As performance and compensation specialists HRN Performance Solutions works with nearly 1000 clients annually to ensure they are paying their workforce according to current market rates for location, industry, employee position, responsibility and performance level. I know from firsthand experience how important it is to a company to manage workforce compensation cost, both from a fiduciary/competitive responsibility but also from a workforce retention standpoint. Companies don’t want to lose top performers. Why then do we continue to see that companies will invest in paying HR consultants to provide and analyze salary survey data and advise them on compensation matters but will be completely in the dark when it comes to basic payroll matters such as overtime or exempt vs. non-exempt classification.
For example, Corporate Counsel magazine recently reported that the number of wage and hour lawsuits filed against employers in federal court have increased for the fifth straight year. Claims are up 10% over a twelve month period measuring part of 2012 and three months of 2013. Typically, these are claims brought under the Fair Labor Standards Act (FLSA) involving misclassified employees seeking overtime pay, hourly workers claiming they were not paid for all hours worked, or restaurant workers claiming they were not properly paid under tip credit rules. Wage and hour claims can also result from state law issues. For example, a national coffee company recently had to pay $3 million for allegedly not providing California employees with required meal breaks and for issuing inaccurate wage statements.
I don’t mean to suggest that the ‘rules’ for payroll matters are easy to understand and apply. They vary by state and in some instances the language is difficult to understand and can be open to interpretation. However when headlines such as those made by the national coffee chain noted above become commonplace, as they are today, doesn’t it make sense to review all wage and hour pay policies for overtime, breaks, tips, position classification, etc. with an experienced legal advisor to avoid very expensive and negative litigious legal proceedings. Employees are much better informed today and jury’s are historically sympathetic to the worker vs. employer during periods of economic challenge and high unemployment. As the saying goes . . . an ounce of prevention . . .
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.
Okay, I really am trying to find good HR news to feature in my weekly HR Fact Friday posting. Sadly, it’s just not happening. Even with the statement earlier this week by a top U.S. government official that the recession is “probably” over I just can’t take the glass half full viewpoint. And I am in marketing. That’s my job! I am generally an optimistic person but when it comes to the economy, the only statistic that means anything to the millions of laid off workers across the country is the number of new jobs being added to payrolls. The recession will “probably” be over when hiring for new jobs exceeds layoffs. Projections are that that tipping point will not happen for quite some time. Case in point . . .
There are more employers who expect a decrease in their payrolls over the next 3 months than there are employers who expect an increase, according to a survey of 28,000 employers by Manpower, Inc.
While 12 percent of respondents said they expected to increase staff from October through December, 14 percent of employers said they expected to decrease payrolls. Sixty-nine percent of respondents said they expected no changes to their payrolls.
“The hiring intentions of U.S. companies continue to be sluggish,” said Jeff Joerres, chairman and CEO of Manpower. “While there are areas within the U.S. which are showing an uptick, we have yet to see the robust hiring intentions that would indicate a full labor market recovery.”
After seasonal adjustment, Manpower’s Net Employment Outlook for the fourth quarter of 2009 is -3%, the weakest in the history of the survey, which began in 1962.
Source: HR.BLR.com Sept. 10, 2009