Hot Topics in Total Rewards

  • 23 Mar 2018 3:24 PM | Bill Brewer (Administrator)

    By Stephen Miller, CEBS
    Mar 23, 2018

    A measure that will prohibit employers from requiring that wait staff share their tips with back-of-the-restaurant workers, such as cooks and dishwashers, was approved by Congress and signed into law by President Donald Trump on March 23. 

    The provision is a small part of a mammoth omnibus spending bill to fund the federal government. The Department of Labor (DOL) last December had proposed allowing employers the option of requiring workers who receive tips to share that money with non-tipped colleagues. The proposed rule would have undone an Obama-era prohibition on the practice.

    The DOL's proposed tip-sharing rule would not have applied to employers that take a tip credit—meaning that they pay tipped workers a rate below the federal minimum wage and workers make up the difference in tips.

    Highlights from media coverage of this latest development in the tip-sharing controversy below. 

    Restaurant Owners Barred from Taking Servers' Tips

    Worker advocates praised the provision to prohibit employers from sharing server tips with others in a restaurant—including, they feared, the employers themselves. Restaurant owners had argued that former President Barack Obama's Labor Department had overreached when it issued the final regulation banning tip-sharing more than a year after the U.S. Court of Appeals for the 9th Circuit ruled specifically that employers could split server tips with traditionally non-tipped employees if the businesses did not claim a tip credit.

    Worker advocates and labor lawyers, however, argued that the rule would give owners control of tips, which they could distribute as they see fit.
    (Washington Post

    Labor Advocates See Further Gains

    Now that the tip-sharing proposal has been stopped, the next fight for labor organizations is raising wages for tipped workers, said Saru Jayaraman, co-founder and president of Restaurant Opportunities Centers (ROC) United.

    "The next step is that we need one fair wage—the elimination of the lower wage for tipped workers so that this incredibly large workforce, the majority of whom are women, is not entirely dependent on customer tips to feed their families," she said. "When this omnibus bill passes, it will represent an enormous step toward that final victory."

    Restaurant Owners Sought Flexibility

    Restaurateurs and other food service providers can require front-of-the-house staff such as servers, bartenders and bussers to pool their tips. Business owners had welcomed the DOL's proposed changes clarifying that back-of-the-house staff could be included in the tip pool. In their view, the restaurant experience is created by the combined efforts of the front and back of the house, and tip-sharing allows cooks and other crew to be rewarded for good service.

    Implementing and managing a legally compliant tip pool, however, would not have been simple, and would have required distinguishing tips from service charges, among other considerations.

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    Source: Society for Human Resource Management (SHRM)

  • 19 Mar 2018 9:45 PM | Bill Brewer (Administrator)

    HR needs to become more strategic and analytical to earn a seat at the table

    By Tony Lee and Dana Wilkie
    Mar 19, 2018

    HR has heard it all before: The nation's CEOs don't think HR leaders are strategic thinkers, and that's why they don't deserve a seat at the table with other top company executives. What's new is that HR's ability to anticipate business needs is getting worse, they say, not better.

    CEOs report that their top HR professionals aren't able to use analytics to forecast the company's employment needs, they can't effectively identify new talent pipelines and sources of talent, and they don't link employee planning to business planning. In fact, only 11 percent say their HR team is good at these skills, down from 20 percent three years ago, according to an extensive collaborative research project from Development Dimensions International (DDI), The Conference Board and EY.

    "While HR leadership should be in an enviable position, in reality it's losing the race," the study's authors wrote. "Their organizations are changing faster than they are, putting them even farther behind."

    The Global Leadership Forecast 2018 is DDI's eighth such report since 1999, and it found that HR professionals who are succeeding with analytics are 6.3 times more likely to have new advancement opportunities than those who aren't, and 3.6 times more likely to have a strong reputation with senior business leaders. (See Tips for Using Analytics)

    "Executives in the C-suite are highly aware of the broad business advantages of making data-driven decisions, and they expect HR to apply the same digital advantage to their talent decisions," said Evan Sinar, chief scientist at DDI, which surveyed more than 25,000 business leaders and 2,500 HR professionals.

    "If HR wants to be seen as a strategic business partner in the C-suite, they need to go beyond just carrying out the business needs of today. They need to prove that they are basing their strategy and decisions on solid data, and they need to demonstrate—often using visualization and storytelling techniques—how those decisions are linked to better business results and financial performance," Sinar said.

    To be sure, not all HR professionals buy these results.

    "It can be very frustrating for HR when their company's top executives don't listen to their concerns, which I know from firsthand experience," said an Atlanta HR director who requested anonymity. "The executives assume our concerns are related to administrative tasks, when in reality they go directly to company strategy on long-term issues like creating talent pipelines, immigration, employee drug use and payroll practices."

    Other HR pros cite a vicious circle. Because they're perceived as reactive and not strategic, they say they aren't given the resources they need to change that perception. And with smaller staffs, they have no choice but to focus on compliance, compensation, recruiting and other pressing daily concerns.

    "If your company's HR managers are working in the trenches and dealing only with day-to-day employment issues, you're probably understaffed," said Cristin Heyns-Bousliman, vice president of HR and general counsel at Blake's Lotaburger, a regional restaurant chain based in Albuquerque, N.M. "We have 1,700 employees across 75 locations, and I have a team working on the daily issues, which allows me to participate strategically with senior leaders. But many HR departments aren't resourced that effectively, especially at smaller companies, and those CEOs often leave HR out of strategic planning conversations."

    Anticipators Are Critical

    The research divided HR professionals into three categories:

    Partners work toward mutual goals with line managers, share information with the business about talent-issue gaps, and provide HR solutions.

    Reactors set and ensure compliance with policies, respond to business needs, and install basic initiatives to manage talent.

    Anticipators use analytics to forecast talent needs, provide insights and solutions to ensure a high-quality supply of talent, and link talent-planning to business-planning.

    Top executives say that 48 percent of their HR leaders act as business partners, 41 percent are reactors, and only 11 percent are anticipators, which they say is the role they need HR to own within their organizations. Conversely, among HR professionals asked the same question in the study, 62 percent say they are partners, 21 percent are reactors, and 17 percent are anticipators.

    "It's interesting that the anticipator role was rated low by both leaders and HR," said Richard Wellins, Ph.D., a senior associate at DDI and the study's author. He says that HR's self-perception tends to be low historically, but that it has improved in recent years more than it has among top company leaders. His question is whether that improved self-perception is warranted.

    "HR can get defensive and say they don't get a seat at the table, but I would ask them two things: When and how do you get involved in the strategic planning process, and how do you compare to other functional areas in regards to leading digitally and leveraging predictive analytics, which are both critical and future-focused?"

    Wellins said that if HR isn't included in strategic planning until after the business planning is complete, then top management is saying they don't think HR has that capability.

    "While I think some senior HR executives are creating real insights around talent requirements versus future business strategies, many do not," he said. "There's a difference between being an HR partner and [being] an anticipator, which has much greater value to the CEO. As an anticipator, HR goes to the C-suite and explains the strategic benefits behind their decisions."

    On the other hand, Wellins said that if you are embracing data analytics, hiring data scientists and otherwise taking a lead in anticipating the company's future needs, yet still aren't getting recognition from the top, then you need to do a better job of tooting HR's horn.

    "Tell stories to the C-suite about how those higher-level analytics your department has embraced have changed your business planning," he suggested.

    Becoming More Strategic

    So what does it mean to manage employees strategically using data, digitalization or analytics?

    Imagine Alexa–style digital assistants serving as virtual coaches to answer benefits, retirement and paid-time-off queries. Or chatbot-enabled resolution for common employee questions. Perhaps cloud-based services for employees and managers that HR once delivered in person. And leveraging data analytics to project future talent needs.

    Executives, Sinar said, don't want to risk putting the wrong person in a position simply because they seem right for the position. Instead, executives are looking to HR to provide data that will help them predict a person's likelihood of succeeding in a position.

    Another approach is to start testing new technologies and ideas within HR, and then share those results to demonstrate you're willing to take business risks.

    "Become an effective adopter by watching the trends and being open to test-drive new technologies, including AI and machine learning, which show some real promise for HR data processing and analysis," said Sharlyn Lauby, SHRM-SCP, president of the ITM Group Inc. in Fort Lauderdale, Fla., and author of The Recruiter's Handbook (SHRM, 2018). "I don't think it's about trying to convince the CEO to view HR differently. In my experience, HR needs to deliver, and when they do, then the C-suite will view them differently."

    Of course, not all CEOs are as flexible and enlightened as HR might like them to be.

    "CEOs need to ask themselves, 'Am I being transparent with HR?' If a CEO doesn't believe that HR is thinking strategically but doesn't provide an opportunity for that within the company, then HR can't change the perception," said Heyns-Bousliman, adding that HR is a direct link to the company's most valuable assets—its employees.

    "CEOs who pay attention to that give HR at seat at their table," she said. "If they don't, the financial side of the company likely will dominate the discussion and planning, and the company can end up harming its people. However, top executives often leave HR out of these conversations, and their perception becomes reality and a self-fulfilling prophecy."

    Next Steps Toward Improvement

    The report offers a range of suggestions to HR professionals to help them enhance their abilities as anticipators:

    • Take a step back and gauge: Which of the three roles best reflects HR within your organization? Don't forget to seek input from line managers.
    • Ensure that HR is well-represented in your company's strategic planning process.
    • Step up to greater accountability by providing business leaders with the support and tools they need to bolster engagement and employees' sense of purpose and growth.
    • Ensure that you're building stronger predictive capabilities on your team.
    • Consider rotating respected line leaders within and out of the HR function.
    • Deploy smart HR technologies to enable leadership effectiveness while freeing up HR professionals' time to concentrate on the more-value-added tasks their businesses require.
    • Move toward the anticipator role by improving HR capability in eight evidence-based practices:
    1. Link talent planning to strategic planning.
    2. Invest more development dollars per leader.
    3. Use an array of data and predictive analytics.
    4. Take a multilevel pipeline approach.
    5. Offer programs to high-potential employees.
    6. Use robust assessment data to make hiring and promotion decisions.
    7. Provide global mobility.
    8. Create external mentorship programs.

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    Source: Society for Human Resource Management (SHRM)

  • 15 Mar 2018 9:43 AM | Bill Brewer (Administrator)

    HR leaders can leverage people analytics to play a key role in aligning talent with value creation, says the global consumer-goods group’s chief human resources officer.

    With 161,000 employees in more than 150 countries, Unilever operates globally and at scale. The consumer-goods group’s brands range from Lipton tea and Magnum ice cream to Surf laundry detergent and Dove skin care. Under the leadership of Paul Polman, chief executive since 2009, the Anglo-Dutch group has sought to drive growth though innovation and by actively reshaping its portfolio while reducing operational complexityand focusing on sustainability as a key theme.

    Leena Nair, chief human resources officer (CHRO), joined Unilever in 1992 as a management trainee. Prior to taking on her current role, she was the group’s global head of diversity and inclusion. She says, “If you look at a competitive advantage that a company truly has, it is really only the ideas, the ingenuity, the passion of its people. Because everything else can be matched.”

    In January 2018, Nair sat down with McKinsey Publishing’s Rik Kirkland to share her views on how HR leaders can play a key role in driving value creation by leveraging data analytics, focusing on the most important value-creating roles, and developing a close partnership with finance teams. The interview took place on the sidelines of the annual meeting of the World Economic Forum in Davos, Switzerland.

    Click here to see the video: Talent management as a business discipline

    Interview transcript

    McKinsey: How do you view the relationship between the HR function and the finance function?

    Leena Nair: I believe that the CFO and the CHRO have to be very close. Their agendas have to be intertwined. Graeme [Pitkethly, Unilever CFO] and I have ensured that a key finance person from his leadership team sits on my HR-leadership team and that key person from my HR-leadership team sits on his finance-leadership team. We also make sure that we have regular catch-ups, both with each other and with the CEO, to ensure that we’re looking at business strategy in totality.

    We’re discussing how we want to deploy investment into certain countries, markets, and categories but at the same time seeing if there’s organizational readiness. Because if you invest but the people are not ready—if there’s not enough talent and capability there—we will never see the investments being turned into reality. So, making the strategic investments in financial capital and human capital at the same time is really important.

    McKinsey: Can you give some examples of how this works in practice?

    Leena Nair: When we have defined our key strategic levers for the year, we ask ourselves, “Which are the five or ten or 15 roles where the biggest impact of value creation in the business could be seen?” Then we use analytics to see whether we’re putting the right people into those roles.

    For example, we look at what we call “stubborn cells”—parts of the company where we haven’t seen the traction and performance we would like to see. And we look at the talent that we’re putting into those roles, the teams we’re getting ready to take on these challenges. How equipped are they? What’s their level of readiness? What’s their level of capability? What’s their level of experience? What’s their level of passion and perseverance?

    So, we look at these human dimensions through the data analysis we have and also look at the business challenges. Then we’re able to say that, for example, “This team created value equivalent to €100 million.” We’re able to link the appointments and placements of talent to the actual value creation that’s happening in the business.

    McKinsey: Are you focusing mainly on key leadership roles in the organizational structure?

    Leena Nair: Increasingly I find that we need to be far less hierarchy-conscious in the way we think about value creation. Often the value is being created in roles that are probably two or three clicks below the CEO.

    In Unilever, we are creating multifunctional, empowered teams, which are actually the front-facing teams looking after a particular category in a particular country. In many cases, you find that the person in the country handling the P&L [profit and loss] might not be very senior in terms of hierarchy but is in the most important role to create value as part of one of our key strategic thrusts.

    McKinsey: What role does analytics play in these conversations and decisions related to value creation?

    Leena Nair: Most of the measures that you see HR teams looking at are very internal measures. What bench strength do we have? How many people do we have on a talent slate? These are very internal measures that don’t tell you what difference it’s making to the business. At Unilever, we are using people analytics to change this.

    We are, for example, the number one employer of choice in 44 of the 52 markets we recruit in. This is great. It’s also a number I like because it’s externally measured, based on Nielsen Universal. But with the power of data and analytics, I’m able to connect the dots and show that in markets where we are more attractive, we are attracting the right kind of people, our costs of recruitment have fallen, our conversion rates have gone up, our recruitment yield is better. So, suddenly, I’m able to show the business that we’re saving €15 million because of the sheer strength of our employer brand in some of our key markets.

    These are the kind of conversations that HR leaders must hold themselves and their teams accountable for.

    McKinsey: The Unilever Sustainable Living Plan has been one of Paul Polman’s signature initiatives. What does the data tell you about the business impact?

    Leena Nair: I passionately believe that the future is about meaningful work and purposeful work. Because the pace of change is so fast, people do tend to be overwhelmed and threatened. One of the things that can give them anchor is a sense of meaning and purpose in their role. It is a key part of our talent strategy to help people discover their own purpose and therefore deploy them into the roles where they can live their purpose.

    And I see the results in our employee surveys. Ninety-two percent of people say that they’re proud to work for Unilever, they want to work for Unilever. Employee-engagement scores are higher than any of our peer and benchmark companies. I see that in the retention numbers—our talent attrition is far lower than the market in almost every market we operate in.

    So, I see the impact of what a meaningful purpose does to employee engagement, motivation, attrition. And I passionately believe that companies with purpose last, brands with purpose grow, and people with purpose thrive in uncertain times.

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    Source: McKinsey & Company

  • 13 Mar 2018 6:01 PM | Bill Brewer (Administrator)

    A big insurer’s acquisition of a big PBM could alter drug prices for better or worse

    By Stephen Miller, CEBS
    Mar 13, 2018

    Following the announcement of three big mergers in the health care industry, will drug prices go up or down?

    1. One of the nation's largest health insurers, Cigna, will acquire Express Scripts, one of the nation's largest pharmacy benefit managers (PBMs) at a price tag of $52 billion. 

    2. Aetna, another of the biggest insurers, is being acquired by PBM giant CVS for $42 billion.

    3. And Amazon is getting into health care (one of the few business lines it hadn't yet touched) by partnering with Berkshire Hathaway and JPMorgan Chase & Co.

    These acquisitions and partnerships could lessen competition and drive up prescription drug prices, some warned—or could lead to greater efficiencies that lower drug costs for employers and consumers, as the corporate titans contend. It might even do both, in different ways, industry observers said.

    Consolidation's Promises and Perils

    "Insurers are increasingly turning to vertical integration in an attempt to manage and control costs," said David Fortosis, Chicago-based senior vice president of health strategy for consultancy Aon. "In addition to the Cigna/Express Scripts announcement, we're seeing this trend with the CVS/Aetna agreement, with United Healthcare/Optum buying physicians and surgery centers, and with Anthem working to create its own PBM."

    "This type of vertical integration makes business sense because of the opportunity to manage the total cost of care across medical and pharmacy" services, said Tracy Watts, the U.S. leader for health care reform at Mercer, an HR consultancy, and a senior partner in the firm's Washington, D.C., office.

    The proof of concept will be in the bottom line for the consumer and employer-sponsored plans, she noted. "Historically, large employers have carved pharmacy benefits out of the medical plan and gone directly to a PBM for more-favorable pricing and a greater share of rebates than the [health insurance] carriers were usually willing to share. The big question is whether the alliances between the medical plans and PBMs bring greater cost-efficiencies, or whether they limit competition, choice and employers' leverage in the market."

    "A large percentage of employers prefer to carve out their prescription drug plan as opposed to integrating it with their medical insurer," believing that doing so gives them greater sway when contracting with providers, Fortosis concurred. "There are employers that tend to be wary of insurers accumulating more leverage—in the past, that formula hasn't always worked to the advantage of consumers and employers."

    That said, "if Cigna and Express Scripts can deliver simplification, cost-efficiencies and more coordinated care, then those would certainly be positives," Fortosis noted.

    Watts gave an example of how integrations could be good for consumers. "When pharmacy is carved out of the medical plan, there is little insurance company oversight for medications prescribed and administered by physicians versus the PBM," she explained. With regard to high-cost specialty medications, for instance, "we often find opportunities to provide these drugs at a lower cost and at a site of care that might be better for the patient," such as a physician's office or a pharmacy clinic, rather than a hospital outpatient facility. "A more-integrated approach could benefit patients and have a favorable impact on cost. But it will be up to employers to ensure there is accountability and transparency."

    Less Bargaining Power

    "The Cigna deal may result in reduced competition, higher prescription pricing and less price transparency," warned Kim Buckey, vice president of client services at Birmingham, Ala.-based DirectPath, an employee engagement and health care compliance firm. For instance, "if my medical coverage is through United Healthcare and my prescription drug coverage is still through Express Scripts, then Express Scripts may not be willing to pass along its lowest drug prices to United Healthcare customers."

    Noting other health care consolidations already completed or underway, Buckey said, "I think this means fewer options for employers. With each insurer now paired with a pharmacy benefit manager, it will be a challenge to unbundle medical and prescriptions to get the best deal."

    Others see limited effects on employer plans in the near term. "This deal is not going to have an immediate impact on employers or health benefit professionals in terms of the cost of health services," predicted David Henka, president and CEO of Sacramento, Calif.-based RxTE Health, a PBM that was spun off from the Safeway grocery store chain. Ultimately, however, "they will have fewer vendor choices in the future in terms of obtaining services and will have less flexibility in those services as they are consolidated into packages. It will be much more regimented in the future, with fewer choices for customers."

    Henka said that by using cost-controlling strategies such as reference-based pricing, employers could lower their drug spending with or without PBM involvement.

    Federal Approval Needed

    A merger or acquisition announcement is not the same as a done deal, however. "The CVS/Aetna and Cigna/Express Scripts acquisitions are going to raise questions within the relevant government agencies," Buckey noted. "Given that Express Scripts was the last large independent PBM, the government may not look favorably on either deal."

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    Source: Society for Human Resource Management (SHRM)

  • 13 Mar 2018 5:58 PM | Bill Brewer (Administrator)

    If the DOL doesn’t finalize a new rule before the 2020 elections, all bets are off

    By Stephen Miller, CEBS
    Mar 14, 2018

    The long, drawn-out process of updating the overtime-pay rules that began under the Obama administration and changed direction once President Donald Trump took office now faces a wild card: If the Department of Labor (DOL) fails to issue a new final rule before the 2020 elections, and if the Democrats retake the presidency, the rule that was struck down in 2016 could come back to life.

    "If Democrats win the presidency without a new final rule in place, expect the new administration's DOL to vigorously defend the [previously] proposed salary level," meaning that the threshold for the white-collar exemption could rise from the current $455 per week ($23,660 annualized) to $913 per week ($47,476 annualized), said Tammy McCutchen, a principal in law firm Littler Mendelson's Washington, D.C., office. Anyone who makes less than $913 a week would then be eligible for overtime pay.

    McCutchen served as director of the DOL's wage and hour division under President George W. Bush. She provided a wage and hour update on March 12 at the 2018 Society for Human Resource Management (SHRM) Employment Law & Legislative Conference in Washington, D.C.

    A Complicated History

    The Obama administration's final rule revising the Fair Labor Standards Act (FLSA) overtime-pay provisions was set to take effect on Dec. 1, 2016. Along with raising the salary threshold for the overtime exemption, the rule automatically adjusted the threshold every three years based on changes to the earnings of full-time salaried workers in the lowest-wage census region.

    However, just 10 days before the rule was to take effect, a Texas district court issued a nationwide preliminary injunction, followed by a permanent injunction on Aug. 31, 2017.

    "The court found that the final rule exceeded the DOL's authority by making overtime status depend predominantly on a minimum salary level," McCutchen said. Employees who "are clearly managers, with the authority to hire and fire, would have been reclassified as being hourly rather than salary" workers, which the court held violated the FLSA's intent.

    Most businesses don't oppose having a minimum salary level for overtime, McCutchen said, but the increase under the final rule was "too much, too fast."

    Not Dead Yet

    Last October, the DOL appealed the district court's permanent injunction (McCutchen cited legal technicalities for this move) and filed a motion to stay the DOL's appeal to the 5th Circuit pending the outcome of new rulemaking.

    In July 2017, the DOL issued a request for information for a new rule and accepted comments through September. After the comment period closed, the DOL announced that it planned to propose a new overtime rule by the end of October 2018.

    While this sounds reassuring, "the case is still open," McCutchen noted. If the DOL were to publish a new proposed rule in October, there would typically be a 60- to 90-day comment period, "so there will be no new rule this year."

    While a new final rule is expected by the end of 2019, what if there are unforeseen actions by the 5th Circuit, or turmoil within the DOL, and no final rule takes effect before the 2020 presidential election?

    If there should be a delay, "a Democratic administration would again switch sides and could move to implement the halted final rule," McCutchen said.

    One reason for slow progress at the DOL to date, she noted, is that the nominations of Cheryl Stanton as wage and hour administrator and Patrick Pizzella as deputy DOL secretary, among other positions, are still waiting for Senate confirmation, which requires 30 hours of debate per nominee on the Senate floor. This has left Labor Secretary Alex Acosta without the leadership he needs to spearhead a revised overtime rule with a less-severe salary-threshold increase, she explained.

    "Keep watching this issue," McCutchen advised. "After 2020, we could be back at the $913-a-week level."

    SHRM Supports a Reasonable Increase

    Most of the comment letters employers submitted to the DOL favored a modest increase to the minimum-salary level, applying the methodology that the DOL used when it last updated the overtime rule in 2004, when McCutchen oversaw the wage and hour division. Few employers supported jettisoning the salary test altogether in favor of a duties-only approach, and few favored automatic updates to the salary level.

    What might the new salary threshold be under a newly proposed Trump administration rule?

    • If applying the 2004 methodology, as McCutchen believes the DOL should do, the revised salary threshold would be $31,824 annualized, or $612 per week.
    • If, instead, the DOL were to increase the threshold by the level of inflation, the new salary level would be $30,576 annualized, or $588 per week.

    In comments submitted to the DOL, "SHRM welcomed DOL's re-examination of the overtime rule," said Nancy Hammer, SHRM senior government affairs policy counsel. "We believe an increase in the threshold is long overdue and are encouraged that our members' input can help DOL arrive at a more workable threshold."

    SHRM does not support automatic updates to the exempt-salary threshold because "such increases ignore economic variations of industry and location and make it hard for HR to manage merit increases for employees near the salary level," according to the Society's 2018 Guide to Public Policy Issues, released at the conference.

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    Source: Society for Human Resource Management (SHRM)

  • 13 Mar 2018 5:49 PM | Bill Brewer (Administrator)

    An employee walks through the parking lot of a Marathon Petroleum Corp. Speedway gas station in Huntington, West Virginia, in 2016. Marathon Petroleum Corp. paid its CEO 935 times more than it paid its median employee in 2017, according to a new disclosure.


    03/13/2018 01:00 pm ET 

    Companies Are Disclosing How Much Less They Pay Workers Than Executives

    And some firms seem a little embarrassed.

    By Arthur Delaney and Dave Jamieson

    WASHINGTON ― A moment that corporate executives may have dreaded for years has finally arrived.

    As Congress chips away at bank regulations established by the 2010 Dodd-Frank law, another part of the measure is exposing the extreme income inequality between bosses and their workers.

    The law requires publicly traded companies to calculate the ratio of their chief executive officer’s compensation to the median pay of the companies’ employees. After a series of delays, firms are finally disclosing their pay ratios in filings with the Securities and Exchange Commission.

    Some of the numbers are shocking. The staffing firm ManpowerGroup paid its chief executive $11.9 million last year ― 2,483 times the average employee’s earnings. The firm noted in its disclosure that most of its employees are temps who work only part of the year, making just $4,828 on average.

    ManpowerGroup’s ratio is the most lopsided of any disclosed as of Tuesday morning, according to Proxy Insight, a company that tracks SEC disclosures for investors. Excluding firms with no employees, the average ratio among the more than 263 disclosures to date is 77 to 1, with CEO pay averaging $7.2 million compared to $93,000 for the typical worker.

    Other notable ratios for big firms include the appliance maker Whirlpool Corporation, which paid its CEO 356 times what it paid its average worker, and the health insurance company Humana, whose top executive earned 344 times more than the median salary for employees.

    The disclosures come as Democrats and Republicans wage a rhetorical battle over who benefits most from the massive corporate tax cut President Donald Trump signed into law late last year. While Republicans have touted modest bonuses several million workers have received from various companies, Democrats have kept a running tally of share buybacks, which inflate the value of a company’s stock and enrich executives. Stock awards represent a substantial portion of executive compensation.

    Companies have long disclosed executive pay as part of their SEC filings, but what’s new is the requirement that they also own up to what they pay their rank and file. Paired together, the numbers can serve as a barometer for economic inequality within particular firms.

    Lisa Gilbert, a lobbyist and expert on executive pay with the consumer advocacy group Public Citizen, said that if company leaders dreaded this day, they were right to do so.

    “It’s embarrassing,” Gilbert said. “We’re learning how little they pay their workers. We’re learning how much they pay their CEOs, and the ratios are stark.”

    Although it has little regulatory impact, the CEO-to-worker pay ratio was one of the most contentious pieces of the Dodd-Frank legislation. It took the SEC three years to issue a proposal for firms to disclose the ratio, over the fierce objection of corporate lobbyists. The business community argued it would be too difficult and costly to calculate the ratios.

    Some regulators sympathized. Two Republican members of the SEC voted against the rule, and one of them, Michael Piwowar, said its real intent was to “shame” executives.

    The rule’s backers argued that both investors and employees have a right to know when executive pay is grossly out of step with typical workers’ salaries, saying it sheds light on a company and its priorities.

    Labor groups have used industry-level wage data to calculate worker-to-CEO pay ratio estimates to spotlight pay inequity. The AFL-CIO reported last year that among more than 400 companies traded on the S&P 500, the average CEO made 347 times more than his or her average worker.

    Executive compensation has grown far faster than overall wages, according to a report by the Economic Policy Institute, a liberal think tank. It found that in 1965, executives earned merely 20 times more than their average employee.

    For some firms, the ratio alone can obscure important details about employee compensation, such as whether workers reside in areas with a low cost of living  and what their hours are, said Tim Bartl, CEO of the Center on Executive Compensation, a group that opposed the pay rule.

    “Unless you get into the details, it doesn’t tell you a whole lot,” Bartl said.

    Still, some companies in their disclosures appear eager to erase their lowest-paid employees from existence to make the pay ratios less conspicuous.  ManpowerGroup, the temporary staffing firm, offered an alternative ratio that excluded the temp workers who are at the heart of its business model.

    The company noted in its SEC filing that its CEO earned only 276 times as much as the firm’s permanent employees.

    Marathon Petroleum Corporation is another firm with an eye-popping ratio. CEO Gary Heminger earned nearly $20 million last year ― 935 times more than the median Marathon employee.

    The company blamed the disparity on the thousands of workers at its Speedway gas station subsidiary. Gas station cashiers earned an average of just $9.83 per hour last year, according to the Bureau of Labor Statistics.

    If the company could wave a wand and make those low-wage workers disappear, then its CEO-to-worker pay ratio would be a much more reasonable 156-1, the company said. 

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    Source: HuffPost

  • 01 Mar 2018 8:03 AM | Bill Brewer (Administrator)

    Starting block race

    Ann Potratz

    Published 10:47 AM ET Fri, 23 Feb 2018

    The Business Journals

    Driven largely by employee demand, unconventional benefits once thought to be the domain of startups and tech companies have begun to take hold in more traditional spaces.

    Considering that four in five employees would prefer new or better benefits over pay raises (according to a recent Glassdoor survey), many leading employers have taken notice and expanded their offerings.

    The new class

    If you're looking to branch out and set yourself apart from the competition, consider these not-so-common benefits:

    • Concierge services: In today's "always-on" economy, many employees have less time to take care of basic personal errands and tasks. Corporate concierge programs help alleviate that stress by managing even the smallest tasks, from picking up prescriptions and dropping off dry cleaning to oil changes and making travel arrangements.
    • Student-loan repayment: As younger generations enter the workforce with record levels of student debt, these programs allow companies to help pay down loans with matching contributions, much the way they'd contribute to a 401(k) plan. It's a smart recruiting tool, too: Studies show that millennials are more focused on loan repayment than saving for retirement when they first enter the workforce.
    • Pet insurance: Between checkups, medication, treatments and procedures, the cost of veterinary care can catch pet owners off guard. Available in a range of options from fully funded programs to employer-negotiated discounts, pet insurance is a great way for companies to give pet-loving employees peace of mind.
    • Hearing-aid benefits: Lest you think these unusual trends are being driven by younger workers, an aging workforce and evolving health insurance regulations have driven up demand for hearing-aid insurance. The programs are often managed like vision plans, allowing employees to opt in and out separately from group health care plans.
    • Financial wellness services: From free credit monitoring to one-on-one sessions with advisers, employer-funded financial wellness programs are growing in popularity. Because improved fiscal well-being is a big contributor to overall happiness, these plans often work in tandem with existing wellness programs.

    A twist on the classics

    While many employers seek to set themselves apart with unique offerings, the majority of employees report that traditional benefits such as health care, paid time off and education assistance still rank among their top priorities when considering job offers. Revamping your policies to stay relevant might mean including some of the following updates:

    • Personalized health plan options: Employees still rank health care as their most sought-after benefit, and many employers are now required to offer it. To stay competitive, consider offering a variety of plans to meet the needs of your diverse workforce. Coverage that feels tailored to your employees' unique family arrangements (such as single, employee-plus-one and family plans) will also help workers feel like their needs are being met.
    • Expanded paid leave: Companies on the leading edge of this trend have added paid parental leave for new mothers and fathers (and even grandparents), and many have expanded time-off entitlements beyond the 12 weeks required under the Family and Medical Leave Act. Paid sick leave laws (required separately from traditional paid time off) are also gaining traction as part of an evolving patchwork of state-specific leave laws. To get ahead of the curve and increase your recruiting power, consider revising your policies now.
    • Laid-back office culture: From flexible hours, unlimited vacation and work-from-home arrangements to casual dress codes, free meals and open-concept offices, some of the most cutting-edge employers in the United States have completely redefined what it looks like to work. Start by asking your employees what would make their jobs easier or more enjoyable, and use their suggestions as a jumping-off point for modernization.

    Taking a hard look at your company's benefit offerings should be a no-brainer, whether you're hoping to step up recruitment or just improve retention rates. A thoughtful, innovative benefits package can help increase satisfaction and loyalty for your existing employees while boosting your appeal among new recruits.

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    Source: CNBC

  • 01 Mar 2018 8:00 AM | Bill Brewer (Administrator)

    Benefits-management tools can draw employees to the platform

    By Stephen Miller, CEBS
    Mar 1, 2018

    HR's conversations with employees about their benefits often occur once a year at open enrollment. A well-designed benefits website, however, can increase employee engagement with their benefits throughout the year, making it more likely that workers will value and effectively use these offerings.

    An Ongoing Conversation

    "A benefits website is a one-stop shop for employees and families to learn about their benefits and take action," said Jennifer Benz, founder and CEO of Benz Communications, an HR and benefits communication strategy firm based in San Francisco. An accessible and easy-to-use website "is a quick way for employees to find the information they need—minimizing frustration, enhancing their experience and inspiring trust," she noted.

    The heart of a good benefits website is an administration platform that can help employeesmanage their benefits choices throughout the year, said Paige Swanepoel, director of marketing and communications at Vericred, an insurance data services company in New York City.

    Tools and Apps

    Many types of decision-support tools and apps can be incorporated into the benefits platform for use on a year-round basis, Swanepoel explained. For instance, a "find a doctor" search feature helps employees locate in-network providers. "This helps employees avoid out-of-network surprises and keep their costs down," she said.

    "Amino, for example, provides cost and quality metrics and matches individuals with the in-network doctors best suited to that patient's needs and preferences," she noted. Some platforms even offer a doctor appointment-booking feature, "making it simple for employees to schedule and book appointments." 

    Cutting-edge organizations "also might consider adding tools such as Emma, a recently announced voice-activated assistant from Alegeus, which offers health care and benefit payments solutions," Swanepoel said. "Emma is a first cousin to Apple's Siri or Amazon's Alexa: consumers ask a question about their health care accounts, and Emma finds the answer."

    When it comes to benefits technology, "there are clearly exciting new developments to keep the conversation active," Swanepoel said.

    Other tools provide personalized dashboards that track how much of the deducible employees have met and how much they've spent through a health savings account or health reimbursement arrangement to help employees stay on top of their finances, Swanepoel noted. Alerts can be delivered directly to employees' smart phones through app notifications that show:

    • Changes in the health care provider network.
    • How much paid time off an employee had used and how many days are left.
    • How much an employee has contributed to a 401(k) or similar retirement plan, how much the employer is contributing, and how this amount compares to the allowable annual limit.

    Bringing a Benefits Website to Life

    Ideally, a benefits website "has a URL that is easy to remember, is optimized for mobile devices and is accessible outside the firewall," so employees or their spouses, partners and dependents can have access around the clock, Benz said.

    An ebook published last month by Benz Communications discusses the foundation for a successful benefits website that provides ongoing communications. It advises employers to:

    • Promote your website consistently as the go-to resource. "Don't think that just because you build it, your employees will come," Benz said. "Launching your site with a kickoff campaign will get you some initial traffic, but you'll need a solid communication strategy in place to continue the momentum" that brings employees to the website.
    • Keep content and design fresh. Information on your site needs to be updated often, with new features and refreshed images. "If any information on the site is out of date, employees will assume all the information on the site is out of date," Benz advised.
    • Review—and act on—your site analytics regularly. A benefits website "is never done," Benz observed. Learn how employees are using the website, then use this information to improve the site.

    "Make your benefits website the hub of your year-round communication strategy, and reference it in all your print materials, e-mail campaigns, social media posts, and other communications as the destination for more in-depth information," Benz advised.

    ***** ***** ***** ***** *****

    Source: Society for Human Resource Management (SHRM)

  • 26 Feb 2018 8:22 AM | Bill Brewer (Administrator)

    Many plan participants are unsure about selling shares

    By Stephen Miller, CEBS
    Feb 26, 2018

    Employees who participate in equity compensation plans that grant company stock as incentive pay understand the long-term value of the benefit—but many are afraid of making a mistake when exercising employee stock options or selling shares, new research shows.

    More than one-third of plan participants (36 percent) said equity compensation is one of the main reasons they took their job, based on newly released findings from a September 2017 survey by investment firm Charles Schwab. The findings are based on 1,000 interviews with equity compensation plan participants who receive incentive stock options or restricted stock awards or who participate in employee stock purchase plans (ESPPs).

    Building Wealth

    According to Schwab's Equity Compensation Plan Participant Survey, the average total value of participants' stock compensation was $72,245 last year, and approximately two-thirds of participants were fully vested.

    When asked for the top reasons why they value equity compensation, most respondents cited the opportunities for building wealth and to participate in company growth.

    Promoting Loyalty

    The survey also found that:

    • Employees see the long-term value of the benefit. Three-quarters of participants consider equity compensation as part of their long-term financial plan, and 63 percent say their employee stock helps them feel more prepared for retirement.
    • Equity compensation plays a large part in employee loyalty. Eleven percent say they would not consider leaving for another job because of their equity compensation, and 28 percent say they would not consider joining a new company until after the next vesting event at their current job.

    Baby Boomers and Generation X employees were most likely to consider employee stock as part of their long-term plan, while Millennials were more likely to expect to use their employee stock soon.

    Planning Ahead

    "Multi-year planning is especially valuable with equity compensation," noted Bruce Brumberg, the editor-in-chief of, an online resource for equity compensation information and tools.

    A recent blog post on his website advised that, before selling stock compensation shares, plan participants should consider:

    • Their financial situation, including short-term cash needs that may prompt them to sell company stock or exercise options.
    • Whether their decisions should be tax-driven.
    • The outlook for both the company's stock price and their job.
    • How comfortable they are with their concentration in company stock and whether they should diversify their equity holdings.
    • Multi-year projections for their income and taxes.

    ***** ***** ***** ***** *****

    Source: Society for Human Resource Management (SHRM)

  • 21 Feb 2018 8:51 AM | Bill Brewer (Administrator)

    Image result for Salary History Bans Could Reshape Pay Negotiations

    Many state and local legislatures are banning employers from asking job candidates about their past pay—and salary negotiations may never be the same.

    By Susan Milligan 
    Feb 16, 2018

    "And what’s your current salary?”

    For as long as many HR professionals and job seekers can remember, that question has been asked and answered almost reflexively during initial hiring discussions. It gives an employer critical early information. Applicants who earn more than the amount budgeted for the job can be screened out right away. Those making much less can be snapped up at a bargain, while still enjoying a salary bump.

    But recently, policymakers have been rethinking the wisdom of this query, given the role it may play in perpetuating gender and racial disparities in compensation. The gender pay gap remains stubbornly wide, with women earning around 80 cents to a man’s dollar. Black and Latina women see the biggest discrepancy, bringing in around 60 cents and 55 cents, respectively, for every dollar earned by white men. 

    ​That’s why a number of state and local legislators, including those in California and New York City, are moving to ban questions about job candidates’ salary histories. “If you keep asking the compensation question, you’re going to exacerbate the issue,” says Dawn Hirsch, chief human resources officer at HireRight, a New York City-area employment background screening firm. In other words, the question institutionalizes and perpetuates the salary differential each time those who have experienced pay discrimination change jobs, she argues.

    “Gender pay inequality will go on forever if we don’t do something,” says former HR director Susie Clarke, now director of undergraduate career services at Indiana University’s Kelley School of Business

    Yet many HR leaders aren’t buying it, so to speak. A survey by the Hay Group consulting firm found that nearly two-thirds of chief human resource officers and other corporate executives surveyed believe the restriction will do little to improve pay equity.

    Be that as it may, salary history bans appear to be changing HR’s long-standing practice of asking candidates about past pay. Whether you work in a jurisdiction prohibiting the question or not, it may be time to revisit your hiring practices and compensation strategies—relying more on market data to set pay, focusing on a candidate’s qualifications or instituting new nationwide policies, for example.

    If you’ve long relied on salary history during negotiations, you might feel like you’re at a disadvantage at first. But consider this: Past salaries may not have been the right benchmark for setting compensation to begin with, many experts say, casting doubt about the wisdom of inquiries regarding past compensation.

    “They should be banned,” says veteran HR manager Pamela Harding, SHRM-SCP, CEO of Metzano in Enumclaw, Wash., which manages social media groups for HR specialists, including the Linked:HR group on LinkedIn. “You should not be asking salary, current or otherwise. But not because of a real or perceived reasoning for why a female is not making as much or a black person is not making as much,” she says. “The reasoning is because no one should be making a decision based on salary. You should be making a hiring decision based on aptitude and experience.”

    No-Haggle Pricing

    Like all business professionals, hiring managers are constrained by budgets, and they want to get the best bang for their buck every time they bring someone on board. They’ve traditionally relied on past salaries as a yardstick for gauging the minimum they could pay a candidate. Some employers go so far as to request W-2s to confirm a person’s salary, says Craig Fisher, head of global marketing for Allegis Global Solutions, a Hanover, Md.-based staffing and recruitment firm.

    Yet that approach makes individuals’ personal work histories—rather than the value of a particular job to the organization—a top determining factor for setting compensation, which some experts and legislators say is illogical at best and potentially discriminatory at worst. That’s why it’s best to negotiate salary in other ways, such as by asking a candidate what his or her expectations are, to avoid making pay gaps worse, Fisher says.

    But doing so―essentially, asking job candidates to blink first and name what they’d like to make—doesn’t always seem to be the best approach either. Research suggests that women may lowball their own salary asks. At the same time, it’s important for hiring managers to get an idea early on of whether the company and the candidate can reach an agreement on compensation.

    ​One way for employers to do that is to be more transparent about how they value each position. Take Colorado Springs Utilities in Colorado Springs, Colo., for example, which employs 1,800 people. It included the question about past pay on its application until the summer of 2017, says Jonathan Liepe, SHRM-SCP, the utility’s human resources supervisor. Now, the organization advertises an expected pay range for each job and has a “no-haggle/low-haggle” approach that takes into account an applicant’s experience, licenses and education as they relate to the job. “To me, it’s steeped more in sound HR principles than having a law in place,” Liepe says.

    The HR team and hiring managers at Alameda Electrical Distributors in Hayward, Calif., have never asked candidates about their past salaries, relying instead on the going rate for the job. “We put a lot of work into our compensation plans. We do market research and get really good data. I don’t need to know about somebody’s last [salary] to offer a fair rate of pay,” says Erin Dangerfield, SHRM-CP, HR director at Alameda. “We’re looking at it constantly. If the world changes, that changes the pay rate.”

    Focus on Skills

    Indeed, the work world is evolving more rapidly than ever, with demand constantly shifting to encompass new competencies. That’s why benchmark salary data should be based not on job titles but on skills—which change rapidly with technology and other fluctuations in the business environment, says Catie Brand, director of talent acquisition at General Assembly, a New York City-based technology school.

    Instead of looking at what an applicant is earning, pay attention to the skill set the person has and how relevant it is to the job being filled. “Companies need to figure it out beforehand. It’s going to put more of a burden on the organization for each position they’re hiring for―what do they want to pay?” says labor and employment lawyer Cindy Minniti, managing partner of the New York office of Reed Smith.

    Today’s job candidates view pay differently as well. Some people are willing to earn less, for example, in exchange for more-flexible schedules, easier commutes or other benefits. Many Millennials and others may change positions, and even careers, frequently and no longer assume (if they ever did) that compensation should be tied to longevity or previous pay, says Carisa Miklusak, CEO of the recruitment firm tilr, a New York City-area company that uses an algorithm to help employers match skills to job requirements instead of job titles. “We see the demand from employees. They want to be paid based on their skills, even if they don’t have 20 years of experience. We’ve seen this overall shift in values in the workforce.”

    Legal Uncertainty

    The legal landscape is still uncertain and the laws vary, even as many companies are moving away from asking about salary histories as a best practice. For example, New York City bans public and private employers from inquiring about a person’s previous compensation during any phase of the hiring process, though they can ask the question after an individual has been hired at an agreed salary. Other jurisdictions, such as Delaware, Oregon and Massachusetts, allow employers to confirm previous salaries, but only after an offer has been made (including a specific offer of compensation) to the applicant. Pittsburgh’s statute and a few others apply only to public employees.

    Instead of looking at what an applicant is earning, pay attention to the skill set the person has and how relevant it is to the job being filled.

    Penalties run the gamut as well. In New York City, infractions are a violation of the city’s human rights law. That means employers could be required to pay damages and penalties of up to $250,000 and undergo mandatary training about the law. Delaware’s legislation imposes civil penalties of up to $10,000 for each infraction.

    Hiring could get even more complicated, depending on how the laws are interpreted by the courts, says Joseph Kroeger, a labor and employment lawyer with Snell & Wilmer in Tucson, Ariz. For example, an applicant could argue that companies that ask for salary histories―even if their own jurisdiction allows it—are violating the federal Equal Pay Act because of the “disparate impact” of the legislation. In other words, if women in one place are protected by a law aimed at closing the gender pay gap, while those someplace else aren’t, it’s a form of discrimination, by impact if not design.

    ​In Philadelphia, the local Chamber of Commerce is opposing the city’s salary history ban law in court, arguing that it violates the constitutional right to free speech without providing clear evidence that it will solve the problem of unequal pay. The Philadelphia statute has been stayed pending resolution of the case, and if courts ultimately rule in the chamber’s favor, laws in other jurisdictions could face similar challenges.

    Next Steps

    In the meantime, here’s what HR and legal experts advise when implementing a ban on asking job candidates about their salary histories:

    Know the law. As obvious as that sounds, “labor and employment laws are constantly changing, and many are locally introduced, so unless you have a finger on the pulse of local legislation, you can easily miss important changes,” says Robert Manfredo, a labor and employment lawyer with Bond, Schoeneck & King in Albany, N.Y. HR leaders in companies with offices in different states or municipalities need to learn which legislation affects them. Further, in recent years the New York State Attorney General’s office has held employers responsible for what supervisors have said at job fairs, Manfredo says, so your entire hiring team needs to be aware of the law.

    Change your mindset about compensation and negotiation. This may be particularly tough, since many hiring managers rely on the “false sense of security” that comes with offering a candidate a modest salary hike, says Beth Conway, vice president of HR at CA Technologies North American in the Boston area. It means making sure everyone from recruiters to hiring managers, supervisors and HR are on board with aligning salaries to a new employee’s worth to the company―and not to what a previous employer paid.

    ​Figure out the salary range for each job, and consider sharing pay bands with applicants.(California requires that.) Be very clear in job descriptions, and update them regularly.

    Conduct competitive market analyses. Use data to find out what other businesses are paying for a particular job and skill set, and stay up-to-date on market rates.

    Ask applicants what their salary expectations are. The answer can help screen out, early on, candidates whose salary demands are well outside the range of what an organization is willing to offer. (Be aware, though, that research suggests that women may lowball their own salary asks.)

    Train hiring and management personnel. Doing this helps ensure that they are not inadvertently asking the salary history question. Continue to hold periodic training to make sure everyone is updated on rule changes, and distribute memos reminding people of the law. Document training by requiring managers to sign statements confirming their participation. This can be critical if a company is sued, says Mineola, N.Y.-based attorney Christopher P. Hampton. That would enable the organization to show it was an individual’s mistake if the question is asked, and not a systematic failure.

    Modify all paperwork to comply with the bans. That includes the written application, the employee handbook, and the interview scripts for recruiters, managers and HR, counsels Michael Schmidt, vice chair of the labor and employment department in the New York City office of Cozen O’Connor. Ensure that there is no reference to salary history, “even if it’s couched in bells and whistles that make it look voluntary,” Schmidt says.

    Most of all, don’t wait around to change your hiring strategies simply because your state or city has not banned salary history questions. Many large organizations are likely to get out in front of the issue by changing their national policies and complying with the most stringent legislation enacted, according to the Hay Group survey. “Get ahead of the game,” Fisher urged, “because it’s coming everywhere.”   

    ***** ***** ***** ***** *****

    Source: Society for Human Resource Management (SHRM)

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