KnowledgePay Blog

HR Analytics: Human Resource Professionals Need to Catch Up

Posted on July 07, 2014 by Chris Kelley

Posted in KnowledgePay, Compensation Consulting, HR Analytics | Leave a comment

HR analytics still seem to be a mystery to some human resources professionals. Although more data is available than ever before due to technology, the HR field lags behind in predicting workforce trends, reducing risks, and increasing returns, according to a Cornell University study.

Is Common HR Analytics Useful?

The Cornell study reports that HR professionals commonly use metrics such as performance, retention, engagement, and compensation. However, this data merely presents current or past trends. The goal, according to the executive participants, should be to predict and analyze the future.

Yet, a 2014 post entitled, ‘Grab hold’ of analytics or get left behind, HR warned, suggests that the finance, supply chain, and operations functions are leaving human resources in the dust. In fact, Deloitte’s Global Human Capital Trends 2014 report notes that 86 percent of companies have no human resources analytics capabilities, while 67 percent say their skills using the data to make predictions are weak.

Thus proactively planning and forecasting, rather than merely reviewing data, becomes imperative for the human resources team. This requires access to real-time information, something few organizations appear to be able to provide.

Make HR Analytics Work for Your Organization

If you’re still scratching your head and wondering how to make HR analytics work in your organization, here are some factors to consider:

  • It’s a nearly impossible task unless you have integrated data, including links to data from other sources such as finance, operations, and marketing.
  • Consider educating yourself on how other business elements such as “leadership, operational efficiency, and customer/financial outcomes are interrelated.”
  • Take time to provide field training for HR staff so they understand the data and how to use it.
  • Build an organizational culture that thrives on the use of HR analytics. Managing the organization using fact-based decision making is a novel concept in many organizations.

Finally, be sure that you to allow for experimentation and testing hypotheses.

At KnowledgePay, we're proud to be able to help organizations that are looking to get more data insights from their job data, employee data and the external marketplace. For more information on HR analytics review our website, read our blog, or contact us with your questions.

 

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Does Organizational Planning and Job Design Matter?

Posted on April 30, 2014 by Chris Kelley

Posted in KnowledgePay, Job Descriptions, Compensation Consulting, Job Titling | Leave a comment

The Business Case for a Disciplined Approach to Designing Jobs and Organizational Structures

Jane had been the accounting department’s top performer for 10 years, but three months ago, to her manager’s surprise, she resigned. Her reasoning? She was no longer satisfied with the work after a recent reorganization.

So what happened?

The company had gone through some restructuring and layoffs about six months prior because of a slowdown in the market. Their overall financial position was still very strong, but they wanted to get lean and took the opportunity to downsize. Unfortunately, while the financial objectives were clear about how many heads to take out of the organization, there was far less clarity around how to most effectively design the new organization and the necessary jobs.

In Jane’s case, what ended up happening as a result of the restructuring was a collection of poor decisions made by her senior management team. The work environment, that at one time was fulfilling and engaging, now became a chaotic fire drill where the entire team’s performance suffered. Jane tried to raise her concerns to her manager, but after a few frustrating months of inaction, Jane decided to jump ship. Good for Jane, but with the brain-drain that slipped out the door with her resignation, the already struggling accounting department now has an even deeper hole to dig themselves out of.

So how did things fall off the rails? We had a chance to catch-up with Jane and get her observations about what went wrong. Here’s how she summed it up:

Work Process Analysis – the senior leadership team approached the restructuring from the perspective of just moving boxes around on the org chart, taking out the required number of headcount reductions. There was virtually no consideration given to either the existing work processes or any analysis done to find ways to reduce cycle times, remove bottlenecks, eliminate unnecessary work, etc. The point being, redesigning an organization should start with a thorough work process analysis.

Evaluation of Structural Alternatives – let’s face it, no organizational structure is ever going to be perfect. However, each of the structural alternatives can provide a certain list of benefits, as well as carry with it a known lit of costs. The leadership team didn’t give any thoughtful consideration to the various alternative structures and as a result, they went with a hodge-podge mix of some functional structure, some customer and some geographic, with no consideration at all given maximizing the benefits of the various structures or overcoming the inherent weaknesses of each.

Design of Jobs – Given the shoddy performance on some of the higher level organization design activities, it should be no surprise that the senior leaders also did not give thoughtful consideration to the design of the jobs that would remain. From Jane’s perspective, it seemed like each person who remained still had all of their old responsibilities, but they were all tasked with picking up other activities from the folks who were let go. Two things happened as a result of this approach, some workers, including Jane, got dumped on with a seemingly impossible workload while others were barely affected. In addition to the imbalanced distribution of activities, the activities that Jane picked up were very fragmented, meaning she saw no clear connection between the work she was doing and how it impacted the overall accounting function. She also complained that the level of skill and complexity of the new tasks were inconsistent. For some activities, she felt like her skills were being stretched, which was a good thing, but the majority of the activities were things that she had mastered five years earlier in her career.

Communication & Involvement – All the bad design issues aside, the point that seemed to cause the biggest sense of frustration for Jane, and what she described as now a team-wide issue, is the way the communications and change management was handled. The reorganization effort was done behind closed doors with just the senior leadership team and they purposefully excluded people from the department in the design process. Some people were starting to piece together rumors while the design work was going on, but when the manager was directly asked about what was happening, he flat out denied knowing anything about any reorganization. Less than two weeks later, the axe fell and the layoffs and restructuring went in to effect. It was stupid on their part to not engage the people who know the most about the work and who could have designed better processes, but then to actually lie about it dug the knife even deeper. In doing so, management cut out the soul of this place making it really hard for Jane to want to stick around any longer.

We asked Jane specifically about money, i.e., was there an adjustment to her pay in the reorganization and did she leave for more money. Her answers might surprise you. She said she did not get a pay adjustment through the reorganization, but that the idea never really even crossed her mind. She knew that the sales had fallen off a little and that the whole reason for the restructuring was to control cost, so she would not have expected anyone to get an increase. And while she did say that she did get a 5% increase to her pay in making the move to the new company, pay was not the reason for her leaving, nor was getting a bigger salary a motivator. What Jane was looking for was a work culture that she could get excited about again. She still has a lot of passion and energy around the work she does and derives so much of her career satisfaction out of being able to contribute to a process, get feedback about her performance from not only her boss, but just by being able to clearly see how her performance matters to the team. Jane expects to be paid fairly, but what gets her fired up and excited about going to work, yes, she said “excited about going to work” has much more to do with the design of the job and the design of the organization.

Lessons Learned

We think there are several important lessons to be learned from this scenario.

Organization and Job Design Matter – The story of Jane above and other outside research on Job Design and Employee Engagement should make it clear that doing a poor job on designing your overall organization and in the individual jobs within it can have a profound impact.

Respect the Process – Whether your needs are driven by growth of your organization or a retrenchment, there are some clear steps to take to designing organizations and jobs. This design work is much more than just an exercise of moving boxes around on a page.

Change Management is Critical – There are several components to an overall Change Management methodology, but the most significant piece here is going to be communications planning and execution.

 

For more information on how KnowledgePay can assist you with your organization planning and job design needs, contact us or visit our website to learn more about our compensation consulting services.

 

 

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Market Pricing - Compensation Group Hits 1500 Members

Posted on April 22, 2014 by Chris Kelley

Posted in Market Pricing, Salary Surveys | Leave a comment

Several years ago, I started a Group out on LinkedIn called "Market Pricing - Compensation". This community has now reached a milestone of having over 1,500 members....it's now at 1,575 and growing every day!

The group is made up of compensation and HR professionals from around the world who all share a common interest of trying to make sure they have the best salary survey sources to fit their relevant labor market. I personally review the profile of everyone that requests membership to make sure the group stays on focus.

We have mostly compensation and HR practitioners in the group, but there are also several salary survey vendors and even a few of the competing market pricing software vendors in the mix. That's all good. The community is supposed to be about information sharing, not a place to get bombarded with sales pitches.

If you're looking for a networking resource where you can bounce ideas around and ask questions about market pricing, salary surveys, job matching, etc., then check out the Group on LinkedIn called "Market Pricing - Compensation." Hope to see you there.

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Can Paying Higher Wages be Smart Business?

Posted on April 09, 2014 by Chris Kelley

Posted in KnowledgePay, Market Pricing, Compensation Consulting | Leave a comment

Many employers follow the formula of reducing overhead and employee wages as their way to increase profit. Given that pay related expenses for any business can be the single largest operating expense, it’s easy to see how minimizing wage expense can lead to higher profits. However, some organizations are realizing that this might not be the best way to optimize profits. The pay check your employees take home is one of the most powerful communications vehicles you have at your disposal and the key message it shows is how much (or how little) you value them. Some business gurus believe that sense of value translates directly into how much effort your employees give on the job and can lead to dissatisfaction and attrition of employees, which leads to higher costs in other areas. This also has a negative impact on customers and top-line revenue. The jury is out though. Would paying higher wages positively impact your business?

Many big name companies see the writing on the wall and are changing philosophies. For instance, Gap, Inc. recently raised the minimum hourly wage for their employees to $9 with plans to increase to $10 an hour in 2015. According to Glenn K. Murphy, Gap's Chief Executive, increasing wages is an investment in Gap's employees which will bring many returns to the company. He said, ". . .To attract and retain the best talent we have to make sure we invest in them."

QuikTrip convenience stores has proven paying higher wages can increase profits. QuikTrip values their employees. They offer employees a "regular wage, a customer service bonus, a profit bonus and even an attendance bonus" according to one manager. QuikTrip's philosophy is that if they treat their employees well, the employees will treat customers well. The customers will then be more loyal to the company.

The numbers don't lie. QuikTrip has an employee turnover rate of 13%. That is drastically less than the top quartile of convenience stores which has a 59% turnover rate. QuikTrip's gas sales are twice as high and their per square foot sales are 50% higher than the industry average. The higher wages are increasing employee and customer loyalty.

On the other hand, a recent Towers Watson survey revealed that higher wages do not necessarily equate with increased employee retention amongst professionals. In a worldwide study, countries with higher GDP growth tended to also have higher levels of employee attrition. The research revealed that the economy can play a large part in employee retention. When employees feel insecure about the economy, they tend to stay put in their current jobs, while a healthy economy brought more opportunities and consequently, job movement.

In addition to higher wages, there are other factors to consider in attrition of employees. Carole Hathaway, Director of Towers Watson’s Rewards practice explained,

"Company culture, good communication, responsive leadership, opportunities for career development and a clear understanding of mission and values within an organisation all contribute to the ‘employment deal’, or Employee Value Proposition and are likely to have an impact on employee retention.”

Employees want to feel valued. As in the old fable, you can't kill the goose (the employee) to get to the golden egg (their productivity). Increased wages is only a part of the total equation of helping employees feel like more than just egg-producing poultry.

Business owners can also show they value their employees by discovering what is important to them and then giving it to them. Keeping promises to and showing compassion and appreciation for employees also helps them be happy. And when employees are happy, your business will grow. Long-term, committed employees become knowledgeable advocates for your products and services.

A study by the Jackson Organization revealed the importance of focusing on employee satisfaction in addition to customer satisfaction. The findings showed, “Companies that effectively appreciate employee value enjoy a return on equity & assets more than triple that experienced by firms that don’t.”

Begin to reevaluate the messages you are sending to your employees. Open a dialogue to find out what they need and then try to fulfill those requests.

To discuss ways to improve your business through a better compensation software solution, please Contact Us.

Pay Higher Wages, Earn More Profit

 

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Job Descriptions: A Strategic Competitive Advantage?

Posted on March 27, 2014 by Chris Kelley

Posted in KnowledgePay, Job Descriptions, Job Evaluation | Leave a comment

Let’s be honest. Job descriptions suck. Writing and administering job descriptions can feel like a waste of time and they take you away from the ‘real work’ that you have to do. That is, until you step back to consider how a focused commitment to doing job descriptions well can actually set you apart as a company and become part of your competitive advantage. If you really are engaged in a “war for talent”, you need to think about how such a mundane task like job descriptions can be such a cornerstone to human resource strategy.

Speed and Accuracy in Hiring Process

Ever schedule job interviews with applicants who turned out to be unqualified? The cost of ambiguity in your job descriptions can cost you both time and money. Clear delineation of qualifications, educational requirements, responsibilities, experience and any other positive attributes required will weed out the unsuitable applicants before they have a chance to waste your time.

Employee Retention and Engagement

What is the cost of employee turnover to your competitive advantage and bottom line? Employees quit for a number of reasons, of course, but check out the recent survey from Career Builder and you should see several ways that high quality job descriptions can help cut down on turnover (or worse….the disengagement that happens among those who just want to leave). Good quality job descriptions can help avoid many of these things by providing clear expectations of the role, indicating career pathing opportunities, and even ensuring that there is meaningful work being performed by the job. The job description is an important piece to being able to communicate the role, the expectations and the opportunity.

Market Pricing

Job descriptions don’t need to be overly complex to be able to determine competitive pay levels through market pricing. That being said, having good quality job descriptions can help you ensure that your market pricing efforts are helping you set competitive pay levels so you not falling behind, or just as bad, overpaying for the skills and responsibilities needed to run your business.

Compliance

So if you think writing job descriptions is a waste of time, what are your thoughts on defending your company in lawsuits that could have been avoided by simply having high quality job descriptions?

Organizational Effectiveness

At KnowledgePay, our technique for wholistic job analysis which uses the concepts of business process mapping and RACI can help identify process bottlenecks, duplication of effort, lack of accountability and more. What starts off as an attempt to write a few job descriptions can often times lead to significant process improvements that improve organizational effectiveness.

Job descriptions, when done well, can serve as the foundation for nearly every aspect of your human resource strategy. Why would you be willing to let them be the weakest link?

To talk more about this, or anything else, please Contact Us.

 

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Market Pricing Hybrid Jobs

Posted on March 25, 2014 by Chris Kelley

Posted in Market Pricing, Salary Surveys | Leave a comment

Comparing Apples & Oranges in Compensation

One of the biggest market pricing challenges we face in compensation is what to do with those pesky hybrid jobs. What are hybrid jobs? As defined on page 35 of The Ultimate Market Pricing Glossary,

Organizations are forced to restructure, de-layer, take out costs, etc., and as a result, end up combining jobs that used to be done by two or more people and dump the work onto just one person. The resulting job is a hybrid of two or more traditional jobs that each may have been benchmark jobs.

A hybrid job is a challenge to market price because of its potpourri of job duties and how it compares (or doesn’t) to the classic benchmark jobs from our salary survey library.

The first hurdle to overcome may seem pretty basic, but we first have to let go of the notion that you are going to find a salary survey that will have that unusual job you created during your last reorganization efforts. Salary surveys are going to have benchmark jobs that other companies in your market are likely to have. Not these one-offs.

So what’s a comp pro to do? Well, there are a few techniques that you could consider and the trick will be to figure out what is most appropriate fit with your compensation philosophy and the objectives of your market pricing efforts. A compensation philosophy that recognizes a balanced approach to ensuring internal equity along with external competitiveness can lead to a different result when compared to a firm whose philosophy is heavily weighted toward external competiveness.

For example, in the organization with a balanced belief in internal and external, you could just rely on your overall evaluation system and focus on ensuring your overall pay structure is market competitive. Regardless of whether you use a rigorous point-factor internal evaluation methodology, or a more simplified method such as slotting or paired-comparisons, you should have enough other jobs in the pay structure where reliable market data does exist and you’ve used that data to build the overall pay structure that is market competitive.

“But we rely exclusively on market data in our organization.”

Ok, we’ll give you three suggested approaches for how you can get creative.

  • Match to next likely job in the career path and discount the data
  • Blend the data from the jobs you combined to form the hybrid
  • Slot to the most common source of internal candidates and consider a premium

 

In all cases, the fundamental issue to address is what is the relevant labor market for this hybrid job. There may not be another job just like yours anywhere out in the market, but at the end of the day, if you had to go fill it tomorrow, you would look somewhere in the labor market to find candidates who had the necessary skills to fill the role. Another way to think about the labor market question is to address the question, so where would someone that is currently in your hybrid job go if they were to move on?

Click the image below to see examples to each of those suggested approaches.

KnowledgePay Suggestions for Market Pricing Hybrid Jobs

Market Pricing Hybrid Jobs - 3 Suggested Approaches

Keep in mind that what you're solving for is related to the supply & demand for talent. Your hybrid job might very well be unique out in the market, but at the end of the day, if you had to go fill it tomorrow, your staffing folks would look somewhere in the labor market to find candidates who had the necessary skills to fill the role.

On a job description basis, it might seem like you really are comparing apples to oranges, but if you’re objective is to strike a balance between making sure that your organization can attract and retain talent with spending the payroll dollars most effectively, then it might be time to enjoy some fruit salad.

For more information on how KnowledgePay can assist you with your market pricing needs, visit our website to look at either our compensation software or compensation consulting services.

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Gainsharing – The Phoenix Rising through the Ashes

Posted on March 19, 2014 by Chris Kelley

Posted in KnowledgePay, Compensation Consulting | Leave a comment

Gainsharing plans have been enjoying somewhat of a renaissance in popularity the past couple of years as the economy starts to recover from the near economic collapse in 2008 – 2010. While these plans originally date back to the 1930’s, they seemed to have peaked in popularity in the early 2000’s . During the darkest times of the recent recession, there seemed to be no new activity in terms of creating new plans and other plans that had been in place were scrapped. As the markets have started to improve though, the prevalence of gainsharing plans is starting to regain its popularity.

So what is a gainsharing plan anyway? The definition of a gainsharing plan is actually part of the identity crisis that caused them to fall out of favor during past decade. A quick search for gainsharing terminology will give you various definitions, but the most common is that they are a compensation incentive plan where a portion of the company’s profits are share with employees. Employees have ‘skin in the game’ and so they are incentivized to improve performance and productivity. Therein lies the major problem according to Brad Hill of Tandehill Human Capital. “First and foremost, gainsharing plans are a commitment to employee involvement where sustained improvements in productivity can lead to a financial reward. The key difference in that definition is that we focus first on gainsharing being a commitment to employee involvement, not compensation.”

When the focus is on gainsharing being a compensation plan, it’s too easy for both employees and senior management to lose focus when times get tough in the outside economy. Employees can start to view gainsharing as another entitlement and become disgruntled if payouts don’t happen. Management on the other hand takes the misguided perspective that this program is a cost that needs to be cut in order to save money.

In both cases, that is the exact opposite of what should happen.

When the economy starts to sour, employees on the frontline are often the ones who hold the key to being able to identify ways to respond and improve productivity. They need to be unleashed on trying to fix problems, not screwed out of an opportunity to make a difference.

The more progressive management teams that we have seen recently understand that even though the economy is still a challenge and there might still be losses to wrestle with on the financials, employee involvement is the most likely path to success. This might even mean paying out on a gainsharing plan where there is a loss because they fully recognize that the loss would have been even greater had it not been for the efforts, energy and contributions that come from employees.

The key to success in putting a gainsharing plan in place is not whether or not the financial formula spits out the optimal results. The key to success is the degree to which management can fully engage the workforce to contribute ideas, and then review, evaluate and implement productivity improvement ideas and openly communicate the activity and results to inspire even more involvement from the people who make it happen.

“Our implementation process is built to maximize employee involvement in the design of the plan, but also for the communication and on-going execution of the plan”, says Hill. The goal is to get great buy-in from both management and employee participants. It is this commitment to employee involvement that will determine whether or not the gainsharing efforts will be successful.

For more information on the Tandehill Human Capital approach to gainsharing, click here.

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Pay Transparency: Culture is Key

Posted on March 14, 2014 by Chris Kelley

Posted in KnowledgePay, Compensation Consulting | Leave a comment

There’s still a lot of talk lately about the idea of pay transparency, but many organizations still not willing to take the plunge. Why the hesitancy? One argument I hear is that pay information is personal and it’s a private matter between the organization and employee. Others respond with view that employees just don’t have a need to know what coworkers earn. Or, my favorite, employees can’t be trusted with this kind of information. Therefore, when social media management company Buffer recently announced it was posting salaries online, you can imagine the uproar.

However, as Buffer CEO Joel Gascoigne emphasized in a December blog post, “Transparency breeds trust, and trust is the foundation for great teamwork.”

Buffer isn’t the only company choosing to share ‘confidential’ information. Thirty-employee SumAll chose to make performance reviews as well as salaries public. They say the program is a success. This may be due to how well they implemented the program. Specifically, they built the right culture as well as developed complementary policies and programs that are transparent as well as defensible.

While employees may be curious about what others make, it’s more important that organizations prepare them for why someone earns a particular amount. Too often, the focus is just on the salary. Line managers need to be prepared with information about the how’s and why’s of the company’s pay programs, but they also need to practice the skills needed to lead conversations back to the context of the overall pay philosophy.

To get it right, according to a New York Times interview with SumAll CEO Diane Atkinson, “culture makes an extreme difference.” For SumAll that includes a 45-day trial period for new hires, and a lot of “hard” peer-to-peer conversations about performance.

Having a culture built on trust and candid dialogue starts at the top and reaches in to every part of the organization, but when it comes to the compensation function, there are specific areas where what you do will help facilitate a more open approach to pay. What it all comes down to is how you:

  • Design your compensation programs so they are clear and easy to understand
  • Value your jobs consistently
  • Administer salary as if everyone was watching (they are)
  • Communicate to line managers and employees early and often

For more information about how the KnowledgePay compensation software tools and consulting services can assist in your efforts, visit our website, read our blog, and be sure to download a copy of the white paper, Pay Transparency: The Future of Compensation Management. For further assistance or questions, contact us.

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Equal Dollar Incentive Payouts

Posted on March 10, 2014 by Chris Kelley

Posted in Compensation Consulting | Leave a comment

Incentive pay plans for front-line employees can be a cost effective way to get more bang for your payroll bucks. There are also tremendous employee benefits to be gained from a well-designed plan. Higher pay opportunity is an obvious benefit, but employees can also feel better inclusion, engagement and teamwork that can come as result of a properly designed plan.

Despite this seeming like a no-brainer, win-win, it is possible to have an otherwise great incentive plan that lands you in hot water with the Fair Labor Standards Act (FLSA) with a simple oversight of the administrative roles that are in place to protect workers.

According to the US Department of Labor, employees who are nonexempt under the FLSA need to be compensated at 1 ½ times their Regular Rate for all hours worked over 40 in a work week. Any incentive payments made to nonexempt employees need to reflect any overtime premium dollars employee may have earned. In other words, the amount of incentive pay needs to get added the employees’ Regular Rate and then the overtime premium is paid out on top of that.

The easiest way to account for this is simply to calculate the incentive payment as a percent of total earnings in the performance. Overtime premium pay is already included in total earnings, so basing your incentive payout as a percentage of total earnings already reflects the additional premium they are entitled to. But as we know, administrative ease should not be the sole factor used to decide upon the mechanics of a pay plan.

Some organizations want to create a pay plan that pays out in equal dollar amounts to create a more team-oriented culture. This egalitarian approach is fitting when the organization wants to recognize that all employees’ contributions were equally important in qualifying for the incentive payment. In these scenarios, the employer must go back and provide an adjustment to any overtime earnings that any nonexempt employees had earned in that performance period.

To make matters even more complicated, there is a decision to be made about how to fund that additional overtime payment. If the incentive plan is truly designed to be self-funded, then it only makes sense that the additional overtime dollars that have to be paid out need to be subtracted from the funding pool. This creates a circular calculation that can drive a compensation analyst crazy.

What we’re going to show in the video below is how KnowledgePay created a nifty little Excel spreadsheet that uses visual basic programming / macros and the function called Goal-Seek. By using this tool, the organization can easily figure out what the equal dollar payouts are supposed to be, stay in compliance with the Fair Labor Standards Act, and fund the payment of the additional overtime with monies from the self-funded incentive pool.

If you’d like to learn more about how KnowledgePay can help you with your Equal Dollar Payout calculator, or any other compensation analysis conundrum, visit our Compensation Consulting page.

http://youtu.be/RRWpTTW7apc

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Twenty Percent of States to Invoke Minimum Wage Changes on January 1, 2013

Posted on December 04, 2012 by Chris Kelley

Posted in KnowledgePay | Leave a comment

That’s right, at least ten of the States have already announced increases to their minimum wage hourly pay rates going into the new 2013 calendar year. If you have workers in any of these locations: Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont & Washington, be ready. Come January 1st of 2013, you’ll be dolling out more coin for employees that have been paid at, or near, the current minimum wage rates. Compensation costs already account for the single largest operating expense for most companies...and those costs are going higher.
The average increase going in to effect is 2.1%, with Rhode Island going up by over 2x that amount (up 4.9%).
Nine of the ten States that will be increasing their minimum wage rates, already have rates that are set above the federal rate of $7.25. With Missouri increasing their minimum wage rate up to $7.36/hour, we will have twenty States requiring wage rates higher than the federal mandate.
Nevada is not on the list to change currently, but they typically announce changes to be effective later in the year if they’re going to move at all.
So what do employers need to do?

  • First, be certain that employees are paid the new rates from the first of the year going forward. If you're worried about the increase costs of having to pay a little more for the hourly rates, just think of how ticked off you'll be if you get caught paying less. Not at all worth the risk.
  • Communicate the changes to both the employees and managers. Find your own positive spin to the message and make sure employees and managers alike know and understand what is happening, when and why. Also, you should be prepared to address questions from others about what is not changing, i.e, if an employee is already earning just over the new minimum wage, will they get an increase too? Organizations generally tend to avoid conversations with employees about pay…here’s your chance to get in front of something that can be a positive.
  • If you're using survey data in any of those markets for lower level jobs, be aware of the potential impact that these changes could have on your normal survey data aging assumptions. Most organizations we work with are applying aging factors between 2-4% which seems reasonable in this overall climate nationally. However, in those ten states, you can bank on the fact that every other employer is going to be increasing their wage rates up for all who are below minimum wage, again, on average 2%. You may need to tweak your aging factor assumption higher to remain competitive.

Happy New Year!

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