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October 30, 2009

HR Fact Friday: Salary Secrets Exposed

Filed under: Compensation — Tags: , 3:27 pm

In down economic times, companies seem to have carte blanche to limit salaries and make low-ball offers. But that shouldn’t be the case.

Below are the top salary secrets your employer doesn’t want you to know. With this information in hand, you’ll be in a better position to get the pay you deserve.

Employers don’t always offer a fair salary.
Some employers think they’re being fair, but they’re not up-to-date with the latest salary information. Others may try to pay less than the market value because they’re financially strapped. That’s why it’s important that you know exactly how much money you should be making.

You can negotiate your salary in a tight job market.
In a recession, many people would rather take a pay cut than lose their jobs. Raises are hard to come by and new hires may feel they have less negotiating power. But that doesn’t mean it’s impossible to bump up your salary;  it’s just a little more challenging.

According to a recent survey from the Society for Human Resource Management, 80 percent of HR professionals say employers are willing to negotiate salaries. So, if you’re looking for a raise at your current job, come armed with your marketplace worth and make your case. And, if you’ve been offered a job that pays less than you like, don’t be afraid to name your realistic asking price. Keep in mind that, if you got the offer, you’re clearly the best candidate for the job — even in this highly competitive job market.

New hires sometimes earn more than long-term employees.

When there’s a strong job market, organizations need to do whatever they can to attract top candidates. This often means that starting salaries may be higher for newbies than they are for long-term employees. Given the current economic conditions, that’s less the norm these days, but it still happens in certain industries. If you suspect that a new hire with similar responsibilities is making more than you are, use current salary data to approach your manager with the request to bring your salary up to par.

Your performance doesn’t decide your pay.
While your performance is one important factor in the salary equation, your pay is also a reflection of many other factors, including:

The job market — lower pay is more acceptable in tighter job markets.
Location — generally the higher the cost of living, the higher your salary.
Years of service — in many cases, the longer you’ve been with a company, the higher your pay.
Organization size — large organizations tend to pay more than small ones.
Education level — in most cases, the more education you have, the higher your pay. Take a free education test to find out how going back to school can help you earn more.

If you’re a valued employee who isn’t making the money you deserve, you do have options. Know your value and make your case. And know too, that many employers — particularly larger employers — have a little more in the “raise kitty” than they let on.

Source: Maria Hanson, LiveCareer

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October 23, 2009

HR Fact Friday: HR Poll — Compensation Audit Frequency

It’s no secret that here at HRN we practice what we preach regarding best practices in compensation administration and employee performance management.  For example, at HRN we utilize Compease for establishing salary grades and comp levels based on current and accurate market data. We regularly update Compease with new and current compensation data compiled from the most trusted and respected sources.

In my regular review of HR news and information sources I came across a live online survey on hr.blr.com asking this simple question:  How often does your org. audit its compensation plan to ensure fairness and equity in employees pay?

The reason this question stopped me in my tracks was because it is one of the first questions our compensation consultants ask prospective clients when discussing their compensation plan and strategy. So I was quite interested in seeing the results. And what I saw was surprising; especially when you consider that all repsondents are HR professionals who should know better.

Source: hr.blr.com

Source: hr.blr.com

The good news is that 30% do audit their comp plan at least once each year. Hopefully these are all Compease clients because this annual update and review function is included in the solution. But what really did surprise me is that an equal amount; nearly one-third have never audited their compensation plan! Never? The next highest number of respondents at 17% selected the ‘less frequently than 3 years’ option. Now I understand this is an unscientific and uncontrolled online poll but even with a margin of error of 10% it’s still a significant finding.

How can a company remain competitive and justify their bottom line if they have no true understanding of what other companies of the same size, in the same industry and geographical region are paying staff members for specific job functions and taking into account experience, education, and performance? With no researched and current comp plan in place a company is at risk of either overpaying employees, resulting in lower profitability, or underpaying key contributors and risking high attrition and turnover. Turnover costs the company money to recruit, hire, and train new staff.

When I see data like this I am motivated as a marketer to do a better job in communicating the benefits of Compease to HR professionals.

Having an annually updated and reliable comp plan in place does not have to be difficult, expensive, or time consuming. HRN has the solution. It’s called Compease. Give us a call and talk to a compensation professional or check it out online at here. Or better yet . . . attend a demo.

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October 20, 2009

HRN News: HRN Announces Release of Incentive Pro

incentivepro_logo_web

SALT LAKE CITY, UT (October 20, 2009) — Jerry P. Nelson, President and CEO of HRN Management Group today announced the release of a revolutionary new online incentive compensation planning and administration solution called Incentive Pro.

Incentive Pro is a simple-to-use and affordable online application designed to make incentive pay programs more effective at achieving and rewarding desired results. Incentive Pro is developed and supported by the same HRN compensation experts that created the popular and successful Compease compensation administration software now in use by over 800 clients.

Mr. Nelson described the underlying philosophy upon which Incentive Pro is created, “Incentive Pro is built on solid business fundamentals; most notably that incentive compensation at its root is a strategic tool to increase revenue and profitability. Therefore the system includes tools and functions to not only track individual performance but also to collectively evaluate plan components and their results; that when measured against pre-determined achievement thresholds, determine concrete ROI statistics.”

Clinton R. Koker, President of HRN’s compensation division added to Mr. Nelson’s comments by stating, “Incentive Pro is not simply an administration tool. It is a strategic solution to improve company performance in targeted areas. In addition to the application, HRN compensation consultants meet with each client to most optimally configure plan components by individual position, and if necessary, develop a customized incentive plan program from the ground up.”

Incentive Pro has been in use by several clients over the past year. Philppe Asselin, VP of Human Resources at Tyndall Federal Credit Union located in Panama City, FL has been using Incentive Pro for 18 months. He had this to say, “Incentive Pro helped us go from good to great in many areas! Performance plans drive performance, but incentives helped our staff members to be more aggressive and become better performers.”

To find out more information about Incentive Pro and to schedule a demonstration please contact our office at 800-940-7522 or e-mail HRN at info@hrnonline.com. Information is available online at: www.hrnonline.com/incentivepro

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October 19, 2009

Choosing the Right Health Plan for Your Small Business

Filed under: General HR Buzz11:58 am

Some say it’s like the Clinton health care fight all over again. Check out any news source and you’re likely to get an eyeful about the ongoing health care debate. While the situation is far from resolved, it’s clear that the solution is likely to have a huge impact on small businesses. As a result, there’s action you may need to take while you’re waiting for this to get untangled (if it ever does).

Even — or especially — in this economy, it’s no secret that employees value health insurance benefits. Surveys have shown that workers value health insurance coverage only second to monetary compensation, according to eHealthInsurance, a licensed health insurance agent. By offering such coverage, companies are better able to attract and retain talent. The problem, of course, is the cost.

Today, many small companies are either cutting back on health care coverage they provide or choosing not to offer it at all, says Sam Gibbs, a senior vice president at eHealthInsurance. Small-business owners reported that the cost and availability of health insurance is their No. 1 concern, according to a National Federation of Independent Business survey. In some cases, employers have switched to a contract workforce to avoid providing health care.

It is possible, however, for small-business owners to provide health care coverage at a reasonable cost.  To do it, “employers should help their employees to understand the reasons for rising health care costs and get them involved” in how much they should pay for their own health care, says Michael McGuire, chief executive officer of UnitedHealthcare of New Jersey.

What that means: When it comes time to figure out what coverage to provide, business owners should sit down with employees and ask what coverage is important to them. Try to determine what benefits are required versus what benefits they can live without.

“Tell them you only have so much money to spend on health insurance and ask them to help you prioritize what is important,” says Gibbs. “When they are part of the process they are better able to understand the costs and help control.”

Why get employees so involved?
Insurers figure that hitting consumers in their pocketbooks will cause them to be more frugal, which will drive down the cost of health care. This is the idea behind the increasingly popular consumer-driven health care trend in which companies offer high-deductible health plans (HDHPs): low-premium/high-deductible plans, in conjunction with health savings accounts (HSAs) or health reimbursement accounts (HRAs). An HSA allows employees and employers with an HDHP to contribute to a tax-exempt account to pay for uncovered medical expenses. Unused funds can be carried over into subsequent years. With an HRA, employers set aside money to reimburse employees’ deductibles or qualified out-of-pocket medical expenses up to a certain amount. While the money can be rolled over for use in future years, it technically belongs to the employer.

In keeping with its name, a high-deductible health plan has deductibles of $1,000 to $4,000 before the insurance begins to pay for expenses. So one way these plans work is for an employer to put money into an HSA or HRA for each employee to be used toward his or her deductible. For example, say the deductible was $1,800 for an individual and $3,600 for a family. The employer could implement an HSA and put in $1,500 per individual and $3,000 per family. That leaves the more traditional (and palatable) $300 deductible for the individual and $600 for the family, says Myron Jucha, vice president of Brooks, Jucha & Associates, a San Diego-based employee benefits company that actually implemented this plan for a small business.

These plans put the responsibility of costs on employees. When employees are in charge of their health care dollars, they are much more likely to question doctors and fight harder to save money. In one instance, says Jucha, a client had a sinus problem and needed surgery. He had an MRI from another facility but the surgery center wanted to do another MRI at its own facility. That person fought to use the one he already had and avoid additional cost. “That never would have happened under an HMO,” says Jucha.

Another example: A client went to get an X-ray and offered to pay cash. The cost of the X-ray went from $200 to $100. “We have seen a reduction of 30 percent in health care costs when we implement a high-deductible health care plan with an HSA,” says Jucha.

Don’t wait for President Obama’s health care reform to buy coverage. At best, implementation of new rules and regulations won’t take effect until 2011. When looking for an insurance plan, Gibbs recommends shopping around to get as many quotes as possible. Also, always buy from a licensed agent or broker, and make sure the insurance carrier is rated B-plus or better from rating company A.M. Best. Finally, understand the policy and read the fine print. Some policies are minimal medical coverage plans in which the plan pays the first $500 and the policyholder pays the remainder of the expense.

Source: Toddi Gutner  MSN.com

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October 16, 2009

HR Fact Friday: Employers Look to Performance-Based Awards During 2009

Spending on performance-based bonuses for exempt workers has grown from 10.8 percent of payroll in 2008 to 12.0 percent of payroll in 2009, according to a survey of large employers by Hewitt Associates, a consulting firm. In 2009, employers also dedicated a larger percentage of their payrolls to bonuses for nonexempt employees.

Fifteen years ago, such variable pay spending accounted for approximately 5 percent to 6 percent of payroll. The survey found that employers are budgeting their variable pay bonuses at 11.8 percent of payroll for 2010.

Many employers have had to freeze or cut salaries because of the economic climate. With performance-based bonuses, however, employers can reward their high performers without their budget taking as big a hit as with pay raises across the board.

“Even in the toughest economies, companies are willing to reserve money for top-performing employees as a way to reward their performance and ensure they retain these employees after the job market rebounds,” says Hewitt’s Ken Abosch. “Over the past decade, we’ve seen companies steadily shift from a fixed pay model to one that emphasizes true performance-based awards, and we expect this trend will continue.”

For those interested in learning more about variable pay system planning and implementation, please contact HRN Management Group. On October 20, 2009 HRN is launching a revolutionary new online incentive planning and administrative product called Incentive Pro. Go to www.hrnonline.com for mor information.

Source: hr.blr.com

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October 15, 2009

Making the Transition from Peer to Boss

Filed under: General HR Buzz7:09 am

The Greeks established a protocol within their military structure whereby if an individual was ‘promoted from the ranks’ to Officer level; he was taken away from his old unit and assigned to a new one. The thinking was obvious – it’s sometimes difficult to command respect from people who knew you way back when.

Unfortunately, this is not always possible in corporate America, especially in smaller organizations. So more often than not, a promotion within your department or work unit brings with it the challenges of supervising those who were once your peers. Some of the pitfalls include:

    • Former peers may attempt to take advantage of you
    • Former peers may feel that they should have been promoted
  • You feel you may need to “overcompensate” just to prove there is no favoritism
  • Friends may expect “inside information” now that you are part of management
  • Separating personal relationships from professional relationships can be tough

As with many workplace challenges, communication can help to alleviate problems. Other tips include:

  • Understand that the relationship has changed
  • Address resentment – it will not go away on its own
  • Do not show favoritism
  • Delegate appropriately
  • Remember what you liked and didn’t like as an employee.  Capitalize on your experiences.
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October 14, 2009

Independent Contractor or Employee? How Do You Know and What Does It Matter?

Filed under: General HR Buzz — Tags: , , 1:53 pm

Independent Contractor Classification Issues Coming Under Greater Scrutiny

The independent contractor “issue” has become more visible in the last year, Congressional hearings have been held in which legislators have been urged to take action to address the issue of misclassification of employees as independent contractors.  Several states have also taken action to apply pressure to companies to revisit classifications.  It’s a subject that will likely see even more attention in the future.   Legislators have apparently heard enough complaints that some companies unfairly avoid their obligations by using contractors or that there simply is no justifiable reason to treat contractors so differently.

Independent Contractors:  A Money Saver and a Great Employer Solution?

The use of independent contractors has increased significantly in the last few years as employers seek to reduce costs and keep their workforces flexible. Whether a worker is an employee or a self-employed independent contractor imposes very different obligations on an employer.  Independent contractors are not on the payroll and do not enjoy many of the legal protections and benefits given employees. They also typically don’t count toward minimum thresholds required to determine whether employers are covered by certain federal employment laws. Generally, employers are not required to:

  • Provide Employee Insurance, Retirement and Leave Benefits
  • Pay Social Security & Medicare Taxes
  • Pay Federal & State Unemployment Taxes
  • Pay Overtime or Minimum Wages
  • Maintain Pay Records Under the FLSA
  • Pay Worker’ Comp Premiums
  • Provide protections under Title VII, the ADEA, ADA,  and Other Discrimination Acts
  • Provide protections under The National Labor Relations Act (which involves union issues)
  • Provide Leave Under the FMLA

Or, A Business Decision That Can Have Significant Negative and Costly Consequences…

It is often difficult to determine whether an individual should be classified as an employee or an independent contractor. Some organizations incorrectly assume that they can “declare” an individual as an independent contractor and that such a declaration will make it so.  But as with all things HR related, nothing is simple. Failure to make a legally correct contractor vs. employee determination, can lead to serious and expensive consequences.  The issue typically arises because of a government audit or an employee complaint.  In fact an employee (or an employer) can submit a Form SS-8 to the IRS (http://www.irs.gov/pub/irs-pdf/fss8.pdf) for a finding of whether an individual is an employee or a contractor.  Over 85% of these forms are submitted by employees and in more than 90% of the cases the IRS finds an employee, not contractor situation.  We’ve included a copy of the Form for your review so you can see what the IRS considers in its determinations.

Too many organizations have ignored this issue (admittedly there are more interesting things to think about!).  Others have simply tried to save money by not following the law. Unfortunately, some of them have paid a high price for doing so.

Or, A Business Decision That Can Have Significant Negative and Costly Consequences… (Continued From Page 3)

In any event, it may be a good time to re-familiarize yourself with the law and various tests swirling around the independent contractor issue. Then examine your own contractors, audit your company’s practices, and take steps to assure future compliance.

How Do You Know if You Have an Independent Contractor?

Legal tests and factual situations, not labels determine whether someone is a contractor or an employee. Simply calling someone an independent contractor and having him sign a contract to that effect is not controlling. A number of details about the work relationship must be analyzed.

And…To Make Things More Confusing, There Is More Than One Test

Several different tests (Common Law, IRS Factor Control, Relative Nature of Work, ABC, and Economic Reality) are used to determine independent contractor status under federal and state law.  Which test is used depends upon the particular statutes or government agencies involved.  The result may be that a worker is an “employee” under one statute and can be considered an independent contractor under another.  As you might expect, the tests are not clear-cut and are open to interpretation.  However, the tests do have some significant similarities, with the main issue being:

Does the company control how the work will be performed (in which case you’ve likely got an employee) or does the company simply oversee the result(which would be more favorable to a finding of an independent contractor relationship).

Various Tests Used to Determine Employment Status Include:

Area/Statute

Test Commonly Used

IRS Withholding

IRS Factor Control Test

Fair Labor Standards Act (FLSA)-

overtime & minimum wage

Economic Reality Test

Workers’ Comp

Relative Nature of Work

Unemployment Benefits

ABC Test

Discrimination (Title VII, Age Act, ADA) &

Affirmative Action

Common Law (“Right to Control”)

Test plus the Economic Reality Test)

Immigration (I-9’s)

IRS Test

ERISA (employee pension & welfare benefits)

Common Law (“Right to Control“)Test

Worker Adjustment & Retraining Notification Act (WARN)

Common Law (“Right to Control”) Test

National Labor Relations Act &

Labor Management Relations Act

Common Law (“Right to Control”) Test

The IRS Factor Control Test

For many years, the IRS used its “20 Factor Test” to determine if an employer exercises sufficient control to establish an employer-employee relationship. The IRS has attempted to “streamline” this by organizing the Factors into 3 groups: behavioral control, financial control, and the type of relationship. (The “20 Factors” remain important.).  The Factors are only guidelines and are not all applicable in every situation.  No one Factor is decisive, rather the entire situation must be considered.  The IRS Test includes most of the elements of the other tests and was based on the common law test.

Behavioral Control Factors

Indicative Of Employee Status

Indicative of Independent Contractor Status

Training

On-the-job training often required. Provided training regarding processes & methods.

Already highly skilled and receives no training.

Instructions

Must comply with company’s instructions and actions are more controlled. Tools & equipment supplied, dictated, and told where to purchase. Directed regarding what workers to hire or assist with work and what work must be performed by certain individuals. Order, sequence, hours, location of work may be determined.  Regular reporting.

Broader discretion and decision-making authority.  Supply own tools & equipment.  Hires. Pays, and  supervises own assistant. May or may not render services personally.  Sets own schedule.  May determine where work is performed. Regular, frequent reporting may not be required.

Financial Control Factors
Significant Investment in Facilities or Equipment

Little or None.

Considerable investment.

Expenses

Company reimburses.

Pay own.

Profit/Loss

Doesn’t incur any economic loss.

Realizes a profit or loss.

Payment

Paid hourly, weekly.

Often paid by the job or project.

Parties’ Relationship
Written Contract

Not likely in an employee relationship. May be fired or can quit any time.

Possible evidence of independent contractor.  Contractual relationship affects termination.

permanency

Ongoing relationship. Works full-time for company.

Projects begin and end.  Hours not totally given to the company.  Generally shorter term and temporary.

Benefits

Receive insurance, retirement, paid leave, etc.

No benefits.

Integration

Functions are an integral part of the business; similar to regular employees.

Services are separate and distinct from regular employees.

Multiple Employers & service availability

Doesn’t work for multiple employers and services not available to public.

Provides services to multiple organizations & services available to public.

Several factors, beyond the IRS test can also be considered.  High level, specialized skills are often indicative of independent contractor status.  The extent to which an individual establishes his own rate of pay, is paid after submitting an invoice, carries the risk of work accident, has consulted with an accountant regarding his business, or has a reputation as being available in the business community may also be relevant.

Final Things to Worry About

Remember that states have also gotten into the act.

Don’t think that you can relax once you’ve figured out the federal law and related tests. (If you ever do.) Some states have also been active in this area. Be sure you are familiar with your particular requirements. If nothing else you’d likely have workers’ comp and state unemployment issues to consider.

Using independent contractors inappropriately can create significant risks and liabilities. Payment of back taxes, back overtime, and related penalties could be just the beginning.  Consider the consequences of misclassifications if an individual is:

  • Improperly denied benefits. (ERISA provides protection here, forcing payment of back benefits and possibly creating breach of contract claims)
  • Injured on the job. (No workers comp coverage, so a company is vulnerable to a lawsuit)
  • Seriously ill and had not been considered eligible for FMLA.
  • Disabled and was discriminated against. (e.g., not reasonably accommodated)
  • Not counted as an employee.  (So the company appears not to be covered by Title VII, ADA, ADEA, FMLA, WARN Act, Affirmative Action purposes, etc….. when it really is.)
  • Not considered an employee and as a result no I-9 is on file.
  • If you use independent contractors be sure you know who owns the rights to the work. In the case of an employee, absent an agreement to the contrary, the company generally automatically owns the work product. That may not be the case with an independent contractor.
  • If you use independent contractors, use a contract. Make the contract in the name of the individual’s business, not her name. If possible, avoid hourly pay and reimbursement arrangements, and have the individual perform discrete projects, not ongoing work.
  • Remember,  sometimes no matter what you call the relationship, how you attempt to structure it, how you “dress it up” and even if you draft the best contract ever, you’ve still got an employment relationship, not an independent contractor.
  • Audit   your independent contractors’ status, before you’re challenged by an individual or the government.  Form SS-8 (included here) can help with that.
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October 12, 2009

Typos Do Matter

Filed under: General HR Buzz1:53 pm

According to the Associated Press, a woman who worked for Notre Dame catering events thought she was the beneficiary of a really big tipper (or so she says).

She received a $29,387 tip on an April 2009 paycheck.  She claims that she called the catering department 3 times to ask about the tip but that no one returned her calls.

By the time someone from Notre Dame called her about the check in June she had spent the money on a new car and bills.

The school alleges that she should have been paid a tip of $29.87 and requested that the money be repaid.

The now ex-employee says the money is long gone and it was the school’s not her mistake.  Notre Dame has sued alleging unjust enrichment and fraud.

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October 9, 2009

HR Fact Friday: Employers Explore Changes to Sales Incentive Plans

Many large employers are planning to make changes to their sales incentive plans during the upcoming fiscal year, such as changing performance measures (60%), changing performance measure weightings (50%), changing incentive formulae or mechanics (49%), and changing their pay mix (20%), according to a survey by Watson Wyatt, a consulting firm.

Conducted among 129 large employers, the survey found that 60% of respondents said sales force productivity and efficiency remains a significant concern. 48% of employers said sales force quota and goal setting is a concern. Just 47% of respondents said they are satisfied or very satisfied with their goal-setting processes.

The survey also found that fewer employers are planning more sales force layoffs as the economy shows signs of improvement. 16% of respondents said they plan to increase sales staffing levels in upcoming fiscal year. By contrast, 12% said they anticipate decreasing their sales staffing levels, down from 53% who said the same in February. Meanwhile, voluntary turnover has declined, with 81% of respondents reporting less than 10% voluntary turnover, down from 51% who said the same in February.

For help reviewing your current incentive compensation plan or to develop a complete incentive plan program from the ground up, contact HRN. Also, ask us about Incentive Pro, a new online incentive planning and administration system from HRN. To schedule an Incentive Pro webinar demonstration call us at 800-940-7522 or email HRN at sales@hrnonline.com.

Source: compensation.blr.com

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Survey on Sick Leave Shows Economy May Be a Factor

Filed under: General HR Buzz5:28 am

CareerBuilder recently released their annual survey on sick leave usage and the results show nearly one-third (32 percent) of workers have played hooky from the office this year, and 28 percent of employers think more employees are absent with fake excuses due to increased stress and burnout caused by the recession.

While most employers reported they typically don’t question the reason for sick leave absences, 29 percent said they have checked up on an employee who called in sick and 15 percent said they have fired a worker for missing work without a legitimate excuse.

For employers, the best approach is to have a documented sick leave policy and communicate in the policy that a doctor’s note may be required when there is suspected abuse of sick leave, (such as excessive usage or a pattern of taking sick days only on Friday).

Which makes me wonder…. Statistically, what are the odds that an employee only gets sick on Fridays?  I’m not sure, but I’d sooner play the odds at the local thoroughbred race track (which is where your employee probably is when he’s sick on Friday).

The CareerBuilder survey included more than 4,700 workers and 3,100 employers.

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