Hot Topics in Total Rewards

  • 11 Jul 2018 10:04 AM | Bill Brewer (Administrator)

    Newborn Baby with Parents

    More employers are offering additional paid time off to moms and dads of all kinds.

    By Barbara Frankel and Audrey Goodson Kingo 

    Updated: June 29, 2018

    Proponents of paid leave, take heart: While we may not have a federal policy in place yet in the U.S., more and more private companies are picking up the slack and offering paid maternity leave to their employees.

    In fact, more than one in three U.S. employers offers paid maternity leave beyond the amount required by law, up from one in six in 2011, according to new data from the Society for Human Resource Management (SHRM), Bloomberg reports. And all 20 of the biggest companies in the U.S. offer at least some paid maternity leave.

    It's not just that more companies are offering the benefit for the first time—many are also expanding the plans they already had in place, sweetening the pot so their star employees don't quit.

    Since late 2017, an increasing number of private employers have expanded their paid maternity leave and paternity leave offerings, some doing so dramatically.

    Why? It makes business sense in a war for talent. According to SHRM, more than 700 of the 1,012 organizations surveyed said that increased benefit offerings in the last year were meant specifically to retain talent. And thus far, the federal government and all but six states aren’t providing new parents with the paid time off they need.

    The United States remains one of only four countries in the world that doesn’t offer paid maternity leave, although there currently are discussions before Congress on this. On January 1, New York joined three other states—CaliforniaNew Jersey and Rhode Island—in offering some form of paid family leave to most workers in the state and all kinds of new parents, from birth mothers to dads to families welcoming children through adoption, fostering and surrogacy. Since employees get paid through disability insurance, their checks come directly from the state, not from their employers. A few others, including Delaware and Indiana, have recently started offering paid parental leave to state employees only, but this doesn't apply to private-sector workers there.

    Another potential motivator for the increase in private companies offering paid parental leave: new corporate tax breaks. Businesses that offer at least two weeks of paid leave at a minimum of 50% salary to employees earning less than $72,000 can start receiving credits under President Trump’s newly signed plan. That’s on top of an across-the-board corporate tax cut, from 35 percent to 21 percent. Employees seeking leave might become the benefactors of those earnings and savings.

    Here’s an up-to-date list of which employers have stepped up their leave game in recent months:

    • Effective November 1, 2017, Cisco’s parental leave policy is gender-neutral and pays new parents for 13 weeks off, a big rise from the former four weeks just for new mothers. The change also includes unlimited PTO for appointments.

    • In September, DocuSign expanded paid parental leave to six months, effective February 1, 2018. The benefit is available to primary caregivers, whether through birth, surrogacy or adoption.

    • EcoLab announced an additional six weeks of 100 percent paid parental leave for all U.S. primary caregivers, effective January 1. The leave can be taken within the child’s first year of birth or adoption. Birth mom employees there will now have 12 paid weeks of leave.

    • IBM’s new policy, announced in October 2017, increases paid maternity leave to new birth mothers employed at the tech giant from a maximum of 14 weeks to 20 weeks. Fathers, partners and adoptive parents, meanwhile, receive 12 paid weeks off—double the previous benefit of six. Parents have up to a year to take the leave, with extra flexibility for scheduling the additional time off for employees whose children were born months ago. At the time of the announcement, Barbara Brickmeier, VP of Benefits, said, “It’s important for IBM to reinvent family-friendly programs to address the needs of today’s parents. It’s among the many reasons IBM attracts and retains top talent. We’ve been at this a very long time—we just made Working Mother magazine’s Best Companies list for the 32nd consecutive year—and we will continue to adapt programs for employees that are in step with the way families and work evolve.”

    • Investment bank Legg Mason in December said it will provide all U.S. employees 12 weeks’ pay for new parents, whether or not the person has a stay-at-home partner. The policy applies to birth and adoptive parents.

    • Lowe's announced on February 1 that it will offer 10 weeks' paid maternity leave and two weeks' paid parental leave, plus an adoption assistance benefit of up to $5,000. Previously, Lowe's offered no paid leave for new parents.

    • Lyft also recently changed its policy on parental leave to offer 18 weeks paid leave for full-time employees, regardless of gender. The policy also expands caregiver support leave from two weeks to 12 weeks. Previously, Lyft offered three months' paid leave to primary caregivers and four to six weeks' paid leave to secondary caregivers.

    • In November, Morgan Stanley announced it would allow primary caregivers to break the 16 weeks of paid parental leave into two-week sections after the first eight weeks. The company said it is offering paid leave of up to four weeks for non-primary caregivers after birth, adoption or foster placement. Previously, they had offered just one week to those parents.

    • In January 2018, New Seasons Market, a large chain of grocery stores on the West Coast, became one of the first in its industry in the U.S. to provide paid parental leave. They now offer four weeks of paid leave regardless of gender for birth, adoption, guardianship or foster placement of a child.

    • OpenTable increased parental leave from four to 10 weeks for employees in states that did not provide Paid Family Leave.

    • As of January 1, OppenheimerFunds has 16 weeks of paid leave for birth parents, up from 13 weeks, and eight weeks of paid leave for non-birth parents, up from five.

    • Rio Tinto, an international mining company, in September 2017 announced a new global minimum policy of 18 weeks’ paid parental leave at full pay for primary caregivers, regardless of gender, following the birth or adoption of a child. Secondary caregivers receive one week pay. Their U.S. employees were able to start taking advantage of this in October 2017.

    • In late January, Starbucks announced that effective October 1, the company will give six weeks' 100 percent paid leave for hourly workers (full- and part-time), regardless of gender. Previously, Starbucks offered 67 percent pay for birth mothers and adoptive parents but no paid leave for fathers. Salaried birth mothers receive 18 weeks' paid leave at 100 percent and salaried non-birth parents receive 12 weeks at full pay.

    • Effective January 1, TIAA changed their parental-leave policy to be gender-neutral. All full- and part-time employees now have access to 16 weeks of fully paid leave to be with their child after birth, adoption or after a child is placed with them for foster care. Before 2018, TIAA birth moms received 12 weeks of paid leave, while dads and adoptive parents received four weeks of paid leave.

    • Walmart announced in January that it will offer full-time U.S. employees 10 weeks’ paid maternity leave and six weeks’ paid parental leave. Previously, Wal-Mart gave salaried birth-mom employees six weeks’ partially paid leave while non-birthing employees got nothing.

    • Whirlpool announced that effective January 1, four weeks’ paid leave at 100 percent were added for new mothers, for a total of 12 weeks. New fathers now get four weeks at 100 percent pay, as do domestic partners and adoptive parents.

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    Source: Working Mother

  • 03 Jul 2018 10:19 AM | Bill Brewer (Administrator)


    Valerie Bolden-Barrett


    July 2, 2018

    Dive Brief:

    • Independence Day in the U.S. falls on a Wednesday this year, but that's not stopping workers from extending their July 4 celebrations by a day or two, an Office Pulse survey found. Half of the employees polled plan to take vacation time around July 4, causing concerns: about one in five managers queried by Office Pulse report feeling overwhelmed by the high volume of vacation requests.
    • Citing June 2018 statistics from AAA, Office Pulse said 46.9 million Americans will travel 50 or more miles away from home this Fourth of July, the highest number since AAA began tracking 18 years ago. Only 14% of professionals in the Office Pulse survey said they "resent their employer for their treatment of vacation time."
    • Other results in the Office Pulse survey showed that 19% of respondents who plan to return to work on Thursday say they'll be "extra tired" or "hungover," including 30% of millennial respondents and 10% of boomer respondents.

    Dive Insight:

    Major holidays are popular vacation times that can leave managers scrambling to find enough employees to cover work schedules. Encouraging workers to submit their vacation requests early using a first-come, first-served system for granting time off allows managers to plan work-schedule coverage ahead of time. Employees won't always be pleased with their vacation options, but having a fair system for granting requests is best practice.

    Holidays also create moments for employees to de-stress; one or two weeks off can even boost employee engagement, according to a new O.C. Tanner study. That said, many employees struggle to find time to take that time off; a Project: Time Off study shows that while employees are taking more vacations now than previously, many still leave unused days on the table. A recent CareerBuilder study shows that 61% of workers are burned out on their jobs, yet 33% don't take enough time off to decompress. Even among those in the CareerBuilder study who do take enough time off, one in three stay wired to the office while they're out.

    Many employees who don't take enough vacation time, or hardly any at all, say their organizational culture makes them feel guilty about taking time off from work. But the adverse impact of stress on people's health, productivity and healthcare costs should compel employers to encourage workers to take their vacations. The top five stress symptoms, according to CareerBuiler, are constant fatigue, sleeplessness, aches and pains, high anxiety, and weight gain, conditions that raise healthcare costs and drain productivity.

    Then there's the issue of actually getting away from the office — even when you're away from it. Employers can discourage workers from staying connected to the office while vacationing. They also can forbid workers from carrying over unused vacation from one year to the next.

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    Source: HR Dive

  • 22 Jun 2018 4:06 PM | Bill Brewer (Administrator)

    AUTHOR: Ryan Golden @RyanTGolden

    PUBLISHED: June 20, 2018

    CHICAGO — On day two of its largest-ever annual conference, the Society for Human Resources Management (SHRM) released its 2018 Employee Benefits Survey. Generally, the respondent group of 3,518 SHRM-member HR professionals has adopted a more diverse set of benefits offerings over the last five-year period, SHRM vice president of research Trent Burner said during a panel analyzing the results.

    Here are five key figures from the report to help HR understand the current benefits landscape, as indicated by respondents:


    Sixty-seven individual benefit offerings were measured by the survey and are being offered by a larger number of employers in 2018 compared to 2017 data. Moreover, 34% of those organizations surveyed increased their benefits offerings in the past year.

    But if costs are increasing across the board and HR is still being pushed to reduce business spend, what gives? "It's a lot more voluntary, a lot more choice — it's giving people a menu to select," Malinda Riley, senior principal at Korn Ferry Hay Group, said during the panel. "You need to offer that to get in the door but it's not necessarily saying pay them a lot more or subsidize it."


    Sixty-two percent of employers offer "health care services such as diagnosis, treatment or prescriptions provided by phone or video," which is up a whopping 28 percentage points from last year's survey when just of over a third (34%) of employers reported offering the same category of benefits.

    Burner said that a case study from his own experience working to implement virtual visits for a medium-sized employer last year demonstrated the utility of behavior data in addressing healthcare spending. For the cost of one physician visit, the employer could offer a virtual physician and a 90-day generic prescription.

    "If I can save the [employer] significant money by changing behavior," he said, "I can then take those savings and reinvest them into other, higher cost areas."


    More than two-thirds of organizations, or 70%, offer some form of telecommuting option to employees, be it on a full-time, part-time or ad/hoc basis, SHRM said. That's up from 62% in 2017 and up from 59% in 2014, according to past SHRM survey data.

    "Work environment has become such a conversation point," David Scott, executive vice president and CHRO at Dish Network, said during the panel. "We saw the trends years ago with 'hoteling' and working from home and we've seen a national gravitation to people having their own workspace."


    A total of six parental leave benefit categories saw increases in organizational offerings in 2018 compared to last year. Maternity is by far the most common, with 35% of respondents indicating that the benefit was offered at their organization, followed by paternity leave (29%), adoption leave (28%), parental leave (27%), foster child leave (21%) and surrogacy leave (12%). As an aside, paid leave benefits also rebounded to a level not seen since 2015 — 27% of employers.

    Parental leave has been a fairly active news-maker in the past year, including Estee Lauder's announcement that it would offer 20 weeks of paid parental leave for both male and female employees. Employers are also paying attention to the processing of returning employees back to work; PwC said it would allow new parents to work 60% of their normal schedule at 100% of their pay for four weeks after returning to work. PwC also extended its allotted paid parental leave to eight weeks per employees.

    Scott emphasized the importance of using annual or biannual employee surveys to gauge what employees want from their benefits, but also said that employers should not overreact to all of the headlines made by particularly generous leave offers.

    "It's a great headline, but not where the majority of organizations are," he said. "Really being clear on who you are and who you want to be [as] an employer, helps you make these decisions on a daily basis."


    Just 4% of respondents said they are offering a company-provided student loan repayment benefit. On the other hand, over one third (35%) are offering financial advice services online, and 34% are offering such sessions in a one-on-one type format.

    Repayment benefits are not tax-exempt for employers, something that a handful of legislators have sought to change, but there remains no change on the issue. That employers are taking a second look at financial wellness is no surprise, however, due to the role that it plays in managing stress and improving both engagement and retention.

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    Source: HR Dive

  • 14 Jun 2018 11:23 AM | Bill Brewer (Administrator)

    Image result for Discover card makes online college free for all workers


    June 13, 2018, 5:30 AM

    Discover is boosting the financial assistance it offers to call-center workers who want a college degree, becoming the latest company to enhance education benefits for employees.

    The financial services company will pay for a bachelor's degree in one of seven programs for its workers, it announced Tuesday. That aid, which covers all costs for the degree, will be available from a person's first day on the job, Discover said. 

    About 70 percent of the company's 7,000-plus call-center workers lack a four-year college degree, said Jon Kaplan, vice president of training and development at Discover. (The company has about 16,000 workers in all.)

    It's the latest sign of companies sweetening their perks to retain workers in an increasingly competitive labor market. Walmart, the nation's biggest private employer, announced last month that it was making heavily subsidized college degrees available to all its workers. In March, Lowe's said it would contribute up to $2,500 for its employees to get educated in the skilled trades. And Lyft started offering education discounts to its drivers in December. 

    "Especially with the student debt crisis, people feel like they can't embark on an education on their own," said Rachel Carlson, CEO at Guild Education, which is partnering with Discover to manage the education benefits. "Coupled with the tight job market, it suddenly becomes a very obvious benefit for employers to offer."

    Discover's announcement marks the first time a financial services company has offered this benefit to lower-level workers, said Carlson. "Plenty will pay for their New York corporate employees to get their MBA, but not many will do that for their frontline workers," she said.

    Workers can choose from the University of Florida (via UF Online), Wilmington University or Brandman University for their degrees. Covered programs include computer science, cybersecurity and organizational management, as well as four different business tracks.

    Tuition assistance ranks high among the benefits workers desire. It outranks parental leave and child-care assistance, according to a recent Harvard Business School study.

    For companies looking to improve employee compensation, tuition assistance presents a cheaper option than raising people's pay. Under the tax code, businesses can deduct $5,250 a year in education costs, a benefit that's also tax-free to the worker.

    For Discover, the main benefit is better employee retention, given that turnover of workers is one of the biggest costs businesses face. 

    "We found that every dollar that Discover spent on tuition reimbursement repaid itself and added another $1.44 to the bottom line," Kaplan said.

    He added, "The intent is to be accessible to the most number of people possible."

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  • 11 Jun 2018 3:49 PM | Bill Brewer (Administrator)


    Valerie Bolden-Barrett


    June 11, 2018

    Dive Brief:

    • Employees who take a week or more of vacation time are more engaged than those who don't, a new O.C. Tanner survey found. The poll of more than 1,000 workers across the U.S. showed that for those who take sufficient vacation time, there is a positive correlation between work ethic and employee engagement.
    • Among employees who take a week or more of vacation, 70% say they're driven to contribute to their organization's success, as opposed to the 55% who don't regularly take a week of vacation; 65% say they feel strongly about working for their organization a year from now, compared to 51% who don't take a week off in the summer; and 63% say they have a sense of belonging at their company, compared to 43% percent of respondents who skip at least a week of vacation time.
    • Although workplaces feel the strain of worker shortages due to summer vacations, encouraging employees to take sufficient time off can pay off in engagement, retention and productivity, O.C. Tanner said. 

    Dive Insight:

    Many employees have trouble taking their allotted vacation because they feel guilty about taking time off, think they're the only one who can do their job or believe their company's culture discourages taking full vacation time. But there are consequences for skipping vacations; for example, a 2017 CareerBuilder study revealed that people who don't take enough time off are more stressed, which can lead to health problems, absenteeism and lower productivity.

    Burned out employees aren't likely to feel engaged or committed to their job, so HR may want to create a clear vacation policy — and instill a vacation-friendly culture — to encourage employees to take time off. Some have toyed with making vacation mandatory, while others have tried adopting an "unlimited" (or, at least, untracked) vacation system to encourage people to take the time they need. Some also prohibit employees from carrying vacation time over into a subsequent year, a method that can keep workers from leaving vacation days "on the table."

    Source: HRDive

  • 01 Jun 2018 11:25 AM | Bill Brewer (Administrator)

    Related image


    Every year, the IRS announces the annual limits for various types of employee benefits, such as Health Savings Accounts (HSAs). The IRS has already changed the 2018 annual limits for HSAs twice this year, which may have caused some confusion.

    As background, amounts contributed to HSAs will not be subject to federal income tax up to the annual limit. Employees and employers can only contribute amounts for employees who are enrolled in a high deductible health plan (HDHP) and who do not have non-HDHP health coverage. If an employee withdraws amounts from the HSA and does not use them to pay for qualified medical expenses, the employee may incur a tax penalty. 

    Unlike flexible savings accounts, the contributed amounts cannot be forfeited at the end of the plan year. Instead, they are placed into a savings account that employees can use even after they terminate employment, making them an attractive benefit to employees.

    Recent HSA Limit Levels

    For 2017, the annual limit for self-only HSA coverage was $3,400 and the annual limit for family coverage was $6,750. In May 2017, the IRS announced the 2018 limits: individuals with self-only coverage would be able to contribute up to $3,450, and individuals with family coverage would be able to contribute up to $6,900 to their HSAs.

    By January 2018, employers and service providers had programmed their systems to reflect the new 2018 limits, and, starting with the first payroll period in 2018, employees began to contribute to their HSAs. But in March 2018, the IRS announced a mid-year change. The IRS announced that while it would not change the self-only coverage limit, it would be reducing the family contribution limit by $50 to $6,850.

    At the same time, the IRS also announced that it would be reducing the annual limits for adoption assistance programs. Originally, the maximum exclusion per adoption was set at $13,840. The IRS reduced this amount by $30 to $13,810. With regard to the adjusted gross income levels, the phase-out was slated to begin at $207,580 and be completed at $247,580. These figures were each reduced by $440, so that the phase out would begin at $207,140 and be completed at $247,140.

    IRS Responds To Complaints

    Some stakeholders complained about the mid-year changes; in particular, the reduction in the annual HSA limits received the brunt of criticism. They informed the IRS that some employees might have already contributed the maximum $6,900 and would have to seek a return of an excess contribution or be subject to excise taxes. Additionally, many employees who aim to contribute the maximum amount to their HSAs typically divide the annual maximum by the number of payroll periods so their paychecks are steady throughout the year. These employees would need to adjust their contributions to adapt to the changes, which might prove troublesome.

    After receiving these complaints, the IRS released yet another Revenue Procedure in May 2018 increasing the family contribution limit back to $6,900. As such, the current HSA limits are $3,450 for self-only, and $6,900 for family. Interestingly, the IRS has not changed the adoption assistance programs limits.

    Problems May Still Exist

    While many stakeholders may be relieved that the limits were increased back to $6,900, there may still be practical implications for employers who offer HSAs to their employees. Before the May Revenue Procedure, some employers may have already distributed any amounts in excess of $6,850 to employees. If your organization did so, you may want to notify employees that it is possible for them to contribute up to $6,900, and, if they would like to contribute additional amounts, they may do so (up to the limit, of course).

    Employees also may have questions regarding how the excess distribution will be treated. The IRS regulations and the May Revenue Procedure make clear that these amounts will generally not be included in the employee’s gross income, and will not be subject to the 20 percent excise tax. Additionally, since the limits changed twice, some employees may need additional assistance to calculate how much they should contribute for the remainder of the year to avoid exceeding the revised annual limits.

    For more information, contact the author at or 949.798.2162.

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    Source: Fisher Phillips!3265!bGxleWRhQG9jY291cnRzLm9yZw
  • 01 Jun 2018 11:21 AM | Bill Brewer (Administrator)

    Image result for employee benefits6.1.18

    As health care costs increase, employers have been exploring new types of health coverage options, one of which is reference-based pricing (RBP). This method typically does not involve a traditional insurance carrier or provider network negotiating covered services for the plan. Instead, employers will set a fixed limit on the amount a plan will pay for certain healthcare services. 

    How Does Reference-Based Pricing Work?

    The fixed limit is often based upon a percentage or multiplier of what Medicare would pay the provider. The question then becomes whether the healthcare provider will be willing to accept these fixed limits, which can be much less than what a traditional insurance carrier or provider network would pay. Here is an illustrative example:

    Let’s say that a participant needs a certain kind of surgery, and a hospital would expect to be paid $2,500 for it even if some insurance carriers may have contracted to pay less than that. The Medicare rate is $500, and the reference-based pricing plan’s fixed limit is 200 percent of the Medicare price, which comes out to $1,000. 

    With RBP, the hospital may perform the service and expect to receive $2,500. Once the hospital is only paid $1,000 from the employer, it may seek the $1,500 balance from the patient. This concept is referred to as “balance billing.” The patient, the employer, or a third-party administrator may then help negotiate down the amount of the balance billing. Of course, there are varying degrees of success for these negotiations.

    From the employee’s perspective, however, this situation may not be ideal—they may feel uncertain about the amount they will end up paying out of pocket for a procedure, and figuring out the cost ahead of time may require significant research. For RBPs to have cost savings, employees must be well-informed consumers.

    RBP And The Affordable Care Act  

    The Affordable Care Act (ACA) limits the amount of an individual’s out-of-pocket expenses for in-network health care costs. RBPs do not have traditional networks, so government agencies issued guidance on the subject to ensure employers did not use RBPs to circumvent out-of-pocket maximums. 

    The agencies agreed that, in general, a plan could treat any health care provider who accepts RBP negotiated prices as an in-network provider, and all other healthcare providers can be considered out-of-network, as long as participants have access to quality healthcare. When determining whether quality healthcare is available, the agencies will evaluate:

    • The types of services that are subject to RBPs. For example, RBP will not typically work for emergency services since the employee does not have an opportunity to select or shop for a service provider.
    • Whether the plan offers reasonable access to an adequate number of providers. This can be a particular challenge in rural areas where provider options may be limited.
    • Whether the providers meet reasonable quality standards.
    • Whether the plan has an easily accessible exceptions process for participants who have special circumstances.
    • Whether the plan has adequately disclosed information to participants regarding the RBP, such as providing a list of services and pricing.

    RBP Litigation

    While there certainly have been payment disputes between employers, participants and healthcare providers over RBP, there has been little litigation over the matter. Disagreements over these issues are typically resolved via negotiation, and employers will often cover any balance billing. There is, however, a lawsuit before a federal appeals court over a reference-based pricing dispute. If the hospital prevails, RBP may become more difficult to implement because providers may start to seek the entirety of the balance billing, rather than engage in extensive negotiations.

    In the case at issue, the employer used an RBP and did not have a negotiated contract with the hospital. The employee went to the hospital for a heart attack and received a bill of nearly $100,000. The employee and the plan paid approximately 25 percent of the bill and encouraged the hospital to accept the payment in full, in part, because the hospital had accepted that amount as full payment for other uninsured patients.  The hospital, however, continued to seek payment for the balance. The hospital has argued that the employee signed an agreement consenting to the full price of the services, so the patient should be contractually required to pay the full amount despite the fact that the hospital accepted lesser amounts from other uninsured patients. 


    Regardless of the outcome of this case, employers who are intrigued by reference-based pricing should do their research to learn more about how RBP will work for their employees. Employers should pay particular attention to employee education and communications regarding RBP, since a surprise six-figure balance bill could quickly become a significant employee relations issue.

    For more information, contact the author at or 949.798.2162. 

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    Source: Fisher Phillips!3265!bGxleWRhQG9jY291cnRzLm9yZw

  • 30 May 2018 9:05 PM | Bill Brewer (Administrator)

    Keeping a motivated workforce requires meaningful rewards and career opportunities

    By Stephen Miller, CEBS
    May 31, 2018

    Forward-thinking employers are treating their rewards strategies as integral to their staffing and performance management efforts—and viewing their rewards as an investment in workers' productivity and engagement—especially as organizations face greater competition for talent.

    At WorldatWork's 2018 Total Rewards Conference, held recently near Dallas, many speakers encouraged using total rewards—compensation, benefits, work-life quality and career development—to enhance business success.

    "Productivity increases have slowed to a crawl since the 2008 recession and engagement has barely moved up," said Josh Bersin, founder and principal of Bersin by Deloitte, a unit of Deloitte Consulting, during a keynote address. "But a set of companies have figured out how to engage people in this environment," he noted. These organizations have adopted "a culture of taking care of people," assessing the needs of their workforce based on factors such as age, education, demographics and job level, and then offering segmented benefits to meet these needs.

    For those struggling with making ends meet, for instance, financial wellness education comes into play, while Millennial women, in particular, seek generous maternity leave benefits.

    A "new generation of rewards" emphasizes well-being by offering benefits that address financial wellness, fitness, stress relief, mindfulness and work-life flexibility, Bersin said. Highly valued rewards can become competitive differentiators that make an employer stand out, and these can be highlighted as the employer's "rewards brand."

    Since organizations have different aims and goals, these, too, should be reflected in the rewards strategy. If retaining experienced employees is a priority, consider letting older employees work fewer hours, perhaps with lower pay, and become "champions" who are a resource for younger employees, Bersin advised. Growing organizations that need to bring in new talent may prioritize student-debt repayment assistance.

    Compensation and Business Strategy

    Keith Reynolds, vice president of global compensation at Pepsico, encouraged thinking of total rewards as it relates to business and talent strategies by asking, "How do we create a compensation and benefits programs that can help us to attract the right talent, retain that talent, and help to engage that talent now and in the future?"

    As an example, measuring the effectiveness of compensation designs "is paramount to the work that we do, especially in our variable compensation plans," Reynolds said. "Our job is to create and design compensation programs that support business strategy. If we don't take the time to pause, look back and measure how well our overall earnings achievement is correlated with business achievement, we'll never understand if our compensation design is effective and where we should make modifications."

    Career Development as a Benefit

    A vital component of rewards strategy, Bersin said, is adopting "a new way of thinking about careers" by helping employees shift roles within a company, even if this doesn't involve a promotion, to keep them engaged. "Thriving companies are social enterprises that believe in employees' growth and development," he said.

    He gave the example of Unilever, a company that encourages employees to create "purpose statements" envisioning what they want from the company, and then helps them plan a path to achieve these aims.

    Picking up on Bersin's theme, "redirecting, re-engaging and differentially rewarding employees can drive up business results," said Kim Scott, a senior professional services consultant at pay consultancy "Retention can't be a passive activity. Make transfers between departments part of your career-development program" by encouraging managers to redirect employees into new roles, even if those roles are outside their department. 

    Managers are often unenthused about talent moving away from their team, even if these workers would be re-energized by the change and the organization would benefit. HR, with the support of senior management, can counter this reluctance through training and discussions, with recognition and rewards given to managers that help their team members shift to a new role.

    Reynolds said that when managers at Pepsico have conversations with employees about their future, the focus usually isn't on pay. "It's about learning and development, career progression, and whether you can explain to employees what their career will look like the next one, two and three steps out."

    Twice a year, Pepsico conducts a pulse survey that asks employees to rate their confidence in their ability to achieve career objectives and asks what is impeding their ability to advance, "which shows where more opportunities for training and development should be directed," Reynolds said.

    Recently, Pepsico split many salary-range broadbands at the director level and above into separate bands so employees could more easily advance to a higher-level position, Reynolds noted. In broadbanding, organizations have fewer but wider bands to allow employees' pay to rise significantly without a promotion, but employees value promotions even without pay increases, Pepsico and other employers have found.

    Present the Full Picture

    "Reinforce your story about market competitiveness through total rewards statements," recommended Tom McMullen, senior client partner at pay consultancy Korn Ferry Hay Group. He noted a trend toward using personalized total rewards statements "not just for your current employees but also for candidates." In addition to the offer letter, for instance, a total rewards statement "highlights the full value of rewards within the organization."

    Along with pay and traditional benefits, the statements should list programs such as learning and development and career-advancement opportunities, he advised.

    While in the past it may have been challenging for small companies to produce individualized total rewards statements, "the technology barriers have largely gone way," McMullen said.

    Added Reynolds, "If you're not doing this, you're missing a huge opportunity to foster employee engagement."

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    Source: Society for Human Resource Management (SHRM)

  • 24 May 2018 11:55 AM | Bill Brewer (Administrator)

    Small and midsize employers favor simpler incentives that are easily explained

    By Stephen Miller, CEBS

    New survey findings confirm what many U.S. workers have already learned: As annual salary raises have held steady at around 3 percent, annual bonuses tied to performance have become a bigger part of compensation.

    While use of cash-based short-term incentives (STIs) is well-documented at large, publicly traded corporations, it is also becoming a common way to motivate and reward employees at private companies, especially at small and midsize firms as well as at nonprofit employers, new research shows.

    WorldatWork, an association of total rewards professionals, recently surveyed incentive pay plans at privately held companies (those without publicly traded stock) and noted the findings in the report Incentive Pay Practices: Privately Held Companies. A companion report focused on nonprofit organizations and government agencies: Incentive Pay Practices: Nonprofit/Government. Both studies draw on polling of WorldatWork members (total rewards professionals mostly at large U.S. employers) in December 2017. Approximately 215 private, for-profit companies responded to the survey, as did more than 110 nonprofit and government organizations.

    Private Companies' Incentives

    To put the number of companies using short-term incentives in perspective, consider these numbers: There are more than 6 million privately held companies in the U.S. and more than 1.5 million nonprofit organizations. Fewer than 4,000 U.S. companies are publicly traded, according to government statistics.

    "Spending on short-term incentives increased modestly at private companies from 2015 to 2017, which reflects the tight labor market and competition for talent," said Bonnie Schindler, partner and co-founder of Vivient Consulting, which partnered with WorldatWork on the research.

    In 2017 versus 2015, among private companies responding to the WorldatWork survey:

    • 96 percent had STI programs, up from 94 percent.
    • Spending on short-term incentives increased to a median of 6 percent of operating profits, up from 5 percent.
    • About 66 percent of nonexempt employees were eligible for annual incentives, up from 52 percent.

    Nineteen percent of private companies used team or group incentive plans in 2017, a drop from 22 percent in 2015, perhaps in part because of concerns that such payments benefited workers who may not have put in as much effort as their colleagues.

    "So-called free-riders can definitely be a problem with team/group incentives," Schindler said. "We did see an increase in spot awards and discretionary awards," which focus on individual efforts, she noted.

    Most private-company respondents were cautious about giving managers discretion in granting annual incentive-plan awards, noting that the rationale for discretion was often poorly communicated, and its use tended to undermine the fairness and consistency of award payouts.

    STI Pay-01.jpg

    As used in the chart:

    • Annual incentive plans, by far the most commonly awarded short-term incentive, are given to individuals based on achieving results identified at the beginning of the performance cycle.
    • In discretionary bonus plans, management determines the size of the bonus pool, but these plans have no predetermined formula, and awards are not guaranteed.
    • Spot awards recognize special contributions as they occur for a specific project or task.
    • Profit sharing plans provide for employee participation in an organization's profits.
    • Team/small-group incentives focus on the performance of a work team.

    While long-term incentives based on meeting performance goals over a multiyear period are a common component of executive pay, they remain seldom used for nonexecutive employees. STI programs, however, are becoming more popular and are used for employees at all levels of an organization.

    STI Pay-02.jpg

    Median Target Annual Incentive Plan Awards

    At private companies, the median annual incentive plan award level for CEOs is 80 percent of salary, with targets decreasing by about half for each lower position level in the organization. 


    Incentive Plan Awards as a Percent of Salary



    Other executives/officers




    Exempt salaried


    Nonexempt salaried and hourly


    Source: WorldatWork, 2018 Incentive Pay Practices: Privately Held Companies survey report.

    Despite the growth of short-term incentives, most private-company respondents consider their annual incentive plans to be only moderately effective, with plan communication, the level of discretion, goal setting and the risk/reward trade-off noted as areas for improvement.

    Simpler Incentives at Smaller Firms

    "There continues to be focus on reducing the complexity of short-term incentive design and establishing a more rigorous process for setting company and individual performance goals," a recent report on executive compensation by consultancy Willis Towers Watson stated. Other research shows simplicity is especially valued when implementing broad-based employee incentives, particularly at smaller organizations.

    "Most small and midsize companies lack a sophisticated compensation team to design, monitor and communicate complex incentive plans," said Michele Kvintus, client manager at PayScale, a Seattle-based pay consultancy.

    Smaller organizations do less of every kind of variable pay except for profit sharing, where small and midsize organizations beat out their larger counterparts, PayScale's 2018 Variable Pay Playbook shows. The report draws on the firm's survey of 7,100 pay managers at companies of all sizes, conducted in November and December last year.

    STI Pay-03.jpg

    "Profit sharing incentive plans that deliver cash to employees based on company profitability are terrific for small and midsize companies because they don't require intensive design work. It's also easy to explain a profit sharing incentive plan to employees," Kvintus said.

    These programs "provide a look back after the close of a business year and foster a 'we grow, you share in it' perspective," she added. "For small to midsize companies, a business-owner mentality among employees is frequently a key factor" for engagement.

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    Source: Society for Human Resource Management (SHRM)

  • 24 May 2018 11:40 AM | Bill Brewer (Administrator)

    Inquiry restrictions vary by state and municipality

    By Melissa A. Silver, J.D., XpertHR Legal Editor
    May 24, 2018

    From Hollywood to the White House, the issue of the gender wage gap is a hot topic. Although the Equal Pay Act has been around for decades, pay disparities persist. As a result, there is a renewed focus on equal pay on the state and local level, which has led to new laws and regulations promoting fair pay. 

    One way in which some states and municipalities are seeking to close the wage gap is by enacting laws banning or restricting salary history questions during the hiring process. Connecticut became the latest state to ban such inquiries when Gov. Dannel Malloy signed a pay equity law on May 22.

    According to the National Partnership for Women & Families, women in Oregon earn just 81 cents for every dollar paid to men. Oregon is another state that has passed a salary-history inquiry ban to create a path toward closing the gap between the wages of women and men.

    In those locations, asking, "What's your current salary?" has been part and parcel of the hiring process for as long as employers have been hiring employees but may no longer be permitted.

    The reasoning behind these laws is that if an employer relies on an applicant's salary history to determine compensation, it perpetuates the gender wage gap. These laws therefore restrict an employer's ability to seek salary history information in an effort to eliminate the differences between what men and women are paid for either equal or comparable work. A job applicant's skills and qualifications should determine salary and not compensation history.

    With the new changes in legislation banning salary history questions, employers need to be aware of the laws in the states and municipalities where their employees are located.

    At least 12 jurisdictions have passed laws banning employers from asking job applicants about their past or current salary, and this trend will likely continue.

    States with salary-history inquiry bans thus far include:

    • California.
    • Connecticut (effective Jan. 1, 2019).
    • Delaware.
    • Massachusetts (effective July 1).
    • Oregon.
    • Vermont (effective July 1).

    In addition, Albany County, N.Y.; New York City; Westchester County, N.Y. (effective July 9); Puerto Rico; and San Francisco (effective July 1) have enacted salary inquiry laws. Philadelphia's ban was slated to take effect in 2017, but a federal judge halted part of the ordinance, finding that a law prohibiting employers from asking candidates to reveal their past salaries violates the First Amendment's free-speech clause. However, the judge said that the city is allowed to stop employers from using past salary information to set pay rates.

    Some jurisdictions, such as New Jersey, New York and New Orleans, prohibit certain public employers from asking about salary history.

    While all of these laws aim to eliminate the pay gap between men and women for performing the same or comparable work, each law places different restrictions on employers. For example, in Delaware, an employer may seek an applicant's salary information for the sole purpose of confirming it, only after it extends a job offer with the terms of compensation that the applicant has accepted. Some laws, such as in San Francisco, permit an employer to consider or verify an applicant's salary history if he or she voluntarily discloses it without prompting or provides written authorization.

    Although there are variations among these salary-history inquiry laws, in most cases, an employer may ask a job applicant about his or her salary expectations. According to Cheryl Pinarchick, an attorney with Fisher Phillips in Boston, asking salary expectations is within bounds. "It's a good way to figure out if you should continue a conversation with an applicant. Are they in the right ballpark for what the job is going to pay?"

    Further, objective measures of productivity, such as sales history or billable hours, could be a legal justification to pay people differently. In fact, the New York City law excludes an objective measure of productivity, such as revenue sales or other production reports from the definition of salary history.

    However, employers should use caution with respect to searching public records for a job applicant's salary history information. Whether it is allowed, Pinarchick said, "all depends on what state you're in and what state they're in, or what city you're in and what city they're in."

    Regardless, Pinarchick recommends that employers avoid doing so. Even if an employer is not prohibited from looking it up, an employer may or may not be able to use that information under the broader pay equity law. An applicant could come back and claim the employer did not hire him or her or that the applicant is paid less because of that salary information, which may be illegal under the law.

    It seems likely that laws banning salary history inquiries will continue to gain traction across the country. Employers should therefore ensure compliance with these laws through smart planning by training managers, supervisors and HR personnel involved in the hiring process, particularly those individuals conducting interviews, and update job applications and other documents that seek this information. With more salary-history inquiry bans on the horizon, employers should also be vigilant in tracking these developments to ensure compliance.

    Melissa A. Silver, J.D., is a legal editor with XpertHR.

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    Source: Society for Human Resource Management (SHRM)

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