Category Archives: compensation

Employer Costs of Benefits

According to just-released U.S. Bureau of Labor Statistics, the percentage of employer-paid benefits amounts, on average, to 29 percent of compensation costs, or $8.20 per hour worked.

Combined with an average wage of $19.68, the total compensation costs are $27.88 per hour worked.

The total compensation cost was $27.46 in March 2009, with $8.02 attributed to the cost of benefits per hour worked

The largest costs are made up of legally required insurance benefits — Social Security, Medicare, unemployment insurance and workers’ compensation — averaging $2.31 per hour worked for private-industry employers

Health-benefit costs averaged $2.10 per hour worked, while paid-leave benefits — including vacations, holidays, sick leave and personal leave — averaged $1.88 per hour worked.

Defined-benefit and defined-contributions plans amounted to 99 cents. Supplemental pay — overtime, premium pay, shift differentials and nonproduction bonuses — averaged 78 cents.

Life, short-term disability and long-term disability averaged 14 cents.

More information on costs for the federal workforce as well as state and local governments is here (PDF). Some breakout information — by industry, union vs. nonunion, geographic region, full or part-time employee, etc. — is available from BLS here (PDF).


Factoring in a Freeze

In the wake of the Democrats political setback in November and concerns over the high government deficits, President Barack Obama caught some by surprise yesterday when he proposed a two-year pay freeze for civilian federal workers.  

“The hard truth is that getting this deficit under control is going to require some broad sacrifice, and that sacrifice must be shared by the employees of the federal government,” Obama told reporters. The freeze would require Congressional approval.

As might be expected, Republican lawmakers applauded the announcement, noting it was a move in the right direction of getting the deficit under control, while union leaders criticized the freeze, with AFL-CIO President Richard Trumka calling it “bad for the economy” and “bad for business.”

But however this ultimately plays out, there’s no denying the proposed freeze comes at an interesting time, as many government agencies continue to brace for an exodus of retiring baby boomers, who now have one more item to factor into their decision making.

Most Read Stories on HREOnline™

Last week’s most popular articles on HREOnline™  — See what you may have missed:

* Bill Kutik’s latest column: When Will They Ever Learn?

The learning management vendors, now solidly selling talent management, are bubbling these days. Cornerstone OnDemand has announced its intention to go public; Plateau has shucked off its heritage of selling installed systems in favor of SaaS; and Saba (already public) is pioneering collaboration tools for corporate use.

* Chilling Worker Speech on Facebook

The NLRB’s case against an ambulance company that fired an employee for a posting on Facebook really boils down to traditional labor law, experts say. Can a worker be fired for bad-mouthing a supervisor who denied them access to union representation? The decision will have implications for company policies on social-media use.

* A New Era for HR Perks?

Increased public scrutiny has probably contributed to the leveling off of executive perquisites, but a recent analysis shows that two-thirds of HR executives receive some form of perk. The larger the company, the more likely HR leaders would receive perks, although there were industry differences.

* HR’s Role in ERISA Regulation

New regulations have been handed down from the U.S. Department of Labor related to fiduciary requirements for fee disclosures in retirement accounts, including 401(k)s. HR can play a key role in compliance by effectively getting the new information out to employees, experts say. 

* Ch-Ch-Ch-Changes in Congress

As the United States braces itself for a Republican-led House of Representatives after the sweeping GOP victories in the midterm elections, experts weigh in on what it all means for HR. 

Testing HR’s Knowledge

WorldatWork released an interesting study today on the ability of HR professionals to determine the truth about various pay and incentive information. 

The HR professionals were asked to identify whether 10 statements were true or false — and a majority of the 641 respondents did well on eight of them. All of the statements were taken from academic research findings.

Wanna try? Here are four of the statements. True or false:

T or F * Some raises are too small to cause employees to put forth additional effort.

T or F * When pay must be reduced or frozen, there is little a company can do or say to reduce employee dissatisfaction and dysfunctional behaviors.

T or F * When workers understand how their pay is determined, organizational commitment and job involvement increase, but pay satisfaction does not.

T or F * When pay rates are based on political factors (liking, favors, etc.) rather than objective performance, employee performance and company performance suffers.

The answers? True. False. False. True.

Some of the answers seem obvious, of course, especially that final question, but it’s an interesting exercise.

See all of the questions in the full study (PDF): The Connection Between Academic Research Findings and Total Rewards Professionals.

The study’s author and research director, Brian Moore, says organizations and HR leaders should understand that “the combination of case studies, common practices and controlled scientific studies can come together to create something more powerful than any of them can deliver alone.”

About that 10 Percent Raise …

… Seems like it will go to all Googlers but one. The company has apparently fired the employee who leaked the information about the across-the-board 10 percent raise to employees.

David Shadovitz wrote about the raise on The Leader Board here, noting that “Don Delves, president of The Delves Group in Chicago, told me this is ‘one of those things Google does because it can.’ Others will look at it and be envious, he adds.

That envy will certainly be tempered by the technology giant’s decision to terminate an employee over disclosure of the information.

A 10 Percent Solution

Is Google serious about retaining talent?

A story in today’s Wall Street Journal reports that the Mountain View, Calif., company will be raising its 23,000 employees’ salaries by 10 percent, effective in January. CEO Eric Schmidt delivered the news in an e-mail to employees, the WSJ said. “We want to make sure that you feel rewarded for your hard work,” Schmidt wrote. “We want to continue to attract the best people to Google.”

To be sure, it’s interesting timing. The decision comes on the heels of a settlement between the Department of Justice and Google, Apple, Intel, Adobe, Intuit and Pixar, in which the six companies agreed to eliminate their no-poaching agreement.

The WSJ article suggested that the move comes as Google “ramps up its battle with competitors, especially neighboring Facebook Inc., in a fight to secure talented staff.”  About 10 percent of Facebook’s employees are Google veterans, the story said.

Earlier this morning, I spoke to Kerry Chou, senior practice leader at WorldatWork in Scottsdale, Ariz., about the announcement. Chou confirmed an across-the-board 10 percent hike is extremely unusual, especially in today’s low inflationary environment. “It does indicate they’re trying to solve some kind of problem, though it’s not clear what that problem is,” Chou says.

(How rare is it? When I googled “10 percent pay increase,” the only other story that came close concerned the Encinitas City Council—near San Diego—which considered a 10 percent pay hike earlier this year.  I doubt I would have fared any better were I to google 20 percent.)

Don Delves, president of The Delves Group in Chicago, told me this is “one of those things Google does because it can.” Others will look at it and be envious, he adds.

There’s nothing inherently wrong with the move, Delves says, but most companies would be “more strategic and calculating” in how they go about doing this. He then pauses a moment and adds: “I suppose the beauty here is it’s a simple, bold move that you can summarize in a paragraph. But it’s also very expensive.”

If the problem is indeed retention, as the WSJ article suggests, Chou says Google might want to manage its expectations. “Pay has more bite for potential employees, but once you have someone onboard and want to retain them, things like culture and technology increase in importance,” he points out.

Perhaps.  But I suspect it won’t hurt.

Pay Scales and Weight Scales

Thanks to the good folks at, who ran a very interesting story today about some new research from the University of Florida that finds skinny women and overweight men earn more, on average, than their average-sized colleagues:

According to the study, women who weighed 25 pounds less than the group norm earned about $16,000 more per year. A woman 25 pounds above the group norm earned about $14,000 less. Thinner men, on the other hand, made almost $9,000 less than their average male co-worker. 

Now, I get the idea that women who weigh less than their counterparts would make more than their average-size or overweight colleagues. After all, we all live in a society that praises puny and castigates corpulence.

But I admit I was shocked to learn that men who weighed less than the group norm actually made less money than their average-sized colleagues.

And, as a man who has always weighed in on the lighter side of the scale, I’m now wondering if, instead of working harder, I should just start eating more if I want to get a raise.

Read the University of Florida researchers’ paper, which was published in the journal for the American Psychological Association, here.

Study Shows Sharp Divide Between Genders on Boards

Nothing really surprising in this release about new research from Heidrick & Struggles and WomenCorporateDirectors showing a big gender divide between male and female board directors on issues of diversity and pay.

Nearly 400 male and female directors were surveyed on what they see as keys to restoring public trust in corporate boards after the economic crisis. While a majority of women respondents (65 percent versus 35 percent of men) said they believe diversity is paramount in this quest, only about half of men and women directors think their boards are doing a good job of advancing it.

Women also seem to have much greater faith in new regulations regarding executive compensation systems (45 percent versus 22 percent for men), proxy access (38 percent versus 17 percent) and enhanced risk-management systems (40 percent versus 1 percent).

Another finding: More women directors than men felt three or more women on a board made it more effective (51 percent versus 12 percent) and that women brought unique attributes to a board (90 percent versus 56 percent). I’m especially fond of that last statistic … not.

My overall take on this? Since women are still personally struggling with issues of pay and gender equity in the workplace, and in the upper echelons of C-suites and boards of directors, it makes sense that they’re the ones who “get it” when it comes to determining the importance of these issues in building overall corporate trust.

Susan Stautberg, co-founder and co-chair of WCD, says the survey also reflects that “women directors, more than men, seem open to challenging the status quo.”

Executive Comp Gets its Credentials

It’s not surprising that the WorldatWork Society of Certified Professionals has developed a new certification for executive compensation, available in October.

As the Washington-based agency notes in its recent announcement of the move, “In the wake of the economic crisis and continued scrutiny of executive compensation by media and shareholders … executive compensation practitioners are being called upon to design and manage programs that attract, motivate and retain dynamic executives and leaders who have the ability to drive positive business results.”

The new certification — designed for executive rewards practitioners, consultants and human resource professionals involved in the design and administration of executive compensation — would help to “ensure that companies are working with knowledgeable and competent executive rewards practitioners,” the release states.

Don Linner, executive compensation practice leader for the Washington-based total-rewards company, says the alternative — poor executive comp practices — “can lead to intense public scrutiny, organizational instability and turnover.”

It’s about time this expertise became legitimate, test-worthy and trustworthy, especially in this environment. Had something like this been in place several years ago, it might have spared a few organizations I can think of some unwanted publicity.

Pay Gap Favoring Men Isn’t Universal

The gender pay gap, where men typically earn more than women, continues to persist. But according to a story posted on Time’s website today, there’s at least one segment of the workforce where the gap now favors women.

In a just released analysis of data from 2,000 communities, Slingerlands, N.Y.-based market research firm Reach Advisors reports that the median full-time salaries of young women who are unmarried, childless and under 30 are 8 percent higher than men in their peer group in 147 of  the 150 biggest U.S. cities.

Because the research was intended primarily for market-research purposes and not to shed light on HR practices, Reach Advisors’ president James Chung declined to comment for this blog post. But in the Time article, he primarily credits education for the difference.

“For every two guys who graduate from college or get a higher degree, three women do,” the Time article said. “This is almost the exact opposite of the graduation ratio that existed when the baby boomers entered college.”

Chung’s conclusion is certainly in line with other studies that show college degrees result in better wages.

Though the economic advantage sometimes disappears as women age and have families, Chung told Time he believes women may now have enough leverage so their financial gains aren’t completely erased as they get older.

In time, I guess we’ll find out whether Chung is right. But at least for now, it’s nice to see study findings that suggest the pay gap in favor of men isn’t true across the board.