Tuesday, March 21, 2017

Linking Gainshare Plans to Strategic Performance Assessment

Strategically aligned performance assessment processes have given attention to increased creativity in reward programs. A suggested rewards program can include gainsharing. While gainsharing has existed for many years, most equate it with profit sharing or a way to legitimize previously scheduled bonus payments. In this two-part Astronology®, we will discuss how to increase organizational success by combining gainsharing and the “Balanced Scorecard” strategic performance method.

Curiously, with combining the use of a simplified two-page performance assessment outline, focusing primarily on "Balanced Scorecard" strategic objectives and each employee's contribution to the organization through his / her essential functions, a strategic performance assessment plan can be created to give an organization enhanced success. How so? If designed properly, gainsharing can focus on the behaviors of individual employees and employee teams, resulting in a more motivated, successful organizational culture.

The U.S. Office of Personnel Management (OPM) website describes gainsharing as: “a reward program that allows employees to share in an award based upon productivity gains or savings in excess of a predetermined baseline of performance. If an organization's goals include improving productivity, reducing waste, reducing costs, and/or creating a savings in production costs, a gainsharing program focuses employees on those goals.”

Organizations should keep in mind when considering any form of gainsharing that

1. An organization cannot expect its employees to continuously improve organization performance when:
  • Their jobs limit their latitude & ability to change work processes, and
  • When they are given little information about the business and / or management systems' focus on control.
2. Gainsharing’s primary goal is to support a philosophy of participative management. When commitment to change is lacking, the involvement process will be ineffective. Gainsharing then will fall short of expectations.

There are six basic components of and processes to build a successful gainshare program.
  1. Define the group to be included. Many organizations attempt to make these programs all-inclusive. However, one must address the "line of sight" issue. All-inclusive programs sometimes lose their effectiveness since employees may not understand how they personally impact results.
  2. Define the formula for measuring success and funding the share. According to the OPM website, “a gainsharing program is self-funding. Therefore, it requires reliable financial measures to calculate the ‘gains’ (i.e., profits or savings) that the organization and employees will share.” This is where the strategic balanced scorecard comes into play. Most organizations focus only on the financial aspects of the scorecard. While this financial emphasis ensures the funds for rewards will be available, this approach jeopardizes the other scorecard components. On the other hand, having four or five objectives can complicate the formula to the point that all are confused and have little trust in the outcomes.
  3. Set the baselines and targets. The baseline for measurement should focus on historic information from the past fiscal year or quarter. Three levels of targets work best for all types of reward and recognition programs: threshold, target, and optimum. However, most gainshare programs focus on one specific level at which the actual share begins.
  4. Determine the share between the organization and the employee. While organization culture often defines this, the most common ratio is 25% to employees and 75% to the organization. Some organizations first determine what percentage they want to reserve as retained earnings and then calculate the share. This ensures the ability to invest in future organizational improvements and, in public companies, to provide for stockholder equity.
  5. Determine payout frequency. Many manufacturing organizations focus on an annual gainshare payout. There is an increasing trend towards quarterly shares to quickly reinforce the behaviors exhibited by employees. However, there may be financial reporting barriers that prevent this from happening. Those on a quarterly program commit to a payout within thirty days of the end of the quarter.
  6. Develop the method to distribute shares to employees. Many advocate an equal share to all involved so as to reinforce the team aspect of the program. Some creative methods include distributing equal shares based on the total hours actually worked during the measurement period. Another determines the share based on the pay grade in which the job is classified. Care must be taken when distributing funds to non-exempt employees. Overtime payment is required on gainshare distributions.
Naturally, the next questions are “what are some critical tips in developing a strategically aligned gainshare program?” and “are there any negative impacts to using such a program?” In our next Astronology® article we will discuss these topics in more depth.

Tuesday, March 07, 2017

Creative Benefit Offerings

               Following up to a previous Astronology® on wellness benefits, this Astronology® article will explore four additional creative benefits programs organizations can consider including in their total rewards packages.

Unlimited Vacation Time
              Unlimited vacation time started in the 1990s, especially in high tech fields. Today, unlimited vacation is becoming an increasingly popular benefit for many organizations, regardless of the field. Although sometimes advertised as liberating in contrast to “old-fashioned constraints such as assigned time off,” there are dangers associated with such programs. For an organization, there will be concerns of benefit abuse. In addition, employers must be aware that employees could collectively take the same days off, and in larger groups than under a traditional vacation time plan. For an employee, a challenge may be keeping a proper work / life balance, as open-ended vacations also can mean open-ended workdays. For instance, a spokesman from Netflix mentions that “we work weekends and around the clock; people work many hours, often from home or elsewhere via laptops/smartphones.” As a result, flexible work scheduling typically goes hand in hand with unlimited vacation time.

Flexible Work Schedules
              Flexible work scheduling is another popular benefit employees tend to enjoy. Whether it’s working from home a few days a week, or scheduling work time an hour before or an hour after the bulk of the staff has left the office, employees are able to find their own working pace and environment. This ensures the organization gets the production it wants from its employees. Some concerns include abuse of privilege and the expectation that employees will always be accessible, even for inaccurately perceived “emergencies.” Creating a policy that keeps both the employer’s and the employee’s needs in mind should curtail these concerns.

Family Focus
              Benefits that help the employee balance home and work life can be very eye-catching. Some of these benefits can include educational assistance for an employee’s dependent, in the form of a scholarship. An Entrepreneur online article notes that in a SHRM 2014 Employee Benefits Report, only 13% of those surveyed said their organizations offered an educational scholarships. Only 2% offered educational loans. These figures remained unchanged in the SHRM 2016 Employee Benefits Survey. Although these financial benefits are not widely popular, the article suggests that employers can set themselves apart by “offering educational scholarships, loans or pre-tax spending accounts.” Additional family oriented benefits include paid parental leave, on-site child care, and flexible scheduling in connection with children’s school breaks.

Paid Workouts
                Employers such as Clif Bar & Company (a nutrition business) offer not only access to an on-site gym, but workout time of 30 minutes every day, to 2.5 hours each week, while on the clock. The incentive of being paid to exercise can be appealing for an employee who needs an extra push to get healthy. Clearly this benefit helps, as Clif Bar in 2011 reported a 96% employee retention rate.

               Unique benefits programs can be an effective means of retaining employees. However, employers must be cautious to not offer a program simply because others are doing it. “Employers must consider the cost of the benefit, employees’ interest levels in such a benefit, and how the program fits with the existing total rewards program, before offering it to all employees,” explains National Director Jennifer Loftus. When it doubt? Try a pilot program first, to see if there’s sufficient momentum and interest to expand the benefit offering to all employees.

             Are you aware of other popular, creative employee benefits not mentioned in this article? Does your organization offer something unique to retain or motivate employees? We’d love to hear your thoughts!

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!