Author: Site Staff

Technology has dramatically changed salary surveys, giving companies—and employees—unprecedented access to information on the market value of almost any job imaginable.

   At first, that sounds great: Salary information is infinitely more useable now that it’s on the Web, as opposed to being trapped in the pages of a report. Users can specify their parameters—employee education and training, company size, industry or location—to arrive at very specialized salary profiles.

   If a client wants to know the salary range for software engineers in Seattle with five to nine years of experience who program in C++ for e-commerce companies, that can be delivered with ease, says Fred Whittlesey, chief compensation officer for Payscale. The online compensation-information company is based in Seattle and began business in 2002. The company won’t disclose the size of its database. It serves small and midsize employers, as well as individuals looking for jobs—or a raise.

   “We are trying to say that businesspeople can’t live with wide variation and stale data,” he says. “… We think by providing more immediate data and more refined data, you make better business decisions.”

   The ability to reshuffle information has created its own set of problems, however. Companies used to be content with compensation information on broad benchmark jobs, says Bill Coleman, senior vice president of compensation for Salary.com, which also serves both employers and individuals. Its database includes information on 1.3 million current job holders and 5,000 companies. Satisfaction with more general benchmark salary data went out the window once employers got access to actual databases and were able to set up their own search parameters, he says.

   “The easier it is to get data, the more you want,” he says. “The demand is increasing because the flow is easier. Bosses and CFOs and CEOs and managers are expecting to find more data.” That puts additional pressure on comp professionals to keep fine-tuning results. Sometimes, they get just as caught up in the data chase, he says. “It’s like crack for comp people.”

   It can be just as addictive for employees and job seekers. They can go to the Web to see what a job is “worth.” They’re not shy about confronting their current or would-be employers with that information.

   “Employees are aware of the compensation tools they can use,” Whittlesey says. “They prepare themselves for meetings, or hiring, or performance reviews. That’s challenging HR to change and become more open.”

   Some Web-based salary information that employees present to make their case for a raise can be too broad to be useful, says Steve Brink, global leader for human capital products solutions at Mercer Human Resource Consulting. Mercer has been in the compensation survey business for 40 years and has 15,000 company entries in its global database. In the U.S. alone, the surveys cover more than 15 million employees.

   Employers need to be sure they are armed not just with a job title and the salary for it, but with the right set of comparisons to counter an employee’s argument, he says. Job content, not just title, also is critical

   Brink also disputes the notion that too much compensation information is overloading employers, at least among Mercer clients. Most organizations that have a solid compensation department know what they want beforehand, he says.

   “They have an idea of peer group they want, and where they want to be matched to positions. How do you want to pay? Is it the 75th percentile of this industry, this peer group? They can do that analysis. They can slice and dice to get to right answer.”

   Technology notwithstanding, market data is only one way of gauging what a job is worth, the experts say.

   “Companies used to rely heavily on internal equity and salary structure,” Coleman says. “But in this addiction model, the more you think you can get, the more you want. HR and comp are more driven by external market data than internal structures.”

   Brink thinks that picture is changing. Before 1970, compensation was set largely by the measure of a job’s worth inside the organization, he says. As the year 2000 approached, a rapidly expanding economy and a highly competitive job market meant there was “a push to get much more market-focused.”

   Now, he says, companies are again weighing their own salary imperatives with what the market indicates a job might be worth. “It’s going back to the center,” Brink says.

Workforce Management, April 24, 2006, p. 35 — Subscribe Now!

The landmark Massachusetts law requiring companies with more than 10 employees to offer health insurance could be a boon—or bust—for staffing agencies and other companies hired to act as employers of record.

For small companies in Massachusetts that don’t offer health insurance or have part-time, uninsured workers, it may be easier to turn employees into contract workers than deal with the administrative burden imposed by the state’s new law, staffing professionals say. The law requires that employers make health insurance available to employees, either under their own plan or through a pool created by the state.

“Clearly, if you are a 10-person company and you want to hire the eleventh, you might want to get that person from a temp agency,” says Michael Connors, CFO of Professional Staffing Group in Boston, which will issue 5,000 W2s this year on behalf of clients.

Staffing firms or professional employer organizations are considered the employer of record by the state because they issue an employee’s W2 tax form on behalf of their client. Under the new law, they will be responsible for making health insurance accessible to those employees who work at least 30 days for the company.

Employers must also subsidize some portion of the premium, according to the legislation that was signed into law by Republican Gov. Mitt Romney on April 12. Businesses that don’t make a “fair and reasonable” premium contribution—the meaning of which will be determined by state regulators—will likely have to pay a $295 fee per employee annually. This fee was vetoed by Romney but will probably be overridden by the Democratic-controlled Legislature.

For a company that does not offer its employees health coverage or does not want to deal with administrative hurdles of compliance, using a PEO makes sense. Eight out of 10 PEOs nationally offer some type of health care plan, according to the Edie Clark, a spokeswoman for the National Association of Professional Em­ployer Organizations, whose 350 members re­present 100,000 small to midsize businesses nationally.

But many PEOs do not contribute to the premium. This will change if they want to continue to do business in Massachusetts.

Genesis Consolidated Services, based in Burlington, Massachusetts, offers 20 different health care options but does not subsidize the plans’ premiums. Monette Galello, vice president for human resources and risk management at Genesis, says she believes the Massachusetts law will boost companies like Genesis, at least in the short run. But, she adds, any increase in the cost of complying with the new law will be passed on to the client.

Companies and state legislators alike hope that universal coverage and higher Medicaid reimbursement rates for doctors and hospitals will bring the cost of insurance down for everyone. But until the law takes effect in January, that hope remains a hypothesis.

“The biggest question mark,” says Jon Hurst, president of the Retailers Association of Massachusetts, “is whether there will be bottom-line savings for employers.”

That concern, especially for staffing and employer organizations that have a national reach, will grow if variations of the Massachusetts law take form in statehouses across the country.

“This is a negative for us because we’re in 50 states, and if 50 states come up with 50 different rules, this will make life difficult for us,” says Doug Goin, CFO of Orlando, Florida-based Zero­Chaos, a provider of skilled, short-term workers for the tech industry. “It will become a real employer’s nightmare.”

—Jeremy Smerd

General Motors has offered a deal to shed itself of much of its union-represented workforce, but it’s only the first of many steps the company must make to become competitive, observers say.

Last month, GM worked out a deal with Delphi and the United Auto Workers that allows the automaker’s113,000 UAW-represented hourly workers and 13,000 of Delphi’s 23,000 UAW workers to receive $35,000 to $140,000, depending on their seniority, if they retire early. But it remains to be seen how many workers will take the company up on the offer.

“I hope GM is better at selling buyouts than they are at selling cars,” says Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts.

The buyout’s success will depend on how risk-averse the workers are, Chaison says. “The fact is, they don’t know what they will get if they reject it,” he says.

Assuming that many workers accept the offer, GM still runs the risk that its best workers, who are more mobile, will be the only ones to leave, says Gregory Homer, a partner in the Washington, D.C., office of law firm Drinker Biddle & Reath.

“There is a huge risk of brain drain,” he says. “Then GM ends up with a workforce that is less productive than it was before.”

The bigger question is what will GM do with the workforce that remains after the buyouts are over.

The company has a big challenge ahead in “repairing the relationships with the workforce,” Chaison says. The employees feel that they have been making lots of sacrifices, and those who stay may suffer from “survivor’s guilt,” he says.

“The workers now feel like there is no plan other than cutting costs,” he says. “The company has to communicate a plan to these workers so they feel encouraged.”

GM might actually get a morale boost in its workforce. Under the agreement with the UAW, the company will bring back 5,000 Delphi workers by September 2008.

“These people never wanted to leave GM in the first place,” says Arthur Wheaton, a workplace and industry education specialist at Cornell University. “So they may have a better attitude and be excited about turning the company around.”

On a broader level, GM needs to completely rethink how it wants its workforce to act, says Mark Neuberger, head of the employment law group of Buchanan Ingersoll in Miami. This means identifying the skill sets that are vital to compete and developing training and incentives to encourage those skills, he says.

GM has to become less bureaucratic, says Robert Chiaravalli, a labor lawyer and a principal at Strategic Labor and Human Resource in West Bloomfield, Michigan.

“They need to get lean quickly to make up for the potential skills gap created by workers leaving,” he says. This doesn’t just mean becoming smaller, Chiaravalli says. “They need to figure out how to inspire creativity and innovation to introduce better cars.”

—Jessica Marquez

As House and Senate negotiators got back to work in late April, the clock was ticking on pension reform—and the longer it takes to reach an agreement on a final bill, the more time business will want to adjust to the changes it ushers in.

An agreement may be reached by the end of May on a final bill that likely will require businesses to fund 100 percent of their pension promises. One of the major sticking points is the use credit ratings to determine whether a company must increase payments to its pension plan. A proposal to give airlines longer than other businesses to shore up their pensions also is generating controversy.

Pension reform is driven in part by a nearly $23 billion deficit at the Pension Benefit Guarantee Corporation and an aggregate $450 billion in underfunded pension liabilities. The funded status of pension plans improved slightly in 2005, according to a new study by Milliman Consultants and Actuaries.

Although the April 15 deadline for the first pension payments of the year has passed, a leading business advocacy group, the Pension Coalition, says it is not as concerned about the calendar as it is about the substance of the final bill.

“The overwhelming sense of people in the coalition is that Congress needs to do as good a job as possible and get this right rather than get it done on a certain date,” says Martin Reiser, manager of government policy for Xerox and spokesman for the coalition.

But the group, comprising about 200 companies and trade associations, also warns that Congress must give businesses time to adjust.

“The longer they go, the more critical it is that they put off the implementation date for a year,” Reiser says.

There may not be enough time for the Treasury Department to write the regulations necessary to implement pension legislation by Jan. 1, according to Reiser. Proposals call for funding requirements to increase from 92 percent to 100 percent incrementally beginning in 2007.

“Part of the problem is what does 92 percent mean?” Reiser says. “Treasury would have to spell that out.”

Beyond the uncertainty of pension reform, businesses with defined benefit programs also face the prospect later in the year of new rules from the Financial Standards Accounting Board that would require them to put the funding status of their pension plans on their balance sheets. Currently, that number is contained in footnotes of financial reports.

A study by Watson Wyatt shows that the accounting change would cut shareholder equity of the Fortune 1,000 by 10 percent, hitting transportation, communication and utility companies particularly hard. Milliman calculates that shareholder equity would have decreased by $222 billion for 100 large firms with defined benefit pension plans in 2005 if the rule had been in effect.

But so far, there’s no sign that businesses will drop defined benefit plans en masse.

“It’s too early to tell whether we’re going to reach a tipping point where there’s a rush to the doors,” says Alan Glickstein, a senior consultant at Watson Wyatt.

—Mark Schoeff Jr.

A new study argues that companies should figure out ways to work with independent professionals, who are happier and better compensated than their traditional counterparts.

The report, from staffing and executive search firm Hudson Highland Group, also finds that so-called “IPros” are more likely to value their workplace autonomy. According to the study, while 86 percent of independent professionals worked full-time at corporations before they became independent, it has been seven years since the typical IPro held a corporate job.

“Smart employers are not only focusing on their full-time employees, but developing strategies to relate to and manage highly skilled professionals who are not under their direct control,” Jon Chait, chief executive of Hudson Highland Group, said in a statement.

Independent professionals point to a lack of benefits, such as health insurance and paid vacation, and inconsistencies in their workload as their main problems, according to the study. It surveyed more than 2,100 well-educated and highly paid workers in the United States, Europe and Australia.

The U.S. workforce is increasingly made up of independent contractors, some of whom are professionals. According to the U.S. Labor Department, there were 10.3 million independent contractors in February 2005, accounting for 7.4 percent of total employment. That figure is up from 6.4 percent in February 2001. Of the 10.3 million independent contractors this past February, 18.4 percent were in “professional and related occupations.”

Hudson’s conclusion about relatively happy IPros echoes Labor Department research on independent contractors in the U.S published earlier this year. The vast majority of independent contractors–82 percent–preferred their work arrangement to a traditional job, the Labor Department said.

—Ed Frauenheim

With defined-benefit pensions collapsing at a steady pace, one ailing industry is partially bucking the trend. In negotiations with unions, airlines are putting many employees into multiemployer plans, a form of the defined-benefit arrangement.

Bankrupt Northwest Airlines is the latest example. Two unions have agreed with the carrier’s proposal to replace the company’s faltering pension plan with the International Association of Machinists National Pension Fund.

The International Association of Machinists fund is supported by 1,700 contributing employers and has $6 billion in net assets. It serves more than 68,000 retirees and beneficiaries. Proponents say it has remained strong because companies are compelled to make contributions each month and the fund is managed by an independent board.

Northwest’s agreement, covering 7,695 clerical, office, fleet and passenger service employees, was accepted on March 7. Two other unions represented by the machinists rejected the company offer, which also included wage and job cuts and health care benefit reductions.

Other airlines that have put employees into the machinists’ plan include United, Aloha and US Airways. At Continental, union employees have the option of going into the machinists’ plan now or later if the airline freezes its pension.

Northwest wouldn’t comment on union negotiations, and United didn’t respond to an interview request. The practical effect of airlines taking the multiemployer option is the same as making a consistent and predictable payment into a direct-contribution pension plan, except that the money is going into the International Association of Machinists fund.

The union boasts that its plan is holding down the fort for defined benefits. Northwest, like most airlines, is putting pensions behind it. It is pursuing a long-term strategy of establishing a 401(k) retirement program for its employees.

“The only defined-benefit plans left in the airline industry will be our multiemployer plan,” says Joe Tiberi, spokes­man for the International Association of Machinists and Aerospace Workers. “Com­pany-sponsored pension plans are going to become extinct.”

But before defined-benefit plans fade away, airlines are seeking a provision in pension reform legislation that would give them 20 years to pay off unfunded pension liabilities. Other companies would get seven years under pension bills that are being melded by House and Senate negotiators on Capitol Hill. Only the Senate measure offers airline relief.

The issue is both propelling and complicating the talks. “The urgency is coming from the airlines,” says Janice Gregory, senior vice president of the ERISA Industry Committee. “They need something and they need it now.”

Northwest wants more time to pay off its $3.7 billion pension liability. “We continue to aggressively pursue passage of this legislation,” says Kurt Ebenhoch, director of media relations for the airline.

Pension bill negotiators also are grappling with proposed changes for underfunded multiemployer plans. Although the machinists stress that their plan is sound, some multiemployer plans have run into the same problem as their single-employer counterparts—promising more than they can deliver.

When that happens, the House would allow remedies that opponents say would deprive many laborers of early retirement benefits they already have earned.

“Unless Congress addresses these issues in the right way, they’ll be cutting the promised benefits of millions of employees and retirees,” says Karen Friedman, policy director for the Pension Rights Center.

—Mark Schoeff Jr.

Dear Aiming High:



Six Sigma is a methodology that focuses on understanding and meeting customers’ needs by using a variety of tools, especially statistical analyses, to drive performance metrics. Although its roots are in manufacturing, there’s no reason you can’t adopt Six Sigma for your service environment.

You could use Six Sigma to tackle a variety of strategic human resources projects, such as:

• Lowering turnover
  
• Paring prescription drug costs
  
• Reducing injuries at work
  
• Improving recruiting time-to-fill
  

Six Sigma methodologies include a project plan known as DMAIC that is used to improve business processes within human resources. DMAIC is an acronym that describes the basic steps you take:

Define — Identify the problem

Measure — Establish metrics to quantify

Analyze — Figure out what the metrics tell you

Improve — Craft a solution based on your analysis

Control — Find a way to sustain improvements

Let’s take an example. Say you want to reverse a trend of high turnover. You would:

Define the problem: reducing unwanted turnover.

Measure: identify key measurements underlying turnover.

Analyze: understand key factors and trends that create turnover.

Improve: identify and execute a plan to address those factors.

Control: implement controls to lower turnover on an ongoing basis.

Historically, human resources professionals have helped with the heavy training requirements when their organizations adopt Six Sigma, either in whole or in part. So expect to play a pivotal role in equipping your workforce. Aside from training, other issues you may need to address include: setting rewards and recognition for project teams; staffing those teams geared toward improving your business processes, and instilling Six Sigma methodology as a staple of your workplace culture.

If you’re like most human resources professionals, you initially might be uncomfortable with the statistical aspect of Six Sigma. Yet it enables you to get beyond merely measuring HR activities and focus on strategic goals. When integrated with your human resource management practices, Six Sigma should help you improve service levels and efficiency. For your customers, few things are more highly prized.

SOURCE: Scott Weston is a certified Six Sigma black belt and principal ofFalcon Strategic Group, San Francisco, June 3, 2005.

LEARN MORE:Building Frameworks for Six Sigma Success

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Dear A Little Too Casual:



Your company can improve morale by strengthening performance appraisals. In turn, performance appraisals strengthen retention by giving employees meaningful, constructive feedback that helps them develop their career skills.

To design your “starter” performance evaluation process, determine the competencies required of employees at all levels (such as initiative or accountability for results or continual improvement). Be sure that those competencies are relevant to your company’s mission. If your company is in the software development business and requires creativity, include creativity as a competency. For a call center, customer focus or customer service is critical. Use the competencies to form the basis of the performance evaluation questionnaire.

Start with a simple rating scale (e.g., meets expectations, exceeds expectations, does not meet expectations). When providing feedback, always offer specific examples of times when the employee exhibited the behavior being described.

If an employee shows a need to improve, specify the performance you want the employee to exhibit. Remember to seek ideas from the employee as to how this performance might be achieved. Employees often quit because supervisors fail to establish a “performance partnership” with them. Employees should feel like their manager is there to help them as a coach, and not feel like their manager is an old-school disciplinarian.

When providing feedback to employees, remind them how their actions serve to advance the organization’s goals and mission. Feedback also involves coaching employees on job skills and tasks (the “what” of performance) as well as on behavior (the “how” of performance).

Also remember to provide feedback between annual and midyear evaluations. Frequent, informal feedback often has a greater impact than formal evaluations.

SOURCE: Patsy Svare, the Chatfield Group, May 31, 2005.

LEARN MORE: 87 other items onperformance appraisals, including several sample appraisals.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Event: The 2006 World Health Care Congress

April 17-19, 2006, at the Marriott Wardman Park Hotel, Washington, D.C.

What: A deep plunge into the issues of rising health care costs and what businesses, insurance companies, doctors, hospitals and others can do to address what has become one of the most pressing national—and international—economic issues.

Show info: For more information about the show, click on www.worldcongress.com/events/NW600/index.cfm

Show notes:

Date: Tuesday, April 18, 2006

Buzzword: “Consumer-driven”

Engagement party: Companies lined up to tell stories of how they reduced costs by “engaging the consumer.” Textron reported that three years after switching to a high-deductible health plan, costs are decreasing. Other companies are beginning to offer high-deductible plans, including AT&T and American Express, the latter of which has created a new credit card to integrate health savings accounts and pay for out-of-pocket costs. Lowe’s executives talked about the company’s efforts to create “transparency”—another buzzword—by culling data from doctors nationwide in order to rank them by efficiency, cost and quality.

Changing the subject: UnitedHealth Group CEO William McGuire, embroiled in reports of improper stock-option granting to executives amid missed earnings reports and sagging stocks, chose instead to speak of the power of technology to transform health care. McGuire envisions a future when a “smart card” credit card contains a patient’s medical history.

–Jeremy Smerd