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INCENTIVE PLAN ESSENTIALS

Well-designed and well-implemented incentive plans can be an important tool for overall company success, but they also have the potential to be ineffective and even damaging if not carefully thought out.  Poorly designed incentives can have too much discretion, too much complexity or just too many measures that can undermine their power and advantage, and they can become just another way to distribute pay.

Before you even consider incentives, make sure you know the company’s strategy and the critical measurements of success.  You will need to know the specifics regarding what you want to achieve, what kinds of improvements, behaviors and outcomes do you want; why aren’t these improvements happening now and what’s preventing them from taking place; what obstacles to the outcomes will employees face, how will employees respond to and try to overcome these obstacles, and is this what you want; Do employees have the skills, experience, systems and support they need to overcome these obstacles and if not, what is lacking?

The potential incentive must be big enough to get the employees’ attention.  Incentives can create a focus on results, but you have to first get the employee’s attention.  Because the opportunity for financial rewards motivates some more than others, your incentive plan will have a greater chance of success if you carefully define what the size of the opportunity must be in order to get the majority of your employees’ focus.

The performance or results required to earn the incentive must be within the employees’ control or significant influence and should be perceived as achievable with some extra effort or stretch.  It should be easy to see and understand the relationship between one’s effort, the results of that effort and the reward.   The incented performance needs to be perceived as a desirable, stretch goal to get and keep the employee’s attention. The payout must be worth the effort required to “stretch.”  The actual payout after the final measurement is made needs to justify the attempt that was made to achieve the full objective.

Develop robust tools for performance reporting so that the employee participants always know where they stand in relation to their goals and payouts.  The payout should be forecast as the performance period proceeds in order to keep the employees’ focus on the desired outcome.   Too much subjectivity in the measurements will turn a Plan into a surprise bonus.   The sources of the measurements should be available to every participant on a regular basis and calculations for determining payouts must be simple and easy to understand.

Incentive plans will also be more valued and accepted by employees when they are a compliment to an already competitive base salary plan.  Incentive plans are not meant to remedy non-competitive pay issues.  Finally, critical factors for a plans success lie in keeping it simple and ensuring good plan communications.

Incentive plans, or any other reward vehicles, cannot drive the performance-improvement bus alone. Unless you identify and remove the barriers to performance, and create the setting in which performance improvement is possible and even likely, throwing incentive money at the problem will likely have little positive impact and could produce some very real negative consequences.

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.

MID-YEAR 2014 STATE MINIMUM WAGE INCREASES

Minimum wage continues to be a hot issue in the states for the 2014 legislative session. Thirty-eight states have considered minimum wage bills during the 2014 session and thirty-four states are considering increases to the state minimum wage. Connecticut, Delaware, Maryland, Minnesota, West Virginia and D.C. have enacted increases so far in 2014.  West Virginia is raising the state’s minimum wage to $8.00 an hour in 2015 and $8.75 in 2016.

 More than a dozen states increased their minimum wage rates effective January 1, 2014.  Delaware is increasing it’s minimum wage to $7.75 on June 1, 2014.  California, Maryland, and Washington DC have increases effective July 1, 2014 and Minnesota is increasing it’s minimum wage effective August 1, 2014.

In Iowa, a bill would hike the minimum wage from $7.25 an hour to $10.10. A Rhode Island bill would raise it from $8 to $9.  And a year after New York approved a multiyear minimum wage hike, another bill was introduced for 2014 that would accelerate the increase.

 Washington state and the District of Columbia will increase their minimum wages rate to $11.50 by 2016 and there is legislation pending in Washington state for another increase to $12.00.   Hawaii is the latest state to have legislation pending to increase the minimum wage to $10.10 over a four year period. 

 Follow this link http://www.wagewatch.com/resources/Minimum_Wage_Chart_May_2014.xlsx

to the WageWatch Federal and State Minimum Wage Chart with details of state and local minimum wage and pending increases.

WageWatch, Inc. is the leading compensation survey provider for the lodging and gaming industries with over 7,000 properties in its database. WageWatch also consults routinely with management companies on their pay structures and pay rates. 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.

Posted in Uncategorized on May 15th, 2014 · Comments Off on MID-YEAR 2014 STATE MINIMUM WAGE INCREASES

Minimum Wage Momentum

According to a national review by The Associated Press, at least 30 states are sponsoring or are expected to introduce wage hike measures. As of Jan. 1, 2014, twenty-one states and Washington D.C. have minimum wage rates above the $7.25 federal minimum wage rate. Nineteen states, Guam, Puerto Rico and Virgin Islands have minimum wage rates the same as the federal minimum wage. Four states and American Samoa have minimum wage rates below the federal minimum wage (therefore the federal minimum applies).  Five states have not established a state minimum wage.

 Minimum wage continues to be a hot issue in the states for the 2014 legislative session. Thirteen states and five local municipalities increased their minimum wage effective January 1, 2014.  Ten states have tied their minimum wages to the index, guaranteeing that they rise with the cost of living each year. Other states, such as New Jersey and Connecticut, passed legislation in 2013 that will nominally raise their minimum wages. 

 Delaware has already passed a law in the 2014 session increasing their minimum wage to $7.75 an hour, effective June 1, 2014, and to $8.25 effective June 1, 2015. D.C. has passed a bill this session to increase the District’s minimum wage; the bill is under review in Congress.

 In Iowa, a bill would hike the minimum wage from $7.25 an hour to $10.10. A Rhode Island bill would raise it from $8 to $9.  And a year after New York approved a multiyear minimum wage hike, another bill was introduced for 2014 that would accelerate the increase.

 Washington state and the District of Columbia will increase their minimum wages rate to $11.50 by 2016 and there is legislation pending in Washington state for another increase to $12.00.   Two states have legislation pending to increase the minimum wage up to or over $10.00 and another two states have legislation pending to increase the minimum wage up to or over $11.00.

 As of Feb. 24, 2014; the following states have bills that are pending regarding state minimum wage increases (includes active carry-over bills from 2013): CA, DC, GA, HI, IL, IA, KS, KY, ME, MD, MI, MN, MS, NE, NH, NJ, NM, NY, NC, RI, TN, UT, VA, WA, WV

 Follow this link http://www.wagewatch.com/resources/Minimum%20Wage%20Chart.xlsx to the WageWatch Federal and State Minimum Wage Chart with details of state and local minimum wage and pending increases.

WageWatch, Inc. is the leading compensation survey provider for the lodging and gaming industries with over 7,000 properties in its database. WageWatch also consults routinely with management companies on their pay structures and pay rates. 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.

Posted in Uncategorized on February 26th, 2014 · Comments Off on Minimum Wage Momentum