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Posts Tagged “hotel compensation data”

Best Practices: Balancing Internal and External Pay Equity

Whether in the context of real estate, common stock, equipment or wages, equity is a term that relates value between different choices, opportunities or investments. Studies into organizational behavior theorize that employees are continuously monitoring and evaluating their work and pay against those of their peers. Perceived unfairness can result in severe production problems.

In order for a business to operate effectively, the company needs to develop a compensation strategy that achieves the two goals of paying wages considered fair to employees, while providing a financial return on the investment for the employer.  Wage equity has two approaches. The first is externally driven by market forces. The second is an internal focus, driven by the employer’s valuation of the job.

Using market pricing to establish wages and salaries is called market based pay. WageWatch has found that market based pay is the best practice approach to designing compensation policy in competitive market segments such as the hospitality, healthcare, and not-for-profit. Every WageWatch salary survey is a market based strategy. Market based pay systems benefit from being inherently empirical, built from research, through surveys, reporting what similar jobs are paid in the organizations that one competes with in the labor market.

Committing to a market base pay compensation structure means that employees will be paid at a competitive wage when compared with rates offered to people in similar positions in peer organizations. The labor market, ruled by supply and demand, drives this approach. The WageWatch PeerMark ™ Survey and online report building tool is designed for custom selection of competitors from which to accurately benchmark job titles. Wage and percentile variances illustrate where you are positioned in the marketplace.

External equity is one side of the coin. There is also the employer’s perception of fairness called internal equity. Where external equity is a measure of market competitiveness forming its basis on job functions and duties, internal equity is a measure of internal worth with a basis in job autonomy and responsibility. If you have multiple incumbents in the same job title who are paid differently, the differences in pay are an expression of internal equity.

We analyze internal equity in a way similar to external market analysis in that we determine worth relative to benchmarked job titles, but different in that the benchmarks are internally established. Internal benchmarks are particularly useful in evaluating both unique and hybrid job titles for which external benchmarks do no exist. Variance analysis here looks inward at wage compression, organization structure, reporting relationships, and job families.

Managing external and internal equity is a dynamic process requiring human resources to stay vigilant on changes in market conditions and business demands. The market based pay approach to compensation gives the influence of the external market on wages precedence over internal equity. The WageWatch PeerMark ™ Salary Survey reports the most current data available which forms the basis of the external analysis. However, since both approaches have the aligned goals of attracting and retaining a talented workforce, the WageWatch Compensation Consulting Team is available to conduct internal equity audits to address employer concerns and add creditability to pay practices.

Posted in Benefits & Compensation on December 20th, 2012 · Comments Off on Best Practices: Balancing Internal and External Pay Equity

Lodging Industry 2012 Wage Increases- Part 1

The year 2012 will be remembered as the comeback year for hourly wage and salary increases for the employees of the lodging industry. The industry had across the board wage increases for both hourly and salaried employees as reported by over 5,000 hotels in the WageWatch hospitality compensation survey for 2012. Overall, wage and salary increases were reported as 2.6% for the year, which was almost double last year’s increase of 1.4% reported by WageWatch in its PeerMark™ Wage Survey for 2011 and follows a period of wage stagnation reported in the industry from 2008 to 2010.

This past January, WageWatch surveyed over 3,400 hotels and disclosed in its 2012 wage forecast budgeted pay raises averaging 3% for exempt and nonexempt employees in the lodging industry. The median and mode were also 3%. There was also very little difference between full service hotels and limited or select service hotels, with the later budgeting 2.9%.

Compensation increases reported in the WageWatch wage survey for the lodging industry as of October 23, 2012 shows little difference between the percentage wage increases for full service hotels and limited or select service hotels for similar positions. This is the first year since 2008 that limited/select service properties have kept pace with their full service brethren.

Pay raises for 2012 came in the face of slower than expect economic growth in the U.S. The consensus economic forecast last December was for economic growth in the range of 2.0 and 2.5 percent for 2012. Through the third quarter of 2012, economic growth is estimated to be mired at 1.7%. In spite of this lackluster economic performance, the lodging industry continues to strengthen.

The President of WageWatch, Randy Pullen, stated earlier this year that he expected strong wage increases, as well the as the WageWatch forecast for an increase in lodging employment of an additional 25,000 jobs, to come to fruition as the lodging industry continues its post-recession improvement in both occupancy and rate.

Interestingly, if the lodging pay raises are examined at a more detail level, several “hot jobs” or hard-to-fills jobs can be identified nationally as well as in several city markets. We will focus on a few of the hourly jobs for the lodging industry this week and take a close look at salaried jobs in next week’s Blog.

Front of the house and back of the house wage increases were essentially the same, with front desk agents receiving on average 1.8% increases, while housekeepers and house persons received 2.4% and 2.1% increases. The relatively smaller increases for these positions when compared to the lodging industry average is not unusual as they are entry level positions with higher turnover, which results in the starting wage rate having more impact and are tipped positions In the hotel kitchens, bakers and cooks received 3.2% and 2.1% pay raises. Again, cook is an entry level position and more dependent on the starting rates, which changed very little from year to year.

The biggest increases for hourly workers went to the maintenance department with maintenance technicians I and II receiving on average 5.5% pay increases. Qualified maintenance technicians are hard to find due to multi-industry demand on this skill set and are considered to be hot jobs.

At the supervisor level, housekeeping supervisors received on average a 2.3% increase while front desk shift supervisors received 2.9% increases and night auditors receiving 3.7% increases. In the kitchens, sous chefs received on average 2.9%.

Next week, we will review the salary survey increases in our blog. Needless to say, the maintenance department does well with chief engineers receiving on average 17.6% increases … more next week.

WageWatch, Inc. is the leading compensation survey provider for the lodging industry with over 5,000 hotels participating in its PeerMark™ Wage survey. 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.

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