WageWatch Ibrief Blog

Login

Archive for 2012

Benefits of Merit Pay

Merit pay is a pay for performance compensation strategy that provides base pay increases centered on demonstrated performance and desired outcomes. It not only rewards high performers for their additional contributions to the business, but also aims to retain key talent and rising stars. WageWatch has found that for 2012, 71% of 4,515 hospitality and lodging employers use merit as either their primary method for increasing base pay or in combination with other methods depending on the job title.

Merit programs need to be closely aligned with performance management systems and the compensation model. One way for HR to illustrate this alignment to management is with a merit matrix. The merit matrix is a decision making tool that combines an employee’s performance score and the position in the salary range to produce a merit pay recommendation. The merit matrix is used by department managers to plan and forecast their merit budgets.

The following are some advantages of adopting a merit based compensation system:

– The connection between individual effort and reward motivates employees to exceed expectations. Their performance is evaluated based on demonstrated ability and objectively according to measureable standards.

– Merit pay drives individuals to further develop skills that are important in succeeding in their role.

– Merit pay is a company’s investment in high performing employees. This investment encourages high performers to stay with the company. At the same time, the absence of reward for poor performance encourages this group to either improve or look elsewhere.

The widespread use of merit pay comes from the wide acceptance by employees that paying for performance is a fair and equitable way of rewarding individual contribution and high performance. When implementing a merit base pay system for the first time, it is critical that the performance evaluation criteria be valued, measureable, and well communicated. The rewards need to be meaningful to the employees and competitive with what others in the marketplace are paying their top performers.

Compensation surveys or salary reports from WageWatch can help you to establish a budget for salary ranges and merit pay, including bonuses and incentives. We are an innovative, cutting-edge organization that is constantly developing new ways to collect data for surveys and salary reports, which allows us to provide services to a wide range of industries. To learn more about our compensation surveys, salary reports and other services, please call 480-237-6130 or contact us online.

WageWatch Banquet Servers Compensation Survey

Banquet servers typically perform duties including hosting, waiting and bussing tables at events including weddings, conferences and fundraisers. Based on WageWatch’s 2012 Compensation Survey for over 5,000 hotels, banquet servers are the top non-exempt earners in terms of tips when compared to all other tipped positions in the industry. It appears that while banquet servers are well compensated; many hotels experience a very high turnover rate. At WageWatch, we questioned why this pattern was occurring, so we conducted a short compensation survey in order to gain a better understanding of the market for banquet servers and to determine the reasons behind this apparent anomaly.

The first question in this survey reads as follows:

If you compensate your Banquet Servers based on a set hourly rate of pay only (with no Gratuity Pool participation), do you pay your AM and PM banquet servers different rates of pay such as a shift differential?

The responses we received from 229 survey participants we’re as follow:

– 93.9% of respondents said they pay their banquet servers a set hourly rate, whether the shift was an AM shift or a PM shift.

– 6.1% of respondents said they do pay their banquet servers a shift differential. The average of shift differential was $1.53 per hour.

The second question in the survey reads as follows:

Does your Banquet Server compensation process include compensation out of a gratuity pool?

The following responses were received:

– About 2/3 of respondents stated that their banquet servers receive tips from a gratuity pool.

– Of the properties with a gratuity pool, on average, 32% is split amongst the banquet servers.

However, the average does not take into account the dispersion in the data. The gratuity pools ranged from 10% to a 100% split with a median of 15%.  With the median less than half the average, banquet servers appear to have opportunities to improve their potential earnings by changing properties.   In order to further understand the reasons for the high turnover rate, we have designed and will be distributing a follow-up compensation survey to develop a more thorough analysis of the banquet server turnover rates. Click here for the results.

WageWatch can help your business with cost-effective compensation surveys that will help you with hiring and budget planning by providing important information such as salary ranges, turnover rates and employee benefit packages. To learn more about our compensation surveys and other services, please call 480-237-6130 or contact us online.

Posted in Compensation Surveys on September 27th, 2012 · Comments Off on WageWatch Banquet Servers Compensation Survey

Budgeting for the 2013 Wage Forecast

Budgeting is a key management function that occurs every year in your organization. The budgeting process involves the systematic collection of information and data so that the financial resources needed to support an organization’s objectives can be reasonably estimated. The biggest challenge to developing a budget is trying to meet the 2013 wage forecast. Typically, senior management will forecast sales as well as the operational and capital expenses necessary to support their business goal and objectives.

In today’s marketplace, consumers are looking for companies who are innovative and offer top notch customer service. Because consumers are looking for the very best service in addition to great products, it’s important for a business to invest in its employees, as they are the most valuable resource to making the business a success. Remember, employees are the largest contributor to a business’ success in today’s marketplace.

During the budgeting process, senior management may be quick to cut your funding unless you can demonstrate how important the human resources department is to achieving the annual goals of the business using the 2013 wage forecast; and demonstrate to them how each of your department’s functions contribute to achieving the requisite ROI.

From a human capital perspective, the data needed to develop a new budget for the 2013 wage forecast include the following:

– number of employees projected for next year;

– new benefits/programs planned;

– estimated wage and benefits cost increases;

– projected turnover rate;

– actual costs incurred in the current year;

– other changes in business objectives and strategy; and

– regulatory changes that may impact employee expenses.

When developing your next budget, keep these proven budgeting tips in mind:

1.       Human Resources is Essential to Success

Make the connection between human resources and a company’s goals. Senior executives may not always see this, so make sure they understand how important the human resources department is to achieving success.

2.       Demonstrate Return on Investment

Have spreadsheets, done meticulously, to show how every dollar invested in the departments within human resources will pay out to other areas of the business. Also be sure to detail profitability.

3.       Showcase Value of Added Line Items

Show how programs, such as an employee assistance program, create value and save money in the long run.

4.       Consider Including an Unimportant Project or Program

Including a project that is unimportant that you can remove from your budget during negotiations with senior management. It will show them that you are willing to take cuts in some areas and are a team player.

5.       Get Finance Onboard

Meet with the finance department early in the budgeting process, so you have a teammate in the battle with executives. Outline the budget for them and make it clear that good human capital planning can help the business achieve its goals.

6.       Know your budget

No one can understand your budget better than you. When the budget committee asks questions, you need to know them without having to search for the answers. Be sure to utilize a 2013 wage forecast to ensure your organization is properly aligning its budget with current market value.

7.       Start Early

Every department likely will be presenting their budgets to senior management, so make sure that you aren’t the last. Plan to be heard early in the budget meetings, before discretionary funding is allocated.

Using the above tips will help you prepare a better budget for your human resources department that is in line with the 2013 wage forecast, which will benefit your organization by furthering its business objectives. WageWatch offers cost-effective salary and compensation survey reports that will help you with budget planning by providing important information such as competitive salary ranges, turnover rates for key positions and employee benefit packages. To learn more about our services, please call us at 480-237-6130 or contact us online.

Posted in Benefits & Compensation on September 12th, 2012 · Comments Off on Budgeting for the 2013 Wage Forecast

How to Avoid Antitrust Claims When Conducting Wage Surveys: Part 2

As stated in our previous post, we will now cover the proper steps to take in order to minimize risk when deciding to share wage and benefit information with a competitor. The safest course of action for human resource directors to follow is to not discuss wage and benefit information with competitors except in controlled and limited situations. The following is a summary of the steps that WageWatch recommends to minimize your risk if you intend to share data:

  • -Employers should act unilaterally about setting wages and benefits.  There should not be an agreement or understanding, written or oral, with respect to fixing, maintaining or stabilizing wages and benefits.
  • -The wage and benefit information should not be exchanged directly between employers.  This means no phone calls or round tables where information is exchanged.
  • -A third party should be utilized in order to make sure that no employer has direct access to each other’s data. Participation in a WageWatch compensation survey can be part of a defense against accusations of antitrust violations. The WageWatch Hospitality Industry Competitive Market Survey complies with all DOJ safe harbor guidelines.
  • -The information that is disseminated by the third party should be aggregated.  The ranges or averages of the wages and benefits cannot be disseminated if it can be related to a particular organization or a specific job.  This eliminates the once prevalent practice of tabulating the data for each employer in a spreadsheet format even if the name of the particular employer associated with that data was excluded.
  • -Each aggregated wage or benefit statistic disseminated should be a composite of at least five different employers.
  • -The disseminated statistics must be “historical”.  This means the older the better.  The aggregated information disseminated to participants should not reflect current or prospective wages and benefits.  Current is defined as wages or benefits that having been in effect for less than three months.

While the above is an overview of steps to be taken when considering exchanging wage and benefit information between hotels, consultation with your legal counsel is recommended before participating in any exchange of wage and benefit information with competitors.

For 13 years, WageWatch has been providing expert services across multiple industries and geographic markets with cost-effective online compensation and salary surveys. We are an innovative organization that is always on the lookout for new ways to collect compensation and salary data for surveys and wage reports, allowing us to expand continuously into new industries and markets.

Please call us today at 480-237-6130 or contact us online to learn more about our services.

Posted in Regulatory & Legal Updates on September 5th, 2012 · Comments Off on How to Avoid Antitrust Claims When Conducting Wage Surveys: Part 2

How to Avoid Antitrust Claims When Conducting Wage Surveys: Part 1

Hotel human resource professionals frequently participate in professional associations, industry groups and other organizations formed to facilitate information sharing and networking.  Few are aware that such activity, if it involves the sharing of cost-related information such as employee wages and benefits, could give rise to violations of antitrust law or be used as evidence of such violations.

There have been a number of antitrust cases brought by plaintiffs in different industries regarding the exchange of wage and benefit information between competitive employers. Probably the two most noted cases are United States v. Utah Society for Healthcare Human Resources Administration (1994) and Todd v. Exxon Corp. (2001). While these cases dealt with specific industries, most attorneys practicing in the area of labor relations and antitrust look to these cases for guidance regardless of the industry.

The Federal Trade Commission and the Department of Justice have issued a statement setting forth an antitrust “safety zone” for health care providers who participate in written surveys.   They will not be considered to be in violation of antitrust laws if the following conditions are satisfied:

– The survey is managed by a third party;

– The information provided by survey participants is based on data more than three months old; and

– There are at least five providers reporting data upon which a disseminated statistic is based, no individual provider’s data represents more than 25% on a weighted basis of that statistic and any information disseminated is sufficiently aggregated so that it does not allow recipients to identify the compensation paid by any particular provider.

This statement gives guidance specifically to the health care industry.  To date, there is not such a case that has been brought in the hotel industry. Although, with the recent surge of labor organization activity going on across the country, our industry should continue to be cautious with regard to how wage and benefit information is shared with competitors.

In our next post, we will discuss precautions to minimize risk if you intend to share wage and benefit information with a competitor.

WageWatch surveys over 5,000 hotels, resorts and casino properties in the United States and the Caribbean. It was the first to leverage the power of the Internet to create the first of its kind, web-based wage and benefits survey tool in 2000.  WageWatch’s proprietary survey process enables human resources professionals to access the most up-to-date and accurate wage and benefits data and prepare custom reports based on their needs and requirements. For more information, please contact WageWatch at 480-237-6130 or contact us online.

 

Posted in Regulatory & Legal Updates on August 29th, 2012 · Comments Off on How to Avoid Antitrust Claims When Conducting Wage Surveys: Part 1