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Compensation and Performance Management Processes are Shifting

Posted by Blair Johanson on Apr 17, 2017 10:11:25 AM

On Thursday, March 30th, Salary.com sponsored a webinar on an interesting compensation and performance management topic.  George LaRocque, Principal Analyst and Founder of #HRWINS presented information from a recent “Compensation Practices Driving Cultural Shifts in Performance Management” report.  Mr. LaRocque made the following statement from his report, “As Performance Management Continues to Change, Compensation Policy, Strategy and Data are Becoming More Important to Employers Than Ever Before.”  George stated that many employers are moving from annual performance reviews to more frequent informal feedback sessions that are tied to business goals and attainment.  Mr. LaRocque mentions in his report that a top objective for new HR technology in 2017 is the ability to support supervisors and managers with performance feedback processes and corresponding conversations about compensation. At the end of the webinar, Mr. LaRocque provided the following key takeaways from the #HRWINS report.  For more information about George LaRocque and the #HRWINS report, please visit http://larocqueinc.com/hrwins/.

 

Download our free HR Guide to a Compliant, Equitable & Competitive Compensation program on the right or click below to contact us for a free demo!
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Topics: Job Worth, Job Valuation, Compensation, equal pay, comparable worth, pay equity

Pay Equity Position Statement Provided by WorldatWork Compensation Experts

Posted by Bruce Johanson on Mar 31, 2017 3:50:14 PM

Last month, the WorldatWork released its position statement outlining the role that compensation and rewards professionals have in reducing and eliminating pay inequities in the U.S. workforce. This position statement was requested by the WorldatWork's Association Board of Directors and Society of Certified Professionals Board in October 2016.  Both Boards recognized WorldatWork’s leadership role in the Compensation arena and its need to provide guidance on this critical issue. In addition, the position statement solidifies WorldatWork's support for clarifying current federal law over an employee's right to discuss their pay with others voluntarily.

"Taking a public position on the topic of pay equity was important for WorldatWork to do at this moment in time when employers, public policy makers and others are working to ensure that their pay and compensation practices are valid and do not unintentionally allow for biases or discrimination based on illegitimate factors," said Cara Woodson Welch, WorldatWork vice president of external affairs and practice leadership. "We are very proud of this statement and hope that it will add to the national dialogue on pay equity in the United States."

WorldatWork Position Statement on Pay Equity

Issue

Pay equity is a complex and controversial issue influencing the American workplace. The most discussed pay inequity has been a measurable, but debatable, gender wage gap between men and women. Historically, this gap has been determined in different ways, with many credible studies showing women earning less than men on a per-dollar basis. Pay inequity studies are not limited to gender pay issues; rather, they also analyze the compensation of other protected employment classes in categories such as race, age and national origin.

Pay equity debates also look at gender and diversity representation at the executive and leadership levels across organizations. This includes evaluating representation and opportunities for women and minorities on a company's corporate board of directors. While progress has been made, much still remains to be accomplished for U.S. organizations to achieve true pay equity. WorldatWork fully expects this critical issue to continue to be a key business priority.

Role of the Compensation Professional

As compensation and rewards experts, WorldatWork and its members have an important leadership role to play in the national conversation on pay equity. National policymakers and employers are seeking solutions to eliminate pay disparities in the workplace connected to gender, race, age, national origin or any other protected class.

Current laws need to be enforced by the federal government, but many additional solutions will be found outside of federal public policy initiatives. In addition, rewards and compensation practitioners and the organizations they serve also have a responsibility to reduce or eliminate pay inequities through innovative private-sector workplace programs and policies.

WorldatWork's Position

WorldatWork strongly supports the current federal laws on pay equity, including the long-established Equal Pay Act, which requires that men and women be given equal pay for equal work in the same establishment.  This law allows pay differentials when they are based on seniority, merit, quantity or quality of production, or a factor other than sex. The association fully supports equal pay for equal work, as well as all federal anti-discrimination laws applicable to employment, including those within Title VII of the Civil Rights Act.

WorldatWork strongly believes that equal work must be measurable. Pay practices that reward performance and all other legitimate factors should remain lawful.

WorldatWork supports pay transparency. We support policies that protect an employee who voluntarily discusses his/her pay or compensation with other employees. Employees must not be retaliated against or fearful of discussing their compensation. An openness on compensation topics and a stronger understanding of an organization's compensation philosophy will give employees the information they need to make informed decisions about their personal employment and compensation status. WorldatWork respects privacy concerns and does not support initiatives that require employers to disclose confidential pay information of one individual to another interested employee.

WorldatWork endorses regular, organization-wide pay analyses to aid in reducing any unconscious biases or structural barriers in hiring practices, performance reviews, promotional guidelines and leadership opportunities that may contribute to pay inequities. Regular pay analyses conducted against the many factors used in determining compensation programs and individual pay should be supported by policymakers, but remain voluntary. WorldatWork's members have the responsibility to ensure these analyses are free of discrimination and use accepted compensation practices. If compensation professionals identify inequities through these analyses, these should be communicated to an organization's management to address the issue. Assessing wages and closing any potential pay gaps based upon gender, race, age, national origin or any other protected class should rest with employers, not the federal government.

WorldatWork believes employers should have access to all relevant employment information when determining compensation for an individual during the hiring process. It is not the intent of our profession to continue past pay inequities when hiring new employees. Compensation should be tied to the specific job and market forces that dictate the rate of pay for that job. In order to make a compelling offer of employment to candidates, WorldatWork opposes policies that prohibit employers from requesting a job candidate's total rewards history during their consideration and interview process.

WorldatWork supports voluntary adoption of gender-neutral workplace policies such as workplace flexibility and paid family-leave benefits that may help reduce wage gaps and retain employees in the workforce. Public policy should be tailored to encourage organizations to offer these benefits not through universal mandates, regulations or taxes, but rather via policy innovation, support of strategic national goals and individual organizational marketplace initiatives.

The principals of the Johanson Group, HR/Management Consulting firm and DBSquared, LLC support the WorldatWork position statement.  We provide compensation consulting and compensation software that completes the non-discriminatory organization-wide pay analyses that WorldatWork recommends in the highlighted paragraph above.  Our two firms have been providing pay equity reviews and other compensation related services/products since 1973 and 2005 respectively. 

Download our free HR Guide to a Compliant, Equitable & Competitive Compensation program on the right or click below to contact us for a free demo!
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Topics: Job Worth, Job Valuation, Compensation, equal pay, comparable worth, pay equity, worldatwork

Employers to Have a Harder Time Attracting and Retaining Top Talent

Posted by Blair Johanson on Mar 3, 2017 1:14:51 PM

 

Recent research completed by Randstad North America says that employers will have to work harder to attract and retain top talented employees. Two factors that are precipitating this talent attraction and retention outcome are low unemployment and a looming labor shortage. Based on the research study, salary and benefits are the most important factors when job seekers are choosing an employer.

Based on a recent WorldatWork news release article, Jim Link, the CHO at Randstad made the following statements, "It's become a candidate-driven market again, and job seekers have more tools at their fingertips than ever to determine if they are getting paid what they're worth. As a result, knowing the market average for specific positions, as well as nearby geographies, is critical information to help candidates and employers ensure they receive or make the most competitive offers." As part of the research data collected from recruiters and a variety of current workforce trends, Randstad predicted that the following jobs would be in demand in 2017.

  • Engineering
  • Finance and Accounting
  • Human Resources
  • Information Technology
  • Life Sciences
  • Manufacturing and Logistics
  • Non-Clinical Healthcare
  • Office and Administration
Download our free HR Guide to a Compliant, Equitable & Competitive Compensation program on the right or click below to contact us for a free demo!
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Topics: Job Worth, Job Valuation, Compensation, equal pay, comparable worth, pay equity, FLSA overtime rule, appeal, trump administration

More Time for Internal Job Valuing and Exempt and Non-Exempt Status Reviews - FLSA Overtime Rule Appeal Delayed Until May 1st

Posted by Blair Johanson on Mar 2, 2017 1:11:24 PM

The Trump administration's second request to delay a federal court's appeal on the November 2016 Fair Labor Standards Act (FLSA) overtime regulation injunction was granted last week by the court.  On Feb. 22, the U.S. Fifth Circuit Court of Appeals granted the U.S. Department of Justice's (DOJ) Feb. 17 request to delay submitting its final brief for another 60 days, citing a need to "allow incoming leadership personnel adequate time to consider the issues."

The DOJ now has until May 1 to file its response. The additional time will allow the new U.S. Department of Labor Secretary to decide the Trump administration's formal response and position on the Obama-era overtime regulation. It also leaves employers still uncertain about their work done last year to meet the original Dec. 1, 2016, compliance deadline to begin a $47,476 salary level threshold.

With the additional time for the December 1, 2016 FLSA Overtime Rule to be vetted by the new U.S. Department of Labor Secretary, employers have time to internally evaluate exempt and non-exempt positions based on internal job valuing systems that help to narrow the number of positions that need to go through the FLSA exempt classifications’ tests.

Download our free HR Guide to a Compliant, Equitable & Competitive Compensation program on the right or click below to contact us for a free demo!

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Topics: Job Worth, Job Valuation, Compensation, equal pay, comparable worth, pay equity, FLSA overtime rule, appeal, trump administration

Doing the Same Job? Get the Same Pay!

Posted by Bruce Johanson on Jan 26, 2017 4:06:25 PM

As our company was doing some research on comparable worth, we found that several states have enacted laws on comparable worth/equitable pay.  Outside of normal factors around work experience, seniority and performance, employee pay should be equal if an employee is doing the same or similar work as their cohorts.  In an article from Human Resources Executive Online titled “Committing to Gender Pay Equity”, just a little over 100 employers have committed to the White House’s Equal Pay Pledge launched in the summer of 2016. These companies are analyzing their wages, hiring practices, promotions and training as they relate to gender and are taking steps to develop and implement best practices resulting in comparable worth around pay for all employees on an annual basis.  These companies recognize that they are in a critical role in lowering the current gender gap. It is a shame that our government feels that they have to promote a pledge program around equal pay for equal work.  There has been a lot of effort to improve the gender, ethnic background and age pay gaps, but there are still some gender gaps that need to be closed.

In the same HR Executive Online article, it states that when it comes to controlled pay gaps (job title, job level and other controllable factors), the worst industry in the U.S. is oil and gas, where men make 7.4 percent more than women in the same job. The worst State with controlled pay gaps is Louisiana where the pay gap is 7.0 percent. These gaps don’t sound too bad as they’re just single digits, but what happens when you look at States with uncontrolled (pure wage differences) pay gaps? The worst offenders are Louisiana and Wyoming with a 29 percent gap! The smallest uncontrolled gender pay gaps are in California, Delaware, Washington D.C., New Mexico, New York, North Carolina and Rhode Island.  Many of these States are the ones that have enacted laws on comparable worth/equitable pay. 

Gender gap is improving and our firm has the ability to assist organizations using our inexpensive compensation management software program DBCompensation 10.0.  We promote “Internal Equity and External Competitiveness” and the DBCompensation program is an objective, defensible and easy system that gets your nose clean and keeps it clean.

Download our free HR Guide to a Compliant, Equitable & Competitive Compensation program on the right or click below to contact us for a free demo!

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Topics: Job Worth, Job Valuation, Compensation, equal pay, gender gap, comparable worth, pay equity

Is Comparable Worth/Pay Equity Gaining in Momentum?

Posted by Bruce Johanson on Nov 30, 2016 10:21:53 AM

Comparable Worth/Pay Equity is the concept of ensuring all employees regardless of their gender, ethnic background, military, disability, etc. receive equal pay when using comparable skills and responsibilities to complete the work.  Comparable worth provisions promote equal pay for comparable work.

With all of the new laws and executive orders over the past eight years, the Wage Gap between women’s to men’s earnings has continued to close and will move closer and closer as more companies get serious about comparable worth policies.  These policies include the evaluation of each position in the organization against a common set of objective and defensible job valuing factors.  This kind of review takes out gender and other forms of potential biases to arrive at an overall point total score for the positions and not the individual in the position.

Schedule a Demo of DBCompensation HR Software

Comparable worth vs. establishing market pay levels through outside market data only is definitely the way to go as it will allow you to use job attributes including skills, knowledge, accountability and working conditions to determine the number of job rating points to be assigned to each of the job attributes and arrive at a total number of points for each position.  Given proper oversight and accountability, you can avoid subjectivity by using a point factor system and be on the road toward true comparable worth/pay equity.New Call-to-action

There are automated software tools that create job descriptions as well as score the jobs against the compensatory factors and these, along with increased laws and regulations around comparable worth, are increasing the momentum for this objective approach to paying all employees for what they are worth, both internally and externally.

 

 

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Topics: Compensation, comparable worth, pay equity

When Developing Employee Pay Plans, Read the Fine Print

Posted by Blair Johanson on Oct 25, 2016 8:00:00 AM

Recently, a large and well-known employee salary aggregator was promoting its market-based pay comparison database and software system as a means for developing reliable pay rates. In the presentation about “developing market-based pay programs,” the company indicated that “internal job alignment” must be combined with market-based pay comparisons in order to create reliable pay rates.

Using market-based pay comparisons for determining pay schedules is the easiest and most popular process based on articles and studies released by WorldatWork. The large salary aggregators provide a very valuable service for compensation professionals by aggregating and validating the pay comparison data and providing it to the professionals for a fee.

Since 1985, the Johanson Group has been providing guidance, writing articles and speaking about pay structure validity and reliability by using a combination of internal job valuing and external market-based pay comparisons. So we know what works and what doesn’t.

With our decades of real-world experience, we have completed enough salary surveys to see the variation in pay from one year to the next. Or even one pay comparison source to the next, for that matter. By relying solely on external market pay comparisons, your organization’s pay structure is at risk. Think about using only a compass to obtain a general idea about where you are going (market-based pay only) compared to using a modern GPS to obtain a very accurate indication of exactly where you are at all times (market-based pay plus job valuing).

New Call-to-actionThe problem with the old job valuing systems was that they were too time-consuming and too subjective. Thankfully, these problems have been left in the past with the introduction of the DBCompensation system. DBCompensation greatly streamlines processes, resulting in tremendous speed and productivity gains. As an example, in the past week Johanson Group completed 330 job descriptions for two clients, including full job valuing in only 55 total hours of work, or an average of only 10 minutes per position title.

For even more time savings, DBCompensation allows importing employee data from HRIS and payroll systems. DBCompensation even allows you to use to twelve separate sources of external market-based pay comparisons, allowing you to create a comprehensive, defensible classification and compensation program quickly and easily.

This industry-proven process provides the basis for developing and maintaining a reliable pay structure, which allows your organization to make more accurate and informed compensation decisions so that you don’t unknowingly overpay or underpay your employees.

Remember, when developing employee pay structures with market-based pay comparisons, read the fine print. Market-based pay comparisons and internal job valuing are required to create valid pay rates.

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Topics: Job Worth, Job Valuation, Compensation

Get Your Pay Right and Use an HR Software System That Pays For Itself

Posted by Bruce Johanson on Oct 24, 2016 4:00:00 PM


During a recent discussion with a prospective customer, the Human Resources Director stated that her company has doubled the number of employees during the past three years. The company was growing so quickly that the CEO asked the Human Resources Director to find a system that would better manage their compensation process. New Call-to-actionThe Human Resources Director attended a DBCompensation software demonstration and she really liked the features and ease of use, but stated that she did not know if the company was ready to make an immediate decision.

Since the DBCompensation software costs as little as $400 per month for a small company, and the prospective company’s monthly investment would be $800 per month based on the company’s size, I posed two questions that she could share with her CEO.

“What if you overpay only one of your hundreds of employees by $1,000 per month?”

“What if you only rely on market pay comparisons to establish your pay rates and you underpay one employee by $1,000 per month, and that employee ends up leaving your company to join another company that pays a more competitive wage?”

She pondered the questions for a moment. I then followed-up with two important thoughts about investing in DBCompensation.

“By not overpaying just that one employee, DBCompensation more than pays for itself.”

“If just one important employee leaves because of pay, the time and expense required to attract, hire and train a new employee is much higher than the modest expense of DBCompensation.”

Getting your pay right is a critical Human Resources responsibility with far-reaching implications for every organization. After thinking about the immediate return on investment, the Human Resources Director stated that she was ready to visit with her CEO and make a case for adopting the DBCompensation software system in a timely manner.

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Topics: Job Valuation, Compensation

Pay Transparency, Closing the Pay Gap and Multiple Regression Analysis

Posted by Blair Johanson on Sep 27, 2016 3:15:00 PM

Learn more about Pay Transparency and closing the pay gap with Lilly Ledbetter's story.

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Topics: Job Worth, Job Valuation, World at Work

Will Market Based Only Salary Structures Survive Regulatory Reviews and Scrutiny?

Posted by Blair Johanson on Sep 27, 2016 11:45:00 AM

Back in October 2012, WorldatWork and Deloitte Consulting LLP released and publicized a study on “Salary Structures Policies and Practices” based on 910 respondents out of 5,398 WorldatWork members who were invited to participate in this focused study.

Some of the key findings from this study follow:

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Topics: Job Worth, Job Valuation, World at Work