Category Archives: compensation

GM Takes Care of its Hourlies

blue collarGeneral Motors is still digging out from the onslaught of legal bills, settlements and recall costs of its faulty ignition-switch debacle that’s been directly linked to at least 51 deaths so far. Costs for the nation’s largest automaker stand at nearly $3 billion and counting.

That has not, however, stopped GM from awarding its unionized hourly workers record bonuses of up to $9,000 apiece based on the company’s performance last year. Excluding settlements and other costs linked to the recalls, GM’s North American division would have seen a whopping $9 billion in pretax earnings last year, reports the New York Times. Recall costs whittled that down to $6.6 billion. GM’s strong financial position was partly enabled, of course, by its $49 billion bailout by the federal government.

“I thought the recalls were going to kill us,” GM worker George McGregor, president of the United Automobile Workers local at GM’s Detroit-Hamtramck plant, told the Times. “We had the big check coming. We shouldn’t have to pay for their defects.”

GM’s unionized hourly workers are to be given annual bonuses based on the company’s financial performance, as per its current contract with the UAW. A spokesman told the Times that CEO Mary T. Barra decided that the workers had done their part to help the company meet its performance goals and should not be penalized because of the failures and mistakes made by others in leadership positions.

GM may also have had its eye on upcoming contract negotiations with the UAW this summer. “General Motors’ announcement today leaves no doubt about the strong, stable environment the G.M.-UAW collective-bargaining agreement created,” UAW President Dennis Williams said in a statement yesterday.

And what about GM’s salaried, white-collar workers? They, too, will get bonuses that will be unaffected by the automaker’s recall costs, two sources told Bloomberg News. Those bonuses are based on a blend of regional and global results, they said.

Barra and her top team will, however, see the recall costs eat into their own compensation, the sources said.

“The optics of not reflecting the recall costs into executive bonuses would be really bad,” Maryann Keller, an independent consultant, told Bloomberg. “In this case, the recall was precipitated by past management, but that’s just the way it is.”

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Another City Tackles Paid Sick Days

The Philadelphia City Council today is debating a hot-button topic with potential HR ramifications that may reach far beyond the city’s limits: whether to enact a paid sick days bill into law.

If passed, the City of Brotherly Love will join San Francisco, Washington, D.C., Seattle, Portland, Ore., New York City, Jersey City, Newark and the state of Connecticut as municipalities with such laws on the books.

While the debate around such laws has been growing over the years, momentum for its passage increased after President Obama’s recent State of the Union Address, which called for cities to ensure paid sick days for millions of Americans. The president is also urging Congress to require companies to give workers up to seven days of paid sick leave a year.

According to the National Partnership for Women & Families, San Francisco became the first locality in the nation to guarantee access to earned paid sick days in 2006.

In 2008, the District of Columbia and Milwaukee passed paid sick days standards that included paid “safe” days for victims of domestic violence, sexual assault and stalking. In 2011, the Connecticut legislature became the first in the nation to pass a statewide paid sick days law, and Seattle became the fourth city, with Portland, Ore., and New York City joining their ranks in 2013.

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Top Five Top Executive Career Mistakes

We all receive hordes of lists at the end of one year and the start of the next. Top 10 this of 2014. Top 5 that. So on first take, I was 185784831 -- executive interviewprone to ignore a release from JMJ Phillip Executive Search on the top five career mistakes executives made in 2014 when pursuing a career move.

Mind you, these “mistakes” aren’t even confined to HR executives. All the more reason to disregard.

But on second read, I decided to share it because every executive, HR or otherwise, could use pointers on what not to do to get where he or she wants to go. And these were put together by an executive search firm — “the top five mistakes our search consultants witnessed in 2014,” as its release states — so they’re not exactly being pulled from thin air.

The first no-no is to focus too heavily on a hypothetical bonus that may or may not come from your current, soon-to-be-previous, employer. As one “high-level executive” told Phillip’s researchers:

“You cannot keep looking backwards. Your future is in the hands of your new employer. So I lost some bonus money, not every step is forward and career growth certainly isn’t linear. If the job is worth taking, it’s worth taking whether you get your bonus from the old company or not.”

As Phillip’s release puts it, “one thing to think about before you sit down to talk compensation, if you’re flinging out wild numbers about a bonus that ‘may come,’ your chances of getting the job are going to go down.”

Second, the consultants found, was what they list as “relocation bi-polarism.” While executives “know the game [and] how to make a career change …,” they write, “we witnessed something in 2014 that was a bit disturbing. Companies often complained about candidates, be it from a firm or their own internally sourced, backing out in the 25th hour because of relocation.” They go on:

“If you don’t want to move, you need to figure that out early on in your career search, ideally before the first interview and absolutely no later than after the first interview. If you fly out somewhere three or four times only to back out, wasting people’s time may not go well for your reputation.”

Third is playing “hide the compensation.” In short, the release says, “nothing seems to stop an offer in its tracks faster than withholding what you are currently earning.” It continues:

“We know it’s a point of leverage and you don’t want them to lowball you, but we look at it from a different light. If the company see’s your value, [it’s] going to pay you what you are worth. Likewise if you are trying to get a 30 percent-to-40 percent raise by playing the hide the compensation game, the company can equally say you’re just looking for a pay day, not a career. Be honest with the company about your compensation, tell them where you would like to be AND WHY, then let the chips fall where they may.”

Fourth, be careful who you’re tempted to say you know in the company you’re interviewing with. Their opinion of you may not align with your perception and they might not even want you working there “because you have dirt on them,” the researchers write.

Lastly, they say, make sure your social-media profile aligns with your resume. As they put it,

“It seems everyone in their life took a position or two that didn’t work out. Maybe they only lasted three months because it was a bad cultural fit or the company wasn’t what they expected. So what do you do? You leave it off your resume but it’s listed on your LinkedIn profile or some other lead gathering site has your information listed and you cannot have it removed. So it only takes one simple Google search for someone to find that discrepancy and question your integrity.”

There you have it. Forgive me if I’m stating the obvious, but these weren’t exactly obvious to me.

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Bigger Raises on the Way?

465463337The numbers have been awfully similar, and awfully stagnant, for some time now.

Employees in the U.S.—those lucky enough to get a raise—have been receiving, on average, something in the neighborhood of a 3 percent bump in pay each year. And there have been no shortage of experts forecasting comparable increases in the months ahead.

Still, there’s reason to be optimistic that things will start looking up in 2015, according to New York Times senior economics correspondent Neil Irwin. In an online piece appearing this week, Irwin asks whether pay raises will become more commonplace this year, and sees at least three recent signs that may point to “yes.” Specifically:

  • The number of available jobs in the U.S. rose to 4.97 million in November—the highest that figure has been since 2001—as seen in the Labor Department’s latest monthly job openings report.
  • The recently-released National Federation of Independent Business Small Business Optimism Survey finds overall optimism among small businesses at its highest point since 2006, with the proportion of small businesses planning to increase compensation in the next three months 17 percent higher than those that planned decreases.
  • Hartford, Conn.-based health insurer Aetna has announced that, beginning in April, it would set a minimum hourly pay rate of $16 for its workers, which Irwin described as “the most interesting piece of evidence for rising wage pressure.” This increase equates to a roughly 11 percent jump in pay for 5,700 claims administrators and various low-level workers at Aetna.

The company is “counting on the raise to make it easier to retain good employees and recruit for vacant positions,” says Irwin, who posits that continuing job growth could find organizations that fail to raise wages “at a competitive disadvantage, losing their best workers to companies like Aetna that try to get ahead of the curve a bit with pre-emptive raises.”

Whether that scenario plays out remains to be seen, of course. Irwin acknowledges as much, allowing for the possibility of the job growth rate flattening as the U.S. inches closer to full employment, and/or the millions of people no longer in the workforce re-entering in large numbers and subsequently holding down wages.

Nevertheless, the aforementioned developments present “a coherent, consistent story,” says Irwin, with employers looking to fill more openings, small businesses expecting to raise pay and “one giant employer … doing exactly that.”

“Add it up,” he says, “and Aetna workers may not be the only ones seeing raises this year.”

Indeed. Aetna employees will certainly not be the only ones receiving raises in 2015. But it will be interesting to see if more large organizations follow Aetna’s lead and begin to break the 3-percent threshold that’s been the norm for so long.

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What Workers Want and How to Supply It

As most of you embark on your first official work day of 2015, and Bruce-Tulgan-New-Photo-June-2014-200x300just in case a New Year’s resolution was to treat your employees even better this year than last, I thought I’d start you off with some suggestions from workplace and demographic expert Bruce Tulgan.

As I noted in this earlier (summertime) blog post about his recent book, The 27 Challenges Managers Face, Tulgan, CEO and founder of New Haven, Conn.-based management consultancy RainmakerThinking Inc., is pretty authoritative when it comes to employer-employee relationships.

In this more recent post, What Employees Want and How to Give It to Them, Tulgan once again relies on his and Rainmaker’s more than 20 years of research into workplaces and manager-employee relationships to give you these “key elements of every job that employees typically care about,” he says.

As he puts it in the post:

“You want to be generous and flexible with your employees. Why wouldn’t you? Everybody is working harder. Everybody is under more pressure. Everybody needs more than what they are getting.

If you are the boss, one of the most important parts of your job is taking care of your people. Remember, people work to take care of themselves and their families. They want your help. Some managers consistently do more for their employees. If you’re not one of those managers, what is your problem?”

He’s not the only one stressing the importance of treating workers with respect and helping them develop — especially as more millennials and Gen Zers enter the workforce. But he’s one of the few with this much research behind what he recommends.

So here’s Tulgan’s list of what employees really care about:

  1. The ability to earn more money. This is all about the compensation package. What is the base pay and the value of the benefits? How much of the pay is fixed? How much is contingent on clear performance benchmarks tied directly to concrete actions the individual employee can control? What are the levers for driving the pay up or down?
  2. More control over their own schedules. What is the default schedule? How much flexibility is there? What are the levers for achieving more or less scheduling flexibility?
  3. Relationships at work. Who will the employee be working with? Which vendors, customers, co-workers, subordinates, and managers? What are the levers for controlling who the employee has a chance to work with (and/or avoid)?
  4. Task choice. Which regular tasks and responsibilities will the employee be assigned to do? How much of it is “grunt work” (tedious or otherwise difficult recurring tasks)? Are there any special projects? What are the levers for controlling the employee’s opportunities to work on more choice tasks, responsibilities or projects?
  5. Learning opportunities. What basic skills and knowledge will the employee be learning in order to handle his basic tasks and responsibilities? Will there be any special learning opportunities? What are the levers for controlling access to those special learning opportunities?
  6. Location and workspace. Where will the employee be located? How much control will the employee have over his workspace? Will there be much travel? Are there opportunities to be transferred to other locations? What are the levers for controlling these location issues? Within a given workspace, how much latitude will the employee have to customize his/her immediate surroundings?

Tulgan says the key to making these desires work for you has a whole lot to do with how you leverage them, as bargaining chips. He offers these examples:

  • “You don’t want to work on Thursday? I’m glad to know that. Here’s what I need from you by Wednesday at midnight.”

  • “You want your own office? Here’s what I need from you.”

  • “You want to bring your dog to work? Great. Here’s what I need from you.”

  • “You want to have lunch with the senior VP? Here’s what I need from you.”

“When managers are able to [leverage employee desires and business needs like this],” Tulgan says, “they are giving the employee control over [his or] her rewards by spelling out exactly what [he or] she needs to do to earn them.

“In exchange,” he says, “the employee will probably be willing to do a lot [more] — to work longer, harder, smarter, faster or better” — while getting a valuable and immediate reward in return.

Sure, you can say all this is intuitive, but I would counter with, “then why aren’t more employers doing it?”

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2014’s Top 10 Posts

Here at The Leader Board, it was another interesting year covering the HR arena, with issues ranging from the controversy surrounding the HR certification, to lawsuits based on a worker’s commute, to HR leaders’ efforts to ensure their organizations’ compliance with the Affordable Care Act and various other legal requirements, just to name a few.

Below are links to the top 10 most-read posts of 2014, according to Google Analytics.

When viewed together, the posts create an accurate mosaic of the issues HR leaders are faced this year and are likely to continue dealing with into the new year.

Enjoy!

  1. SHRM Rolls Out New Certification (May 13)
  2. HR Plaintiffs Build Their Case Against Lowe’s (Jan. 24)
  3. Google Tackles Incentives and Rewards (April 29)
  4. More Restrictions on Criminal-Background Checks (Feb. 10)
  5. Employers Missing ADA Coverage in FMLA Cases (June 30)
  6. Friedman Shakes It Up at SHRM (June 23)
  7. ‘The 27 Challenges Managers Face’ (July 28)
  8. Who’s Leading the Way? (Nov. 13)
  9. Woman Sues Ex-Employer Over Commute (July 2)
  10. Giving HR the Boot (April 9)
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A Blockbuster Hack

By now, I’m sure most of you are quite familiar with Sony’s data breach, which has occupied headlines over the past couple of weeks.

176217375As you might expect, much of the attention surrounds the hacker’s decision to post some of Sony’s yet-to-be-released movies, including a remake of Annie and a new film titled The Interview — a comedy about two American journalists who are recruited to assassinate North Korea’s leader Kim Jong-un. A group named Guardians of the Peace have taken credit for the cyber attack, but some have speculated the North Korean government could be the real culprit here, since it’s none too pleased with The Interview’s storyline. (Others doubt this is the case, and North Korea has publicly denied its involvement.)

Tom Kellermann, chief cybersecurity officer at the private security firm Trend Micro, told the New York Times after the story broke that “unlike stealth attacks from China and Russia, Sony’s hackers not only aimed to steal data, but also to send a clear message. ‘This was like a home invasion where, after taking the family jewels, the hackers set the house ablaze,’ ” he said.

Though it certainly has been well covered in the mainstream press, just a tad less attention has been paid to the non-creative information liberated from Sony’s computers—employee Social Security numbers, healthcare records, salary information and performance reviews. Sure, Sony isn’t the first to experience such an HR data breach, but there’s little question the scope and nature of the information made public (which includes salaries of executives) make this breach especially noteworthy.

I can only imagine the kind of disruption this is likely causing at Sony—and the toll it’s taking on productivity. Not to mention the financial toll it’s going to have.

I also have to think more than a few CEOs, after reading the various stories appearing in the press, were once again wondering, “Could something like this occur here?”

Yesterday, I asked Gordon Rapkin, CEO of Archive Systems, an HR-document-management firm based in Fairfield, N.J., for his take on what happened at Sony.

“My impression is a chunk of the Sony HR breach has to do with people there who kept things on their computers that shouldn’t have been kept there,” he said. What the field, he adds, calls “shadow files.”

What’s more, Rapkin said, the fact that all this information was unprotected and unencrypted and seemed to be available in the same trove that was pilfered is pretty surprising. “Usually,” he said, “[the information] is carved up in different systems and kept in different files—with salary information in one place, benefit information in another, and employment and performance in a third. But here, it looks as though all of this was accessible in the same place. That’s surprising, especially when you consider HR information represents some of the more sensitive data a company possesses.”

Lisa Rowan, vice president of research at IDC in Framingham, Mass., agrees. “It seems odd for [these] to be stored together,” she said.

At a recent records-management conference he attended, Rapkin said his company surveyed attendees on how many felt HR followed their organization’s information-governance policies. One-third of those queried, he said, responded that HR didn’t follow those policies and procedures. Hardly a vote of confidence.

Perhaps Sony is the latest company to get hit, Rapkin explained, but, he added, “I think the problem may be fairly common.”

(Looking for more thoughts about this topic?  You might want to check out “4 security takeways from the epic Sony hack.“)

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HO HO HO-liday Bonuses

It’s that time of year again!

No, I’m not talking about Christmas, but rather the annual tradition (depending on where you work, of course) of holiday bonuses.

Two new polls on the topic of holiday bonuses were recently released by Oklahoma City-based Express Employment Professionals. The polls show that, while cash tops both sides’ wish lists, there’s precious little consensus on other “shows of appreciation.”

In an online poll of more than 200 employees and job seekers, they were asked, “How do you wish your company showed appreciation to employees?” They responded:

Cash Bonus 27%
Pay Raises 13%
Days Off or Shortened Holiday Hours 9%
Gift Cards 5%
Gift Items Other Than Money 1%
A Holiday Party 1%
Other 1%
A Combination of the Above 35%

In a separate online poll of 400 respondents, business leaders were similarly asked, “What type of holiday bonus will you give your employees this year?” While 34 percent said cash, another 21 percent said, “We will not give holiday bonuses.”

In addition, of the 7 percent who chose “other,” 27 percent self-reported Scroogish answers such as “no holiday bonuses ever.”

What Type Of Holiday Bonus Will You Give Your Employees This Year?
Cash 34%
We Will Not Give Holiday Bonuses 21%
Gift Cards 12%
Other 7%
Extra Days Off    3%
Tangible Gifts 3%
A Combination of the Above 19%

“During the holiday season, it’s important for businesses to show their appreciation to their employees,” said Bob Funk, CEO of Express, and a former chairman of the Federal Reserve Bank of Kansas City.

“It can be disheartening for an employee to feel unappreciated, yet our poll indicates that more than a fifth of employers won’t give their workers anything this holiday season. You don’t have to be extravagant about your holiday bonuses, but it’s important to show recognition. As one respondent told us, ‘A thank you note will suffice.’ ”

So even if your company isn’t planning on handing out envelopes with cash in them this season, you should at least be preparing for some sort of expression of appreciation for your workers.

‘Tis the season!

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HR: Stewards of Compensation?

Forbes contributor Robin Ferracone just posted this morning an interesting Q&A she conducted last month with Jerry McGrath, DHR International’s global HR practices leader, on the topic of HR’s role in determining executive compensation.

In the piece, Ferracone — an executive compensation consultant for more than 30 years — tells McGrath that “the expediency and overall success” of an organization’s compensation program depends on great collaborations with the HR community:

 We believe the role of HR is very important, and we like working closely with the HR team as well as the compensation committee of the board. If we don’t work closely together, surprises inevitably arise, and no one likes surprises – at least in this context.

With that said, Ferracone then highlights a few pitfall areas for HR executives to avoid in the comp arena.

“I have to admit, it was easier to come up with the roles HR should avoid,” she says, which include:

  • CEO advocate: This approach does not play well with the compensation committee and sets up an issue of trust;

  • Peacekeeper: Some eggs may need to be broken to make an omelet; and

  • Copycat or scared-y cat: HR shouldn’t be afraid to proffer opinions. HR deserves to have its own point of view heard.

She then offers five areas HR executives can focus on “to become the stewards of compensation” at their organizations:

1.  Regulation: When it comes to the CEO Median Pay Ratio disclosure, keep it simple. Interpret and clearly communicate the numbers for shareholders. Keep it low-key.

2.  Shareholder Engagement: Engage with shareholders and proxy advisers, but at the right time. Listen carefully to their thinking, ideas and concerns, but don’t feel you’re wedded to them in your design. Instead, wed yourself to your company’s strategy.

3.  Linking Talent to Strategy: Compensation has largely been a backward-looking exercise.  We need to look forward in order to protect our talent franchise. As you think about retention and  workforce planning, you need to think about how to link talent planning to compensation.

4.  Managing Dilution and Talent Retention: For a struggling company, you must recognize when equity isn’t doing its job. You need to think differently about how to compensate in this environment.

5.  Build Trust and Collaborate: The best approach is to work collaboratively with both compensation committees and consultants. Be engaged in the process and refrain from advocating for the CEO.

“In short,” she says, “HR needs to work with management and the compensation committee to ensure that executive interests are aligned with shareholder interests.”

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Good News: I Quit

According to a new Reuters analysis of the latest monthly U.S. Labor Department labor data, Americans quit their jobs in September at the fastest rate in over six years, to the tune of 2 percent of U.S. job-holders, or about 2.8 million workers.

And while it may seem counterintuitive to think that a rise in the quits rate — or the number of people quitting their job in a given month — would actually be a good sign for the overall health of the economy, such is the case in the murky world of economic indicators.

But why is it a good thing when more people quit their jobs? Two reasons, according to Reuters:

One, the quits rate fell during the  recession and has been slower to recover than other labor market indicators because workers were hesitant to make any job changes in uncertain times.

Some analysts, the Reuters piece notes, believe this has helped keep wage gains stagnant even as the jobless rate has fallen because employers don’t have to raise wages as much to retain talent when there is less employee turnover.

Second, the report notes Federal Reserve Chair Janet Yellen has signaled the quits rate as an indicator she is following on her “dashboard” for assessing progress in the labor market’s recovery.

“It’s definitely good for wages,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. “Also, the chair of the Federal Reserve is looking at it, and if she’s looking at it, we have to as well.”

So if you happen to notice a rise in the quit rate of your own organization, you can either take solace in knowing it’s contributing to the overall health of the economy, or else reevaluate your compensation and retention programs to ensure your best talent doesn’t float out the door on the rising tide of the economy.

Just like with economic indicators, it’s all in how you look at it.

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