Happy Holidays and a Happy New Year

Hi loyal readers!

Sorry for being absent from the blogging for a while but we have a ton of great things lined up and ready to go for your right after we turn the calendar to 2015.

But before we do, I want to thank you for reading, wish all of you a lovely holiday season and a very happy new year. Here is to amazing things for all of us in 2015!

Recapping the Hot Human Resource Trends of 2014

In the beginning of January 2014 Astron Solutions released a white paper entitled, “2014’s Hot Human Resource Trends”.  As we forge on into 2015, in this issue of Astronology we’ll recap those predictions…and how they’ve played out this year.

Trend #5: Decline in Unpaid Internships

            

As we suspected, 2014 saw an explosion in lawsuits. In January 2014, Elite Model Management settled with former unpaid interns. In October of this year NBC Universal closed a $6.4 million settlement with their unpaid interns. Lastly in November, Condé Nast settled with their former unpaid interns to the tune of $5.8 million. This lawsuit also ended with Condé Nast terminating its internship program. As mentioned in the white paper, “The U.S. Department of Labor, Wage and Hour Division, has a fact sheet describing what an FLSA compliant unpaid internship program should include. Make sure your for-profit organization is in compliance with these before offering any unpaid internships in 2014.”

Trend#4: Immigration Reform

            

Immigration reform is continuing to be a concern for policy makers. As of this writing, we are awaiting possible adjustment to current immigrations laws. Human Resource professionals need to stay informed in order to ensure their organizations have the talent necessary to success in the short- and long-terms.

Trend #3: Application of the United States vs. Windsor Ruling

            

In our white paper we mentioned: “Application of this decision will follow into 2014, as many organizations will be faced with interpretation and implementation matters. Make sure you are aware of how the decision impacts compliance and payroll matters, such as those related to FMLA leave administration, payroll taxes, Federal income taxes, tax-qualified retirement plans, group health plans, COBRA, and immigration practices.”  States like Utah found themselves dealing with appeals that halted marriage license issuance in 2014. However, as of October 6, 2014, the Supreme Court refused this appeal. Human Resource professionals should make it a goal to stay informed in the area of state application of same sex marriage laws, as well as the federal application, into 2015.

Trend #2: The Affordable Care Act

            

Many human resource conferences have covered the impact of the Affordable Care Act and associated updates. In 2014, these updates included increasing the small business tax credit, and determining what type of healthcare your organization can provide. These issues will only become more complicated in 2015.  Does your organization have a trusted benefits broker, legal counsel, or other source of information to ensure on-going compliance with the evolving ACA?

Trend #1: Gamification in Human Resources

            

In an upcoming white paper from Astron entitled, “Using Gamification in Total Rewards Design,” Astron Solutions will outline the benefits of using gamification in your total rewards program, as well as possible applications. According to the Forbes.com article, Gamification Gets Down to Business, “It is estimated that by 2016, over 70% of Forbes’ Global 2,000 companies will have some form of gamification in their business.”

Have you seen some of these trends pop up in conversation in your organization? Write Astronology about it and we may feature your input in a future article.

Supplemental Individual Disability Insurance: An Essential but Undervalued Benefit for Higher Paid Employees

By guest author, Robert Trobe of Crystal & Company

Summary

Disability insurance is one of the four most important employee benefits including medical, retirement, and life insurance. Inadequate disability coverage can cause devastating financial consequences if an individual were to suffer a prolonged or permanent illness or injury, yet it is frequently undervalued in the hierarchy of employee benefits. This occurs largely because employees do not expect to become disabled.  Yet one in three Americans between ages 35 and 65 will become disabled for more than 90 days (Statistics, Social Security Administration). Group sponsored Long Term Disability (LTD) plans are often capped at a benefit of $10,000 or $15,000 per month, do not cover non-salary cash compensation, and are frequently taxable, leaving higher paid employees particularly exposed to risk.

Employers can mitigate the risk for higher paid employees through a group sponsored supplemental Individual Disability Insurance (IDI) program. An IDI program can provide a critical benefit to employees in organizations with a significant number of higher paid earners whose total compensation, including cash bonuses and commissions, is not adequately protected under a conventional Group LTD plan. IDI can be provided on a “guaranteed issue” basis on top of a Group LTD plan to cover any gap.

Crystal & Company, a privately owned insurance broker and consultant, has successfully implemented IDI programs for a number of clients providing the following advantages.

Key Advantages for Higher Paid Employees

An employer sponsored IDI Program can provide essential coverage to higher paid employees including the following:

•   Protection of a significant portion of their income stream including salary, bonuses, and commissions in the event of disability

•   Guaranteed Issue basis if certain conditions are met, which eliminates

·         Invasive medical exams

·         Physician statements or review of medical records

·         A review of tax filings

·         Examination of net worth

·         Personal history interview

·         An extensive insurance application

•   Coverage defined on an “own occupation” vs. the more general “any occupation” basis, which may not apply to an employee’s specific job duties as an attorney, chief financial officer, VP for human resources etc.

•   “Portable” coverage that remains in effect if the employee leaves the organization

•   Significant group discount compared to individual retail rates

•   Tax-free benefit if paid by employee with after-tax income

•   Fixed rates guaranteed not to change up to age 65                                                                              

Key Advantages for the Employer:

IDI programs can be used by the employer:

•   As a key recruitment and retention tool for senior and middle management staff

•   To deter a higher paid employee from returning to work too early due to financial hardship

•   To provide a choice in how to offer the program:

−     As a voluntary employee-paid benefit at no cost to the employer

−     As a non-contributory employer-paid benefit with a significant group discount

−     As a “hybrid-paid” benefit where the premium is shared by employer and employee

•   With no significant commitment of HR staff resources to implement or administer

How is it Implemented?

Supplemental IDI is available through select insurance carriers including MassMutual, UNUM, and MetLife among others. It can be implemented with the assistance of a broker/consultant and requires limited resources from often overtaxed human resource departments. The enrollment normally occurs after bonuses are paid, but generally not during open enrollment for health and other benefits. A robust communication and education effort conducted by the IDI carrier and the broker/consultant, under the direction of the employer’s HR department, is integral to a successful implementation. The plan includes individual consultation and online and telephonic enrollment.

Will this Benefit My Employer and Higher Paid Employees?

In general, an employer willing to pay for the coverage needs only 10 or more employees to obtain an IDI offer. If the program will be paid by the employee, and thus be voluntary, there should be at least 50-75 employees each earning more than $75,000 in total compensation.

What Should I do if interested in Supplemental Individual Disability Insurance?

For an initial assessment of the feasibility and value of such a program or for questions on this article, please contact Robert Trobe (robert.trobe@crystalco.com or 212.504-5960).

Four “Landmines” and Best Business Practices to Avoid Them

By pmphrblog | Published October 6, 2014

Now that summer vacation is only a memory, “getting back to business” is the primary objective. As part of this, every owner, CEO, CFO, and HR professional should assess their organization’s compliance with workplace laws, in order to avoid “landmines” that can severely impact the positive bottom line you worked so hard to achieve. The best approach to reducing the exposure to expensive audits and lawsuits is to establish sound business policies and procedures and proactively address some critical areas. Now is the time to review these areas and put compliance self-audit into the budget!

1. Pay Practices and Pay Equity:  The number of organizations exposed to wage and hour audits by the Department of Labor (DOL) increases each year, and the results inevitably are expensive settlements or even more expensive litigation. Last year, the Wage & Hour Division of the DOL recovered nearly a quarter of a billion dollars in back wages. These cases included employees misclassified as “independent contractors” or employees who were improperly classified as “exempt” and not paid the overtime they were entitled to. Additionally, paying employees “off the clock,” or not designating all time worked as paid time (deducting for breaks not taken, allowing employees to work while not recording the time, designating certain activities as non-working time incorrectly) often results in substantial unpaid wages and overtime being awarded. A recent survey revealed that 18% of cases filed in local federal courts have been wage and hour cases.

Federal contractors and subcontractors have even greater obligations. Since the OFCCP heads up the Equal Pay Task Force for the White House, Director Shiu continues to aggressively investigate pay practices and pay equity during OFCCP audits. A recently signed Presidential Memorandum will continue to keep this in the forefront as, when finalized, it will require a report to be submitted annually to the OFCCP to include total W-2 Wage and Tax Statement earnings and total work hours for the previous calendar year for all employees included in the contractor’s most recently filed EEO-1 report, whether or not the employees were still employed on December 31.

Best Practice: Reviewing job descriptions, the classifications of your workforce, and your pay practices should be on the top of the “To Do” planning list this fall. Be aware that you must be prepared to allocate funds should adjustments need to be made as a result of this review.

2.  EEOC (and Human Rights) Charges and the Need for Training of Managers and Supervisors:  Last year, the U.S. Equal Employment Opportunity Commission (EEOC) obtained the highest monetary recovery in the agency’s history ($372.1 million). Few organizations realize that charges of “retaliation” are the most frequently cited category of discrimination. Race discrimination, sex discrimination (including sexual harassment), pregnancy discrimination, and disability discrimination made up the rest of the top five charges for which employers paid out large amounts in settlements. As most HR Professionals know, these charges are often a result of a manager or supervisor saying or doing the wrong thing due to his / her lack of knowledge of the labor laws or not following organizational policies and procedures.

Best Practice: In today’s diverse workplace, equipping management with the training and information needed to effectively deal with people from different backgrounds is critical. Providing training for managers and supervisors is one of the best investments an organization can make. At minimum, every organization should schedule Anti-Harassment / Discrimination / Retaliation training for their managers and supervisors on a regular basis.

3.  Updated Employee Handbook:  Employee lawsuits have risen 400% in the past 20 years, to 6.5 claims per 1,000 employees annually. Employers need to implement guidelines for the prevention of discrimination in the workplace. A well-written handbook and consistently applied policies & procedures are critical to maintaining good morale, ensuring that employees understand their responsibilities, and providing clear guidance to all levels of management. Workplace laws keep changing; organizations need to be aware of the changes, make modifications, and keep their policies & procedures current.

Every organization should be updating its policies to address vibrant topics such as tele-commuting, social media, use of organization issued equipment, and recent changes in FMLA.

Best Practice: Review your handbook, policies and procedures with a workplace specialist to ensure that you are addressing current federal and state regulations. Organizations should also be reviewing the need to translate policies in the native language of their workforce. Be sure that you have a signed receipt from every employee that acknowledges receipt of the organization’s handbook.

4.  Form I-9:  PMP has found that most employers are confused as to how and when to correctly complete Form I-9. Must the employee complete Section 1 on the first day of work? (YES!) Is the employer allowed to ask the employee for specific documents? (NO!) Should the I-9 be kept in the employee’s file? (NO!) It is the lack of knowledge of regulations that can cause organizations to receive fines of $1,100 per form and up to $16,000 per worker for incorrect or missing forms. The U.S. Immigration and Customs Enforcement (ICE) continues to escalate its worksite enforcement and has announced that it will implement another round of I-9 audits. Although organizations are allowed to do self-audits and correct errors, this should only be done by a person who is familiar with the current regulations.

Best Practice: Contact a knowledgeable HR Professional to schedule a review of your organization’s I-9 forms.

By being proactive, an organization can greatly diminish its exposure to expensive litigation. Budgeting time and money to address these four areas of concern now is the smartest way to avoid a large, negative impact on an organization’s bottom line.

**********

This article is intended for general information only and should not be construed as legal advice.

For more information on labor relations please visit us at:

http://www.pmphr.com/

About Portnoy, Messinger, Pearl and Associates:

Portnoy, Messinger, Pearl and Associates, Inc. (PMP),  the oldest labor relations consulting firm representing management on Long Island, was founded in 1964 by former union organizer and worker’s rights advocate, Murray W. Portnoy.  Initially, Murray offered human resource consulting and union contract negotiating services to a handful of clients. Today PMP has a full staff of experienced and talented human resources and labor relations consultants, labor and employment attorneys, and administrative personnel. Murray Portnoy's values and vision remain at the core of PMP's mission and principles.

Medicaid Enrollment: Almost a Free Lunch for Employers and Employees

Guest Author, Robert Trobe of Crystal & Company

Summary

The expansion of Medicaid eligibility under the Affordable Care Act (ACA) offers a huge opportunity for employers to significantly contain their employee benefits costs, as well as provide enhanced benefits to employees and their families through a Medicaid enrollment program. These costs are already escalating with many organizations as uninsured individuals, faced with increasing tax penalties due to the ACA individual mandate, opt to enroll in their employer’s benefit plans. In addition, in 2015, employers with 100 or more employees will be required to offer affordable health coverage to their full-time employees (30 hours per week or more), further increasing costs for organizations not currently providing such coverage.

Successful implementation of a Medicaid enrollment program does not just happen; it depends on active outreach by skilled individuals knowledgeable about Medicaid policies, compliance requirements, and enrollment processes in each of the 27 states plus the District of Columbia that have opted for Medicaid expansion (see list at bottom of this article). Crystal & Company, a large privately owned insurance broker and consultant, has partnered with an experienced Medicaid enrollment vendor to implement such a program.

This article outlines the key benefits and savings from a Medicaid enrollment program sponsored by an employer, how it can be effectively executed, and whether it would be of value to a particular organization.

Eligibility

Individuals and their families are generally eligible for Medicaid in the expansion states if the combined income of the members of their household (not the family, but those who live at the dwelling of the applicant) earn less than the following:

• Household of Four: $32,913
• Household of Three: $27,310
• Household of Two: $21,707
• Household of One: $16,104

Benefits to the Employer

Employers benefit from each successful enrollment in two ways:

         
Employees Currently Participating in the Employer Plan—The employer cost for providing health, prescription, and dental benefits to their eligible employees can amount to $5,000 per year for an individual and $15,000 or more per year for a family. This compares with a Medicaid implementation cost (through our partner vendor) of $20 per month for each employee who is eligible and has applied for Medicaid (with the help of the vendor) plus $40 for each employee screened but found not eligible.

Employees not Currently Participating in the Employer Plan—For employees who have not enrolled in the employer’s benefit plans because they work less than the required hours, or because they could not afford the employer’s plan, the intangible benefits of Medicaid enrollment can be substantial in terms of increased morale and reduced absenteeism.

In virtually all cases where there are sufficient numbers of Medicaid eligible employees, the employer saves substantial dollars from an effective Medicaid enrollment program.  The return on investment can be 5:1 or more.

Benefits to Enrollees

Eligible individuals and their family members receive coverage for health, prescription, dental, and vision at no or very low cost. The Medicaid benefit is provided with no deductibles or co-insurance, and limited co-pays. In addition, successful enrollment in Medicaid affords employees the opportunity, if they wish, to obtain Food Stamps, which can increase individual income from 15-30%. The end result is a substantial savings for those currently enrolled in the employer’s benefit plans, who otherwise would be contributing to the cost of that plan and paying significant dollars for services provided.

For uninsured or underinsured individuals, the Medicaid benefit can literally be life-saving and prevent bankruptcy from medical claims. A study based on 2007 sample data (http://www.pnhp.org/new_bankruptcy_study/Bankruptcy-2009.pdf ) found that 62% of bankruptcies were attributable to uncovered medical costs.  Three quarters of the sampled individuals had health insurance.

It is true that Medicaid provider networks are historically less developed than commercial networks, which is why this program is not a completely free lunch.  However, recent federal and state initiatives are aimed at reducing that disparity.

Successful Implementation

Applying for Medicaid can be very complex.  It requires several components—most importantly a competent vendor with the following system and human resource capabilities:

• Staff intimately knowledgeable in Medicaid policy and processes in the applicable state.
• A system that can help workers collect the data they need with a pre-enrollment questionnaire.
• A telephonic and Web-based enrollment process, including pop-ups that explain confusing questions.
• Outcomes that are tracked for reporting back to the employer.
• A multilingual call center with Medicaid experts to assist workers every step of the way.

Will this Benefit My Company and What should I do if Interested?

Companies that have at least 20 employees (including part-time employees) who are paid $32,900 per year or less should consider implementing a Medicaid enrollment program. For an initial assessment of the feasibility and value of such a program or for questions on this article, please contact Robert Trobe (robert.trobe@crystalco.com or 212.504-5960)

States with Expanded Medicaid Programs

Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and West Virginia.

The Employee Lifecycle

By guest author Mandy Skinner of The Wedge Group

In today’s competitive and ironfisted market, businesses are only as good as their employees.  It is this simple truth that makes the employee lifecycle so influential in the success of an organization.  The employee lifecycle is a model that follows the stages of an employee’s career within an organization from start to finish.

The first stage of the lifecycle involves the hiring, orientation, and on-boarding of the employee.  A comprehensive background screening during the hiring process can save a lot of frustration later in preventing theft, violence, and fraud.  Safeguarding your product and your employees is always a good plan.  After the candidate passes the screening, they must then begin the orientation process.  As we all know, first impressions are everything, so having a comprehensive process to do this well is imperative.  It gives the employee the impression that the company is well organized and takes care of their own.  In addition to fulfilling the required paperwork, a solid on-boarding program can set the stage for employee engagement and retention.  A program that integrates the new employee into the workplace culture as well as builds professional relationships, such as those developed with mentoring programs, work well to develop this commitment.

The next stage of the employee lifecycle is based on development.  By encouraging development in the employee, we are improving their capabilities as well as enthusiasm.  There are several ways to do this.  Training and development in leadership, team work, and technical skills will help to improve an employee’s skill set.  Another way is to engage employees on a personal level through perks such as health and wellness programs.  Although programs like these are indirect in the development of an employee, the return on investment is excellent, not to mention the improvements in employee morale and engagement.  It is no wonder that many of the world’s top performing companies are offering them.

Management plays a key role during this phase of the employee lifecycle.  Effective performance coaching and support from a strong leadership team can truly change a person’s life.  It can mean the difference between moving up and moving out for an employee.  When done well, effective management can also largely contribute to the realization of a company’s vision and mission.

The third step in the employee lifecycle involves transition.  Some people work in the same place for their entire careers, but the truth is most do not.  As skills and experience are developed, talent within the organization grows and allows for more staff movement internally.  Promoting from within has many benefits including greater employee engagement, smoother transition, and deeper loyalty.  Unfortunately from time to time, an employee may not be a good fit for the organization or the process of restructuring demands that employees be let go.  Regardless of the reason for transition, a smooth transition into new positions, retirement, or outside of the company relies on having processes in place to accommodate this movement.  Clear communication, expectations, timelines, and planning are key to developing this process. 

Just like any cycle, this process goes back to the beginning.  Once an employee transitions out of their position, it must be filled again bringing us back to the first stage of the employee lifecycle.  It is important to understand the process and work within it as effectively as possible to create the best team for your organization.

The Wedge Group, Inc. offers support to companies without Human Resource teams or in partnership with existing HR staff.  Our programs develop and implement the best system for getting the most out of and retaining engaged, productive, and steadfast employees.  Our background checks and on-boarding programs work to help you find and retain the best talent.  We also offer Leadership and Team Development, and Performance Coaching training to ensure that your employees are engaged and productive.  Succession Planning is a proven way to have a plan in place for all sudden changes within the work force and to have a solid Business Continuity Plan.  If you are looking for external motivators, our Corporate Health and Wellness Program have a proven track record and outstanding return on investment.  Career Transition Coaching has been a staple of our services from the beginning; we pride ourselves on providing employee support while cutting costs for the organization making the process much more efficient and positive.  Our commitment to providing the best support and service is what has kept us in business for over 30 years. 

For more information on getting the best out of each and every employee, please visit us at:

www.TheWedgeGroup.com

You can also contact us at JIhnotic@TheWedgeGroup.com or (607)772-9359 for further questions and inquiries.

About the author:

Mandy Skinner is the Head of Client Services at The Wedge Group, Inc., where she has worked with organizations such as Cornell University and Prudential Securities.  Her service and support are individualized to meet the changing and diverse needs of all The Wedge Group’s clients.

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.