Category Archives: compensation

Meet the 25 Highest Paying Companies

In case you missed it yesterday, Glassdoor released its list of America’s 25 highest paying companies, and the results show consulting and tech companies are writing the biggest paychecks to workers.

The top five are:

1. A.T. Kearney

  • Median Total Compensation: $167,534
  • Median Base Salary: $143,620
  • Industry: Consulting

2. Strategy&

  • Median Total Compensation: $160,000
  • Median Base Salary: $147,000
  • Industry: Consulting

3. Juniper Networks

  • Median Total Compensation: $157,000
  • Median Base Salary: $135,000
  • Industry: Technology

4. McKinsey & Company

  • Median Total Compensation: $155,000
  • Median Base Salary: $135,000
  • Industry: Consulting

5. Google

  • Median Total Compensation: $153,750
  • Median Base Salary: $123,331
  • Industry: Technology

According to Glassdoor’s latest report revealing the 25 Highest Paying Companies in America for 2016, several companies are offering employees six figure paychecks. This report is based on each company’s median total compensation, compiled by looking at salary reports at companies in which employees have anonymously and voluntarily shared both their base pay and other forms of compensation (i.e. commissions, tips, bonuses, etc.) over the past year.

“This report reinforces that high pay continues to be tied to in-demand skills and higher education, which in part, is why we see several companies on this list among the consulting and technology industries,” said Dr. Andrew Chamberlain, Glassdoor Chief Economist.

Salaries are sky-high at consulting companies, he says, due to “barriers of entry” in this field, which refers to employers wanting top consultants to have personal contacts, reputations and specialized skills and knowledge. In the tech sector, he adds, “we continue to see unprecedented salaries as the war for talent is still very active, largely due to the ongoing shortage of highly skilled workers needed.”

Interestingly enough, the press release announcing the findings mentions that high compensation levels may not actually lead to high employee-engagement numbers:

While the companies on this list pay handsomely and a Glassdoor survey shows salary and compensation are among peoples’ top considerations before accepting a job, Glassdoor research also shows that salary is not among the leading factors tied to long-term employee satisfaction. In contrast, culture and values, career opportunities, and trust in senior leadership are the biggest drivers of long-term employee satisfaction.

Something to ponder: Would you rather have your company attain a spot on this list next year, or would you prefer higher employee-satisfaction numbers?

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Survey: Employees Only ‘Moderately’ Engaged

The good news, according to the Society for Human Resource Management’s latest Employee Job Satisfaction and Engagement Survey, is that employee satisfaction is at its highest level in 10 years, with 88 percent of respondents saying they’re satisfied with their jobs. The bad news? The number of employees who say they plan to look outside their current company for a new job is also up, at 45 percent. SHRM announced the survey results at its Talent Management Conference in Orlando earlier this week.

The keyword for holding on to employees is spelled R-E-S-P-E-C-T: 67 percent of the 600 employees surveyed ranked “respectful treatment of all employees at all levels” as “very important” to job satisfaction, followed by overall compensation/pay and benefits, job security and “opportunities to use skills and abilities,” which tied for fifth place with “trust between employees and senior management.”

As for employee engagement, actual engagement levels are little-changed from last year’s survey, said Evren Esen, SHRM’s director of survey programs, coming in at 3.8 out of 5 with 5 being the highest, showing that employees are “moderately engaged.” Satisfaction and engagement aren’t always aligned, with engagement typically tied to employees’ connection and commitment to their work and organization, she said.

One of the top factors affecting employee engagement are the engagement level of their coworkers, said Esen. “If employees don’t see those around them as being engaged, this will impact the overall level of engagement in the organization,” she said.

Being engaged means feeling that you’re an important part of the organization’s mission, she said.

“The opportunity to use their skills and competencies is of continuing importance to employees – it gives them a sense of engagement and pride,” said Esen. HR should develop a “skills matrix” for employees to get a better sense of “what they do well, not just what they do” in their everyday jobs, she said. This will make it easier to determine if there are other ways employees could be contributing and – by extension – feel a tighter connection with the organization.

“Nobody is going to feel sustained doing the same job over and over,” she said.

Dissatisfaction with their compensation and benefits was a top reason why employees plan to look for new jobs, the survey finds. Sixty three percent of employees chose overall compensation as “very important” to them, yet only 23 percent described themselves as “very satisfied” with their own compensation. Similarly, 60 percent chose overall benefits as very important, but only 27 percent said they were very satisfied with their benefits.

“Companies have only reinstated some of the cuts to benefits they made during the Great Recession,” said Esen. “Organizations really need to focus on what benefits their employees really want, and offer the ones that appeal to all demographics of their employee base.”

HR must also keep in mind the needs of a multigenerational workforce, she said.

“Millennials want their ideas to be valued and not dismissed just because they’re younger and less-experienced,” said Esen. “Boomers want to be valued for their experience, but often feel they’re not sufficiently valued for it. It’s important to keep both groups satisfied.”

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Commemorating Equal Pay Day

OK, so it may not be the most celebratory of occasions on the year’s calendar, but it is nonetheless well worth an HRE Daily post to acknowledge the persistent pay gap that has plagued women ever since joining the workforce many decades ago.

To that end, HREonline.com just posted a piece this morning titled “Pay Equity: New Challenges, New Pressures, New Strategies.” Written by Mercer’s Stefan Gaertner, Gail Greenfield and Brian Levine, the piece takes a look at the gender-pay landscape and what new challenges HR faces in ensuring a balance between the genders when it comes to pay:

More aggressive regulation for pay equity is clearly a trend. We believe this represents a stern call to action for employers to review their job and pay structures as well as analyze pay differentials to ensure that they understand their data, with a focus on pay gaps and business-related factors that may or may not explain them.

Employers also need to rectify any issues identified. We find that the all-too-common “wait and see” approach is not effective — once a plaintiff knocks on the door, it is too late to craft a story or actually address gaps in an orderly fashion.

Elsewhere in cyberspace, there’s an interesting piece on CNN.com titled “One Way to Close the Pay Gap for Women,” written by Mary Ellen Carter, an associate professor of accounting with the Carroll School of Management at Boston College, whose research focus is executive compensation.

In the piece, Carter argues that organizations can shrink or eliminate the gender-pay gap by including more women on corporate boards:

In new research, my co-authors and I found that pay gaps are much lower when more women serve on corporate boards.

For example, the proportion of female directors at the Massachusetts company TJX (parent of T.J. Maxx, Home Goods and other apparel and home goods retailers) has hovered around 30% since 2006.

And in our analyses, Carol Meyrowitz, who retired as TJX CEO in January, was paid fairly, relative to executives of comparable companies as she rose through the ranks.

TJX illustrates what our overall analyses show — that this effect flows deeper into the executive pool. Other top-level female executives, like chief financial officers, are also better paid when the board includes more women.

It’s true that there is no easy answer or silver bullet to create an even playing field in all respects, but here’s hoping by the time the next Equal Pay Day rolls around, more organizations will be working earnestly to ensure the compensation rates between men and women will be even closer than it is today.

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Key Lessons from the Tyson Decision

ThinkstockPhotos-485982240I’m sure many of you have now read or heard about the Supreme Court’s Tyson vs. Bouaphakeo decision on Tuesday upholding a Court of Appeals decision in the Eighth Circuit,  which sides with Tyson workers at an Iowa pork-processing plant.

The employees’ main grievance was that they did not receive mandated overtime pay for time spent “donning and doffing” protective equipment.

In its attempt to reverse the judgment, lawyers representing Tyson took aim at the case’s class-action status, making two arguments. First, they argued the class should not have been certified because the method used to prove injury assumed each employee spent the same time donning and doffing protective gear. Second, they argued that certification was improper because the damages awarded to the class could be distributed to individuals who did not work any uncompensated overtime.

In delivering the majority opinion (6-2), however, Justice Anthony Kennedy wrote that …

“A representative or statistical sample, like all evidence, is a means to establish or defend against liability. Its permissibility turns not on the form a proceeding takes—be it a class or individual action—but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.”

In this instance, Kennedy said, the court’s holding is in accord with the 2011 Wal-Mart v. Dukes decision, which supported the blocking of a class-action against the retailer.

Yesterday, I asked Patrick Bannon, a partner in the Boston office of Seyfarth Shaw LLP, to share his assessment of the Tyson decision.

It’s pretty narrow, as SCOTUS decisions go, he said, because it’s largely based on the fact that it accepted a study by an expert hired by the plaintiff as valid evidence, but it didn’t really look at the particulars of the study. “They assumed,” he said, “that it was valid because the defendant hadn’t challenged the study. In a case in which an employer challenges a study with shaky statistics and not good evidence, the outcome could have been quite different.

“If there’s a cautionary tale here for employment attorneys,” Bannon said, it’s be careful of plaintiff lawyers bearing statistics.

Asked if HR leaders should be doing anything differently in light of the decision, Bannon noted that it does raise the question as to whether employers should be tracking donning and doffing time, even if it’s time employees don’t need to be paid for. “That’s a question HR folks should at least be thinking about,” he said. “It’s not always right for every workplace to try to measure tasks that you don’t think are really work, but if it turns out that it really is work and you were wrong about it, then you start down the road that Tyson Foods was on.

“If you’re an employer with a lot of employees who are all doing a repetitive task every day—and if there’s a way to measure what they’re doing that’s not too intrusive or confusing—then I’d be thinking about it,” he said.

Other employment attorneys noted that the case took on additional importance because of its connection to the Wal-Mart ruling, in which the Court rejected the use of statistical evidence to provide a pattern of discrimination.

Seth Rafkin, a partner in the New York and San Diego offices of Cooley LLP, pointed out that …

“The key threshold at issue in the Tyson and Wal-Mart cases was whether the positions and work experiences of class members were sufficiently similar such that the statistical evidence based on [a] sample of class members could reasonably be relied on as representative of the experience of other class members. In the Wal-Mart case, the Court found that the positions and experience of class members was so diverse that the statistical evidence could not be relied on as representative of the class’ experience. In contrast, the class in the Tyson case all worked at the same facility, performed similar work and were subject to the same policy.”

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Why Young Women Really Leave Their Jobs

If you’re thinking that the talented young women departing your organization are going home to start families, you might want to think again.

In compiling its special report, What Executives Need to Know About Millennial Women, the International Consortium for Executive Development Research recently interviewed executives and “rising female stars” between the ages of 22 and 35 at a group of seven organizations including BlackRock, eBay and HubSpot, according to ICEDR, which supplemented these interviews with surveys of talent leaders and millennials from a handful of other companies.

In doing so, ICEDR study authors Lauren Noël and Christie Hunter Arscott found the majority of business leaders they interviewed were laboring under the impression that most millennial women leave their companies around age 30 in an effort to better balance work lives with family demands, or because they are about to start a family.

The millennial women taking part in the study, however, told a different story.

Indeed, 65 percent of young female respondents said that finding another job with better pay was the top reason why they quit their last job. A lack of learning and development opportunities was cited by 62 percent of millennial-age women, while 56 percent pointed to a dearth of “interesting and meaningful” work, and another 56 percent walked away because of what they saw as an imbalance between the effort they expended and the compensation they received.

This isn’t to say that twenty- and thirty-something women don’t value work/life balance, though, as 54 percent of women polled indicated they would soon be starting a family and would like to spend more time with them.

If the execs taking part in this study were taken aback to find their responses didn’t quite jibe with those of their young female stars, they weren’t the only ones.

“When considering the main reasons why women around age 30 leave organizations, one might expect the primary influences to be motherhood or difficulty integrating work and life,” the authors write in the report.

“Surprisingly, young women identified finding a higher paying job, a lack of learning and development, and a shortage of interesting and meaningful work as the primary reasons why they may leave.”

Unexpectedly, the authors also found female participants in their 20s offering similar responses.

“There is a popular perception that millennials’ desires will change over time. Interestingly, our survey revealed that women in their 20s largely do not leave organizations for different reasons than women in their 30s,” the authors write, noting that four of the five top reasons for leaving were identical across the two age groups.

Noël and Hunter Arscott—both millennials—offer some “key actions” employers can take to help attract, engage and retain female employees in this age group.

For example, they urge leaders to provide extra support to women during key transitional phases in their professional lives, “including university to first job and changing roles. Start early and pursue targeted interventions at critical career and life junctions.”

Employers must also understand that millennial womens’ input has “broader talent implications” throughout the organization, say Noël and Hunter Arscott.

“By implementing strategies and programs informed by the needs of millennial women, leaders will simultaneously be addressing what matters most to broader talent pools.”

Ultimately, “motherhood is not the primary reason women around 30 are leaving organizations,” they write. “Focus on what matters most: pay women fairly, challenge them with learning and development opportunities, and provide them with meaningful work.”

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… But What About Gen X Workers?

What will we do as the baby boomers retire en masse, and take their decades of knowledge and experience with them? And these millennials, who many projections say will soon make up nearly three-quarters of the U.S. workforce—how do we harness their considerable abilities and put them to the best use within our organization?

Organizations everywhere have wrestled with the questions and challenges surrounding these unique groups of workers in recent years.

But there’s another, large group of employees in the middle that may not receive as much attention. Some new research, however, suggests that employers would be wise to focus more on Generation X and the many assets this dedicated cohort can bring to the workplace.

As a card-carrying member of Gen X, I absolutely remember a time when we were mostly thought of as a pretty apathetic bunch with no real work ethic. (Not that we cared about these perceptions or felt like expending any effort trying to change them.) But this new survey, conducted by the Futurestep division of Korn Ferry, finds that Gen Xers—defined in the study as those born between 1965 1980—are actually the most engaged employees in today’s workforce.

Indeed, 52 percent of the 1,070 executives responding to the recent global poll said as much, compared to 23 percent saying they see boomers as the most invested in their jobs, and another 23 percent feeling the same way about Gen Y workers. (The remaining 2 percent felt those fresh-faced, barely-out-of-their teens comprising Generation Z are the most engaged.)

“While members of each generation are critical to the workforce and their diversity of thought brings new ideas and insights to companies, organizational leaders would benefit by harnessing and rewarding the hard work habits of Gen Xers,” says Andrea Wolf, Futurestep’s North American HR practice leader, in a recent statement announcing the findings.

So, what can employers offer to attract these hard workers and provide the perks that make them want to stay?

According to the survey, feeling they have “the ability to make a difference in the organization” was most important to 39 percent of Gen X-age employees in the workplace. That figure is more than double the number of respondents citing “job stability” (16 percent) or “development opportunities” (15 percent) as what matters most to these workers.

In terms of retention, 41 percent of respondents said experiencing “a sense of pride in their work” was what kept Gen Xers in their current jobs, with 24 percent most valuing “financial stability” and 23 percent prizing “company culture” above all else.

And what kind of benefits get those notoriously indifferent Gen Xers revved up about their jobs? Money helps, of course, with 48 percent of respondents pointing to “pay and bonuses” as the most important benefit to employees in this age group, followed by “paid time off,” at 25 percent, and “retirement plans,” at 19 percent.

While Gen Xers might say they want time off, don’t count on them to take it, says Wolf.

“Talk to a Gen Xer about his or her vacation, and they’ll say they’re too busy to take one, or they had to cut it short because of work,” she says. “Employers may want to consider rewards other than extended vacation time to attract and retain this group.”

Too busy at work to take vacation? Thinking about retirement? Wow, there was a time when we were too busy slacking off and obsessing over Seinfeld to even look for a job or consider our financial futures. Gen X has really come a long way.

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Pay for Performance is Given a Poor Grade

Money on hand.

Money on hand.

Employers have long embraced the notion of paying for performance. But are these programs really making a difference? Are they really leading to better employee performance?

If we’re to believe the latest survey of 150 companies coming out of Willis Towers Watson, the impact these efforts are having on organizations leaves something to be desired.

According to the Arlington, Va.-based consultancy, the vast majority of North American employers say their pay-for-performance programs are falling short when it comes to driving individual performance.

Moreover, the survey finds that only one in five companies (20 percent) find merit pay to be effective at driving higher levels of individual performance at their organizations. Further, just under one-third (32 percent) report their merit-pay programs are effective at differentiating pay based on individual performance.

Nor are employers the only ones giving these programs low marks. Only about half of employees say these programs are effective at boosting individual performance levels; and even fewer (47 percent) believe annual incentives effectively differentiate pay based on how well employees perform.

Why the low marks?

Part of the reason is employers are either trapped in a business-as-usual approach or suffering from a me-too mentality when it comes to their programs, according to Laura Sejen, global practice leader for rewards at Willis Towers Watson.

Sejen elaborates …

“Pay-for-performance programs, when designed and implemented effectively, are great tools to drive performance, and recognize and reward employees. However, conventional thinking on pay for performance is no longer appropriate. Companies need to define what performance means for their organization[s] and how managers can ensure they are driving the right performance, and re-evaluate the objectives of their reward programs to ensure they are aligned with that definition.”

Nearly two-thirds (64 percent) of those surveyed say managers at their organization consider the knowledge and skills required in an employee’s current role when making merit-increase decisions, according to the study. That compares to fewer than half (46 percent) who say their programs are designed to take these performance indicators into consideration.

The Willis Towers Watson findings probably shouldn’t come as a huge surprise to those in HR, since they echo the findings of other studies we’ve reported on in the past.

Roughly a year ago, for instance, we reported on research by Organizational Capital Partners and the Investor Responsibility Research Center Institute that found 80 percent of S&P 1500 companies are not measuring the right metrics, over the right period of time, for performance-based executive compensation.

So what’s the key takeaway here? Well, if we’re to believe the research, it’s the fact that employers clearly have a lot more work to do when it comes to pay for performance—and no one knows this better than the companies themselves.

But, of course, knowing and doing something about it are two entirely different things.

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EEOC Wants Pay Data From Employers

Under a new proposal from the Equal Employment Opportunity Commission, all employers with more than 100 workers will be required to furnish pay data to the federal government as part of their Employer Information Report (EEO-1), beginning with the September 2017 report. The objective, says the EEOC, is to make it easier for the government to spot potential cases of pay discrimination and to assist employers in promoting equal pay in their workplaces.

The proposal will be announced today in conjunction with a White House ceremony commemorating the seventh anniversary of the Lily Ledbetter Fair Pay Act.

“More than 50 years after pay discrimination became illegal it remains a persistent problem for too many Americans,” said EEOC Chair Jenny R. Yang in a statement. “Collecting pay data is a significant step forward in addressing discriminatory pay practices.”

“We can’t know what we don’t know,” said Secretary of Labor Thomas E. Perez. “We can’t deliver on the promise of equal pay unless we have the best, most comprehensive information about what people earn.”

The collected pay data will help employers evaluate their own pay practices to prevent pay discrimination in their workplaces while giving the Labor Dept. “a more powerful tool” to do its enforcement work, said Perez.

The EEOC proposal is in response to a task force set up by President Obama, which recommended new data-collection requirements to combat pay discrimination in the workplace.

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Giving New Hires a Boost in Pay

Despite much stronger U.S. jobs reports—the latest released by the Department of Labor this morning showing an increase of 292,000 jobs added in December—employers have typically kept wages in check. Many have expected the tightening labor market to begin to lift take-home pay, but with a few exceptions, that hasn’t materialized. Indeed, wages dropped a penny in this latest DOL report.

ThinkstockPhotos-476196983Of course, it’s another story for those switching jobs, as a study released yesterday by Robert Half confirmed. In a survey of CFOs, the Menlo Park, Calif.-based staffing firm found more than half (54 percent) of those surveyed report increasing new hires’ starting salaries from what they made in their previous jobs, with the average increase around 10 percent.

About 36 percent of the CFOs said the salary was the same, while 5 percent said it decreased and 5 percent weren’t sure.

Asked how the pay increase compared to what they offered two years ago, 68 percent of CFOs responded that today’s salaries were at least somewhat higher.

As Robert Half’s Paul McDonald explains …

“Employers who want to improve their odds of securing skilled talent are offering highly attractive starting salaries right now. Companies are competing not just with other businesses that are hiring but also with the applicant’s current employer, who may make a counteroffer to retain the services of a valued employee.”

McDonald added that “professional job seekers with in-demand skills are receiving multiple job offers. Employers need to put their best bid on the table—and do so quickly—or they risk losing good talent.”

Seemingly good advice, as employers start their efforts to fill some of the positions they’ve budgeted for 2016.

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Employers Worry About Pay-Ratio Perceptions

Results of a recent poll by New York-based Towers Watson show it’s not the mechanics of complying with the new CEO pay-ratio-101366398 -- money on scaledisclosure rule — such as data gathering, getting the right sampling, identifying the median employee and the like — that worries employers the most.

It’s how they’re going to explain the pay-setting process to their employees and how their pay ratio will look compared to other companies’ ratios. This according to the almost 600 corporate compensation professionals who weighed in on the Towers Watson Webcast Poll on CEO Pay Ratio Disclosure Rule.

The communication issues loom especially large. Half the respondents cite that issue among their top concerns. Also, how employees will react when they start comparing their compensation to their CEO’s and to the median employees’ is keeping many a top business leader up at night.

For a refresher, this New York Times piece offers some pretty complete details, history and analysis of the 3-to-2 vote on Aug. 5 by the Securities and Exchange Commission that will require most public companies, starting in 2017, to regularly reveal the ratio of their chief executive’s pay to that of employees.

Some of the controversy is also spelled out in the piece:

“Representatives of corporations were quick to assail the new rule … saying that it was misleading, costly to put into practice and intended to shame companies into paying executives less.

“But the ratio, cropping up every year in audited financial statements, could stoke and perhaps even inform a debate over income inequality that has intensified in recent years as the wages of top earners have grown far more quickly than anyone else’s.”

What’s disconcerting at this point isn’t just how this ratio will be perceived, but how few employers really know what they need to do to comply. In the poll mentioned above, only 17 percent of employers agree they understand all of the costs, effort and data that will be needed while almost two-thirds (65 percent) disagree.

In an earlier Towers Watson survey of 170 U.S. compensation professionals, Towers Watson Talent Management and Rewards Pulse Survey, only 48 percent agree that their companies had identified the data they’ll need and know how they will capture it to calculate the pay ratio, while even fewer (41 percent) say they’re prepared for how the disclosure will affect employee perceptions of their pay.

And if you think time is on your side and you’ll get it right with many months to spare, think again, says Steve Seelig, senior regulatory adviser for executive compensation at Towers Watson.

It’s “not too early for HR to begin thinking about how well its company communicates with employees, and to then set a strategy for improving its message,” he says, adding to:

“Keep in mind that, when the disclosure comes out, workers below the median will [immediately start to] wonder what it takes to get them to that level, and why their company is not paying them more. Those employees at or above the median will naturally wonder whether their pay levels are determined fairly, or how the level of CEO pay might be hindering their pay increases. Workers also will be looking at companies across the street and pondering if their median pay is higher, and whether it might be a good idea to look around.

“Human resource executives should [be proactive and] view the pay ratio disclosure as a chance to make sure their employees understand [their company’s] pay-value proposition. Companies that get this communication effort right will find they actually have strengthened their relationship with the workforce, with better productivity and reduced turnover as likely outcomes.”

Those that don’t get it right shouldn’t be surprised when the opposite occurs.

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