Ask The Expert: School Bus Strike

On this last week in January, we are going to start a new tradition where we'll do an "Ask the Expert" series with Human Resource questions that will be answered by Astron Solutions' National Director, Jennifer Loftus. Jennifer has so many abbreviations after her name (MBA, SPHR-CA, GPHR, CCP, CBP, GRP) that I believe she qualifies as an expert in this field (and many others as well). Feel free to submit any HR questions that you have and I'll zip it over to Jennifer to see if we can get it answered for you. So without further ado, here is the first post:

Question (after reading the last Astronology), Cassandra said:

It made me reflect back on this whole school bus strike happening out in Staten Island. How are they able to strike? Because they are unionized?

Answer from Jennifer:

Yes, the school bus drivers are striking because they are part of a union / collective bargaining agreement. Although such rights are afforded to all employees under Section 7 of the NLRA, it’s generally only unionized employees who will take a strike action.

If what the City says is true, that the bus drivers are asking for a contract clause that is illegal, it seems odd to me that they are trying to get that changed through a strike, rather than working with their legislators.

Guest Post: Happy Birthday to Us!

Once again we give the floor to Jennifer who wanted to talk about a very special day that was had at Astron yesterday. Congrats to Jennifer, Michael and the rest of the team for such an awesome accomplishment!
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Happy birthday, Astron! 

Yesterday, on January 22^nd, the Astron team celebrated our 14^th anniversary! How quickly the time has passed. Thank you for being a part of our success, from our humble two person beginnings in Suite 6G, to where we are today! We look forward to serving you for more many more years to come.

Compensation 101: Compensation Philosophy

The compensation philosophy is the foundation for all compensation decisions an organization makes.  Developing a compensation philosophy, however, is not always an easy task.  There are a number of questions that an organization’s leaders must explore in order to ensure that the compensation philosophy helps the organization to achieve its goals. 

What is the purpose of a compensation philosophy? What elements are included in the compensation philosophy?  Does the compensation philosophy vary by employee group, department, or other category? How frequently must it be updated?  These are critical questions that need to be answered by Human Resource professionals, no matter the organization. In this issue of Astronology, we discuss the ins and outs of compensation philosophies and their importance.

What a compensation philosophy and why is it so important?

A compensation philosophy, in short, is the formal statement or commitment an organization creates in regards to the compensation of their employees. The transparency of this commitment benefits both the employee and the organization when it comes to pay strategy and salary negotiations. Compensation philosophies usually are developed with teamwork between human resources and executives.  The key factors to be considered when creating a compensation philosophy can include the:

•          Organization’s financial position,
•          Size of the organization,
•          Type of industry,
•          Organization’s objectives,
•          Salary comparisons with the competition, and
•          Level of talent currently in place and needed for success.

The main goal of a compensation philosophy is simple: attract, retain, & motivate employees.  In order to do this, the compensation decision making team should mix Base Pay (salaries based on survey insight), Incentive Pay (cash or non-cash awards), and Benefits (non-financial awards) in accordance with the organization’s resources.  For example, private sector organizations would want to develop a pay philosophy that includes competitive pay, whereas an organization in the public and non-profit sectors may want to develop a pay philosophy that is more rounded to also include a heavier emphasis on work/life benefits.  Developing a philosophy can be a challenge, as many organizations have varied circumstances.  The organization’s unique circumstances can make creating a competitive compensation philosophy difficult, no matter the level.  A careful balance of resources must be considered.

How often should the compensation philosophy be reviewed?

With this question we explore the on-going “Lead/ Lag Tango”.  Many organizations review salaries once or twice a year.  However, despite the annual or bi-annual salary review, market values change continuously. As a result, an organization is likely to be at market value once or twice a year. Consequently, the compensation team has to decide when they would like to offer raises.  Should your organization lead the market at the beginning of the year, following the lead-lag approach? Or lead at the end, following the lag-lead approach? What if an industry or position requires new college recruits at different intervals of the year? What if different positions have different recruiting seasons? These are personal decisions that must be considered for your organization’s needs. Planning reviews a month or two before an industry / position recruiting season is an approach for successfully navigating this dance.

How important is consistency?

Consistency is very important. Salary.com gives the wary example on the importance of consistency: “…suppose a company established a flat rate of $9.90 per hour for nonexempt employees in a customer service role. The department had 200 percent turnover. Despite the published flat rate, some employees with college degrees successfully negotiated for $10 per hour or more, while employees with 20 years of experience faithfully assumed the flat rate was non-negotiable. Soon, three women over 40, a protected class under age discrimination laws, were earning less than three men who had just graduated from college. The manager's defense when confronted with the disparity was that the women never asked for more.” This is a sobering reminder of the importance of staying consistent to a dedicated compensation philosophy.

How important is communication?

A sound compensation philosophy can create a sense of fairness in organization. As a result, it is important that a pay philosophy be communicated to all employees and even job candidates. It is much easier to mention in salary negations the market rate in relation to an organization’s salary offer, rather than dealing with complications down the road. 

How do I know my compensation philosophy is of quality?

SHRM offers the following questions to test your compensation philosophy:

• Is the overall program equitable?
• Is the overall program defensible and perceived by employees as fair?
• Is the overall program fiscally sensitive?
• Are the programs included in the compensation philosophy and policy legally compliant?
• Can the organization effectively communicate the philosophy, policy, and overall programs to employees?
• Are the programs the organization offers fair, competitive, and in line with the compensation philosophy and policies?

 Would you like to know more about compensation philosophies?  Are you struggling with updating yours?  Astron Solutions offer a variety of compensation packages that designed for varying organizational sizes and industries.  Contact us today for a free 30 minute consultation.  We look forward to helping you achieve your compensation goals for 2013!

Talking Unemployment

I have to admit the graphic doesn't exactly fit with the article but Slate last week looked into the best places to find a job by studying the unemployment rate of big cities:

The new metro area unemployment numbers are out, and the winner for lowest unemployment among American metropolitan areas is once again Bismarck, N.D. at 2.6 percent...In terms of large metropolitan areas with populations of over 1 million, you ought to set your sails for Oklahama City (4.5 percent) or New Orleans (4.7 percent and falling fast) as labor markets that are both hot and clearly seem to have the ability to absorb more people. Tulsa...is also doing quite well with a 5.1 percent unemployment rate but not quite as well as the D.C. area where we're at 5 percent.

As you can see by the always-handy Google graph, the unemployment rate has been pretty steadily decreasing since it reached 10% back in October of 2009 to the point where it's at ~7.8% now. In New York, we're seeing a 8.3% unemployment rate in the state and a 8.8% unemployment rate in New York City according to the New York Department of Labor.

The New York Times Economix blog recently looked into why the unemployment rate was so high still but in the article brought up something else that is equally disturbing:

Another feature of the current recovery is the long duration of unemployment for many workers. At the end of last year, 4.8 million Americans were unemployed for 27 weeks or more, and their share in the total number of unemployed workers fell to 39 percent after peaking at 45.5 percent in March 2011 and exceeding 40 percent for 31 consecutive months. The previous peak was a far lower 26 percent in 1983, at a time when the unemployment rate was about as high as it is now.

That number may actually be low, as it does not factor in "1.1 million discouraged workers who want a job but are not currently looking for work, and many of the 1.7 million workers who have joined disability rolls because they cannot find a job."

That's scary. And while all the talk lately has been about the Fiscal Cliff and the Debt Ceiling and other matters of the such, the author points out that Congress has not taken into action some of President Obama's proposals from his first term that would have started to reduce this long-term unemployment such as increased unemployment fund for job training and placement programs and a tax credit for businesses hiring people out of a job for more than 6 months, among other initiatives. The author worries that this could compound the problem and lead to much worse news for the US economy than anything we've had to worry about thus far. Scary stuff, indeed.

Ford's Impact

This was sent along to the blog from our fearless leader, Jennifer. Figured this was a good post for a long week's Wednesday on the blog:

I was reading in the 1/7/13 issue of Woman’s World, and they have an “it happened this week” column.  I found this neat HR story in this week’s happenings:

Henry Ford stunned Americans when he enacted an eight-hour workday and $5 daily minimum wage at his Ford Motor Company in 1914.  The unprecedented wage hike more than doubled most workers’ salaries.  The result?  Employee turnover decreased, and profits shot up $30 million over the next two years!

Compensation Practice Basics – Our New Six-Part Series

According to an October 2012 study reported by WorldatWork, it’s back to basics for compensation programs.  Human Resources professionals must be knowledgeable about the fundamentals of several compensation tools in order to successfully attract and retain talent in 2013.  The study, Compensation Programs and Practices 2012, notes that, across a wide spectrum of organizations, there is a more rigorous approach when it comes to compensation practices than in past years. 

Astronology looks forward to sharing compensation basics with you and exploring changes in compensation practices and programs for the future. We will examine the study’s findings and discuss compensation basics with you throughout the upcoming six-part Astronology series.  By the end of the first quarter of 2013, you will be primed and ready to enhance your existing compensation programs to ensure successful employee attraction and retention!

·         Compensation 101: Compensation Philosophy – Coming January 22nd

Compensation Programs and Practices 2012 found that 67 percent of organizations are adopting a formal, written compensation philosophy to ensure compensation programs support the organization’s culture. Has your organization adopted a compensation philosophy?  What elements are included in your compensation philosophy?  When was the last time you updated the compensation philosophy?  Does your compensation philosophy vary by employee group, department, or other category?  We’ll explore these questions and more in Compensation 101: Compensation Philosophy, as a compensation philosophy is the foundation upon which all other compensation decisions are made.

·         Compensation 102: Job Evaluation Methods – Coming February 5th

Market pricing remains a dominant method for job evaluation.  However, it is not a true job evaluation method, since its focus is external rather than internal.  Since neither the external nor the internal can be ignored when developing compensation systems, many organizations use a variety of methods to determine job values. In Compensation 102: Job Evaluation Methods, we will examine the various job evaluation methods and how they can be used to effectively create job groupings reflective of internal and external value.

·         Compensation 103: Salary Structures – Coming February 19th

According to Compensation Programs and Practices 2012, 85 percent of organizations have a formal salary structure. What are the pros and the cons of having a formal salary structure in place? What type of salary structures can be used to attract and retain talent?  How often should an organization update its salary structures?  How does HR know when it is time to create a brand new salary structure?  Compensation 103: Salary Structures will examine a wide variety of necessary considerations when building a salary structure.

·         Compensation 104: Pay for Performance – Coming March 5th

Compensation Programs and Practices 2012 cites that 71 percent of organizations have a formal employee performance appraisal system. A popular choice in this regard is to measure individual performance against management or personal objectives. How flexible can an employee performance appraisal system be? Where do you start when establishing a performance appraisal system?  What types of evaluation criteria should be included in the performance appraisal system?  How can HR ensure that the performance appraisal system is fair?  Does compensation link with performance appraisal score?  Should it?  The thorny issues are on tap for Compensation 104: Pay for Performance.

·         Compensation 105: Pay Communications – Coming March 19th

Compensation Programs and Practices 2012 found that 80 percent of organizations relay pay information to their employees via brief written or oral communication. In some cases, individual attention is given to employees regarding the topic of pay.  What is the best way to go about communicating the sensitive, but necessary topic of pay?  What communication methods are most effective?  Is there one right way to share pay information?  Are there any legal considerations that impact pay communications? You won’t want to miss Compensation 105: Pay Communications, since the best compensation programs lose their proverbial punch if not communicated effectively to employees.

·         Compensation 106: Variable Pay – Coming April 2nd

Wrapping up our six-part series, Compensation 106: Variable Pay will discuss the options surrounding and challenges with incentive programs. According to Compensation Programs and Practices 2012, in 2012 84 percent of organizations used some form of bonuses or incentive compensation to reward employees.  There are many options in the realm of variable pay: bonuses, award recognition payments, and individual performance plans are but three. What the pros and cons of different variable pay design options? Which variable pay options are viable for your organization, given its goals, objectives, financial status, and culture?  Does one variable pay design option fit all?  Or should the variable pay design change over time?  Our six-part series on compensation basics comes to a close with Compensation 106: Variable Pay’s examination of a more advanced compensation topic.

It’s going to be an educational Spring 2013 here at Astronology!  We look forward to exploring these topics and questions with you in the next six issues. We also look forward also to hearing your reactions, responses, and questions. Please contact us today with any specific questions you’d like us to tackle during this six-part series on compensation basics, and we’ll be sure to include a response to your question in the relevant article!

Home for the Holidays?

Happy New Year from all of us at Astron Solutions! As we start the new year, we start a new year of holidays and vacation time for all employees. But as companies try to maximize productivity and eliminate as much "unnecessary" vacation time as possible, which days out of the year are truly mandatory to give off and which ones are "optional"? The question may seem simple but there is a great amount of ambiguity as it pertains to both public employees and those that work for the private sector.

According to Compensation Today, without a collective bargaining agreement or contract that says that you have to, technically there is no federal law that says that you have to provide any holidays for nonexempt employees, yet 97% of companies due, mostly to create goodwill among their employees and keep up with societal norms. Some companies provide a lot of vacation time for their employees and some provide very little, but the actual days that are provided change by company and geography.

According to WorkAtWork's Survey from 2010, the top 6 days off for any type of system of paid holidays were New Year's Day, Thanksgiving Day, Labor Day, Memorial Day, Independence Day, and Christmas Day (all clocking in at ~90% or above). After that was the Day aft Thanksgiving and Christmas Eve which were both highly provided.Others got President's Day/Washington's Birthday, Martin Luther King Jr Day, New Year's Eve, Good Friday, Veteran's Day, and/or Columbus Day.

But that doesn't mean everyone gets all of these--far from it. Even the states can't agree on who gets what days off. MLK Day, which is coming up, is celebrated in almost every state as a legal holiday but Rhode Island doesn't recognize it as such. But Rhode Island celebrates Columbus Day as a day off which 22 other states don't give to their employees.

The key? Find out which days you "need" people in the office. Sure, you could probably use people in the office 7 days a week for 52 weeks of the year, but in lieu of that, which days are your clients not working that you can give them all off. Start with those as the base days off. Then figure out a good amount of days that make sense to have off and work towards those. Figure out what's normal for your industry and what's fair for your employees based on their location and come up with an easy-to-follow, smart, and, most importantly, consistent vacation schedule. The last thing you want is your employees planning something for their annual MLK Day off just to find out when they come back to work after New Years that they will have to work that day.