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| ARTICLES |
[ Best Compensation Practices ]
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If the cost of labor (compensation, benefits and taxes) is one of the largest - if not THE largest - item on your P&L statement, then it makes perfect sense to measure and manage the cost of your workforce. In doing so, you should use four criteria to help you determine how much to pay your employees, and what level of benefits you should offer.
Pay Philosophy
How much you pay employees (and independent contractors) should align with the prevailing salaries and wages in your industry, current and projected market conditions over the next 12-24 months, and your desire, based on your "world view" or "philosophy of work," to provide compensation that is better than, equal to, or less than, what competitors are paying.
Market Data
The SMC Compensation Survey is the best source for Pittsburgh labor market data because it has more data points about the 10-county southwestern Pennsylvania region than any other survey of its kind. By using the Survey's data yourself, or with assistance from compensation experts, you can develop pay structures that are tied to performance management systems and the resulting annual merit increases. This strategy can help you manage labor expenses most effectively by helping to ensure that you are rewarding people based on quantitative metrics rather than on perceptions or assumptions which may be false.
Pay Structure
By connecting compensation strategies to well-defined performance management systems and merit increase formulas based on the SMC Compensation Survey, you will be able to manage labor expenses effectively because the amount you invest in your workforce will be more predictable than ever. By having such valuable knowledge at the beginning of the calendar or fiscal year, you can adjust marketing strategies, capital investment and bonus payments to optimize production schedules and cash flow.
Incentive Programs
These compensation plans are being used increasingly to manage labor costs by basing pay on performance rather than attendance. If designed properly, incentive plans can drive business performance to unprecedented heights. Conversely, ill-conceived incentive programs can hinder growth and deflate morale throughout the company.
While watching television shows featuring acrobatic stunts or other high-risk activities, you've probably heard the expression "don't try this at home." When it comes to developing and implementing compensation strategies, the same rule should apply. It's easy for a business owner or manager who's not an expert in the realm of compensation to think that he or she can develop a compensation system that is mutually beneficial to the company and employees. In the vast majority of cases, however, I have found that the do-it-yourself approach does more harm than good.
Clearly, developing the best compensation practices is a task that's best left to professionals, like those at Corporate Compensation Partners, who have the knowledge and experience to help business owners strike the ideal balance between morale-crushing stinginess and enterprise-crippling extravagance.
For a copy of the SMC Compensation Survey, contact Rosann Linza, SMC's director of human resources, at 412.342.1604.
This article was originally published in SMC Business Council's Working PArts magazine, January / February 2015 issue.
About the Author
Rodney A. Cottrell, CCP is the current President of Corporate Compensation Partners, LLC and EHResearch Data Services, LLC. Concentrating only in compensation issues, Rodney is considered an expert in the areas of executive pay, sales compensation, incentive plans, employee compensation, FLSA, compensation and benefit surveys, and compensation technology. He provides international compensation consulting to clients in multiple industries across the United States and is a frequent lecturer and guest speaker at colleges and corporate events.
Mr. Cottrell is a graduate of the La Roche College Master of Science In Human Resource Management program with a specialty concentration in Strategic Management and holds a Bachelor of Science degree in Business Administration from the Indiana University Kelley School of Business with a concentration in Human Resource Management and Psychology. Rodney holds the following professional certifications: Certified Compensation Professional (CCP), Certified Employee Benefits Specialist (CEBS), Compensation Management Specialist (CMS), and Senior Professional in Human Resources (SPHR).
Rodney A. Cottrell, CEBS, CCP, CMS, MSHRM, SPHR
Corporate Compensation Partners, LLC
(724) 934-0800
rcottrell@corporatecomp.com
www.corporatecomp.com
www.linkedin.com/in/corporatecomp
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[ Wage & Hour Smartphone Apps ]
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Yes, there are Apps for That! While many human resource professionals and business owners may already know that the Department of Labor developed and issued several Smartphone applications available for free to aid in identifying workplace violations of timekeeping, health, and safety violations, the majority of small business owners may still not know these tools exist. While one app may cost employers considerable dollars in fines and penalties, the other can cost employers potential workers and customers!
The Applications
The Wage and Hour Division of the Department Of Labor ("DOL") has launched two applications for Smartphones, both of which deserve the attention of small business owners. The first is a timesheet application that allows employees to track the hours they work independent of the employer timekeeping records. The "Timesheet App" then calculates the wages employees are owed for time worked. The app is available for free on iTunes in both English and Spanish.
The second application was developed in cooperation between the Wage and Hour Division and the Occupational Safety and Health Administration ("OSHA"). The App, titled "Eat Shop Sleep" combines enforcement data from the DOL and OSHA with popular consumer ratings websites such as Yelp and Google Maps. The combined data lists employers, such as restaurants, along with workplace safety violations, Fair Labor Standards Act ("FLSA") violations, child labor violations, etc. and the ratings provided from customers.
Timesheet App
The timesheet application produced by the DOL allows employees to track hours worked, break times, and overtime hours for one or more employers. The user must register the employer for whom time is recorded before the application can initiate. In other words, the DOL is requiring the app to collect data on the employer, without the permission of the employer and irrespective of proper data collection by the user. Further, the DOL has indicated that during investigations where employer timesheet credibility may be called into question, use of the employee recorded data in the app will be permitted.
The Timesheet App can also calculate simple wage and overtime estimates. In combination with timesheet data recorded by the user, the app requests wage information and will calculate the gross wages due the employee, including overtime. It should be noted here that the overtime calculations provided in the app are fairly simplistic and should not be relied upon for situations where the "regular" wage is changed due to "special pay" and a recalculation of the "regular weekly wage" is required, such as with incentive pay, shift differentials, commissions, non-discretionary bonuses, holiday pay, or tips.
The application is pre-programmed with the current minimum wage, providing a warning notice if the amount is below the Federal Minimum Wage. The app does not currently comply with State or Local Minimum Wage laws for those States where the Minimum Wage exceeds the Federal Minimum Wage. The Fair Labor Standards Act defers to State or local law in areas where State or local law is more favorable to the employee. Since the Pennsylvania Minimum Wage is currently the same rate as the Federal Minimum Wage ($7.25/hour), the app is accurate for Western Pennsylvania employers.
There are also other employee-helpful features that include a glossary of wage-and-hour terms, a definition of "time worked," materials about wage laws, links to DOL web resources and, a function that allows users to email the DOL directly.
The DOL has indicated that additional apps are forthcoming that will function for tip income, bonuses, commissions, pay deductions, holiday pay, shift differentials and paid time off. At this time, these features have not been made public and nor has the application been distributed for Android phones.
Remember, in these days of working remotely via Smartphones, laptops, home computers, and other electronic devices, employers must be vigilant and require non-exempt employees to record their time spent actually working at home, and must compensate them. Remember, the employer is suffered work performed by the employee.
Eat Shop Sleep App
The Eat Shop Sleep ("ESS") application, developed jointly by the Wage and Hour Division ("WHD") and OSHA creates a repository of data available for public consumption allowing customers and prospective employees to learn about workplace violations.
On the WHD flyer, the DOL prompts the question, "Given the choice, would you dine at a restaurant or shop at a store that didn't pay its employees properly?" Additionally, the DOL suggests that prospective employees search ESS and "Use it while job hunting."
Search results can be narrowed by industry, health/labor violations, or company name.
A red icon next to the company's name indicates FLSA violations; a green icon indicates that the company has no violations on its record. When a user chooses a company, the violation is displayed by showing:
- the time period in which the violation(s) was found;
- whether the violation was a child labor violation or an wage/hour violation;
- whether the company is a repeat offender;
- the number of employees owed back pay from the company;
- the total dollar amount owed to employees; and
- any fines or penalties imposed by DOL.
The app also provides the user with information on health, safety, and labor highlights, definitions, and alerts. Finally, the app has a "Take Action" button that submits suspected violations to the DOL.
Business owners should be aware that customers typing away on their Smartphones might actually be reporting suspected violations to the DOL and/or workplace safety violations to OSHA.
Please contact your labor attorney for legal advice regarding your pay practices.
About the Author
Rodney A. Cottrell, CCP is the current President of Corporate Compensation Partners, LLC and EHResearch Data Services, LLC. Concentrating only in compensation issues, Rodney is considered an expert in the areas of executive pay, sales compensation, incentive plans, employee compensation, FLSA, compensation and benefit surveys, and compensation technology. He provides international compensation consulting to clients in multiple industries across the United States and is a frequent lecturer and guest speaker at colleges and corporate events.
Mr. Cottrell is a graduate of the La Roche College Master of Science In Human Resource Management program with a specialty concentration in Strategic Management and holds a Bachelor of Science degree in Business Administration from the Indiana University Kelley School of Business with a concentration in Human Resource Management and Psychology. Rodney holds the following professional certifications: Certified Compensation Professional (CCP), Certified Employee Benefits Specialist (CEBS), Compensation Management Specialist (CMS), and Senior Professional in Human Resources (SPHR).
Rodney A. Cottrell, CEBS, CCP, CMS, MSHRM, SPHR
Corporate Compensation Partners, LLC
(724) 934-0800
rcottrell@corporatecomp.com
www.corporatecomp.com
www.linkedin.com/in/corporatecomp
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[ Antitrust Regulations & Salary Surveys ]
September 5, 2014 |
Most human resource professionals participate in professional associations, industry groups and other organizations to promote information sharing, learning opportunities, and networking. However, many are not aware that such activities may lead to a violation of the Sherman Antitrust Act if it involves the sharing of wage and benefit data.
Regulatory Situation
The conduct of formal and informal compensation surveys (e.g. as simple an act as calling a competitor to identify pay ranges) is regulated by the Sherman Antitrust Act of 1890. The Sherman Antitrust Act was passed to limit monopolies and other restraints on commerce. In general terms, this legislation and resulting litigation have helped define the act of “price-fixing” and other collusionary activities. Over the past 30 years, this law has been increasingly used to challenge the legality of salary surveys in determining labor market rates and compensation practices.
The Department Of Justice and the Federal Trade Commission have issued a joint policy statement which has been interpreted to provide a "safe harbor" for organizations involved in the exchange of compensation and benefits information.
The Agencies will not likely challenge provider participation in written surveys of wages, salaries, or benefits, if the following conditions are satisfied:
- The survey must be managed by an independent third-party (e.g. compensation consultant, government agency, or trade association);
- The information provided by survey participants is based on data more than 3 months old; and
- Adhere to the following data aggregation policies:
- There are at least five providers reporting data upon which each disseminated statistic is based;
- No individual provider's data represents more than 25% on a weighted basis of that statistic; and
- Any information disseminated is sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular participant or service provider.
Penalties
Antitrust violations are punishable by criminal penalties, including imprisonment and fines, as well as civil penalties, such as payment of trebled damages and attorneys' fees. Penalties for non-compliance with the Act include:
- Criminal imprisonment for up to three years;
- Criminal fines up to $10 million, twice the damages born by the victims or twice the individual's monetary gain for the violation, whichever is greatest; and
- Attorneys' fees and cost of litigation born by the plaintiff.
Recommendations
Employers can protect themselves and their human resource employees by discontinuing the practice of contacting other employers directly to share wage, benefit, and policy information. There are various surveys conducted by independent compensation consultants that will provide information to employers while complying with the Sherman Antitrust Act. One such survey is the Survey of Executive and Administrative Assistants. This survey, conducted nationally for 23 years, provides compliance with defined "safety zones" and is available by contacting surveys@ehresearch.com or view other compensation surveys at www.ehresearch.com.
While conducting surveys, providers should also keep in mind that competitors should not have direct contact with each other regarding the actual survey or compensation/benefit information. In addition, the survey results should not identify the participating companies, either directly or indirectly. Finally, any discussion as a group relative to the survey results may be considered a gross violation of antitrust rules. Contact your antitrust attorney for legal advice regarding your pay practices.
About the Author
Rodney A. Cottrell, CCP is the current President of Corporate Compensation Partners, LLC and EHResearch Data Services, LLC. Concentrating only in compensation issues, Rodney is considered an expert in the areas of executive pay, sales compensation, incentive plans, employee compensation, FLSA, compensation and benefit surveys, and compensation technology. He provides international compensation consulting to clients in multiple industries across the United States and is a frequent lecturer and guest speaker at colleges and corporate events.
Mr. Cottrell is a graduate of the La Roche College Master of Science In Human Resource Management program with a specialty concentration in Strategic Management and holds a Bachelor of Science degree in Business Administration from the Indiana University Kelley School of Business with a concentration in Human Resource Management and Psychology. Rodney holds the following professional certifications: Certified Compensation Professional (CCP), Certified Employee Benefits Specialist (CEBS), Compensation Management Specialist (CMS), and Senior Professional in Human Resources (SPHR).
Rodney A. Cottrell, CEBS, CCP, CMS, MSHRM, SPHR
Corporate Compensation Partners, LLC
(724) 934-0800
rcottrell@corporatecomp.com
www.corporatecomp.com
www.linkedin.com/in/corporatecomp
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[ PRIOR ARTICLES ]
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| IN THE NEWS |
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| [ FOR IMMEDIATE RELEASE ] |
2015 Annual Survey of Executive and Administrative Assistants
Sewickley, PA, December 14, 2015 - Reported in the 2015 edition of the Survey of Executive and Administrative Assistants (SEAA), the median total cash compensation for assistants to CEO's nationwide is currently $107,100, a slight increase from 2014. This is the eighth consecutive year we have been able to report total cash compensation over $100,000 for the nation's top administrative support. The median total cash for all reported incumbents in the SEAA is $81,100, with the percent of assistants receiving bonuses at 63%.
Assistants average 16 years of service with their company and senior-most CEO assistants' tenure average slightly higher with 19 years. Of those reporting education levels, 24% of the assistants have received a 4-year degree or higher.
Companies participating in the 2015 survey have a median revenue of $9.5 billion. Size is an important factor in relation to pay as there continues to be a substantial difference in CEO assistants' pay between the larger half of the survey population (companies with revenue of $12 billion and up) vs. the lower half. This separation is a trend identified in 2008 and continues today.
For 24 years this research report has focused on the pay of executive assistants serving senior executives at the Fortune 1000 and other companies in the billion-dollar-plus category. The senior executives they support are paid at the $200,000-and-up salary level and are typically within three reporting levels below the CEO. The assistants to these executives - and especially, Assistants to the CEO - stand apart from their counterparts typically found in support staff or nonexempt surveys.
The 2015 SEAA covers over 800 job incumbents at 69 of the major U.S. corporate headquarters. Data is reported on 27 of the 28 surveyed assistant positions as well as all assistants by level from the CEO (up to 3 levels).
"This report is unique, not only in the jobs studied, but the pay prediction model we provide to our readers." According to EHResearch president Rodney Cottrell, "this report differentiates from others in knowing that the difference in pay can be measured and explained with some degree of accuracy based upon a set number of factors."
In addition to the general facts found above, the SEAA contains detailed information and analysis on policies and practices such as performance management programs, prevalence of dedicated assistants, FLSA exemption practice, Long-term Incentive compensation practice, and pay prediction models.
EHResearch Data Services, LLC conducts research for corporations and associations and administers custom pay surveys, as well as advising select compensation consulting firms in various aspects of compensation and benefits data. EHResearch Data Services, LLC is located in Pittsburgh, Pennsylvania.
If you have any questions regarding this information or would like to purchase a copy of the 2015 Survey of Executive and Administrative Assistants, please contact us at 800.330.4154 or by email at surveys@ehresearch.com.
Rodney A. Cottrell, CEBS, CCP, CMS, MSHRM, SPHR
EHResearch Data Services, LLC
(724) 934-0800
surveys@ehresearch.com
www.ehresearch.com
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| [ PRIOR NEWS ] |
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| "I engaged Rodney to rebuild my new company's compensation from scratch. He did such a thorough job (which included interviewing dozens of people to do job analysis) that I have continued to use him as my external compensation expert. His team does job eveluation, recommends market-based merit pay and pay band adjustments, and provides advice on the construct and design of four variable pay programs. They have also ensured our executive compensation practices are above reproach - which is important to us as a federal contractor." |
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