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SPECIAL HUMAN RESOURCES MANAGEMENT MATTERS ARTICLE: “2019 YEAR-END/2020 PAY INCREASES”

Posted on December 8, 2019 by Trinity HR

For those of you finalizing 2019 year-end/2020 pay increases and bonuses, this article is definitely for you.

Performance-based pay increases are projected to be 3.2 to 3.3%. This is up only slightly from last year’s 3.1%.

However, when looking at the total of increases for 2019 year-end/2020, the percentage increases to in the high 3’s or even 4%.  Please note that “total increases” include performance-based/merit increases plus:

  • Cost of living adjustments (hopefully only if required by a collective bargaining agreement)
  • Across the board increases (shame on you!)
  • Promotional increases
    and
  • Additional increases (market &/or internal equity adjustments)

Research shows that the following pay increase practices remain very much in place, and are being adopted by an increasing number of organizations:

1)     Differentiation in percent directly related to individual performance

  • About 9 out of 10 organizations now do so.
  • This practice shows increases for the highest level performers often being double or more of that for the average employee.

2)     No pay increase for individuals whose performance is evaluated to be below a threshold established by the organization

  • In some organizations this threshold is established as “below fully meets performance requirements”.
  • In other organizations the standard for being eligible for a pay increases is lower—such as “partially meets performance requirements”.

3)     The use of lump sum increases rather than an increase in base pay
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4)     An extension of inclusion in eligibility for incentive compensation to employees beyond executives and managers

  • Frequently now including professional and administrative staff
  • Some organizations extending it to all employees

5)     A growth in the part of total direct pay (salary plus any form of variable pay) being delivered by means of incentive compensation

Trinity’s compensation and performance management services include:

  • Reviewing/developing pay philosophy and structure
  • Conducting pay analysis in comparison to the market place
  • Reviewing pay policies and practices for compliance with the Fair Labor Standards Act and other applicable regulatory requirements
  • Designing incentive compensation plans, such as GainSharing
  • Creating plans such an Employee Stock Ownership Plan (ESOP) or a “Shadow” Stock Plan for privately-owned companies

For more information:

  • E mail Trinity at info@TrintyHR.net
  • Visit our website at www.TrinityHR.net
  • Call us at 856.905.1762 or Toll Free at 877.228.6810

You have HR questions…Trinity has answers!

Posted in Compensation & Performance Management

“WHAT ARE THE SIGNS YOU DO NOT NEED COMPENSATION CONSULTING HELP?”

Posted on November 25, 2019 by Trinity HR

This is the time of the year that most organizations have completed or are in the midst of doing their business’ strategic planning process.  One of the aspects of this process that is often overlooked is the following question:

    How do our pay philosophy, strategy and plan support our strategic plan in the short-term (this coming year and the long-term (the next three years)?  [Okay, for the next three to five years for those of you whose plans address this longer span of time.

Now back to the question of “How does your pay philosophy and plan support your business plan?”  Let’s start by offering a set of questions that your organization should periodically ask itself:

1)      What is the amount of your company’s total compensation investment?

2)      Do we have a clear pay philosophy and strategy?

3)      What results should our pay strategy be producing for your company? (i.e., What is the ROI on that investment?)

4)      Are our pay practices and decisions consistent with our philosophy and strategy?

5)      Do we have an easy to understand statement about it for our employees and potential employees?

6)      What is our compensation target relative to the market?

7)      Should we have a single target for all jobs or different targets for selected jobs?

8)      Where is our actual compensation in comparison to our target?

9)      Which is better—higher salaries or higher incentive pay?

10)  Which positions should be eligible for incentive compensation?

11)  Does one type of incentive compensation work best for all those eligible?

12)  What’s the right mix between base pay and incentive pay?

13)  Should we use a short-term or long-term incentive pay plan?

14)  How many metrics should our incentive plan(s) have?

15)  Should those metrics remain the same or vary from year to year.

No, I did not forget the question asked in title of the article. Here are the two signs that you do NOT need compensation consulting help:

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1)     Your 4 & ½ year-old granddaughter or someone else’s is not in charge of compensation.  Before anyone accuses me of being gender or age biased, please note:

  • I have not been asked for proof of age when ordering wine for 50 years.
  • My very accomplished and now retired wife has always been the CFO of the LoDico family.
  • I have two very accomplished adult daughters.
  • I love my 4 & ½ year-old granddaughter very much and she’s exceptionally smart, but she’s not in charge of Trinity’s compensation.  Ditto for my 2 & ½ year-old grandson.

2)     The real sign is that you can successfully answer the fifteen questions we asked.

By the way, many of you are gearing up to go through year-end performance appraisal and pay review process.

  • You’ll find some sound information on Trinity’s within the “HR Management Matters” tab by clicking on “Articles” and then typing “year-end” in the search box.

FOR INFORMATION AS TO HOW TRINITY CAN HELP YOU WITH YOUR COMPENSATION CHALLENGES AND/OR OPPORTUNITIES:

  • Email us at Info@TrintyHR.net
  • Go to our website — ww.TrinityHR.net
  • Call us at 856.905.1762 or Toll Free at 877.228.6810

You have HR questions…Trinity has answers!

Posted in Compensation & Performance Management

IMPORTANT CHANGES TO OVERTIME PAY REGULATIONS

Posted on October 7, 2019 by Trinity HR

BACKGROUND

On September 24th, 2019 the U.S. Department of Labor (DOL) issued its long-awaited changes to the overtime regulations of the Fair Labor Standards Act (FLSA—and sometimes referred to as the Wage & Hour Act).

  • The FLSA establishes regulations related to which employees are required to receive overtime pay (classified as “non-exempt” employees) and which employees may be classified as “exempt” (and therefore not entitled to overtime pay).
    • In its regulations related to the determination of “non-exempt” or “exempt” status, the FLSA has a two-factor test, with both parts needing to be met in order for an employee to be classified as exempt:
    1. A pay level test
    2. A duties test

NOTE; The DOL has made ensuring employers are not misclassifying employees who do meet both parts of the test to be exempt an enforcement priority.

  • The FLSA requires employers (regardless of the number of employees) to pay non-exempt employees making less than a threshold amount at time-and-a-half of their regular rate for all hours beyond forty (40) in a week.

NOTE: California’s related state law requires time-and-a-half payment for hours greater than eight (8) in a day, regardless of the number of hours worked in the week.

KEY PROVISIONS OF THE FINAL RULE

In the final rule, the DOL:

  1.  raises the “standard salary level” (the pay level part of the two-factor test) from the currently enforced level of $455 per week to $684 per week (equivalent from $23,600 to $35,568 per year for a full-year worker)
  2.  raises the total annual compensation requirement for “highly compensated employees” from the current level of $100,000 per year to $107,432 per year;
    • The DOL had been proposing to raise the new level to $147,600 per year for an employee to meet the salary test to be classified as a “highly compensated employee”.

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  3. allows employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually) to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices
  4. decided not to include automatic updates to the required salary level, but instead the DOL will review the salary level every four years
  5. did not change the duties test for “white collar” exemptions to

EFFECTIVE DATE

The new regulations will go into effect on January 1, 2020.

  • It is estimated that an additional 1.3 million workers will now become eligible for overtime pay.
  • The estimated annual cost to employers is about $300 million.

RECOMMENDED NEXT STEPS for employers

  1. Review its classification of employees to ensure they are properly categorized in terms of non-exempt or exempt status.
    • The review should include a record for each position that documents the process by which the classification was determined.
    • Without a documented, formal process, an employer at risk for the DOL to do a deep dive into your pay practices—this is never (never is a word to be rarely used) a good thing!
      NOTE: From Trinity’s experience, it is not uncommon for such a review to discover that there are employees
      classified as exempt who definitely do not qualify as such.  We’ve seen cases in which the percent of employees misclassified has exceeded twenty (20) percent.
  2. Determine how to correct this non-compliance in such a way as to minimize the cost and the employee relations impact—this is not as simple as at first you may think it is.

NOTE: Reclassifying exempt employees to nonexempt requires considering a  broad range of issues, including a communication strategy, manager and employee training, new or revised timekeeping policies and practices, scheduling, compensation structures, calculation of the overtime rate, and other issues.

For more information, INCLUDING HOW TRINITY CAN ASSIST YOU TO ENSURE COMPLIANCE:

  • E mail Trinity at info@TrintyHR.net
  • Visit our website at www.TrinityHR.net
  • Call us at 856.905.1762 or Toll Free at 877.228.6810

You have HR questions…Trinity has answers!

Posted in HR Legal & Compliance

LANDMARK ANTI-WAGE THEFT LAW

Posted on September 9, 2019 by Trinity HR

New Jersey’s recently passed Wage Theft Act (“WTA”) somewhat flew under the radar. However, it will likely have seismic repercussions for employers operating in New Jersey, and because it is arguably the toughest legislation of this type in the U.S., it will make New Jersey a destination venue for wage and hour class action litigation.

  • The law took effect effective of its passage on August 6, 2019.

SUMMARY OF KEY PROVISIONS

The primary and immediate impact of the Act’s amendments to various wage-payment laws is the institution of increased penalties for failure to pay wages, including criminal punishments.  Below is a summary of the Act’s key provisions:

  1. Amends key provisions to NJ’s Wage Payment Law, the Equal Pay Act, and the Wage and Hour Law.
  2. With amendments to each of these laws, the Act provides that if an employer is found to owe wages to an employee that is due unpaid wages or wages lost due to the retaliatory action, the employee is allowed to recover:
    • The wages owed
    • Plus liquidated damages in an additional amount equal to 200 percent of the unpaid wages
    • Plus reasonable costs of the action and attorney’s fees to the employee
  3. Includes critical employee protections and harsher employer penalties than those previously in place.
  4. Significantly extends the statute of limitations for minimum wage and overtime claims from two years to six years
    • This substantially increases an employer’s exposure for non-compliance.
  5. Requires employers to provide current and newly hired employees with written notice of  their rights under New Jersey’s wage and hour laws and an explanation of how to file a claim in the event of a violation.
    • The NJ Department of Labor and Workforce Development will be preparing a model notice for use.
  6. Expands the definition of “employer” to include any successor entity or successor firm of the employer, meaning that a successor entity can also now be liable for the purported wage violations of its predecessor.

INCREASED CIVIL PENALTIES

Under the WTA, violating employers are subject to greater civil penalties. Of particular note is that the WTA now provides for treble damages and:

  • A violator must pay wages owed plus liquidated damages equal to 200% of wages owed.
  • The WTA imposes fines of $500 and 20% of the owed wages for a first offense (which increase to $1,000 and 20% of the owed wages for each subsequent offense), and administrative penalties ranging from $250 for a first violation to $500 for every subsequent violation.

CRIMINAL PENALTIES

Employers found to have violated New Jersey’s wage laws are also subject to criminal penalties. A violating employer commits a disorderly person’s offense, and, based on the number of violations, must pay fines ranging from $500 to $2,000 and/or serve jail time of 10 to 100 days.

PRESUMPTION OF RETALIATION

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Under the WTA, any employer that takes an adverse action against an employee within 90 days of the employee’s filing a wage complaint will automatically face a presumption that the employer’s action was retaliatory for having filed the complaint. This presumption “may be rebutted only by clear and convincing evidence that the action was taken for other, permissible, reasons.”

  • An employer who is found to have retaliated against an employee for filing a complaint commits a disorderly persons offense and, upon conviction, will be subject to a disorderly persons offense, fines in the range of $100 to $1,000, payment of the employee’s lost wages, damages and reasonable costs of the action to the employee.
  • If the employee was discharged, an employer who is found to have retaliated will be required to offer reinstatement plus pay:
    • A fine of $100 to $1,000
    • The employee’s lost wages
    • Damages equal to 200% of the lost wages
    • Reasonable employee costs, such as attorney fees

PUBLIC DISCLOSURE OF VIOLATORS

The WTA provides that a public website maintained by the New Jersey Department of Labor and Workforce Development will list each wage claim in which an employer is found to be in violation of one or more state wage and hour laws in a final determination by the commissioner of Labor and Workforce Development or a court judgment.

These listings will contain information including, but not limited to:

  • Name and address of the employer
  • Nature of the claim
  • Number of affected employees
  • Amount of wages owed
  • Penalties resulting from the wage claim

RECOMMENDED NEXT STEPS BY EMPLOYERS

  1. Review this new law with all departments/functions related to compliance with it
  2. Ensure the requirements summarized in 5. above are met
  3. Conduct an audit for compliance with all New Jersey’s wage laws

For more information:

You have HR questions…Trinity has answers!

 

Posted in HR Legal & Compliance

PEOPLE MANAGEMENT, PART 3

Posted on June 17, 2019 by Trinity HR

In Part 2, we likened supervisors and managers to shepherds during the agricultural period of the world.  Shepherds had the important responsibility of watching over a flock of sheep, which had great value.

  • Likewise, our supervisors and managers have the key responsibility to watch over an organization’s people, which typically are called its most valuable asset.
  • The importance of this role is increased during the current period in which jobs are plentiful and candidates are not; and therefore high levels of retention is key.

Part 2 also discussed three of the attributes of a shepherd of people: 1) establishing and maintaining boundaries; 2) cultivating a strong bond of trust; and 3) being an example.

Here in Part 3, we’ll talk about some additional attributes of a “Shepherd Leaders”.

  • Before doing so, let’s address the question of should leading be from the front or from the rear. The answer is from both — but equally importantly is leading in the midst of those you lead, with the best positioning of the leader varying at different times.

4)  Provision

  • “Shepherd Leaders” provides for the needs of those they lead.
  • Employees differ from one differ both in terms of what their needs are and in their expectations about those needs being met.
  • A leader should know her/his people well enough to understand which employee is in need of what at any given time – this requires listening and watching.
  • These leaders genuinely care about those for whom they are responsible.
  • This means caring about individuals as people and not just as someone who makes a product or provides a service — a “whole person” approach.
  • Caring from the heart, not the brain.  At times it entails providing stability, comfort and possibly even courage.

5)  Sacrificial  

  •  “Shepherd Leaders” knowingly choose personal sacrifice for the wellbeing of her/his people.
    • As an example, they do not “throw people under the bus” when something goes wrong, despite the potential blowback directly onto them.
  • These leaders know it’s not about them; it’s about those they lead.
    • & in turn what’s in the best interests of the organization

6)  Invested 

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  • Shepherd Leaders have a personal stake in the well-being of their people.
  • Like the shepherd with his sheep, these leaders are not going to abandon those they lead because of the organizational landscape has them in a valley rather than on a mountain top.
  • These shepherds stick with their people when the going gets tough or dangerous.
  • They are personally invested in and committed to those they lead.

7)  Relational 

  • “Shepherds of People” put in the takes the time, energy and effort to build solid and genuine relationships with those they lead.
  • As a result, their people know the “Shepherd Leaders” voice and trust it.
  • They are drawn to others and are committed to learning how they think and feel, by noticing changes in behavior
  • These leaders listen with a purpose to truly understand rather than to be understood and responding appropriately.

8)  Visionary 

  • “Shepherd Leaders” have a vision for the future and move toward it.
    • They know it is not enough to announce the path forward and expect that everyonewill go down the right path and stay on it.
  • They know that there will be rough terrain, that green pastures and still waters may be scarce, that disease may strike the flock. Still, they find a way to frame a positive yet realistic vision of the future.
  • Leaders know the importance of providing hopeful vision about the future of the organization and the role of each person and the team as a whole in it.

If your organization needs help with Leadership Development, Trinity’s Team of Consultants can provide expert and affordable assistance.

For more information:

You have HR challenges…Trinity has solutions!

 

Posted in Strategy, Management & Leadership

PEOPLE MANAGEMENT, PART 2

Posted on May 20, 2019 by Trinity HR

In Part 1, we discussed:

1)     The keys to organizational success typically can be found in the three Ps:

  • People
  • Processes
  • Products/Services

2)     People are sometimes hard to manage, but we have to be skilled at it

In the agricultural period of history, shepherds played a key role. Their role was to tend, herd, feed, and guards herds of sheep.  Sheep represented an extremely valuable asset, and so this role was an important one.

To be clear, I’m not comparing sheep to people. However, consider this, almost all organizations contend that people are their most valuable asset.  When we connect the dots, here’s a logical conclusion:

  • Regardless of organization size, industry or others factors, it makes sense for us to view supervisors, managers and executives as “shepherds of people”.

With that being valid, what are the attributes of a “shepherd of people?

1)   Boundaries

  • A true leader will establish and maintain boundaries—just as the shepherd had a sheep pen within which he gathered his sheep.
  • Relationship are defined and preserved by boundaries. Stepping over those boundaries can damage or destroy the relationship.
  • These boundaries include appropriate ethical and moral boundaries.

2)     Trustworthy

  • A leader needs to cultivate a deep sense of trust from those she/he leads.
  • The late Stephen covey in his classic book entitled “The Speed of Trust” wrote the following:
    • Simply put, trust means confidence…When you trust people, you have confidence in their integrity and in their abilities”.

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  • Those under our shepherding develop trust in us when there is:
    • Honesty: truthfulness and disclosure
    • Openness: willingness to share information and ideas
    • Consistency: predictable behaviors and responses
    • Respect: treating others fairly and with dignity
    • Integrity: keeping our word, promises & commitments

3)     Example

  • A true leader leads by example, and thus is a model people consider worth following.
  • She/he does not say, “do as I say, not as I do”.
  • She/he says, “let’s go”, not “go”—that one word (“let’s”) sends a powerful message.

In Part 3 of this series, we’ll look at other attributes of a “shepherd of people”.

If your organization needs help with people management,  Trinity’s Team of Consultants can provide expert and affordable assistance.

For more information:

You have HR challenges…Trinity has solutions!

Posted in Strategy, Management & Leadership

PEOPLE MANAGEMENT, PART 1

Posted on April 15, 2019 by Trinity HR

ORGANIZATIONAL SUCCESS

The keys to organizational success typically can be found in the three Ps:

  1. People
  2. Processes
  3. Products/Services

An organization can be successful success without exceling at all three. But to optimize its success, an organization needs to excel in all three.

When asked about it, almost all organizations talk about the importance of their people.  However, when a deeper dive is done, we find that there can be a big difference between that statement and the actions which are regularly taken to make that an everyday reality.

The reasons for this difference generally is due to one or both of the following reasons:

  • The organization is not truly committed to consistently doing what it takes in order to create a great work environment.
    • Often, the organization wrongly believes that to do so is expensive.
  • Its first line supervisors and managers do not have the required skills.
    • This is especially true when as employers we promote into management those employees who have been the best performers in doing their non-supervisory roles.

MANAGING PEOPLE

Let’s be real about managing people.

  • People can be hard to manage.
    • Products and services do not have feelings or an attitude…but people do
  • Not all people are easy with whom to work.
    • We click easily with some, and clank loudly with others.
  • Managing others does not come naturally to many individuals.
  • This ability magically or mysteriously appear in new supervisors or managers.
  • Not all long-time supervisors & managers are doing so in a highly effective way.

Your supervisors and managers are the face of your organization to its employees.  It should not be a surprise given that they typically…
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  • Spend more time with your employees than higher ups
  • Are the ones delivering your company’s important messages about

The reality is that all work gets done through people…so we have to lead & manage them effectively. That’s why it is so important for you to invest in the continuing development of your supervisors & managers.

The reality is that all work gets done through people…so we have to lead & manage them effectively. That’s why it is so important for you to invest in the continuing development of your supervisors & managers.

SOME ISSUES CAUSED BY SUPERVISORS AND MANAGERS

If your supervisors and managers are not effectively trained, they can cause your organization problems in a variety of ways.  Here are several:

  1. Decreased productivity and performance
    • Employees who are treated well do perform better.
  2. Higher turnover
    • Often, employees don’t quit their companies…they quit their supervisor.
  3. Non-compliance
    There are a myriad of local, state and federal laws and regulations that apply to you.
    Examples include:

    • Having a harassment-free work place
    • Overtime payments
    • Lawful interviewing

If your organization needs help related to people management, Trinity’s Team of Consultants can provide expert, cost effective assistance.

For more information:

You have HR questions…Trinity has answers!

Posted in Strategy, Management & Leadership

“THE ART OF DELEGATION”

Posted on January 14, 2019 by Trinity HR

One of the keys to be a successful supervisor or manager is mastering the practice of delegating. For some leaders, delegating is very unnatural and uncomfortable. This is particularly common with first-time supervisors.

Let’s explore several aspects of effective delegation, including:

  • The process itself
  • Its benefits
  • Reasons leaders fail to delegate

The Process of Delegation

Simply described, delegation is the process wherein the manager assigns responsibility to its subordinate, along with the certain authority to accomplish the task on the manager’s behalf.

  • Note: It entails responsibility AND authority.

Here is a 7 step process:

  1. Define the assignment
  2. Select the individual to whom to delegate it
  3. Meet to explain why the assignment is important & why this individual has been selected
  4. Assess any training and resources needed for success
  5. Stated required results, including completion date and, if appropriate, completion milestones
  6. Provide support and be available for discussion along the way
  7. Evaluate the assignment’s completion and provide feedback

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3 KEY Benefits of delegation

  1. Enables leader to use her/his time on other more important matters
  2. Serves to develop staff & prepares them for future growth
  3. Demonstrates leader is interested in professional development of staff members

3 Common reasons leaders don’t delegation

  1. “I can do it better myself.”
  2. It takes too much time to show somebody else.”
  3. “This is too important for me to trust anyone else to do it.”

If your organization needs help related to an HR Management matter, Trinity’s Team of Consultants can provide expert, cost effective services and solutions.

For more information:

You have HR questions…Trinity has answers!

Posted in Strategy, Management & Leadership

ARE YOU READY FOR YEAR-END PAY REVIEWS?, PART 3

Posted on December 17, 2018 by Trinity HR

In Part 1, we looked at:

  • Pay increase projection for 2018 year-end/2019
  • Pay increase guidelines by performance level
  • Reviewing internal equity
  • The role of the market place

In Part 2, we addressed the importance of pay data related to the market place.

Here is Part 3, we’ll consider the importance of communications with employees about pay.

EMPLOYEE PERCEPTIONS

A recent survey revealed some interesting and problematic findings about employees’ perception about their pay.  Specifically, it focused on how employees perceived how they are paid compared to the market versus how their actual pay compares with market pay.

  • The percentages in red show the percentage of employees whose perception about their pay in comparison to the market is correct.
EMPLOYEE ACTUAL

PAY

 % BELIEF PAID ABOVE MARKET % BELIEF PAID

AT MARKET

 % PAID

BELOW MARKET
Paid Above Market 21% 44% 35%
Paid At Market 6% 30% 64%
Paid Below Market 3% 14% 83%

Only those employees paid below the market rate had a correct perception (83%)
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  • Of those paid above market, only 21% had the correct perception.
  • Of those paid at market, the correct perception was held by only 30%.

 

  • As a whole, companies are doing an extremely ineffective job of helping employees to correctly understand how their pay stacks up against the market place.
  • Making it even more troublesome, it that those employees companies are paying above market levels have the worse correct awareness!

CAUSES

From Trinity’s perspective, there are several factors contributing to this problem.

  • Many companies are either not letting employees know the basis for how individual pay is determined or are inadequately doing so.
  • Most companies are extremely hesitant to share with employees market data – even when they paying employees at or above what the market calls for.
  • If your company’s pay is at or above the market, why would you not want to let employees see that by sharing data? It’s clear from the survey that employees are filling in the blanks themselves – and filling in lower dollars than the actual ones.
  • If your pay is below the market, you should want employees to understand why that it the case. Or perhaps, evaluate the negative impact (including low morale, unwanted turnover and even potential unionization) of  paying lower than like companies versus the financial impact of getting pay to become competitive

 ACTIONS FOR YOU TO CONSIDER

1) Communicate your company’s pay philosophy to all employees.

  • We at Trinity have some strong views as to the “right” and “wrong” ways of communicating this information. We’ll freely discuss them with you so:

2) Educate your employees as to how the company determines individual pay.

3) Share market data with employees – “seeing is believing”

HOW TRINITY CAN HELP:

  • Trinity’s Team has a high level of expertise in all aspects of compensation design and management, as well as performance management systems.

For more information about trinity, INCLUDING OUR SERVICES:

You have HR challenges…Trinity has solutions!

Posted in Compensation & Performance Management

ARE YOU READY FOR YEAR-END PAY REVIEWS?, PART 2

Posted on December 10, 2018 by Trinity HR

In Part 1, we looked at:

  • Pay increase projection for 2018 year-end/2019
  • Pay increase guidelines by performance level
  • Reviewing internal equity
  • The role of the market place

Here in part 2, we’ll further unpack the importance of pay data related to the market place.

  • The most important question that has to be answered is this one:  Is your pay on target?
  • Here’s the question in non-word form for those who prefer a picture or image.

The only way to answer this critical question with certainty is for your organization to periodically conduct a market compensation analysis that examines both base pay and variable pay.

  • Without such an analysis you could be either underpaying or overpaying – both of which have unintended consequences.
  • Losing a highly valued employee because of her/him being underpaid is such an example.

Four Features a Market Compensation Study Should Have

1)     Uses data from relevant organizations, which means those:

  • Of comparable size (as measured by revenue and/or number of employees)
  • Within your industry
  • In the geographical area in which you would recruit for a position – locally, regionally or nationally

2)     Data addresses both base pay and incentive pay in order to provide total cash compensation

3)     Creates a position match by taking into account factors such as below, not just by a position’s title that can vary greatly from company to company:

  • Duties and responsibilities
  • Educational level
  • Experience requirements
  • Key skills and competencies

4)     Provides specific recommendations which take into account pertinent position holder factors, such as:

  • Qualifications in comparison to the position’s requirements
  • Level of performance
  • Special value to your organization of certain positions

SPECIAL MARKET PAY ADJUSTMENTS

The Market Study will identify positions and incumbents within positions who are appreciably below your organization’s target relative to the market place.

  • For example, you may have set the 50%ile of the market as your pay target.

The Study’s recommendations give you an approach or approach options on how to address these instances.

Points To Keep in Mind

1)     A Market Analysis can be conducted internally if an organization has:
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  • An HR staff with specific expertise in compensation and the availability of the time to accomplish it and
  • Access to relevant market data or the ability to buy such data, with data to include both base pay and incentive compensation
    • market data’s cost can be prohibitive

2)     Most often, unless the organization of a substantial size, it either:

  • Disregards the value of a Market Study
    or
  • Hires an HR consulting firm to conduct the Study on its behalf since the consultant has:
    • Expertise in compensation matters
    • Made the investment to acquire market data specifically for the purpose of conducting Market Studies of total cash compensation

True or false?

1)     To be truly effective, a market compensation study has to include all or almost all of the positions within your organization.

FALSE!

  • A wisely designed study identifies certain benchmark positions that are used to “fill in the blanks” for positions not included in the study.
  • By proper design, the study’s time and expense can be substantially reduced – while still being an extremely valuable and meaningful compensation tool.

2)     A small company can derive benefit from a Market Analysis showing where its pay stands in comparison to other companies competing for the same pool of talent.

TRUE!

  • Organizations of all sizes can benefit from seeing where they are underpaying and overpaying and using that knowledge to be compensation decisions.
  • Trinity’s Team has done Market Analysis for organizations ranging from less than 20 employees to those with thousands of employees, and from those with annual revenue ranging from several million to billion+ size.

3)     The data used should not be just base pay, but also variable pay so as to reflect total cash compensation for positions being compared to the market.

TRUE!

  • Reviewing only base pay provides an incomplete picture and can lead to incorrect conclusions, such as a false sense of confidence in your pay’s competitiveness.

HOW TRINITY CAN HELP:

  • Trinity’s Team has a high level of expertise in all aspects of compensation design and management, as well as performance management systems.

For more information:

  • E-mail Trinity at info@TrintyHR.net
  • Visit our website at www.TrinityHR.net
  • Call us at 856.905.1762 or toll free at 877.228.6310

You have HR challenges…Trinity has solutions!

Posted in Compensation & Performance Management