Randstad recently released its annual salary guide.
Staffing Agency Randstad released its 2017 Salary Guides, which cover seven industries including human resources.
With the low unemployment rate and a skilled labor shortage, HR organizations must position themselves to attract and retain top talent, according to the guide released Feb. 21. Across generations, gender and education levels, salary and benefits was cited as the most important factor when choosing an employer.
The guides provide an in-depth look at salaries for many in-demand roles:
Human resources
Information and technology
Engineering
Finance and accounting
Life sciences
Manufacturing and logistics
Office and administration
“As a staffing agency, we feel it is our responsibility to provide our clients and employers with the salary information they need to make employment decisions in their best interests,” said Jim Link, chief human resources officer of Randstad North America. “With the strong economic growth over recent months, workers can anticipate an average pay increase of 3 percent in 2017.”
Compensation information is highlighted for specific positions within these sectors. Over 40 geographic markets are grouped into five pay zones that offer similar pay rates. Salaries in specific regions vary based upon local market conditions and position-specific requirements such as company’s size, experience levels, professional certifications or certain software knowledge. The data reflects base compensation and is derived from a combination of private and public companies through the Economic Research Institute.
According to Randstad, among the highest compensated lower-level HR positions is a benefits and compensation specialist, earning a base salary of $79,644 per year in areas including San Jose, California, and Fairfield County, Connecticut. The average salary for an HR manager in the professional services industry is $78,898 to $100,940 in New York. The lowest compensated lower-level HR position is a human resources coordinator, earning a base pay of $32,187 annually in geographic markets including Jacksonville, Florida; southern Nevada; Columbus, Ohio; and central Pennsylvania.
In Chicago, the lowest salary for a VP of HR is $126,690 in the nonprofit sector, according to the report. Other salaries from the guide: The highest VP of HR position earns $190,550 in the insurance and IT/software industries. A senior HR manager earns $79,644 to $123,600 annually. The average salary for an HR coordinator in the health care industry is $37,131 to $47,792. The average salary for an HR generalist in the financial services industry is $63,705 to $84,924. A learning and development director earns $95,532 to $163,410 annually. The highest salary for head of recruitment is $164,800 in the insurance, IT/software and financial industries.
Today’s talent pool is limited, and it’s difficult for hiring managers to fill open positions. “There are currently 5.5 million job openings and only 1.4 unemployed people per job opening,” said Link. Employers requiring candidates with specialty skills have an even smaller candidate pool from which to hire. The supply and demand of talent can significantly impact how attractive your compensation package must be to draw top candidates.
The guide provides a benchmark for assessing the strength of an organization’s pay rates against those of competitors. It’s become a candidate-driven market where job seekers utilize tools to determine if they are getting paid what they’re worth. Knowing the market average for specific positions and nearby geographies can ensure candidates and employers receive the most competitive offers. “The guides serve as a reality-check for securing the best talent in a competitive, job-heavy, talent-short economy,” said Link.
Mia Mancini is a Workforce intern. Comment below or email editors@workforce.com.
It’s important for businesses to understand the different types of wage garnishments and learn ways to accurately and efficiently process them.
Proper management of wage garnishment can be especially crucial to growing businesses because as their hiring increases, they may also be inadvertently increasing their garnishment liability. That’s why it’s important for an employer to remember four things can help appropriately and accurately process wage garnishments while remaining compliant.
1. All garnishments are not the same.
Here’s a basic wage withholding definition: When an employee fails to repay a debt, a wage withholding court order can be issued against the employee’s earnings to satisfy that debt. This court order — also called a wage garnishment — requires the employer to withhold a portion of the employee’s wages and forward them to a third party. Wage garnishment orders also can be issued by government agencies such as the IRS, state tax agencies and the U.S. Department of Education.
Simple, right? A business receives an order about one of its employees and refers it to its payroll department to process by withholding the appropriate wages and forwarding it to the proper recipient.
There are six common types of wage garnishment. They are:
Child support garnishment comprises by far the highest volume of orders employers process, and, while some of the laws are very standardized, the law can vary by state.
Creditor garnishments are debts that occur when a person is delinquent on consumer payments (e.g. credit card debt). The creditor may take the debtor to court and seek a wage withholding order for the outstanding debt.
Bankruptcy orders. Based on research from the American Bankruptcy Institute, 97 percent of all bankruptcies are personal filings rather than business filings.
Student loans may be collected by the U.S. Department of Education, which may contract with collection agencies to enforce and collect the defaulted loans.
Tax levy garnishments can be issued at the federal, state or local level. Each state differs in its requirements and those laws may differ from federal levies.
Wage assignment occurs when an employee voluntarily agrees to have money withheld from his or her wages. Wage assignments are governed by state law and do not involve a court order. Since they are voluntary and the employee specifies the amount to withhold, they do not fall under the requirements of the Federal Consumer Credit Protection Act.
It’s important that employers keep in mind the type of debt owed, the party collecting it, and the laws applicable to that debt. Knowing which laws, rules, and regulations apply and keeping current on them when processing wage garnishments can be challenging for employers, and, if done incorrectly, may expose employers to various liabilities and penalties.
In addition, the six types of wage garnishments noted above are the most common wage garnishments; employers may receive other less common types of wage garnishments. It’s the employer’s responsibility to comply with and make sure all orders are processed in a timely manner and correctly whether or not they are familiar.
2. Wage garnishment can affect employee productivity and morale.
Most employers recognize that wage garnishment has a direct impact on employees. However, this impact can extend beyond their paychecks. Processing garnishments is not as straightforward as simply withholding wages from an employee’s paycheck and sending a payment. The process is far from simple and can be complicated by myriad emotions.
Employees often find it humiliating because the courts have intervened and employers have become involved in their private struggles.
Employees in this position may feel that they’re now working for the institutions to which they’re indebted rather than for themselves and their futures. Stress and anxiety are often natural extensions of the garnishment process.
An affected employee’s anxiety could show itself through decreased productivity or a lack of motivation. Employers can help affected employees and potentially decrease future garnishments by providing financial wellness training and counseling, as well as tax education, to help employees manage debt.
3. Wage garnishment can affect an employer’s finances and business efficiency.
Employees aren’t the only ones affected by wage garnishment. Employers expose themselves to financial and legal risk when they incorrectly garnish an employee’s wages, fail to file in a timely way, file a defective response, fail to follow specific requirements when sending payments, or make other missteps with a garnishment. Mishandling a garnishment can lead to a judgment against the employer for the entire amount of the employee’s debt, a lawsuit from the creditor or the employee, or other costs or penalties that the employer didn’t anticipate or budget for.
In the instance of garnishments for child support, employers could potentially feel the impact of laws designed to restrict travel. For instance, the Social Security Act was amended in 1997 with a sub-section that established the denial, revocation, or restriction of U.S. passports if the non-custodial parent has child support arrears of $2,500 or more. Additionally, some state agencies have the authority to deny or revoke drivers’ and professional licenses for past-due child support obligations.
If your business requires employees to travel internationally or employs drivers, these laws could impact an employee’s ability to do his or her job effectively and, by extension, impact the efficiency of your business.
Another current area of focus that could impact employers is in the creditor garnishment arena. Currently, the American Payroll Association is working with the Uniform Law Commission to establish a standardized processing for creditor garnishments through the Uniform Wage Garnishment Act, which proposes to standardize the wage-garnishment process for employers, employees and creditors. Currently, state laws differ significantly in their requirements regarding wage garnishment, from the beginning to the end of the garnishment, and are often outdated. This means businesses that operate in multiple states must identify and abide by these different legal requirements, which can potentially lead to processing errors, confusion, inefficiency and noncompliance.
Companies can help manage these challenges if they become familiar with garnishment laws and guidance from agencies such as the Federal Office of Child Support Enforcement, develop reliable and timely procedures for garnishment processing and ensure that policies are administered fairly for all employees facing a wage garnishment.
It may be useful to develop tools, resources and strong contacts with agencies, courts and garnishors. Staying close to these agencies may help your business remain aware of major changes to wage garnishment laws.
Consider participating in state and federally initiated pilot projects. These programs are valuable opportunities to positively build relationships, influence initiatives and provide needed feedback. Make sure you have established a way to monitor legislation that could affect garnishment processing.
Other steps an employer can take include participating with committees, attending conferences regarding wage withholding, and leveraging other contacts you’ve developed with the agencies, those imposing wage garnishments, or other employers.
4. Paper processing is the not the only option.
A study by the ADP Research Institute revealed that 7.2 percent of employees had wages garnished in 2013. Keeping pace with the proper and timely processing of wage garnishments is challenging for many businesses.
As wage garnishment volumes and laws intensify, garnishment processors have the option to use electronic funds transfer, or EFT, to save time, increase efficiency, streamline processes and potentially reduce costs.
Currently, virtually every child support state agency has the ability to accept child support payments via EFT, and some have even mandated employers to send payments electronically. Some tax levy agencies, trustees and student loan agencies also are implementing electronic payment capabilities. In addition to business efficiencies, EFT enables greater security of personally identifiable information, such as Social Security numbers.
Minnesota has passed legislation requiring employers to electronically file their response to a state tax garnishment summons with the state tax agency, and Wayne County Court in Michigan is piloting the option of electronic responses.
Electronic income withholding orders are already very popular. These enable states to electronically distribute income withholding orders and employers to electronically accept or reject them.
Clearly, wage garnishment can have a profound effect on the employee who is being garnished, as well as the employer who must implement the garnishment. It’s important for businesses of all sizes to understand the different types of wage garnishment, familiarize themselves with the laws governing them, and learn ways to accurately and efficiently process them.
Using best practices can help streamline an employer’s responsibilities and ease the potential anxiety an employee may feel with this sometimes-necessary workforce issue.
Julie Farraj is vice president of Garnishment Services for ADP Added Value Services. Comment below or email editors@workforce.com.
If you don’t like the answer, you can always change the question. Especially if you have money. Lots of money.
There are a lot of companies across America that struggle with diversity hiring. It’s under-utilized in multiple job families, and even as employers try to attract diverse talent, it hasn’t gone great.
After all, not everyone wants to work for your company. Throw in the fact that you can’t pay new hires anything they want without messing up your compensation equity, and most companies don’t make the diversity hiring progress they’d like to.
Salesforce has the same problems you do. But Salesforce also has innovation in their DNA.
So Salesforce did what any company with progressive DNA (and loads of cash) would do. They changed the answer, and thus the question. Turns out the answer isn’t more DIVERSITY, it’s more EQUALITY.
Confused? You’ll get it soon. TechCrunch recently reported that Salesforce named Tony Prophet the company’s first-ever chief equality officer. That’s equality, not diversity, and the distinction is important to note since the company said that a major focus for it was what it termed “the women’s issue.”
Initial interviews with Prophet yielded the following quote: “The notion of being chief equality officer — now that was very thoughtful and deliberate on Salesforce’s part and on Marc’s [Benioff] part versus being chief of diversity or chief of inclusion because you can have a diverse workplace or a diverse culture in many parts of America that are very diverse but are hardly inclusive and there’s hardly equality. We want to go beyond diversity and beyond inclusion to really achieve equality.”
Translation? Tech companies have huge issues finding enough females and minorities to work at their company, especially in the San Francisco Bay Area.
Earlier this year, Salesforce chairman and CEO Marc Benioff revealed that his company spent about $3 million in 2015 to equalize compensation across the company, closing the tech giant’s gender pay gap.
Of that $3 million, the equity increases were smaller and more spread out than you would think. Salesforce reports approximately 6 percent of employees required a salary adjustment, and roughly the same number of women and men were impacted. The HR pro in all of us would assume there’s equity increases embedded in that number that impact diverse male employees as well.
A quick look at Salesforce’s workforce diversity numbers shows the following: 70 percent male and 30 percent female; 67 percent white, 23 percent Asian, 4 percent Hispanic, 2 percent black, and 2 percent two or more races.
Translation: The company still has a lot of work to do, but by changing the conversation to equality, not diversity, they’ve effectively changed how they’re measured by the outside world.
I’m not saying diversity hiring in tech isn’t important. I am saying that Salesforce is working toward a related, equally important goal and now will be considered in a different light than other major tech companies, whom I would expect will follow suit soon enough.
Most companies subscribing to this publication can’t afford to write a huge check to support equality increases similar to the Salesforce initiative. But just because you don’t have $3 million lying around doesn’t mean you can’t do anything on the equality front.
The first and easiest action you can take is to make sure your offer process is less subjective. Most companies are turning over 20 percent of their workforce annually, which means you could be well on your way to resolving half your equity issues in three to five years.
The next tool in your pay equality arsenal is to stack rank the departments you want to fund equity increases for and start budgeting funds on an annual basis to take care of those over time.
If you can’t find enough diverse hires, it makes sense to ensure the ones you have (including women) are paid on equal footing to everyone else.
Then you obviously want to get your message out.
At Salesforce, that message includes the fact they’re changing the conversation from diversity to equality, with an emphasis on pay equity.
By focusing on pay equity/equality, Salesforce has created a masterstroke to relieve some of the diversity hiring pressure and is going all in, with first mover advantage and everything that comes with it.
I’m a cynic on most things. Even the cynic in me has to respect how Salesforce is controlling the narrative here.
Does this move from diversity to equality make Salesforce an employer of choice or a ninja/Jedi of public relations? I’ll let you decide.
Kris Dunn, the chief human resources officer at Kinetix, is a Workforce contributing editor. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.
Each month Workforce looks at important stats in the human resources sector. Here are the topics we’re keeping an eye on for January 2017. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.
The one employment-law question I’ve been asked most since waking up last Wednesday to the reality that The Donald will be The President (aside from, “How did this happen?” and for that I direct you to
The short answer? “No, it does not mean that.”
Beginning Dec. 1, the salary level for white-collar FLSA exemptions will increase to $913 per week, period. After all, the new regulations roll in on Dec. 1, and President-elect Trump does not become president until 51 days later. So, even if he wants to stop them from taking effect, he’s powerless to do so, and any legislative efforts would die at the hands of the current president’s veto.
The long answer, however, is a bit more complicated.
If you take a look at Trump’s campaign website, he has an entire page dedicated to “Regulations.” And Trump does not like regulations. What did his campaign promise he’d do to regulations once becoming president?
Ask all department heads to submit a list of every wasteful and unnecessary regulation which kills jobs … and eliminate them.
Reform the entire regulatory code to ensure that we keep jobs and wealth in America.
Issue a temporary moratorium on new agency regulations that are not compelled by Congress or public safety in order to give our American companies the certainty they need to reinvest in our community, get cash off of the sidelines, start hiring again, and expanding businesses. We will no longer regulate our companies and our jobs out of existence.
Decrease the size of our already bloated government after a thorough agency review.
If you ask any small business owner, the FLSA’s new salary test checks each of these Trumpian boxes.
Yet, this issue was not one on which Trump focused during the campaign. In the only campaign interview I could locate that touched on this subject, he did not call for repealing the upcoming FLSA changes outright, but instead called for “a delay or a carve-out of sorts for our small business owners.”
One possible solution? Take a look the bipartisan H.R. 5813, which would phase in the new salary test over four years, and eliminate its triennial re-indexing. If you are looking for potential models Trump might adopt, you could do a lot worse for a starting point.
The bottom line. You cannot, and should not, hope for a reprieve from these rules at the 11th hour. The new salary test is coming, regardless of what Trump may choose to do after the fact.
In other words, if you’re not prepared for these new rules, you better get prepared, and quickly, because in 16 days they become the reality of every business.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
Are you still struggling with how to handle your currently exempt employees who,
Let me offer a suggestion you may not yet have considered — the fluctuating workweek.
As an employer, you have two options to pay salaried, non-exempt employees:
Under the standard method, you calculate the employee‘s weekly rate based on the salary divided by the number of hours worked that week, and then pay the employee 1.5 times that rate for all overtime hours. Thus, if a non-exempt employee earns a salary of $1,000 a week, and works 50 hours in a week, the employee would earn an additional $30 per hours worked over 40 ($1000 / 50 = $20 per hour base weekly rate x 1.5 = overtime premium of $30). Thus, in this week, the employee would earn an additional $300 for the 10 hours of overtime, rendering his total pay for that week $1,300, not the customary $1,000 salary.
Under the fluctuating workweek method, you include the base-rate part of the overtime premium in the employee’s weekly salary, and only pay the 0.5 premium kicker as overtime. Using the same example as in number 1 above, the employee would still have an hourly rate of $30, but would only earn an additional $100 for the week, as under this method, $20 of the $30 overtime rate has already been paid as part of the base salary.
As you can see, there is a clear economic advantage to employers using the fluctuating workweek calculation to pay overtime to salaried non-exempt employees. You’ll realize a 66 percent savings on your overtime pay.
Under the FLSA, however, an employer cannot unilaterally implement the fluctuating workweek calculation. Instead, to pay salaried, non-exempt employees via this advantageous method, you must meet these four elements:
the employee clearly understands that the straight-salary covers whatever hours he or she is required to work;
the straight-salary is paid irrespective of whether the workweek is one in which a full schedule of hours are worked;
the straight-salary is sufficient to provide a pay-rate not less than the applicable minimum wage rate for every hour worked in those workweeks in which the number of hours worked is greatest; and
in addition to straight-salary, the employee is paid for all hours in excess of the statutory maximum at a rate not less than one-half the regular rate of pay.
Recently, the 11th Circuit court of appeals, in
What are the takeaways?
If you haven’t yet determined how you will handle your currently exempt employees earning less than $913 per week, time is running out. You have 30 days from today to figure out and implement your strategy.
If you have non-exempt salaried employees who work hours fluctuate from week-to-week, give strong consideration to implementing a fluctuating work week, via a written agreement that explains, in plain English the arrangement.
Employment Law 360 reports that Hawaiian Airlines has been sued by a group of employees claiming that their mandatory unpaid 10-day customer service training course violated the Fair Labor Standards Act.
According to court papers, trainees learned things like federal regulatory requirements and how to use a standard airline software system. … The suit claimed the Fair Labor Standards Act and state law required trainees be paid at least minimum wage “because, among other things, attendance was mandatory, the course material was related to the trainee’s job, and attendance was during regular working hours.”
For its part, the airline argues that the lead plaintiff “was well aware the course was unpaid before she started.” That’s not much of an argument. Under no circumstance may an employee voluntarily agree to forfeit pay to which the employee is entitled under the FLSA. It’s no different than asking an employee to volunteer his or her time and work for free (which, by the way, is very illegal).
Lots of opportunities exist for employees to train, take educational classes, or otherwise better themselves — inside classes, outside classes, seminars, lectures, and continuing education requirements, to name a few. Whether attendance at these activities counts as paid “working time” under the FLSA, however, depends on four factors:
Is attendance outside of the employee’s regular working hours?
Is attendance truly voluntary?
Is the course, lecture, or meeting indirectly related or unrelated to the employee’s job?
Does the employee not perform any productive work during such attendance?
An employer must be able to answer “yes” to all four of these questions to consider an employee’s attendance non-working time.
For non-exempt employees, this determination is important for two reasons. First, working time must be paid at the employee’s regular rate. Secondly, it counts towards the number of hours worked in a work week for determining overtime eligibility.
This issue is even more important in today’s tight economy. Failing to consider these factors before requiring or suggesting training or education for employees could result in the added expense of non-budgeted wages and overtime, as Hawaiian Airlines may soon discover.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. To comment, email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
The Fair Labor Standards Act does not require paid lunches for employees. Indeed, quite to the contrary, the FLSA provides that meal breaks (presumptively defined as breaks of more than 20 minutes during which the employee is totally relieved of his or her work duties) can be unpaid.
What happens, however, to an employee’s overtime compensation if the employer pays an employee for non-working lunches? Is the employer entitled to use the extra compensation for the paid lunches to offset other overtime compensation?
Nothing in the FLSA authorizes the type of offsetting DuPont advances here, where an employer seeks to credit compensation that it included in calculating an employee’s regular rate of pay against its overtime liability.
Instead, as the court points out, the FLSA only permits employers to take an offset against overtime payments in three limited circumstances, each of which involves some component of premium pay in excess of an employee’s regular hourly rate:
Extra compensation provided by a premium rate paid for certain hours worked by the employee in any day or workweek because for hours worked in excess of eight in a day or in excess of the employer’s defined maximum workweek.
Extra compensation provided by a premium rate paid for work by the employee on Saturdays, Sundays, holidays, or regular days of rest, or on the sixth or seventh day of the workweek, where such premium rate is not less than one and one-half times the rate established in good faith for like work performed in non-overtime hours on other days.
Extra compensation provided by a premium rate paid to the employee, in pursuance of an applicable employment contract or collective-bargaining agreement, for work outside of the hours established in good faith by the contract or agreement as the basic, normal, or regular workday (not exceeding eight hours) or workweek (not exceeding the employer’s defined maximum workweek), where such premium rate is not less than one and one-half times the rate established in good faith by the contract or agreement for like work performed during such workday or workweek.
Come Dec. 1, the DOL is adding more than four million employees to the doles of overtime eligibility. Employer are doing to look for ways to limit their overtime exposure to keep payrolls under control. Be aware, however, that taking a credit against overtime for paid lunches is one option not available to you.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. To comment, email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
A pay for performance program can be instrumental to a company’s talent strategy.
An effective compensation strategy is integral in attracting new talent and retaining and motivating the best performers. Yet, if not done appropriately, the way in which a company compensates its employees can lead to a number of negative effects.
Compensation should never be a guessing game or one based on gut feel, but rather should be based on a solid foundation of actual data. Data that needs to be assessed include items such as the company’s position against the market as it relates to wage rates, the company’s desired market position on wages, the company’s overall compensation philosophy, and available resources that the organization has to reward employees. It is with this data-informed foundation that more companies today are using a pay for performance program to guide their compensation decisions.
A pay for performance program can be instrumental to a company’s talent strategy; when employees are recognized for their work through increased compensation, they will be more likely to be engaged and continue working at their best.
The challenge for many employers, however, lies in determining which positions should be eligible for performance-based salary increases and how much they should receive.
Many would contend that pay for performance is where two employees holding the same job and performing at the same performance level should get the same increase regardless of where they are paid in their respective salary range, such as all employees rated a “3” would receive a 2 percent increase and all employees rated a “1” would receive a 4 percent increase. However, this is not pay for performance, but rather increase for performance. By basing pay for performance on additional data — not just performance data but also company budgets and competitive market position — companies can make compensation a critical competitive differentiator.
Now let’s define what a true pay for performance system is. A pay for performance system looks not only at your performance level but also at your compensation level as well. For companies seeking to utilize data to create an effective pay for performance program, there are three main steps to get it right.
Three Steps to Implementing a Pay for Performance System
Measure employee performance. Most companies rely on a performance management system offering quantifiable metrics to determine how employees are performing. Key to doing this successfully is to calibrate performance criteria with managers, allowing them the ability to subjectively identify those who are exceeding expectations, those who are meeting expectations and those under-performing. Calibration can be a time-consuming exercise but is critical in ensuring that performance is managed consistently across the company.
Appropriately allocate the compensation budget. Once the company has calibrated performance criteria and assessed their employees against the same criteria, the next step is to determine which employees will receive an increase and by how much, based on market position and desired market position. For instance, you may decide to increase the salary for some job families that are further behind the market, or job families you deem more critical to the success of the organization.
In addition to looking at current market position for specific jobs or job families, you should also be assessing trends in the markets as some job families may be moving faster than others. We have found that technical positions tend to move at a faster rate than non-technical positions. As an example, we looked at our CompAnalyst Market Data rates for software engineers and accountants and compared the movement of the rates for those jobs between July 2015 and July 2016.
While software engineers levels 1-3 went up by approximately 2.3 percent, we found the market rates for accountants levels 1-3 dropped by 1.7 percent. Since the market rate for software engineers is moving faster, a company should seek to increase compensation for these job families. Certainly, we can see that we should be allocating more to software engineers than accountants in order to keep pace with the market movement.
Understanding where you stand and what the market is doing allows you to allocate precious compensation dollars appropriately, such that you are not overpaying the slower moving positions and underpaying the faster moving ones.
Connect compensation to performance. Use technology to measure and analyze internal compensation practices against market rates by creating a salary increase matrix — a function of how much an individual is paid and their performance level. Doing so will ensure that an employee’s pay is moved toward the appropriate position in their salary range based on their individual performance and the movement of their position in the market as a whole.
Utilizing a pay for performance system, you may find instances where an individual might receive what I would refer to as a “0 percent merit” increase, even if they are meeting performance expectations. This would be appropriate when an individual’s performance level is eclipsed by their pay.
As an example, an employee who is meeting the expectations of their job but is paid in the upper part of a salary range would be a situation where a “0 percent merit” may be appropriate. While it may be difficult to tell an employee they’re not getting a salary increase, I would submit the more difficult discussion would be explaining to company leadership why top performers in the most business-critical positions are leaving the company.
What to Keep in Mind When Implementing Pay for Performance
The ability to use relevant data to tie compensation to performance management is crucial to developing and retaining a high-performing workforce, while ensuring compensation is aligned with company budgets.
Key to success is underscoring the focus on pay for performance rather than increase for performance. Giving all employees extra compensation for doing their job isn’t as effective as basing their increase on both their current pay and performance levels. By leveraging real-time performance data, the company has a defensible way to determine how much each employee should receive. This will help to differentially reward top performers, while ensuring appropriate allocation of increased dollars to all other employees. It will also help to spur performance improvements; when employees understand that any increase will be based on their performance, they are likely to strive to work at their best to receive the maximum increase.
Just as important is understanding the market. To utilize pay for performance most effectively, the company must remain aware of how the market is moving for its job families, and ensuring the compensation strategy reflects such movements. Being able to track which roles are increasing in value and adjusting compensation accordingly will ensure crucial decisions around compensation are based on actual data.
Getting Pay for Performance Right
As compensation is often a company’s biggest expense, it is critical that companies get it right. Leveraging data on compensation rates and performance alike and ensuring alignment with the company budget is key to striking that balance. With the insight into what employees are currently making, the market rates of their positions and their individual performance, the company can make informed decisions on how best to allocate its compensation dollars. As a result, the company can ensure it pays its employees based on the value they bring to their organization.
The Hilton Hotel, Bangkok. Photo credit: Ian Gratton
Women on average make 79 cents to a man’s dollar in the United States, according to the National Partnership for Women and Families — and that’s before taking factors like age and race into account.
With a workforce that is half female, Hilton Worldwidebecame one of55 companies to sign the White House’s Equal Pay Pledge, which encourages businesses to provide equal pay for women. Half of Hilton’s global workforce is female. The pledge extends to employees of hotels owned and managed across the Hilton portfolio and corporate offices in the United States, according to Laura Fuentes, senior vice president, talent, rewards and people analytics.
President Barack Obama initially announced the pledge at the United State of Women Summit in June. The White House released a press release on Women’s Equality Day on Aug. 26, announcing 29 new companies to sign the pledge, bringing the total to 55, including Microsoft, Apple, Chobani, IBM and Target Corporation.
“We have long been committed to diversity and inclusion across our company, and signing the Equal Pay Pledge is just one way we have demonstrated this commitment,” said Fuentes via email. “Our goal is to be the most hospitable company in the world — for our guests and team members around the world.”
The international hotel chain uses groups — such as its Women’s Team Member Resource Group, Women’s Executive Networking Program and Women in Leadership Excellence Program (in partnership with the University of Virginia) — to further this commitment, Fuentes added. Also, it uses certain family-focused benefits such as an “industry leading” maternity leave policy and flexible working options.
More specifically, by signing the pledge Hilton and the other companies have promised to conduct an annual companywide gender pay analysis, review hiring and promotion processes to weed out unconscious bias and other barriers, and promote best practices that can close the national wage gap.
“When women are fully engaged in our workforce and communities, society at large benefits from the great ideas and innovation that flourishes” said Microsoft in its statement. “Our commitment to equal pay gives us the opportunity to attract and hire from a broader talent pool of the best employees, managers and leaders.”
Target, in a statement, said it has implemented “meaningful business practices” such as leadership training designed to reduce that likelihood of making decisions based on stereotyping or bias.
Hilton, meanwhile, aims to represent the different cultures, backgrounds and viewpoints of its guests in order to become to the “most hospitable company.” Part of that diversity is gender diversity.
“We’re honored to help advance action around this important issue,” Fuentes said.
Web: Andie Burjek is a Workforce associate editor. Comment below, or email at aburjek@humancapitalmedia.com. Follow Workforce on Twitter at@workforcenews.
If you don’t like the answer, you can always change the question. Especially if you have money. Lots of money.
