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THE IMPORTANCES OF METRICS FOR HUMAN CAPITAL (Resources)

In a research report entitled, The State of Human Capital 2012, ( Report ) prepared by The Conference Board and McKinsey & Company, they concluded that the one word that describes the state of the Human Capital Department in most companies today is “paralysis”. What they meant by that was there were too many factors to manage including a changing workforce, too much uncertainty, too many risks and too little support. One area that was identified as a key success factor for the future was developing stronger workforce analytics and metrics. While HC professionals agree that metrics are critical to their future success and importance to the executive suite, overall metrics utilization by the HC departments is considered to be lagging when compared to other departments within their organization.

HC metrics are a vital way to quantify the cost and the impact of employee programs and HC processes and measure the success or failure of HR initiatives. The use of metrics on the labor force can have a positive impact on profit.  Metrics can quantify the dollar impact that HR processes and actions have on business goals.  The ability to illustrate trends and impacts with numbers is a very effective way for HC professionals to influence and get the support of managers and executives.  Metrics can highlight inefficiencies, reduce expenses, and drive improvements and financial results. 

Critical to the success and value of HC metrics is that they are accepted by colleagues and executives.  Contrary to popular belief, more often than not, the metrics don’t require a degree in mathematics or complex formulas.  Not every metric idea will succeed.  Many workplace metrics seem like great ideas, until you actually put them on paper and find they tell you little or nothing of value.  Careful selection of what is measured places the focus on business goals and lets everybody know what is important. Make sure you know what you want to measure, how you will measure it and how the results will be used for improvement.   The basic goal of any HC metric is to provide managers with information that allows them to improve the measured item.  In order for metrics to be useful, first you need to ensure that the data is accurate and easily accessible. 

A basic but important HC metric is workforce productivity or employee return on investment (ROI) measured by dividing the total dollar amount spent on labor costs by total revenue, or revenue per employee (total revenue/the number of employees).  Ask executives to weigh in on the biggest workforce issue(s) and the resulting metrics. A best practice is to have a current or hot issue metric that needs executive attention. 

With the tightening labor market, turnover is returning as a hot issue. Turnover is a common HC measurement and is calculated by dividing the number of terminations by the average number of active employees during the same time period.  This simple measurement as it is applied and modified can be used for many HC metrics.  For example, using the basic turnover measurement: how many employees leave during their first year of employment – this may signal a problem with the recruiting process or with the on-boarding process; how many top performers are leaving – perhaps a problem with compensation or a lack of promotional opportunities; how many employees are leaving from each department – departments with high turnover may signal a problem with management. The cost to replace employees can then be applied to highlight the bottom-line cost of turnover.

Some other examples of HR metrics are:

  • Recruiting Process Metrics:
    • Number of overall days that “key positions” were vacant
    • Year over year comparison of average new hire performance appraisal scores
    • Manager satisfaction with new hires
    • Percent of diversity hires in managerial and senior positions
  • Compensation & Benefits Metrics
    • Survey employees on their perceptions of fair pay as compared to work expectations.
    • Percent of employees satisfied with their compensation
    • Percent of top performers that are paid above the average salary for their position
  • Employee relations  Metrics
    • Compare year over year results of % of employees that rate their manager poorly
    • Turnover % of low performing managers and employees within one year of receiving the low performance score
    • % of low performance rated employees that are on a performance improvement plan
    • % of employees that are all in any performance improvement plan that improve at least one level on performance appraisal ratings within 1 year
  • Training & Development Metrics
    • % of employees that report that they are satisfied with the learning and growth opportunities
    • % of employees that report that they are satisfied with on-the-job learning

As you decide on and develop your HC metrics, it is important that you have asked your executives for their input regarding factors that help the organization and departments run smoothly, satisfy customers and turn a profit.  And your metrics should provide information, and not just numbers. As you identify what’s important to your organization’s strategic success, the metrics that matter most should rise to the surface.  Your goal is not to inundate executives and managers with numbers, but to provide critical information that they can use in making decisions about business issues.

WageWatch offers accurate, up-to-date market surveys of pay practices, benefits, 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.

WageWatch Wage and Employment Forecast for 2013

LODGING INDUSTRY 2013 WAGE FORECAST

The WageWatch 2013 survey of over 6,000 hotels nationwide in our database shows planned pay raises for hourly employees and non-exempt salaried employees averaging 2.8% with a median of 3.0% and a mode of 3.0%. The annual survey completed on January 7, 2013, further disclosed that hotels are planning on similar pay raises for their salaried exempt employees, with a mean of 3.0%, median of 3.0% and a mode of 3.0%. Randy Pullen, President and CEO of WageWatch stated, “For the lodging industry, 2013 will feel a lot like the 1993 movie Ground Hog Day starring Bill Murray, as WageWatch forecasts that pay raises for all sectors of the lodging industry will repeat raises experienced in 2012.”

If the planned wage increases for 2013 are further broken down between full service hotels and limited or focused service hotels, the survey discloses that full service hotels will, in general, have slightly higher pay increases.  Full service hotels participating in the 2013 survey disclosed an average planned pay raise of 2.9% for hourly employees, with a median and mode of 3.0%. Focused service hotels had a slightly lower average pay raise for hourly employees of 2.8% with a median and mode of 3.0%.  For salaried exempt employees, both full service and focused service hotels reported planned wage increases averaging 3.0% with a median and mode also of 3.0%.

Randy Pullen also stated, “While hotel companies are planning on pay raises of between 2.8% and 3.0% for 2013, it is likely that actual wage increases that will be reported later this year by WageWatch in its 2013 hotel wage survey will be two or three tenths of a percent less than the forecast.  We saw a similar trend last year where actual wage increases for the lodging industry as reported in our iBrief Blog of October 24, 2012 Industry 2012 entitled Wage Increases- Part 1, were lower than the forecast, coming in at 2.6%.”

LODGING INDUSTRY 2013 EMPLOYMENT FORECAST

This year will see continued employment growth in the Accommodations segment of the Leisure and Hospitality super sector as reported by the U.S. Bureau of Labor Statistics. The U.S. saw significant gains in employment for the Lodging Industry the first half of 2012 as indicated in the following table:

 

WageWatch had forecast employment growth seasonally adjusted on average of 25,000 jobs in 2012 vs. 2011.  As the year progressed, hoteliers became more conservative and did not hire as many seasonal workers during the summer months, which pulled down the average for the year.  WageWatch attributes the pullback directly to the political uncertainty of the election year and the looming fiscal cliff impasse at yearend. This conclusion is based on the continued strong economic recovery that the industry experienced in 2012, which should have translated into more employment gains.

Our forecast for last year of a 25,000 increase in employment was based in part on the PKF Hospitality Research, LLC’s national econometric forecast of the U.S. Lodging markets for 2012.  Actual performance for 2012 was better than forecast by PKF, with 61.5% occupancy, a 1.6% increase over 2011 yearend 59.9%.  Actual Average Daily Rates came in slightly lower than forecast. Overall, RevPAR increased by 6.8%.  Net operating income was forecast to increase by 12% for 2011 over 2010, a strong performance on the back of an 18% increase for 2010 over 2009. This level of growth in the lodging industry should have supported an increase of 25,000 jobs in 2012.

Looking ahead to 2013, most leading economists are forecasting continued slow but steady growth of the U.S. economy in the range of 2.0% or better. Expectations are for slow growth the first part of 2013 with stronger economic growth the second half of the year. This should result in continued growth for the lodging industry. Smith Travel Research is forecasting an increase in occupancy of 0.3% and an Average Daily Rate increase of $4.86 for the lodging industry, with RevPAR increasing by 4.9% for 2013.  PKF Hospitality Research is slightly more optimistic with a RevPAR increase of 6.0% for 2013. Overall, the improving Average Daily Rate and occupancy numbers for the lodging industry will lead to stronger income statements for hotels, with net operating income growing by double digits in 2013.

Based on continued economic growth in the U.S. with the economy strengthening midyear and strong financial performance forecasts for the lodging industry for the year 2013, seasonal employment should increase significantly this summer with the Accommodations segment rebounding strongly, with employment growth of 20,000 jobs for the year. This will bring employment levels slightly above yearend 2008 levels, but still 50,000 jobs below the peak for yearend 2007.

 

Posted in Wage Forecast on January 9th, 2013 · Comments Off on WageWatch Wage and Employment Forecast for 2013

WageWatch Looks Ahead to 2013

 

The New Year began with our political leadership in Washington, DC finally reaching an agreement on a permanent tax cut for 98% of Americans.  No longer will it be known as the temporary Bush tax cuts. It was not pretty to watch, but it was instructive. It marks the first of many more compromises that will be made during the year to begin the process of reigning in deficit spending and stabilizing our Nation’s debt crisis.

What does this mean to the U.S. economy and to employment for 2013?  Essentially, it is good news. This should not be as a surprise for most of our readers, but it probably means more of what we experienced in 2012.  A slow growing economy with employers cautiously hiring for critical positions, while trying to understand how the Affordable Care Act (ACA), better known as Obama Care, will impact their costs and employee insurance plans.

Most economists agree with this scenario of slow growth with the possibility of the economy picking up speed later in the year if the private sector gains confidence in the future stability of the U.S. economy.  WageWatch will have more to say about the economy and the impact it will have on this year’s wage increases for the hotel and gaming industries when we publish our Employment Forecast 2013 next week. The forecast is based on our survey of over 4,000 properties late last month.

Looking at other trends for 2013, clearly, the ACA has garnered the most headlines during the year.  As we have previously reported, if you are a small business with 51 or more full time employees, you will be fined $2,000 per employee, excluding the first 30 employees, if you do not offer insurance for employees that work an average of 30 or more hours each week. For small businesses with 50 or fewer employees, there is no penalty. Small businesses of all sizes are also not required to provide insurance for part-time employees. We are already beginning to see examples of employers cutting back on the number of fulltime employees by reducing their hours. Also, look for small businesses with more than 50 employees to reduce their workforces or change the structure of their companies.

One bit of good news is the IRS ruled this past Monday that affordability does not extend to fulltime employees’ families. Under ACA, employers will have to offer insurance that is certified affordable only to employees. To be certifiable as affordable, the premium for each employee’s plan cannot exceed 9.5 percent of their total household income. If the insurance coverage doesn’t meet the affordability law, employees will be offered tax credits to purchase insurance on their own. Business owners will then have to pay whichever is less: $3,000 per employee that receives the credit or $2,000 per employee, excluding the first 30 workers.

Finally, WageWatch welcomes our newest employee, Debra Anundson, who joined us on January 1st as our new Manager of Compensation Analytics.  Debra was with Interstate Hotels & Resorts for 22+ years, where she served in many capacities in Compensation and Benefits at the corporate office, managing all facets of their compensation, health & welfare and retirement benefits.  She created salary structures for exempt and nonexempt positions in all divisions as well as the corporate headquarters.  You can read more about Debra in the press release.

WageWatch, Inc. is the leading compensation survey provider for the lodging and gaming industries with over 6,000 properties in our database participating in its PeerMark™ Wage survey. WageWatch also conducts compensation surveys the healthcare, staffing and non-profit industries. 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.