Posts belonging to Category compensation

At least, that’s according to the piece ”Mind The Gap – Knowing What Employees Want Is Key” by Lena M. Bottos, Kenexa’s vice president of compensation.

After reviewing the results of its annual Compensation Outlook Survey, then “directly comparing the data with a similar survey from visitors to our consumer website, Salary.com, and to World Norms from Kenexa’s Employee Engagement database. We gained incredible insight from these comparisons and were able to clearly see similarities and differences worth noting.”

According to Bottos, across all HR categories covered in the survey, there was a “noticeable gap” between the Salary.com visitors and HR perception, while the World Norms data hovered somewhere in between:

We can safely assume that the visitors to Salary.com are biased toward workplace dissatisfaction, because they are visiting a career site most likely looking for a career change or a new job. It is also highly likely that the World Norms data is skewed toward more highly engaged employees or more self-edited answers, depending on an individual’s trust in survey anonymity. The bottom line, however, is that HR’s perception of employee attitudes is off the mark in every category.

The piece goes on to share a few data points backing up the findings, including:

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It’s nice to think that your highest-achieving, hardest-working employees are driven to excel in the name of meeting team goals, advancing the company’s mission, increasing market share and all of that good stuff.

And many of them are. That should be part of what pushes them, anyway.

We all know there needs to be something in it for them as well. The prospect of receiving a promotion is one obvious motivator, and employees want to know what’s required to reach the next rung on the company ladder. And from an employer standpoint, making sure workers understand how they can continue climbing is also a wonderful recruitment and retention tool.

Nevertheless, a recent survey from Scottsdale, Ariz.-based WorldatWork finds very few companies making serious efforts to convey promotional guidelines and policies to their workforces.

The survey of 873 HR, compensation and benefits managers found just 16 percent of respondents saying their organizations widely communicate such information to employees.

Companies neglecting to share parameters for employee promotions do so at their own peril, says Kerry Chou, practice leader with WorldatWork, in a statement announcing the findings.

Employers may be missing out on an opportunity to enhance [their] ability to attract, motivate and retain employees by not sharing general information about the guidelines or processes associated with promotions.”

While employers may be mostly hush-hush on promotional guidelines, the study finds organizations still finding room in the budget for programs supporting employee advancement, and respondents report promoting about 8 percent of employees in a typical year.

The survey also found the average promotional increase award to salaried employees in 2012 was 8.7 percent, compared to 8.3 percent in 2010. Officers and executives received an average promotional pay increase of 10.2 percent, versus a median jump of 9.5 percent two years ago.

Most responding companies (81 percent) defined a promotion by an increase in pay, band, grade or level, and/or the addition of higher-level responsibilities (76 percent).

Make special note of how most respondents defined a promotion: While nearly one in five organizations reported awarding promotions without salary increases, the importance of providing a bump in compensation shouldn’t be overlooked, says Chou. In other words, pay up when you promote.

While a bigger title and recognition from peers are nice, employees will usually not feel completely satisfied with a promotion unless there is a meaningful increase in base pay.”

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It’s fair to say that Google has a reputation as a world-beater in the employee perks department. Free fitness classes, an on-site medical staff, a subsidized massage program, foosball tables and video games, free haircuts and dry cleaning services are just a few of the benefits enjoyed by employees at the corporation’s Mountain View, Calif. headquarters. And, it seems the company’s generosity extends to workers’ families as well, and continues long after Google employees have passed away.

As reported by Forbes, spouses or domestic partners of U.S.-based Google employees who die while under the employ of the company will receive a check for 50 percent of the deceased employee’s salary for 10 years. The surviving spouse or partner also acquires vested stock benefits, and their children receive $1,000 a month until the age of 19; perhaps longer if the child is still a full-time student.

What’s the catch, you may ask? There isn’t one, according to Google. A company spokesperson confirms that there’s no tenure requirement to receive this benefit, which means that most of the Internet search giant’s 34,000 employees are eligible.

One of the things we realized recently was that one of the harshest but most reliable facts of life is that at some point most of us will be confronted with the death of our partners,” Google Chief People Officer Laszlo Bock told Forbes. “And it’s a horrible, difficult time no matter what, and every time we went through this as a company we tried to find ways to help the surviving spouse of the Googler who passed away.”

Death benefits were formally implemented at Google in 2011, according to Bock. While “there’s no benefit” to the organization from an economic or productivity standpoint, “it’s important to the company to help our families through this horrific if inevitable life event,” Bock says.

The newest addition to the long and varied list of Google employee perks is indeed a generous one, and certainly won’t hurt the company’s reputation for offering unique benefits to its people. But will this kick off a trend? Will more large companies begin offering similar benefits to their employees? And should they?

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At this week’s Total Rewards 2012 conference in Orlando, speakers from Boeing reminded attendees that there often is more than one way to read a piece of data.

During a session titled “Compensation, Fix Employee Pay! When Compensation Professionals are Asked to Address Low Scores on Employee Surveys,” two Boeing comp professionals—Senior Compensation Specialist Cindy Jorgensen and Compensation Specialist Ron Steele Jr.—talked about their efforts to get to bottom of why employees at Boeing’s South Carolina facility had a low opinion of the company’s pay practices.

Steele told those in the room that Boeing’s pay is extremely competitive in South Carolina—where the company employs about 6,000 workers who are dedicated to the building of its 787 (pictured here). But apparently that wasn’t the consensus among Boeing employees there.

Asked to rate the fairness of pay during a 2011 employee survey, workers at the South Carolina operation gave Boeing low marks. (The survey was conducted with the help of Kenexa.)

At first glance, Steele said, the data pointed to a pay system that needed fixing.  But a closer look suggested there might be other factors at work here.

To figure out what those factors might be,  the comp folks began to drill deeper into the data, looking at (among other things) how the South Carolina findings compared to those found at other Boeing operations and in other industries; and by reading through page after page of verbatim comments from the employee surveys. (Boeing employees “aren’t shy,” Steele said.)

This was followed by a series of employee focus groups, which eventually shed some much-needed light on the issue.

In the end, the group’s persistence paid off.

Jorgensen and Steele concluded that the low scores had less to do with what employees were being paid and more to do with employees who didn’t really understand the pay system at Boeing.

That, in turn, led to a much more meaningful response (my words) focusing on initiatives that could have a positive impact, such as managerial training and employee education.

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Executives from the Center on Executive Compensation of the HR Policy Association headed a session at WorldatWork’s Total Rewards 2012 conference on Tuesday to offer some insights into best ways to structure pay-for-performance strategies — and how to best tell their story to investors.

Nearly all companies this year received approval on their say-on-pay votes — about 89 percent — but seven have failed so far, said Timothy Bartl, president of the Center, but he noted: “No company that failed in 2011 has failed in 2012.” That indicates the companies learned from the experience and were able to not only tell their stories better but to have better stories to tell.

Common reasons for a lack of support, he said, were the comparison of CEO pay to a company’s performance, poor pay practices, significant changes in the structure of CEO pay and poor disclosure.

Most companies just don’t explain their compensation strategies very well, said Charles Tharp, CEO of the Center. “The question is why do we overcomplicate it?”

One issue that can be misunderstood — and needs to be better communicated — is the issue of  ”board discretion,” he said. Many investors see that as a way for companies to increase compensation, when, he says, it is more often used used to decrease it.

Bartl says it’s important to understand that the primary audience for executive-comp disclosures are the company’s largest institutional investors, proxy advisory firms (But Tharp notes, remember to design your comp strategies for your organization’s goals, not for the advisers, but “be sensitive to how they read these” and know their “hot spots.”), the media, regulators, competitors and employees.

The template for any effective pay summary, Bartl says, is to outline the company strategy, performance objectives and results, how pay varies with performance outcomes, actual pay vs. performance and changes going forward.

“Truly it’s two stories,” Tharp said. Companies need to validate they have a good executive comp strategy and they need to show what their plans are for the future. “It’s two pieces of the pie.”

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“When you think about how you are going to draw talent into the organizations … rewards is going to be at least first or second on the list for most people,” said Jack Wiley, president of the Kenexa High Performance Institute, during a panel session on the importance of compensation to “a great people strategy” during WorldatWork’s Total Rewards 2012 conference in Orlando, Fla.

Joining him on the panel were Frank Wagner, director of compensation at Google; Ken Abosch, compensation practice leader at Aon Hewitt; and Emma Mon, manager for compensation in North America for Dow Chemical.

Compensation is not only going to be one of the top motivators for potential employees, but it is also one of the top costs of doing business, Abosch said.

So it’s necessary, he said, to have an articulated, written statement of the company’s compensation strategy; to have a “vision around compensation is critical.”

But, Mon said, ”what works at the plant level is very different than what works at the engineering level.” Her organization uses an employee survey to gauge sentiment from the workforce as well as to communicate to the company’s leaders about compensation as well as growth opportunities.

“And people talk,” she said, so when Dow does take action to align compensation to the market, the message gets around the company.

Since Google has “all knowledge workers,” Wagner said, compensation is a way the company “communicates the value of what they are doing … [It] is really key to our value proposition of how we operate as an employer.” Key to that communication is the manager-employee relationship and the dialogue between them, he said.

“We have lots of conversations between employees and their managers,” Wagner said, although he notes some managers are better than others at communicating the value of the employee’s work and the compensation strategy.

Abosch said there needs to be “line of sight” — that employees must be able to see a direct relationship between the work they do, the impact on the company’s goals and the rewards they get back. Organizations need to review the way they set goals and make sure employee contributions align with employee compensation.

It may not be equal pay, he said, but it will be “equitable pay.”

Research has shown, Wiley said, that employees who feel they are fairly paid are three times more likely to be engaged, to feel they have a promising future and to stay at that employer.

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HR leaders are increasingly using metrics and analytics to more effectively drive their talent decisions. But can the same be said of those specializing in comp?

At this year’s Total Rewards 2012 in Orlando, executives from Mercer and WorldatWork previewed key data from a recent study that suggests something of a disconnect between how comp leaders view their analytical skill levels and the kinds of intelligence that they’re presently generating.

Not surprisingly, most of the comp professionals surveyed indicated they were using techniques such as internal and external benchmarks (95 percent and 90 percent respectively) and ongoing reporting (87 percent) to help drive their decision making in their organizations. But the percentage of those using more sophisticated methods, such as projections, simulations and predictive modeling, was noticeably lower—at 80 percent, 64 percent and 43 percent, respectively.

Despite this, those in the comp profession believe they have adequate skill levels to effectively use analytics, with roughly 67 percent of the respondents saying they possess the skills to use more advanced analytics.

Though not entirely surprised by the findings, Mercer Partner Brian Kelly says the percentage of comp professionals using more sophisticated techniques was lower than he’d like to see.

“They’re saying they have the skills,” Kelly says, “but they’re still not doing it.”

Mercer Senor Partner Haig Nalbantian says he considers it somewhat ironic that a data-rich function like comp would run the risk of being “left behind” when it comes to analytics.

Mercer and WorldatWork plan to release a more complete report on the study’s findings in the next week or two. But it seems safe to conclude that a first glance at the data already suggests the profession clearly has some work ahead of it.

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Following the $2 billion trading loss at JPMorgan Chase, the issue of clawbacks has “caught the public’s attention,” said Mike Melbinger, partner and global head of employee benefits and executive compensation, during a session at the WorldatWork conference.

And, he says, “When something catches fire like this, it’s almost always bad news.”

The current discussion of whether the lender will attempt to take back bonuses that were paid to executives may have a substantial impact because the U.S. Securities and Exchange Commission is still in the midst of writing regulations to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act.

That law requires the implementation of clawback policies when bonuses or compensation paid to executive officers is based on “erroneous data,” Melbinger said. Previously, the law said companies “may” clawback such compensation; now it says they “must.”

“There is a history of … bad facts making bad law,” in this area, said Melbinger, noting that Dodd-Frank is “very short and open ended, so all of the real action will be in the rules.”

The issue requires organizations to revisit their pay-for-performance philosophy, said Daniel P. Moynihan, a principal at Hay Group who focuses on executive compensation. Companies should also consider providing documented statements of their clawback policies and key design attributes to employees.

Another issue, of course, is how to get that money back, he said. A $100,000 employee who got a $10,000 bonus may no longer even have that money anymore, so one potential solution is to have a policy that allows the company to recoup that money from future incentives.

Even more problematic, he said, will be trying to clawback bonuses from employees who no longer work at the company. Since clawbacks can go back three years, employers may want to have departing employees sign an acknowledgement that a clawback could be a possibility.

The fallout of the JPMorgan Chase case will be interesting, said Irv Becker, national practice leader on executive compensation at Hay Group.

Unlike some previous clawback dramas, this wasn’t an issue of a “rogue trader,” but was instead an investment strategy that ”wasn’t sufficiently safeguarded or implemented.”

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Compensation surveys done by Pearl Meyer & Partners indicate “the rebound you hear about is actually starting to occur,” says Ken Cardinal, managing director in the firm’s Southborough, Mass. office.

In his work, he focuses exclusively on surveys and just released a book, Conducting Compensation & Benefits Surveys, which he co-authored with Beth Florin, also a managing director at the firm as well as president of its employee compensation and survey practices. The book was published by WorldatWork, which opened its Total Rewards 2012 Conference at the Gaylord Palms Resort in Kissimmee, Fla.

For years, Cardinal says, merit increases have been in the vicinity of 3 percent, but “now it appears they are moving north. I wouldn’t be surprised to see 4 percent or more. … It appears that hiring bonuses are picking up too.”

He bases his view on the many “club surveys” his firm does, in which competing companies provide compensation and benefits data, which is then used for benchmarking by all of them.

The areas most “poised for rebound,” he says, are Washington, D.C., Houston and Silicon Valley. It may also occur in Boston and New York City. Lagging behind are areas in the Rust Belt, although he notes Michigan has seen some positive growth from Ford and GM.

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The food at your favorite local eatery may be delicious, but do the employees who prepare it and serve it to you receive paid sick days? Are the waitstaff paid at least $5 per hour (more than twice what federal law requires for workers whose compensation comes mostly from tips) and are non-tipped employees paid at least $9 per hour? Thanks to a new guide from the New York-based Restaurant Opportunities Center United, diners will soon be able to find out.

The guidebook, ROC National Diners Guide 2012: A Consumer Guide on the Working Conditions of American Restaurants, is intended to serve as a sort of Zagat guide for diners who are as concerned about the pay and benefits received by the establishment’s employees as they are about whether or not the chicken on the menu is free-range, Saru Jayaraman, ROCU’s co-director, told Bloomberg Businessweek. The group assigned grades to 186 of the nation’s largest restaurants and fast-food chains based on whether or not they offer their employees the aforementioned wages, paid sick days and career advancement. Restaurants that score in at least two of those categories receive a “star” rating.

Bloomberg Businessweek notes that the majority of the restaurants surveyed failed to receive a star or declined to answer all of the survey’s questions (some of the ones that did get a star include Five Guys Burgers and Fries, Chipotle Mexican Grill and In-N-Out Burger). ROCU is using the guidebook to help lobby for laws that would guarantee seven days of paid sick leave per year for employees in all industries.

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