Tuesday, February 21, 2017

Pay Equity in the Workplace: Do Gender-Based Disparities Still Exist?

The American Association of University Women released its Spring 2017 Gender Pay Gap report/guide with statistics regarding the pay disparity between women and men. In this issue of Astronology®, we look into how broad these pay disparities truly are and how this situation impacts Human Resources.

According to the American Association of University Women (AAUW), in 2015 women earned 80% of what men earned. The smallest pay gap was found in New York, where women earned 89% of what men earned. Delaware came in second at close to 89%, with Florida third at 87%. The largest pay gaps were Louisiana at 68% and Wyoming at 64%. Some writers highlight that the AAUW’s findings do not take into account personal choices with respect to careers. These choices or factors include college major, occupation, industry, hours worked, workplace flexibility, and experiences.

Yet in AAUW’s recent research findings, unexplained pay gaps still exist even when men and women have the same level of education. For instance, women with a Bachelor’s degree make 74% of what their male counterparts with the same education earn. Women with a high school graduation level education made 78% of what their male counterparts earned.

In regards to industry, there is research that notes a few fields were women make more than their male counterparts. These fields tend to be historically male-dominated fields such as riggers, small engine mechanics, and non-oil & no-gas drillers. For many industries, however, a gender pay gap exists, with male counterparts making more. In some cases, the gaps are closer than others. These findings, plus additional research & speculation, lead many to believe that personal choices can’t fully account for the gender pay gap. Adding to the importance of the discussion, a 2013 Pew Research Center report finds that 40% of all households with children under the age of 18 include mothers who are either the sole or primary source of income for the family.

What can HR departments do to prevent gender-based pay disparity? Keeping accurate records is an important step. The AAUW urges employers to “conduct salary audits to proactively monitor and address gender-based pay differences.” Astron Solutions offers an array of packages to support organizations in the quest for fair and equitable compensation programs. We encourage you to learn more about how we can be your trusted partner in this critical and sensitive matter! If you do not use an outside consultant, however, closely watching your organization’s internal salary increases, salaries for new hires, and salary changes associated with promotions is critical in eliminating gender-based pay gaps in your organization. An ounce of prevention today is worth a pound of cure tomorrow.

Are Wellness Benefits Worth the Investment?

Interest in wellness benefits has surged in recent years. The Kaiser Family Foundation’s 2016 Employer Health Benefits Survey found that 46% of small employers and a whopping 83% of larger organizations offer some form of wellness programs. These programs generally include the following areas: 
  • smoking cessation, 
  • weight management, and 
  • behavioral or lifestyle coaching
In this issue of Astronology® we look into wellness benefits to determine if they really are worth including in your employee total rewards package.

Traditionally speaking, when it came to employee health, the employer’s main concern was making decisions around a healthcare package that could reasonably meet the needs of its employees. It was commonly felt that health coverage was the best way for an organization to demonstrate the care it had for its employees. However, steadily, it has been noted that although Americans are living longer due to medical advances…the quality of life has gone down, due to chronic disease and preventable illness. As a result, these illnesses also take a toll on an organization’s productivity, as employees have to take days off for doctor visits, and possibly request lighter workloads due to illness.

To combat this drain on productivity, the interest in wellness has grown. While many people may be self-motivated to improve their wellness on their own, some individuals may have challenges in doing so. Those challenges can include
  • lack of accessibility,
  • lack of knowledge, and/or
  • lack of time to fully commit to living healthier lives
To help, some organizations have created programs to make wellness easier. Some noted positive results after offering wellness benefits to employees have included the following:
A Harvard Business Review online article mentioned that there also are some financial benefits to consider with respect to wellness. The article mentioned a study conducted by Richard Milani and Carl Lavie, which noted a $6 health care saving for every $1 invested in health intervention. Talk about positive ROI! Another example included a Cancer Center creating a workers’ compensation and injury care unit. Within six years the unit saw an 80% decline in missed work days and a decrease in modified duty days by 64%. In addition, the article pointed out that employees that participate in these benefits programs also are more likely to stay with the organization, rather than seek employment elsewhere.

How can an organization get started in creating a feasible yet attractive wellness program in which employees would like to participate? The SHRM website has a very helpful and in-depth article on Designing and Managing Wellness Programs for starters. In addition, consider these examples of programs started by two prominent healthcare-focused organizations:
  • Aetna: Offered Mindfulness at Work and Viniyoga Stress Reduction to employees to help lower the risk of mental and physical health deterioration. Mindfulness at Work reduced stress for its participants by 36%, and Viniyoga reduced stress for employees by 33%.
  •  Mayo Clinic: Besides offering on-site fitness facilities, Mayo Clinic also encourages work-life balance through discounts on travel and vacation. Backup daycare and bringing sick children to work, to be cared for by skilled staff nurses, also are helpful offerings.
Does your organization offer some form of wellness benefits? What were the deciding factors in assembling the offerings? We’d like to hear your thoughts!

Monday, January 23, 2017

It's Astron's 18th Anniversary

It's our 18th Anniversary! It has been a joy to contribute to the HR community with products such as Flare­® & Total Rewards Consulting!

Five Steps to Simplify Your Compensation Program

As compensation professionals we are often asked if there are alternatives to simplify the method by which compensation decisions are made and communicated within an organization. This has become especially important when Human Resources is required to provide services with reduced staff. The following are five basic ways to simplify the complexities of compensation.

Step 1: Consolidate job titles and descriptions based on broader criteria & common activities, and move to a “job classification” pay system.

Job classifications describe the primary functions, typical responsibilities, judgment required, qualifications, personal interactions, and degree of confidentiality required of a family of positions. Job classifications are used to place positions in the proper salary range and compare salaries to those of other organizations in the labor market. Broad job descriptions are used to describe a group of jobs. This system is typically found in the public sector and higher education.

An effective example of this type of program can be found in the State of Nebraska. The program identifies a number of broad classifications including the following:
  • Officers and Administrators
  • Professionals
  • Technicians
  • Protective Service Workers
  • Para Professionals
  • Administrative Support
  • Skilled Craft Workers
  • Service Maintenance
Competencies and complexities are established within each broad classification level based on required skills. Employees are placed into the classification and level based upon their competency levels and ability to perform the complexity required.

Step 2: Reduce the number of pay grades and salary ranges by moving to a “Broadbanded” pay system. 

Broadbanding links directly to the use of classification systems. Broadbanding allows for more flexibility in determining individual compensation based on the combination of individual skill & competency as well as the complexity of the job.

According to research from Stern & Associates, “broadbanding is the consolidation of traditional pay structures, consisting of many, narrow pay ranges into a few, wide ranges or bands.” Broadbanding support responsive, swift-moving organizational cultures.

Organizations with competency-, longevity-, and performance–based pay systems find broadbands are essential to their programs.

Before moving to broadbanding, however, Stern & Associates suggests organizations consider the following:
  • Broadbanding demands that managers are aware of, and can interpret, market pay data.
  • Broadband control points are not precise for individual jobs.
  • Broadbanding increases the potential for employees to float to the top of the band, and receive pay rates way out of sync with the market.
  • Broadbands lack the automatic cost-control mechanism inherent in narrow pay ranges.
  • Broadbanding eliminates the possibility for precise job analysis / evaluation.

Step 3: Develop performance appraisal methodologies that focus on job competency and individual contribution.

Another method of simplification is to move away from generic performance systems, and move towards competency-based performance management systems. The design of a competency-based performance management system is for employers to reward their employees for their knowledge, skills, and competencies. There is no straightforward calibration in determining if an organization is well fit for a competency-based management system. There are three factors to consider, however, that further explain why competency-based plans are worth the attention:
  1. The decline of the job as we know it today (i.e., many employers increasingly view the job as an anachronism — a dated concept);
  2. Many organizations that have successfully built skill-based pay plans for non-exempt workers have gone on to build skill-based pay plans for knowledge workers; and,
  3. Competency-based pay fits the strategic focus on core competencies, i.e., the linking of core competencies and business strategy for business success.
Step 4: Eliminate merit or pay-for-performance programs tied to base pay and instead allow for a bonus / incentive system that focuses more on outcomes and results.

Moving to a pay-for-performance system that rewards employees using bonuses or flat dollar amounts based on their performance for a specific period of time is one way to simplify the difficult process of determine pay adjustments based on individual performance. According to research from the U.S. Merit Systems Protection Board Report to the President and Congress on merit pay,

“pay for performance can encompass a variety of rewards for above average performance. The two most common are bonuses, which are one-time cash payments, and performance-based pay, which provides a permanent increase to base pay.

Bonuses represent an amount of pay that is ‘at risk’ every year. In contrast to base pay, which is stable and primarily reflects an employee’s market value, bonuses should depend purely on performance and are not guaranteed. Employees in these types of systems frequently receive base pay that is considered comparable to average market rate to facilitate recruitment and retention of a high-quality workforce, but additional dollars are distributed (often annually) on the basis of performance during the rating period. As a result, employees are guaranteed a certain salary, with the potential for earning more. The amount generally depends on a variety of factors, such as the available funding and the evaluation of the individual’s contributions, but the organization retains discretion over how much to spend each year.”

Be careful before implementing a bonus or incentive plan, however. If base pay levels are not fully competitive, reliance on bonuses as a reward may increase turnover.

Step 5: Step up employee / management HR committees to discuss new programs and to provide assistance in straight-forward communication.

A key to the success of any program redesign, regardless of how much the end product has been simplified, is the ability to effectively communicate with those impacted by the program. The most effective way is to meet with a task force of employees & managers to review program changes and to clarify the communication prior to dissemination. However, there have been concerns over the years regarding the legality of this communication methodology. Some suggested steps to take in communicating new programs can include the following:
  1. Be thorough in your communication – Make sure employees at all levels clearly understand the changes and how the changes will affect their individual pay.
  2. Focus on answering the question “What in it (the changes) for me?” – Since this is affecting something personal (pay), it is best to be able to explain thoroughly what will affect employees personally.
  3. Use a variety of means to communicate – There are various forms of media to use when communicating adjustments. Use one or two to address the changes…for some, an e-mail will work, for others one on one meetings, or “town meetings” will be needed. Remember that individuals generally need to hear a message three times before they remember and understand the information provided.
  4. Ask for and listen to employee feedback – Besides giving you a gauge on how the adjustments are being received, this also will communicate to employees that you care about their thoughts on the changes, promoting positive organizational culture.
However, as Astron Solutions National Director Michael Maciekowich reminds us, there are rules regarding the use of employee participation committees when discussing topics such as compensation. As per the National Labor Relations Board, “Section 8(a)(2) of the National Labor Relations Act (“NLRA”) makes it unlawful for an employer to establish certain employee participation programs or employee committees. It is important that the makeup of the committee include management and should be reviewed by legal counsel prior to meeting.” Before launching an employee participation committee, be sure to check with counsel to ensure legal compliance.

Tuesday, December 20, 2016

End of 2016, Beginning of 2017 - Astronology® Looks Back on an Exciting Year in HR

We find ourselves again at the end of another year! Can you believe the 4th quarter of 2016 is coming to a close? Continuing with previous year ending Astronology® releases, we will review some hot button issues & events in Human Resources in 2016, and how they may reappear in the HR realm during 2017.

Work Stoppage…to reappear again?
In September, many were surprised to learn that a college campus, Long Island University’s Brooklyn Campus (LIK-Brooklyn), was undergoing a faculty lockout. In a September Astronology®, we discussed work stoppages and learned that they are not held often. Lockouts and other forms of work stoppage occur with even large organizations, such as the NFL and Kellogg’s. Is it possible that other organizations can possibly find themselves in a similar bind in 2017? We certainly hope not. However, there have been murmurs of another sports franchise narrowly avoiding a lockout in the upcoming year. As a result, we do need to be mindful of the issue.

Minimum Wage Challenges?
In recent years, we have been peppered with discussions over living wages, the “Fight for $15” campaign, and their impacts on Human Resources and compensation. In April of this year, we saw New York Governor Andrew Cuomo reveal plans to raise the minimum wage to $15 by 2021. Other cities have also followed suit…or have already begun rolling schedules to reach higher wages. With the presidential elections over, and President-Elect Donald Trump making cabinet selections, many wonder what will become of the federal minimum wage. We all eagerly wait to see what happens with the minimum wage in 2017.

FLSA Final Rule. Is it on? Or off?
A number of organizations worked closely with their Human Resources partners and departments to prepare for the enactment of the FLSA Final Rule announced in May 2016. In some cases, job descriptions had to be clarified in order to help distinguish levels of positions. In other cases, adjustments in pay had to be made to ensure compliance. Then suddenly in November, a few days shy of the December 1 active date, an injunction was called and everything was put on pause. With a new presidential administration coming in, organizations are left with questions. Will the FLSA Final Rule push through? Will it be completely thrown out? Is it possible the mandate will be reformed? Only time will tell. We all anxiously await. In the meantime, it’s been suggested that organizations that have already made adjustments keep them, as the federal hold on the FLSA rule does not change any city or state laws.

Technology Marches Onward!
It’s predicted that by the year 2020, millennials will make up 75% of the workforce. This advancing change in workforce makeup also has accompanied an advance in technology. This technology can take many forms, including automation, gamification in performance reviews, and data analysis. Astron is especially hopeful to seeing more advancements in the area of HR technology and data analysis as a part of organizations’ strategic decision making processes.

As 2016 comes to a close, we eagerly look forward to 2017 for some answers to questions and some surprises in Human Resources. Were there other topics from 2016 that you think may make a resurgence in 2017? Why not share your thoughts with Astronology®! We’d love to hear your opinions!