Category Archives: compensation

Top Stories on HREOnline Last Week

These were the most-read stories on HREOnline™ last week, in case you missed any:

1. Technological Revolution: Sue Meisinger’s latest HR Leadership column:

The ease of using social-media tools, combined with recent indications that the Democratic-controlled National Labor Relations Board will be examining acceptable uses of technology by employees — and not just union employees — means that HR leaders should be taking a hard look at the issue as well.

2. Bridging the Credibility Gap: a contributed article by Sarita Bhakuni and Michelle Johnston, both with CPP.

To retain top talent, organizations need to start talking to their employees. When left in the dark, people draw conclusions which tend to be worse than reality. HR leaders should also be aware of uncharacteristic behavior by their managers, which often indicates high levels of stress.

3. Court Rules for Third-Party Retaliation Claims, by Tom Starner

A decision by the U.S. Supreme Court to reactivate a lawsuit — based on a claim that a company retaliated against one employee by firing her fiancee — should result in more lawsuits being filed by spouses and significant others. But the unanimous decision did not define just how expansive the “zone of interests” is, leaving HR leaders in the dark about where to draw the line.

4. Marketing HR Messages, by Kristen B. Frasch

Should HR leaders turn over their internal communications and engagement efforts to marketing professionals? No, say HR experts, but their organizations sure could benefit by HR learning more about the marketing mind-set.

5. Temp Salaries Rising, By Michael O’Brien

Wages for skilled, temporary workers are beginning to inch up from their low points, according to new benchmarking information. And since demand for temps — which historically precedes the demand for permanent workers — is increasing, does this mean the job market is finally improving?

Polling Shareholders

About half (51 percent) of U.S. companies plan to hold annual say-on-pay votes, while about four in 10 (39 percent) expect to hold votes every three years, according to a recent survey by Towers Watson.

One in 10 (10 percent) comanies plan to hold a shareholder vote every two years.

“Clearly, there’s no single right answer to the question of how frequently these votes should be conducted that will work for every company,” says James Kroll, a senior consultant at Towers Watson. “Each company seems to be assessing its own circumstances and needs, taking into account its specific shareholder composition and the degree of potential shareholder concern about the company’s executive-pay programs.”

As we mention in our latest HREOnline™ story, Remuneration Rumination, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires companies to hold say-on-pay votes every three years.

While experts quoted in that story wonder whether a mandatory say-on-pay system will help improve the size and structure of pay packages, they also recommend compensation structures that contain sufficient equity in the form of stock and options to align the executives’ interest with shareholders.

Executive stock awards should have long vesting periods, they say, and pay plans should reward executives for outperforming peer groups at other companies.

As for say-on-pay votes, nearly half (49 percent) of companies are unsure what vote tally will be considered a successful outcome by their boards, according to the Towers Watson survey.

Catching Up on Compensation Trends

A few bits of news crossed my desk today that I thought I’d share just in case you hadn’t seen them. Both offer glimpses into where the nation’s businesses stand on compensation practices that might be handy comparative tools for you and your organization.

The first is this good-news-bad-news release from Challenger, Gray & Christmas (scroll down past that first top item to get to it). It shows that, while companies aren’t increasing their holiday bonuses by much, they’re at least not decreasing them by much either. In the survey of about 100 HR professionals, 63 percent said their companies were giving year-end bonuses this year, compared to 64 percent last year.

Underscoring just how precarious this on-again-off-again recovery still is, 16 percent of respondents said their companies were planning to give smaller bonuses this year, compared to only 4 percent in 2009.

“According to economists, the recovery began in July 2009,” says John A. Challenger, the firm’s CEO. “but, for many companies, the recovery simply means they are no longer hemorrhaging money.”

The second window into where things stand is a new guide for HR professionals that the U.S. Bureau of Labor Statistics will soon be releasing called “Zooming in on Compensation Data.” The release about it calls it “a convenient, hands-on reference document that provides brief explanations of various BLS surveys, with charts … [plus] separate sections for wage and salary administrators, benefits administrators, wage and contract administrators, as well as information on the 21st-century workforce.” Also included is contact information for all eight regional BLS offices.

Lastly, here’s some latest research from Sibson Consulting showing moderation in salary-increase and other compensation planning will be the name of the game for 2011.

In this still-volatile but ever-improving economy, it has to be extremely difficult to know what compensation and total-reward moves are best to keep your company competitive and strategically positioned for the recovery. It also must be nearly impossible to time the moves perfectly. Figured these bits of information couldn’t hurt.

Most Read Stories on HREOnline last week

See what you may have missed:

* Checking in With the Next Generation

Peter Cappelli ‘s latest Talent Management column looks at Wharton’s annual mid-term exam, which explores students’ view of their last job and the way they were managed. In most cases, management was lacking. Feedback was limited or nonexistent, and bonuses — instead of resulting in engagement and motivation — often prompted these high-potential candidates to quit or slack off. 

* Time to Re-Engage

Top businesses for HR practices — according to an exclusive recalibration of Fortune’s “Most Admired Companies” list — are taking employee engagement very seriously in this economy. (A PDF of the Top 50 Companies is here.)

E-Learning Still Trending Up

Companies continue to adopt technology-based training for employees as expenditures in training and development decreased overall last year. At the same time, the expenditure per employee actually remained stable, because the workforce was smaller.

 * Pinpointing Leadership Qualities

Social networking is changing the way HR leaders think of legal risks and recruiting opportunities, writes Susan R. Meisinger in her latest HR Leadership column. It also should make them think about the way they select high-potential candidates for leadership-development programs.

* Talking up Flexibility

Work/life balance is drawing more attention from the White House and other policymakers as research continues to show that the issue has an impact on the decisions of working families. A recent conference brought together representatives from the administration, military, academia and corporate America to attempt to drive the discussion onward.

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.