Readers Write

“Rewards and Recognition: Are You Doing Enough to Acknowledge Employees’ Hard Work?”, our September 2^nd Astronology article, generated quite a buzz!  Loyal reader Richard Virgilio of Intrepid HR Consulting shared his thoughts with us via e-mail:

I find the comment of how "one size fits all" is not likely true for a Total Rewards program to be absolutely not true in every case. Whenever someone, whether a vendor or an internal manager, offers a "one size fits all" solution, it is likely to be simplistic, shallow, and fraught with great credibility risk. If "one size fits all," why would there be any need for sizes? As business partners, HR professionals need to have a definite "early warning system" with many indicators and appropriate metrics. Early action when alarm bells sound for what should have been a "comprehensive" or "exhaustive" or "everybody wins" solution to an issue is vital to a thriving company and HR department.

Thanks for writing, Rich, and thank you for sharing your feedback!  Red flags should accompany “one size fits all” mentions in discussions.

The Astron Road Show

Business Council of New York 2014 Annual Meeting

Make your plans now to attend The Business Council’s Annual Meeting at The Sagamore Resort on Lake George, September 17 - 19.  The meeting will feature a robust agenda spread across all three days.  New this year will be panels on promoting corporate board diversity, corporate social responsibility, the state’s new energy and tax policies, and the business issues that drive professional sports.  Astron is proud to support this event, click here for more information.

New York State SHRM Conference

Have you wondered how you can engage your employees in a new and innovative way? One avenue organizations are exploring is Gamification.  Astronology discussed the growing popularity of gamification in a previous article. On September 28-30, 2014 Michael Maciekowich will be a guest speaker in Buffalo, NY at the New York State Society for Human Resource Management’s annual conference. Michael Maciekowich will be speaking on Gamification and the use of it in Human Resources. Register today to hear him speak!

2014 Upstate NY Healthcare HR Conference

From October 8 – 10, The American Society for Healthcare Human Resources Association (ASHHRA) Upstate New York Healthcare Human Resource chapter will be hosting its annual conference. The Astron team will be in attendance and look forward to seeing many of our friends in the Healthcare industry! The conference will be located at the Woodcliff Resort & Spa in Fairport, NY.

Wisconsin State SHRM Conference

Looking for a way to gain more knowledge on HR topics and policies? The Wisconsin State Society of Human Resource Management will be holding its conference at the Monona Terrace Convention Center in Madison, Wisconsin. The conference will be held October 15-17, 2014. In addition to exhibiting, Michael Maciekowich will present “Gamification in Human Resource Management: An Introduction.” He looks forward to seeing you!

As you can see Astron will be on the road several times throughout the summer and into the beginning of fall. Will you be near any of these locations? Consider stopping by and saying hello to the Astron team! For future updates on Astron’s travels, check out our Astron Roadshow page!

2015 Compensation Budgeting Preview

Moving towards 2015, Human Resource professionals are once again faced with many uncertainties that may have a dramatic impact on compensation program administration.  First, there are the mid-term elections in November.  A shift to a Republican majority in both the House and the Senate would create a stalemate in Washington, D.C. in terms of new legislation that would impact human resources, especially compensation program administration.  Second, chaos around the world and the continued threat of terrorism’s impact on the global economy creates an uncertain environment within which we must plan and operate effectively.

United State Economic Forecast for 2015

The key to understanding 2015 compensation budget predictions is to first understand the 2015 economic forecasts. According to Business Insider (http://www.businessinsider.com/ubs-2015-us-gdp-forecasts-2013-10#ixzz3D6YfLSNJ):

"Despite a slow economic recovery through 2013, U.S. growth still is expected to pick up…After currently forecast 3.0% growth in 2014, we now project 2015 growth to also be 3.0%...Central to their accelerating growth thesis is the idea that the fiscal drag will become less and less onerous.  And this will be offset by a Federal Reserve that begins to tighten monetary policy. This is a theme we expect to be common across most economic forecasts. Indeed, UBS's 3% growth expectation represents the median expectation among Wall Street economists. By mid-2015, we expect the Fed to start gradually raising the Federal funds rate to 0.75% by the end of 2015. In this setting, the benchmark yield on the 10-year Treasury note is projected to rise to 3.2% by the end of next year and 3.5% by the end of 2015. UBS warns prolonged fiscal restraint would certainly be bad news. Furthermore, Obamacare could discourage hiring by small businesses.”

United States Compensation Budgeting Forecasts for 2015

With this economic perspective as a backdrop, it is not surprising to see most, if not all, of the major consulting firms and associations with similar predictions for 2015 compensation budgeting. The following is a summary of these predictions.

The Hay Group (www.haygroup.com):

“Hay Group expects the 3 percent median base salary increase to hold steady across most U.S. industries, including chemical, consumer products, financial services, health insurance, industrial goods and utilities. Two sectors, however, have different expectations: Oil and gas industry employees can expect a median base salary increase of 4 percent and Hospital employees can expect an increase of 2 percent for most employee groups. More employers expect to tie reward programs to performance-management practices. These programs include increasing future emphasis on improving variable-pay programs (56 percent of respondents) and improving key non-financial rewards such as career development opportunities (63 percent).”

Mercer (www.mercer.com):

In its latest study, Mercer points to the following five year trend:

Mercer further comments that:

“As organizations strive to balance reward programs with budgets and the need to retain critical talent, they are analyzing key segments of their workforce and concentrating rewards on top performers. Consequently, the range between increases to high-performing employees and those given to lower performing employees continues to widen. Mercer’s survey shows the highest-performing employees received average base pay increases of 4.8% in 2014 compared to 2.6% for average performers and 0.1% for the lowest performers.”

WorldatWork (www.worldatwork.org):

Following is an excerpt from WorldatWork’s latest salary budget survey:

“‘Salary increase budgets will likely remain close to the 3.0 percent mark until market forces require employers to raise wages more aggressively,’ said Alison Avalos, research manager for WorldatWork. ‘Recovering from the recession is no longer driving employers’ salary budget planning. Current salary budget increase amounts are less about a recovery from widespread pay freezes from a few years back and more about the current marketplace not demanding much growth in the size of pay increases for employees.’ Organizations continue to converge on budget amounts between 2 percent and 4 percent, with 85 percent to 90 percent of all organizations landing there, depending on employee category. The percentage of organizations not awarding increases has dropped to 2 percent to 5 percent, fairly close to historical levels.”

Total U.S. Salary Budget Increases
Employee Category	Actual 2014 Mean	Actual 2014 Median	Projected 2015 Mean	Projected 2015 Median
Nonexempt hourly nonunion	2.9%	3.0%	3.0%	3.0%
Nonexempt salaried	3.0%	3.0%	3.0%	3.0%
Exempt salaried	3.0%	3.0%	3.1%	3.0%
Officers/executives	3.0%	3.0%	3.1%	3.0%
All	3.0%	3.0%	3.1%	3.0%
Source: WorldatWork 2014-2015 Salary Budget Survey, preliminary findings.

http://www.shrm.org/hrdisciplines/compensation/articles/pages/2015-salary-budget-forecasts.aspx#sthash.sOv2leaA.dpuf

Astron’s Perspective

One key issue not reflected in these predictions is the compensation budget impact of the move to increase both the national and states’ minimum wages. The following is a summary of the upcoming minimum wage changes scheduled for 2015, as reported by Business & Legal Reports (www.blr.com):

State minimum wage changes effective December 31, 2014:

·         New York: $8.75 (See additional increase effective December 31, 2015)

·         West Virginia: $8.00 (See additional increase effective December 31, 2015)

State minimum wage changes effective January 1, 2015

·         Connecticut: $9.15

·         Hawaii: $7.75

·         Maryland: $8.00 (See additional increase effective July 1, 2015)

·         Massachusetts: $9.00

·         Rhode Island: $9.00

·         Vermont: $9.15

State minimum wage changes effective June 1, 2015

·         Delaware: $8.25

State minimum wage changes effective July 1, 2015

·         Washington, D.C.: $10.50

·         Maryland: $8.25

State minimum wage changes effective August 1, 2015

·         Minnesota: Large employers $9.00; Small employers $7.25

State minimum wage changes effective December 31, 2015

·         New York: $9.00

·         West Virginia: $8.75

The above changes, coupled with the US Federal Minimum Wage for Federal Contract Employees at $10.10 per hour, up from the current $7.25, will have a hidden impact on compensation budgeting.  Increases in federal and state minimum wages create compression and a domino effect on pay grade & range structures.  An organization that had set its lowest pay grade minimum at $7.25, and employers with federal contract workers, will have to raise that grade minimum by $2.85, or 39%. In New York State, the minimum wage on December 2015 will increase (in two steps) from the current $8.00 to $9.00, or 12.5%. Those employees in the lower pay grades will have to have their pay rates adjusted to avoid pay compression.  In addition to the bring to minimum adjustments necessary for employees currently in the lowest pay grade, attention should be paid to the salaries of employees in higher pay grades, to avoid compression with the lowest wage earners.

There’s a lot to keep in mind as you begin your 2015 compensation budgeting.  With the uncertainty both home and abroad, maintaining and updating one’s pay structures is more than a “plug and play” activity.  Rather, employers must keep a strategic perspective, not only on the pay range and annual salary adjustments, but also on the use of variable compensation and pay for performance tools, to effectively reward the truly high performers, the employees who make the difference between an organization going through the motions and organizational success.

A Not-So-Pleasant Look at HR

We do a pretty good job on this blog at staying cheery and positive, but once in a while, it's good to look at the bad. LinkedIn has a lot of great post by the Influencers and this was certainly one of them from Alan Collins.

He starts off in the most cheery of ways: "No matter what you do, someone is going to criticize and distrust you -- and many will hate you, even if they don't know your name."

But isn't that true of a lot of jobs, especially support roles like Legal, Compliance, and, of course Human Resources. But he gives some good advice, including this one:

2. Replace no's with options (lots of them), whenever you can. 

Let’s say your client is concerned about his three best people and wants to increase their pay beyond reason, in order to retain them. 

In this case, don't respond with just a flat out no. Meet with him on his turf to brainstorm alternative, creative solutions that address his real need: retention. For example, could you keep these top performers by creating an opportunity to improve their skills so they might be promoted (with higher pay) more quickly? Can you restructure their jobs to give them even more recognition, freedom and autonomy in making decisions? Can you enhance their work life by providing flexible work schedules, remote working arrangements or more time off? 

Strive for win/win solutions. It's not always possible, but work hard with your clients to come up with alternatives that both you and they can embrace.

The best thing you can do at work is include your co-workers in the decision process (where appropriate). No one wants decisions made for them, especially when that decision influences their wallet, their works status or their future. Keep them in the loop and strive for their respect--because the truth of the matter is not everyone will like you...and that's okay.

Rewards and Recognition: Are You Doing Enough to Acknowledge Employees’ Hard Work?

Forbes reported in 2012 that there is a $46 billion market for employee recognition programs. With it being such a huge market, clearly employee recognition is important for every organization to consider. Research from Bersin indicates that in “organizations where recognition occurs, employee engagement, productivity and customer service are about 14% better than in those where recognition does not occur.” With our interest piqued, Astronology will dig deeper into the topic of employee rewards and recognition, and explore best practices for these programs.

Employee recognition programs can vary, from the very simple and inexpensive to the elaborate.  No matter where your organization falls on that continuum, the stakes are high when considering the impact of a low recognition culture on an organization’s bottom line.  What are some consequences of ignoring the need to recognize employee contributions? 

• Low productivity and low performance
• Negative attitudes and a poor team culture
• Increased absenteeism
• Low employee retention rates and increased turnover rates           

It’s safe to assume that no organization would like to have to address and reverse any of these issues. And yet, doing something doesn’t mean that it will be a success.  Even more unsettling is learning that you can have a rewards and recognition program and still not meet the needs of employees. How so?

Susan M. Heathfield’s article featured on About.com points out that, for starters, many organizations believe in the “one size fits all” model when it comes to employee recognition and rewards. This results in narrow thinking when deciding when and how employees should be rewarded and recognized. As a result, employee complaints, jealousy, and dissatisfaction become prevalent.  Guidelines to consider in order to create a sharper rewards and recognition program for your organization include the following:

·     Decide what you want to achieve through your employee recognition efforts.  A program cannot solve all problems and motivate everyone to do everything.

• Create goals and action plans for employee recognition.  Metrics focus activity towards the relevant and significant.
• Ensure that fairness, clarity, and consistency are important to and evident in the program
• Avoid “employee of the month-type programs.”  These approaches are usually not clear to employees and lead to accusations of “pet employees” receiving the awards. 
• Recognize all people who contributed to a success equally.

Heathfield highlights a program to increase attendance that can spur your organization’s brainstorming in the area of employee rewards and recognition.  An organization hands out a three-part form or three-part certificate.  During the organization’s weekly staff meeting, one form is given to employees who had perfect attendance the previous week. The second form is kept in the personnel file.  The third form is entered in a monthly drawing for gift certificates. The goal and action plan for the program are clear, the raffle catches employees’ interest, and the approach avoids the angst that “employee of the month” programs can cause.

           

Forbes also gave the following best practices for employee recognition programs.  Consider these when developing a new or reviewing an existing employee rewards and recognition program.

• Recognize people based on specific results and behaviors. Leave the “employee of the month” mentality and deliver awards based on specific actions.
• Implement peer to peer recognition, rather than the traditional top down approach. According to Forbes, “peers know what you’re doing on a day to day basis, so when they ‘thank you’ for your efforts the impact is much more meaningful. Top-down recognition is often viewed as political and it rarely reaches the ‘quiet but critical high-performers’ in the company.”
• Share recognition stories: Story telling is powerful. Sharing recognition stories can build camaraderie.
• Make recognition easy and frequent.  Make it simple and clear for everyone to participate, receive, and enjoy.
• Tie recognition to your own organizational values or goals: “Too many CEOs and managers focus on bottom line results without thinking about how it feels to slog away and work without anyone saying thanks.”

Has your organization established a rewards and recognition program? Does your organization adhere to some of these suggestions? What works best for you?  We’d like to hear from you!  Please submit your response to Astronology and we may feature your response!