Tuesday, November 22, 2016

Preparing for Possible Policy Changes in Human Resources

After the election of every new governmental administration, it’s important for Human Resources to take stock of its current concerns and prepare for possible adjustments & new hot topics. The recent presidential election is no different, with its host of new concerns for Human Resources and the general public. With Republican nominee Donald Trump winning the electoral vote for the presidential seat, and a Republican dominated House of Representatives and Senate, those in the field of Human Resources should keep a keen eye out for changes in policies we may have just recently implemented. In this issue of Astronology®, we’ll review some key policies that could possibly be subject to adjustment over the coming months and years.

Fair Labor Standards Act (FLSA) Exemption Rules
Most everyone in HR has been preparing for the December 1st FLSA Final Rule Adjustments announced this past May, and determining which roles are exempt and which are non-exempt moving forward. However, there has been speculation that further modifications under the incoming new administration may include an adjusted exemption for small business. Given that nothing has been stated or implemented definitively, however, employers should maintain their current course, and implement any changes necessary to be in compliance with the FLSA on December 1st.

Federal Minimum Wage
An extremely hot topic for the past two years has been the possibility of raising the minimum wage, with adjustments to meet the rising cost of living across the nation. While in New York the “fast food” minimum wage will gradually be raised to $15 by 2019, the current Federal minimum wage is $7.25. While it is speculated that Congressional Republicans are resistant to any increase, the President-elect previously mentioned that he wouldn’t mind a $10 minimum wage. However, President-elect Trump has noted that he believes states should take responsibility for this matter, or “call the shots.”

Federal Child Care and Paid Leave Support
While campaigning, the President-elect highlighted three facets in regards to federal child care support:
  • A dependent care savings account
  • Income tax deduction for dependent care
  • Six weeks of paid maternity leave
Campaign talk is one thing. Programs put into action are another. There are questions on how these programs could be supported. One economist has speculated that the six weeks of paid maternity leave could encourage employers to drop their own maternity policies and lean on having taxpayers support maternity leave.

The Affordable Care Act
Things are unclear as to what will happen with the future of the Affordable Care Act (ACA). What was initially understood as possibly being totally repealed under a Trump administration, it now appears instead that portions of the ACA will be put under repeal. We’ll have to wait some months to see what features of the ACA will stay the same and what will change.

Astronology® looks forward to tracking the possible new changes in HR coming with the new administration in Washington, D.C. As in the past, we’ll be sure to give further insights as time goes by and more specific policies & adjustments are announced.

Tuesday, October 11, 2016

Concerns Surrounding Non-Profit Executive Compensation

Executive compensation is a natural concern of many in the non-profit sector. A 2011 report from the Chronicle of Philanthropy highlighted that the median pay of executives in 132 surveyed charities and foundations increased 3.8% over the prior year. Three years later, Charity Navigator reported that the typical charity CEO’s compensation had increased just 2.6% over the prior year. The Charity Navigator report surmises that raises have been modest since the recession. However, the report also acknowledges that despite this overall trend, there are some non-profit leaders that earn “excessive” wages of more than $1 million. Factors involved in increasing executive pay levels include the following:
  • Greater competition among non-profits to attract top talent.
  • Difficultly in retaining staff, and a lack of internal candidates for some critical positions. 
  • Nonprofits’ desires to lure corporate executives, as the finances of non-profits have become subject to greater government scrutiny.
In addition to higher pay, some non-profits compensate for the lack of stock options and other corporate extras in the sector by allowing flexible work time. Others even pay bonuses, once rare at non-profits.

In recent years, the Internal Revenue Service has begun examining executive compensation at non-profits with an eye toward uncovering potential abuse.

Understanding the need to recruit and retain quality staff has added to the concern over how to structure compensation policies & programs to be fair and competitive, without crossing the fiscally abusive line. Incentive plans and other innovative compensation & human resources practices are becoming critical elements in the organizational strategy of many non-profit organizations.

A previous Astronology® highlighted details to consider when developing a compensation plan for non-profit executives:

1. Rationale for developing plans

Surveyed non-profits indicated multiple reasons for creating new programs. More than half of the participants indicated their program objectives included the following:
  • improve morale and/or employee relations;
  • improve employee retention;
  • link pay to performance / improve employee performance; and
  • become more competitive in total compensation (i.e., cash compensation, recognition, and benefits).
2. Types of plans and performance measures

The most popular types of cash compensation and recognition programs implemented by the participants were bonuses, incentives, and non-cash recognition programs.

Productivity, financial, and quality measures were the performance criteria most often used as the basis for the respondents’ compensation awards under a variety of programs.

3. Budget and award amounts

The average variable compensation award payouts typically ranged from 20% - 30% of salary. In some organizations, the targeted payouts ranged from 10% - 20% of the salary range midpoint.

Interestingly, in Astron’s confidential database of non-profit organizations, target incentives levels are as follows:
  • Staff / Non-Management: 5% - 10%
  • Supervisory Staff: 5% - 15%
  • Middle Management: 10% - 20%
  • Senior Management: 15% - 30%
  • Executive Management: 20% - 40%
  • CEO: 30% - 50%
Beyond these details, following are guidelines to consider when implementing a new compensation plan:

1. Nonprofit organizations should first conduct an assessment to determine the appropriateness of innovative compensation to their cultures and organizations. This assessment should focus on the following:
  • the objectives to be achieved through implementing an innovative compensation program,
  • what motivates staff,
  • the opinions and views of members, constituents, & volunteer leaders, and
  • the financial resources available.
2. Any innovative compensation program should be viewed as part of a total approach to compensation and carefully integrated into the design of that program. A market analysis of current compensation levels related to the jobs in the organization should be conducted in the early stages of or prior to developing a program.

3. The innovative compensation program, especially management incentive programs that provide significant opportunities for financial rewards, should be clearly tied to performance. The program should demonstrate the achievement of overall organization objectives in finance, program, development, client service, membership, public affairs, government relations, community relations, and any other areas deemed important to the organization.

4. Organizations should consider pilot testing innovative compensation programs on a selected group of staff before introducing the programs to all staff. More than one innovative compensation program should be considered, especially in larger organizations. Many non-profit organizations have implemented at least two types of programs.

5. Innovative compensation programs should be well communicated to staff and used as a vehicle to announce the success of employees, teams, and the organization.

Is non-profit executive pay a concern for your organization? Is there some form of transparency in place to alleviate those concerns? Are you considering changing or have you recently changed your compensation plan? Please share your thoughts with Astronology®. We may feature your response in a future article!

Tuesday, September 27, 2016

Work Stoppage in the 21st Century

What do the NFL, the cereal brand Kellogg’s, and Long Island University Brooklyn Campus (LIU-Brooklyn) have in common? They all have dealt with employee lockouts in the last five years. Given the September 14th end to the LIU-Brooklyn faculty lockout, in this issue of Astronology® we discuss lockouts and work stoppage in general.

Strike vs. Lockout…what’s the difference?
Both lockouts and strikes are forms of work stoppage. However, the ways they develop are different. Strikes occur when employees decide as a group to stop working during a labor dispute. In some cases, striking can be illegal. For instance, certain labor contracts, as well as certain public service employees, are not allowed to strike. An exception to this rule could be if the job has hazardous work conditions. Oftentimes, the National Labor Relations Board (NLRB) determines whether a strike is lawful.

Strikers fall under two categories. The objectives of “economic strikers” are better wages, hours, and/or working conditions. The objectives of “unfair labor practice strikers” involve rectifying unfair labor practice(s) allegedly committed by the employer.

Lockouts occur when management decides that employees should stop working during a labor dispute. In some instances, employers will hire replacement workers, even though locked out employees are entitled to their jobs after the lockout ends. The NLRB lists a number of things employers can do with respect to lockouts and strikes, including the following:
  • Lock out employees defensively – provided it is not to interfere with or defeat union activity.
  • Lock out employees defensively – in response to a “whipsaw” strike.
  • Lock out employees offensively – if the sole purpose is to “bring economic pressure to bear in support of a legitimate bargaining position.”
  • Hire temporary replacements to continue operations during a strike or lawful lockout.
  • Hire permanent replacements to continue operations during an economic strike.
How often do work stoppages occur? According to the Bureau of Labor Statistics (BLS), there were only 12 major strikes and lockouts in 2015. These stoppages idled 47,000 workers. The lowest annual report was a total of five major strikes and lockouts back in 2009.

Lockouts in the Education Field

In the case of LIU-Brooklyn, the faculty lockout was an unprecedented move in the higher education field. SHRM mentioned in an online article that these lockouts rarely occur for a number of reasons. For instance, it is speculated that the current NLRB is more prone than prior boards to rule against employers. Publicized lockouts also can give the employer a negative label in the eyes of the public. In the case of the higher education sector, where the needs of the student are directly linked to the quality of the staff, if the staff isn’t happy, students aren’t either. For the business and advertising aspects of higher education, this is bad publicity, and bad for business.

LIU-Brooklyn initiated its faculty lockout in order to avoid a strike, since previous negotiations have resulted in strike votes. The faculty lockout, which started September 2nd, lasted until September 14, 2016. The solution reached? LIU administration extended the faculty members’ previous contracts until May 2017, and will reimburse healthcare costs incurred during the time period of the lockout for the affected 400 professors.

What of the other companies mentioned in the beginning of this article? Back in May 2015, Kellogg’s was found guilty of unlawfully locking out 200 employees for nine months at its Memphis, Tennessee cereal plant. Kellogg’s had to bargain with the union, offer to reinstate any locked out workers who had not returned to work, and give back pay and benefits lost during the lockout. For the NFL, in 2011 the 18 week, four day lockout ended with NFL owners approving a 10 year bargaining collective agreement that was later ratified by NFL players.

Has your organization ever faced a form of work stoppage? How was it handled? Share your thoughts with Astronology® and we may feature your response in a future article!