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July 16, 2015

Are You Feeling the Attraction and Retention Pinch?

Filed under: General HR Buzz9:27 am

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by Gene Mandarino, HR Performance Solutions

Are you feeling the attraction and retention pinch? If you aren’t yet, you soon will be. Executive mobility is increasing, unemployment is dropping, and retirement funds are growing. Credit unions are no longer recruiting from the ranks of the unemployed but are being forced to recruit from the ranks of the employed. This market dynamic will drive up the costs of attracting and retaining executives. Is your compensation strategy prepared to deal with this?

As a compensation consulting company, we are in the business of helping credit unions determine appropriate pay ranges for all levels of employees. In 2015, we have seen a dramatic increase in clients requesting help in validating pay levels for executives. Some clients are asking because they want to be sure they are paying enough to retain key people. Others are asking because they are recruiting executives and are feeling the pressure to offer more money. Without question, we are in an employee market.

In a presentation on executive pay I recently delivered to HR professionals at a credit union, I was curious to know if they were feeling the employee market pressure that we were feeling. I started the presentation by showing a slide illustrating how the unemployment rate had changed since 2010. In 2010, it was 9.7% nationally, now it is 5.5%, with some states, like Nebraska, at or under 3%. I also pointed out that, according to the Department of Labor, 2014 was the best hiring year in 15 years. After presenting this data to the audience, I asked them if they were feeling the talent attraction and retention pinch. Everyone raised his or her hand, some even blurted out “absolutely.” I was not particularly surprised by the show of hands. But, I was surprised by how vigorously they raised their hands and by the commentary. They clearly validated what we are experiencing as a consulting company.

The decrease of unemployment numbers and the record rate of hiring do not tell the whole story. There is another dynamic in play that creates even more pressure for employers. The stock market has had a 16% return in the last four years, making it possible for a wave of executives, who previously wanted to delay retirement because of market losses, to reconsider retirement. Those who delayed retirement are now more likely to retire.

With more executives retiring (we are currently experiencing a six-year low in unemployment), there are more executive job openings and fewer unemployed people to fill these jobs. As a result, credit unions looking for talent are being forced to recruit from the pool of the currently-employed. This is compelling these credit unions to pay more to lure executives away from other employers, so those who want to keep their executives are forced to pay more to keep them.

So, how can you prevent your key executives from leaving?

1. Have a clear compensation philosophy. In these times, you may have to shift from a philosophy of “paying at market” to “paying above market” to defend against having your talent poached.

2. Be sure you have the most up-to-date base and incentive compensation data so you know what the market is offering and can pay people what they are worth. This is especially important if you have experienced high levels of asset growth over the last few years.

3. Calculate the costs of replacing an executive. Below are some hard cost estimates of losing an executive making $200,000.

  • Search fee ………………………… $40,000 (20% of pay)
  • Signing bonus ……………………  $20,000 (10%)
  • Relocation costs …………………. $25,000
  • Six month “ramp up” costs ……… $100,000 (50% of 1st year pay)
  • Total ……………………………….. $185,000

4. Recalibrate your merit structure for executives to ensure that executives can earn increases that will enable their base pay to keep pace with the market.

5. Last but not least, show appreciation for your key employees, especially your high performers. Pay being relatively equal, employees who feel valued and appreciated will stay with the credit union.

HR Performance Solutions, a division of CU Solutions Group serves over 1,400 clients in the areas of performance management and compensation. For more information, please e-mail us anytime at hrconsulting@hrperformancesolutions.net.

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July 13, 2015

DOL Releases Long Awaited FLSA Proposed Changes

Filed under: General HR Buzz9:00 am

Overtime

by Emily Sternberg, HR Consultant

 

On Tuesday June 30th, 2015, the DOL released its long anticipated changes to the Fair Labor Standards Act. If enacted, the new law proposes to raise the current exempt status salary threshold from the current $455 per week to $970 per week ($50,440 annually). It is estimated that this change will impact nearly 5 million white collar workers, making them eligible for overtime compensation for hours exceeding 40 in week.

Additional proposed changes include increasing the salary level for an employee to be considered highly compensated to the 90th percentile of weekly earnings, bringing the level to $122,148 annually. Most interesting in the proposal is to add a mechanism to ensure that the salary and compensation levels going forward will continue to provide a useful and effective test for measuring exemption status. This will allow for the minimum salary threshold to be updated in line with changes in averages salaries for white collar employees nationally.

What does this mean for employers?

Employers should begin to evaluate which exempt employees will be impacted by this proposed change and begin to create strategies for implementing and communicating the change to staff. This does not mean that all salary employees must be paid on an hourly basis, however it does mean that salaried employee must be paid at one-and-a-half times their base rate for any hours worked over 40 in a single week.

This proposed regulation will not take effect immediately, and the DOL is seeking comment on the proposed regulation. Employers will be notified of when the change is in effect and will most likely be given a reasonable window in which to implement the new regulation.

 

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July 6, 2015

Stop Dangling That Carrot: Other Ways to Motivate Your Employees

Filed under: General HR Buzz6:18 am

dangle carrot

In last week’s blog post, we took a look at employee engagement, and how management’s approach to engagement can effect job performance. In a perfect world, all of your credit union’s employees would be firing on all cylinders, all the time. But how realistic is that? Some people will be consistent top-performers, while others show up just for the paycheck. The trick is to take the paycheck people, and inspire them; inspire them on their own terms. This isn’t done by setting an all or nothing standard of excellence, but by individual goal-setting and creating a method of achievement.

Here are some key elements of goal-setting, and creating a means of success in any situation:

    • Motivation – The work that a person performs is a direct reflection of who they are as an individual – this is the psychological component of achievement. Motivation can be the hardest, or the easiest part, but is certainly the most foundational. Communicating a person’s role, why it is important and how it contributes to the larger picture can instill a sense of ownership over a process or procedure. If the situation allows, consider getting your employees involved in the decision-making process or, at the very least, allow them to voice their input.
    • SMART Goals – This was first developed by George Duran in the early ‘80s, and focuses on setting the right goals. According to the acronym, goals should be Specific, Measurable, Assignable, Realistic and Time-related. While the motivation component focuses primarily on the employee, this component is more driven by management. It’s important to allow the employee to contribute to the definition of achievement, but management has to make certain that the end product leads to a healthy bottom line.
    • Consistency – Anything worth doing, is worth doing right; and consistently! Upkeep is the duty of all parties involved and encompasses nearly all facets at your company. Motivation is a spark that needs to be maintained and fanned until it becomes a fire, and then fanned some more. Situations and projects need to be reassessed and readdressed to make sure that they are consistently on track. None of these things matter if they are introduced and executed only once. Engagement is an ongoing and dynamic process that needs to be sustained in order for it to translate into performance.
    • Leading It’s not always about where you are, but where you are going. Trajectory and momentum are crucial to the process, especially when goals are near completion. We should always keep an eye on the obstacles ahead so that when our goals are met, we’re ready to meet the next challenge.

It all boils down to the classic negative versus positive reinforcement argument. Negative reinforcement leads to avoidance – employees will typically do as much as necessary to avoid reproach, and stop right there. When your employees are driven by achievement, they are much more likely to go above and beyond. While simple recognition of good work can certainly help, the effects are often fleeting. For lasting performance and production, a true driving force, we need to engage and tap into something more constant. A structured means of achievement can be just that.

HR Performance Solutions is dedicated to providing human resource solutions that help businesses thrive. Click here to learn more about our performance driven products and services.


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