure to do so.  For 2017, the stronger U.S. economy and increased employer confidence should continue to bolster job gains, and economists expect the previously sluggish wage growth to accelerate.  Whether or not you’ve adjusted your salary structure during the past few years, it is certainly time to do so now.

The review of your salary structure should determine whether it is still aligned with the company’s needs, pay philosophy and the labor market.  Salary structure adjustments maintain the structure’s competitiveness with the external labor market and protect an organization’s ability to compete in the market place for talented employees.  If the salary structure gets out of sync with the overall labor market, a company may find itself paying employees too much and needlessly increasing operating costs, or paying employees too little and having difficulty attracting and retaining talent.  Salary-structure issues are less expensive to address early on so it is best to review your salary structure annually for any needed changes.  If you wait two or three years to review and adjust, the labor market can move significantly upward in that period of time and the cost of salary range adjustments and resulting salary increases can be substantial.

Other business changes and events may warrant a review of the salary structure, such as the company’s merger or acquisition, or a competitor opening or closing a facility that impacts the company’s operations.  At times during the year hiring managers may alert you to possible salary-structure issues and their insight can indicate that specific areas of the salary structure are out of alignment.  But there may be other factors that the manager is not aware of, such as an organization’s strategic decision to set pay levels above or below the market median.

There are two basic methods for updating your salary structure and many companies will alternate the two methods, performing the ‘quick’ adjustment one year and the ‘in-depth’ adjustment the following year.

  1. The Quick Adjustment method is where you collect and consider trend or annual merit increase information, then adjust your ranges by a percentage you view as necessary to remain competitive. Trend and annual merit increase surveys are published every year and most companies rely more on average or median salary increase figures.
  2. The In-Depth Adjustment method is where you select a representative sample of benchmark jobs using currently published compensation surveys for your competitive market. Collect the competitive salary data, and then compare your salary range mid-points to the market medians or the percentile that you chose to compete with for the benchmark jobs. The results will help you determine the degree to which your ranges should be adjusted and also identify any jobs or job families whose pay is moving at a different pace than the rest of the market and may need re-graded. This methodology requires more data and time to complete.

Alternating annually between these two methods should maintain competitiveness, cost efficiency, and save time from performing the In-Depth Adjustment analysis every year.  Any resulting increases from the structure movement should be minimal and workable within the current budget year.

It is also important to remember that established pay grades, the jobs’ placement within the pay grades and well-maintained job descriptions are the nuts and bolts of the salary structure.  Companies change over time and job functions and duties can also change.  Keeping job descriptions accurate and reflecting the core duties of each position will be essential to appropriate and competitive salary ranges and pay.

Companies should consider the reassessment of their salary administration programs, along with all of their compensation plans, as a vital and ongoing part of the program’s success.  Assessing the program to ensure that it continues to meet your company’s needs is perceived as a credible and functional part of the Human Resources process, and will enhance your company’s ability to remain a competitive force in the marketplace.  When was the last time your organization reviewed its salary structure(s)?

At WageWatch, we offer accurate, up-to-date benefit survey data, market compensation data, salary reports and consulting services 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. WageWatch, Inc. is the leading compensation survey provider for the lodging and gaming industries with 6,000 properties participating in its PeerMark™ Wage Survey.  WageWatch also conducts compensation surveys for other business and industry segments including healthcare and non-profits.  For more information on our services, including market compensation data, benefits survey data, salary reports, and consulting services, please call WageWatch at 888-330-9243 or contact us online.

 

TO CHECK OR NOT TO CHECK: A BACKGROUND CHECKS PRIMER

Conducting thorough pre-employment background checks are a critical tool in mitigating new hire risks. There are many types of background checks available to HR professionals that can be conducted in-house or externally by vendors who specialize in employment screenings.  HR professional should take a strategic view of onboarding as a process.  By doing so, several layers of checks and screenings are implemented to best reduce new hire risks.  It is the old adage that the result is more than the sum of its parts.

The new hire selection process starts with the job advertisement or announcement.  The announcement needs to be designed to attract specific skills and behaviors while discouraging those without.  Posting in the advertisement that the position requires a drug test or criminal background check is a potent deterrent.  Those still interested should be directed to a job application that captures information that will form the groundwork for the pre-employment screenings in the next recruitment phase.

The EEOC enforces Title VII of the Civil Rights Act; Age Discrimination Act; Title I of the Americans with Disabilities Act; Equal Pay Act; and Title II of the Genetic Information Act.  Employers are welcome to use all manner of pre-employment screenings – as long as they comply with EEOC standards.  None of these Acts directly prohibit employment discrimination based on credit information, conviction records, previous employment, education, or psychological/behavioral profiles.  However, the EEOC has a published a Compliance Manual and provides guidance on a number of pre-employment scenarios, because of the disparate impact facially neutral policies can have on these numerous protected classes.

This is the tightrope that causes many HR professionals to gloss over background checks out of fear of inadvertently triggering an EEOC investigation.  What you don’t know, can hurt you.  HR has a duty to the company to traverse this tightrope and understand the often gray and contradictory playing field (between state and federal guidelines) in which they conduct pre-employment screenings.

Criminal Background Checks – Treat each criminal record individually in the context of the job sought, work environment and conditions, and risk to the organization. Ask the candidate about the situation. Deliberate omission and lies can be used a basis to disqualify the candidate.

Credit Check – Most commonly used for positions that have are executive level, have financial responsibility, or have access to confidential information such as social security numbers to reduce the risk of theft or embezzlement.  Allow candidates the opportunity to explain negative results as some reasons, such as medical bills, are protected.

Physical/Medical Exam – This screening is allowed only after a conditional offer of employment is extended and is used in specific jobs that require a proof of fitness in order to safely perform duties.  All candidates in the job category are required to have the same medical examination.  The candidate medical history is confidential and must be kept separate from employment records.  HR professionals need to keep in mind that the medical examiner does not make the final hiring decision.

Motor Vehicle Record – This is a critical check for positions that are required to operate a company vehicle as part of the job requirement.  In some states, DUI convictions are kept with the DMV not the criminal court system.  There are vendors that make multi-state verification easier by consolidating searches.

Work & Education History – Past performance is a strong indicator of future performance.  The goal of the work history and education background check is to establish that the glowing resume represented to the recruiter is factual and accurate.  On education, check with the governing body on the authenticity of the degree.  We recommend asking for full transcripts for recent graduates with a short work history.

As a company, it is important for you to understand the new regulations set forth by the EEOC and implement them in your hiring and workplace practices.  Additionally, for the good of your employees, it is helpful to analyze benefits 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 to hire and retain a happy, talented team.

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.

ANSWERS TO ADA ISSUES QUIZ!

Day in and day out, we at Pautsch Spognardi & Baiochhi Legal Group get more questions about disability discrimination and accommodation than any other law.  Listed below are the questions AND answers!

  1. The Americans with Disabilities Act and state laws providing protections against disability discrimination cover employers with 15 or more employees, and not those with less.

    False: Many states have laws protecting individuals with disabilities working or applying for jobs at companies that employ as few as one (1) employee. Illinois and Wisconsin are among these states.

  2. So long as you treat an employee who is an individual with a disability the same as all other employees you will comply with the requirements of ADA.

    False: It is true that individuals with a disability are entitled to treatment equal to that which you give non-disabled employees.  But, you are also required by ADA to afford these individuals with disabilities reasonable accommodations that allow them to perform essential functions of their job.

  3. ADA and state discrimination laws against disability discrimination require equal treatment between employees with disabilities and those employees that do not have disabilities.

    True:  It is true that this is required.  But as noted in the answer to question #2, more is required—reasonable accommodation.

  4. Depressive disorder is a covered disability under ADA.

    True and False: It all depends on whether the condition of the employee or applicant is such that it meets the definition of a “qualified individual with a disability” under ADAAA or applicable.  In other words, does the physical or mental condition substantially limit the employee or applicant in a major life activity such as walking, seeing, talking, working, etc., or does the employee or applicant have a record of such impairment, or is the employee perceived as having such a condition?  This is often a difficult analysis that must be made based on the individualized circumstances of that individual’s condition.  So, some cases of cancer will be determined to be a disability, and some will not.

  5. An employee who suffers a compound fracture of their tibia and fully recovers from this injury and receives a full release for work in four months’ time is likely covered by ADA due to this condition.

    False: Under the Americans with Disabilities Amendments Act of 2008, Congress set six months as the minimum time for coverage as a disability protected by the law.  Beware, however, of terminating an employee based on this premise and law.  It is particularly risky to terminate an employee based on the assumption that the disability won’t last more than six months, when it may.

  6. An employee who suffers an Achilles tear in her left foot and is fully released for a return to work after exactly one year is covered under ADA.

    Probably True: Given the length of time involved, see the answer to question 5 above; it is likely that this condition is covered.

  7. An employee whose only physical limitation on her medical release for work is a 15-pound lifting restriction is not covered by ADA.

    Probably False: If this release is permanent, then almost certainly the employee is covered because this has been held by many courts and agency’s to be a substantial limitation on the major life activity of lifting.

  8. An employee whose only physical limitation on his medical release for work is a 50-pound lifting restriction is not covered by ADA.

    True: Many cases have decided that this sort of condition is not a covered disability because it does not “substantially limit” a major life activity.  In other words, the employee is still a pretty good lifter.

  9. Migraine headaches are not a covered disability under ADA.

    True and False: For all of the same reasons noted above with respect to “cancer”, some cases of migraine headaches are covered, while others are not.

  10. The definition that sets forth the requirements for qualifying as an “individual with a disability under ADA” is essentially the same as that defining a “serious health condition” under the FMLA.

    False:  The two definitions are vastly different.  FMLA’s definition focuses on the need for continuing medical treatment and in-patient hospitalization while ADA’s definition is, as noted above, far more focused on the length and the long-term severity of the condition.

As you can see from these answers, ADA, and the state disability, discrimination laws are difficult laws to interpret and apply to the facts and conditions that occur and are present in your workplace.  The definition of who is a qualified individual with a disability is a particularly knotty one.  The Supreme Court has tackled this definition many times and Congress reversed a number of these decisions in passing the Americans with Disabilities Amendments Act of 2008.
Pautsch Spognardi & Baiocchi Legal Group, LLP; http://www.psb-attorneys.com/ Office: 414-223-5743

 

MINIMUM WAGE UPDATE JULY 2017

Voters in four states Arizona, Colorado, Maine and Washington approved ballot measures that will raise their state minimum wage by between 43% and 60% over the next few years. Arizona, Colorado, and Maine will incrementally increase their minimum wages to $12 an hour by 2020. Washington’s will be increased incrementally to $13.50 an hour by 2020.

State increases that are effective July – December 2017 include Maryland, Minnesota, New York, Oregon, Washington DC, and USVI.

State and City minimum wage increases continue to make front page news. An unprecedented number of cities and counties have moved to adopt higher local minimum wages. In addition, cities are proposing substantially higher wage levels than in past years. Cities with minimum wage ordinances include San Francisco, San Jose, Los Angeles, Chicago, Seattle (SEA-TAC), Montgomery County and Prince Georges County MD, Santa Fe, Albuquerque, and others have already approved increases. Many other cities have ordinances that become effective in 2017 and beyond.

Follow this link to the WageWatch Minimum Wage Chart with details of federal, state and local minimum wage and pending increases: Minimum Wage Chart

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 workweek. 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 to determine 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 worked performed and do not test based upon 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 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-WAGE (9243) or contact us online (https://www.wagewatch.com/Contact/ContactUs.aspx).

MINDFULNESS: EMBRACED BY BUSINESS

In a world where multitasking and information overload are the norms, an old idea, ‘mindfulness’, is becoming increasingly appealing to organizations who are effectively applying it to their businesses. Mindfulness is training the mind to focus. Our ability to concentrate is seriously compromised the more we multitask. And technology, though useful to us in so many ways has actually impeded our ability to concentrate or to be mindful of what matters moment by moment. If you would like to investigate further for your organization or for yourself, Psychology Today has an overview of the practice on their website (http://www.psychologytoday.com/basics/mindfulness).

Many Fortune 500 and other organizations are embracing and promoting mindfulness for their workforce. Business schools are beginning to teach mindfulness and it is included in many MBA programs. In the workplace, mindfulness is a skill that aids concentration, clarity, and equanimity. Present moment awareness keeps your mind from dwelling on the past or obsessing about the future. Becoming more aware of what is going on around you allows us to be fully focused on the task at hand and more likely to spot opportunities. Mindfulness makes us more conscious of what is going on within us, helping to identify and remove subconscious thinking that can be obstacles to success. Mindfulness also enhances creativity, innovation, and improves the brain’s ability to process information. So it is not surprising that more and more corporations are embracing mindfulness as a business practice.

To be mindful is to be aware, to be conscious, to be aware, and to appreciate the impact of one’s actions. Mindfulness is a mental state achieved by focusing one’s awareness on the present moment, while calmly witnessing one’s thoughts and feelings without judgment. Mindfulness is a 2,500-year-old tradition of Eastern cultures that now is considered a science of the mind. Many consider mindfulness to have its origins in Buddhism; however, it can be traced back more than 2,500 years ago, when Hindus practiced a range of meditations, which included mindfulness.

It may be time to consider mindfulness, as a business skill. Extensive research has been done over the last 15 years that show mindfulness is linked to psychological and physical, health. It decreases blood pressure, regulates the heart, increases the immune function, and enhances memory. It essentially rewires our brain. The idea that increasing mindfulness may lead to better decision-making deserves attention.
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.

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
Non-financial compensation such as job training and development
Recognition and advancement opportunities

A large percentage of the company budget is compensation, and therefore, it 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.  A good incentive plan should be easily understood by 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.

 

RED FLAGS FOR ANTITRUST EMPLOYMENT PRACTICES

The Antitrust Division of the Department of Justice (DOJ) has announced a new initiative to criminally investigate and prosecute employers who enter agreements with their competitors to limit or fix the terms of employment for potential hires.

The DOJ and the Federal Trade Commission (FTC) issued guidance for Human Resources (HR) professionals that provides a deeper explanation of the relevant laws, potential violations, and best practices for avoiding liability.  Here is a link to the guidance that was issued October 2016: https://www.justice.gov/atr/file/903511/download

The following Red Flags” for HR professionals have been identified by the FTC and DOJ as examples of “Antitrust”.  These nine red flags are indicative of what types of agreements or information exchanges may violate the regulations.  This is not an all-inclusive list nor does the presence of a red flag automatically indicate an antitrust violation.

  1. Agree with another company about employee salary or other terms of compensation, either at a specific level or within a range.
  2. Agree with another company to refuse to solicit or hire that other company’s employees.
  3. Agree with another company about employee benefits.
  4. Agree with another company on other terms of employment.
  5. Express to competitors that you should not compete too aggressively for employees.
  6. Exchange company-specific information about employee compensation or terms of employment with another company.
  7. Participate in a meeting, such as a trade association meeting, where the above topics are discussed.
  8. Discuss the above topics with colleagues at other companies, including during social events or in other non-professional settings.
  9. Receive documents that contain another company’s internal data about employee compensation.

In the Guidance, HR employees have been specifically identified as individuals in positions of authority with respect to hiring and compensation decisions and so will need to lead the charge to ensure that their company is not the target of an investigation.

The DOJ’s and FTC’s Guidance provides certain boundaries for common HR practices like benchmarking and participation in compensation surveys to determine whether companies are paying competitive compensation packages to their employees. HR professionals should follow this previously issued detailed guidance on how best to exchange compensation information for benchmarking purposes in an antitrust compliant way. See Statement 6, Provider Participation in Exchanges of Price and Cost Information, United States Dep’t of Justice and Federal Trade Commission, Statements of Antitrust Enforcement Policy in Health Care (Aug. 1996).

WageWatch offers accurate, up-to-date HR metrics, 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.

HUMAN RESOURCES ROLE IN INNOVATION

How can human resources contribute to innovation?  How can we turn new ideas into reality, break old paradigms and step outside of the box with new solutions to old problems?  Innovation may begin with creativity but it is more than an idea — it takes place when great ideas come to fruition and make their mark in the world.  In the past, most businesses focused on continuous improvement of their products and services to maintain a competitive edge.  But in today’s economy, that’s not always enough.

As Human Resource professionals, we are fortunate to be responsible for many areas of an organization that frequently impact and contribute to innovation; including recruitment, performance management, recognition, rewards, training, and employee engagement.  Human Resources can also play a key role in creating an organizational structure and overall culture that fosters and supports innovation.

Recruiting can focus on hiring for innovation by identifying people who can “think outside the box” or have skills and capabilities that lend toward innovation.  Performance management can serve as a valuable tool in the creation of a sustainable culture of innovation.  Performance measures can give consideration as to whether or not employees are given the time and resources to experiment, generate and explore ideas, and make presentations to management.  Rewards can be used to reinforce the importance of innovation and recognition can be used to encourage and inspire employees to innovate and share ideas.   HR’s role in organizational design provides huge potential for enabling innovation.  For example, organizational design can be used to facilitate easier exchange of employees’ ideas across boundaries and functions.

An example of a human resource-driven innovation that used an out-of-the-box idea to improve the recruiting process is La Cantera Resort in San Antonio, TX, a Destination Hotel, they have incorporated an idea made popular by Disney, the Fast PASS. In Disney’s version, guests can avoid the line and use a Fast PASS to get a ticket to ride an attraction at a specified time with limited to no waiting. This helps improve the guest experience, improves wait times, improves communication and enhances the ability to meet the expectation of guests. At Destination Hotels, they have incorporated this concept into their recruitment practices. Special “FAST PASS” cards are given to managers who can spot people in their daily interactions (at grocery stores, restaurants, bars, the mall, etc…) providing exceptional customer service and invite them to consider an employment opening/opportunity with Destination. They can call a specific number and get a “prioritized/guaranteed” in person interview as opposed to filling out an application during certain hours and hoping to a chance to be considered. Like Disney, the approach at Destination Hotels improves the experience for the candidate and the HR function/hiring managers. It speeds up the ability to source the most qualified talent and create a match to open position needs at the resort. Destination competes on innovation.

While HR can have a significant impact on many of the key drivers of innovation, it is a collaborative process and requires many areas to come together in order to succeed.    Executive leaders hold the key to the level and success of innovation in their organization. They control the strategic direction, influence the culture, and directly and indirectly control all organizational practices.   Managers must know how to lead innovative teams, and individuals must know how to apply innovative thinking.  Every department or function must be part of the process.  For example, Information Technology has become an enabler of innovative ideas, but it is also often the starting point for innovative products or services and Finance has a unique opportunity through the budget development to add innovation either as a line in the overall budget or as a percentage of every departmental budget.

Organizations need to develop practices that make it easier to innovate.   For example, at the core of an organization’s  culture should be an acceptance of the need to experiment and understand that this comes with the risk of failure and that failure needs to be seen as a learning experience and an important step in the process.  Culture is definitely key to sustainable innovation.  The mindset and culture of the HR team have an exponential impact and influence on the entire organization.  HR leaders can help enable their organizations to differentiate themselves by understanding the critical importance of innovation today and how their role can contribute by attracting and keeping the most innovative people, constantly improving their skills and creating and enabling a culture of innovation.

WageWatch offers accurate, up-to-date HR metrics, 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.

PAY COMPRESSION: CAUSES AND SOLUTIONS

Pay compression is when either a subordinate’s base pay is very close to or more than their supervisor’s or when a less tenured employee is equal to or paid more than a senior employee in the same position.  One of the most common causes of pay compression is when pay increases for current employees are low, but new employees are paid a higher salary to attract them.  This problem becomes more severe in economic downturns when pay increases are limited but it occurs even in better economic times.  Pay compression is most evident in pay systems where lower level jobs, either through union contracts or other market forces, create a situation where first-line supervisors are paid less, on an hourly basis, than their subordinates.

When the job market is weak, many organizations hire people who had already done the same work for another organization, eliminating the need for training. Rather than hiring people with high potential and developing them for the long term, they have opted for people who can “hit the ground running,” regardless of their potential.

When salary compression and the policies that enable it are sustained over several years, it can be demoralizing and lead to widespread employee dissatisfaction. Employers should be concerned because salary compression can transform compensation from a motivator into a de-motivator.

Salary compression may be accompanied by pay inequities which could violate equal pay regulations. In situations where newer staff earn more than experienced staff, it could create a pay equity problem if the experienced staff are a protected class.

There are steps that can limit the detrimental effects of salary compression. For instance, when a new job opens, organizations should try to promote someone from within, rather than hiring from the outside. Many organizations have policies that limit how high within a range new hires can be paid.  When new hires are brought in at higher salaries or when across the board increases are given due to market movement or minimum wage increase, have a policy that requires internal equity analysis and adjustments.

Institute a policy of transparency and calibration across units.   Disparate actions between different organizational units can create salary compression and other inequities. Transparency can take the form of a simple scorecard showing the rates of increases and promotions in each unit. Calibration can involve managers sharing planned compensation actions with their peer managers. It can also include several levels of approval for any actions before they take place so that a senior leader can spot any actions that appear suspect and will cause inequities, including compression.  This tends to create a norm and, over time, leads to decisions that are more consistent and responsible.

Salary compression can be a serious problem that eventually causes an organization to lose some of its most talented employees. Although many organizations have unintentionally allowed salary compression to take root, there are actions they can take now and in the future to keep it from reoccurring.

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.