Hot Topics in Total Rewards

  • 22 Mar 2019 12:09 PM | Bill Brewer (Administrator)

    The simple pension plan that started in 1636 took centuries to evolve into free snacks and ping-pong tables.


    The promise of opportunities to bring your dog to work or to take a break between meetings by playing ping-pong or hopping aboard a Peloton treadmill has become somewhat common in workplaces across the country. Even coworking spaces like Luminary which are filled with freelancers and startup founders, offer perks like free wine.

    With unemployment hovering at historic lows, employers are beefing up their benefits and perks to attract candidates who aren’t necessarily actively looking for work but could be persuaded to make the leap for the right package. A survey from the Society for Human Resource Management (SHRM) revealed that the vast majority (92%) of employees said benefits are important to their overall job satisfaction. Nearly a third (29%) of employees reported that their overall benefits package was a top reason to look for a position outside of their current organization and 32% of employees who said they wouldn’t look cited their overall benefits package as a top reason as well.

    From the standard benefits like health insurance and 401K to premium perks like student loan repayment and maternity concierge services, employees have come to expect benefits as part of their overall compensation from their employers. But it wasn’t always this way.


    The very first benefit recorded for workers happened during colonial times. In 1636, Plymouth (now part of Massachusetts) began paying a pension to colonists who were disabled during the fight for independence. The nascent government in 1789 passed a federal pension plan that would pay benefits to veterans of the Revolutionary War. The first private pension plan wouldn’t appear until 1875 when American Express offered employees who retired from the company 50% of the salary they earned in their final decade with them (but not to exceed $500).


    As the country grew, so did the need for skilled workers in manufacturing, which meant that individual employers needed a way to attract talent and keep them loyal. So in 1797, Albert Gallatin, the Secretary of the Treasury under Presidents Jefferson and Madison, who also happened to be a glassworks mogul, crafted the nation’s first profit-sharing plan for his employees.

    The profit-sharing plans we know today continued to evolve in the 1800s, when the likes of General Foods and Pillsbury gave part of their profits to employees as a bonus. Companies used profit sharing during World War II to give their workers additional compensation without having to raise their wages.


    Healthcare as a benefit didn’t appear until 1877 when the Granite Cutters Union started the first plan for workers who got sick or injured on the job. However, retailer Montgomery Ward was the first to adopt a group accident and sickness policy for its employees, around 1910.


    Flash-forwarding to the mid-1940s, Kodak and Dupont established alcohol recovery programs, which were the precursors to the modern Employee Assistance Program. And by 1940, vacation coverage for hourly employees had grown to 50%. A 1943 report submitted to then Secretary of Labor Frances Perkins revealed that nearly 8 million workers, or 60% of those under union agreements, were entitled to paid vacation, up from just 2 million in 1940.


    IBM started the first elder-care program in 1987 and in 1991 Starbucks became the first private employer to offer stock options to eligible full- and part-time employees.

    From here benefits and perks expand to include many of the ones we are familiar with now. And the menu just keeps growing. In 1996, the SHRM tracked 60 perks and benefits. In 2018 that number had swelled to over 300.

    Among them, paid parental leave has been both a hot-button issue for equity between men and women in the workplace as well as a tool employers have used to lure talent–particularly in tech jobs. And paid leave for caregivers is becoming a more urgent need as gen Xers who are mostly in middle management and executive positions toggle between caring for children and elder and sick family members.

    Employers looking to build loyal teams have taken a less practical approach to benefits in recent years. Instead, they’ve built company cultures around group wellness, unlimited vacation policies, and even more esoteric perks such as pet cloning.

    The bottom line is that benefits and perks affect the bottom line. The most recent Bureau of Labor Statistics data shows that in 2015, employers factored in 31.3% of their payroll for benefits as compared to 20 years prior, when 71.4% was earmarked for salaries, and only 28.6% went to benefits.

    2017 SHRM survey found that organizations leveraging benefits to recruit and retain employees are nearly twice as likely to have more satisfied employees and to report better business performance. As a previous Fast Company report revealed, companies that invested in benefits beyond healthcare and vacation saw a boost in retention rates–and an increase in diversity. As Patricia Clarke, chief talent officer at Havas, told us, “It’s an investment in these people to continue to grow and be amazing contributors.”

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    Source: Fast Company

  • 18 Mar 2019 1:37 PM | Bill Brewer (Administrator)


    Ryan Golden@RyanTGolden


    March 18, 2019

    Dive Brief:

    • Employee participation in an employer's optional volunteer program is not considered hours worked under the Fair Labor Standards Act (FLSA) — even if the employer awards a bonus to certain participating employees — provided the program is charitable and voluntary, the U.S. Department of Labor (DOL) said in an opinion letter Thursday.
    • The letter answered questions about an employer's optional community service program in which workers perform activities either sponsored by the employer or chosen by employee. The employer doesn't require employees to participate in the program, DOL said, nor does it control their participation. As part of the program, the employer "rewards the group of employees with the greatest community impact with a monetary reward." Workers also are compensated for time spent volunteering during work hours or when they're required to be on the employer's premises.
    • DOL also said the FLSA permits an employer to use an employee's time spent volunteering as a factor when calculating a bonus without needing to treat volunteer time as hours worked, so long as the volunteering is optional and doesn't have an adverse impact on the employee's working conditions or employment prospects. On a separate point, the agency approved the employer's use of a mobile device app to track participating employees' volunteering time for the purpose of determining which team would win the monetary award. But were the employer to use the app to direct or control worker's volunteer activities, time spent following such instructions would count as hours worked under FLSA, the agency noted.
    Sign Up

    Dive Insight:

    Employers might need to exercise caution when launching volunteer programs. DOL makes clear that the FLSA does not permit employees to volunteer services to for-profit employers but, at the same, time the agency stated in its March 14 letter that "Congress did not intend for FLSA 'to discourage or impede volunteer activities,'" and also cited previous agency opinion letters in explaining that an employer "may notify employees of volunteer activities and ask for assistance with them as long as there are 'no ramifications if an employee chooses not to participate.'"

    Volunteerism has been linked to larger corporate initiatives to improve brand image as part of corporate social responsibility efforts. By offering paid volunteer hours or otherwise encouraging employee-led projects in local communities, employers may be able to create team-building opportunities and improve engagement. Many have joined in on the trend and encouraged volunteerism through such programs, as did Starbuckswhen it launched a pilot program in 2018 allowing select employees to split their time working at a community organization while still getting paid.

    DOL's wage and hour opinion letters can serve as a partial defense for other employers in the event of litigation — provided employers rely on the letters in good faith — but that defense can be an imperfect one due in part to the letters' fact-specific nature, experts previously told HR Dive.

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    Source: HR Dive

  • 05 Mar 2019 7:00 AM | Bill Brewer (Administrator)


    Jennifer Carsen


    March 4, 2019

    Accurate timekeeping starts with policies and training, experts say. If you don't have that, tech can't help.

    You’d notice if an employee stole vast quantities of office supplies. Or the company car. But time theft is different.

    It’s pernicious because it can be just few minutes here and there; but multiplied over years and across an entire workforce, it can add up to a big chunk of an employer's payroll — on which it's getting zero ROI. And it's maddeningly difficult to pin down who’s responsible and what the actual damage is. Is there a solution that curbs the problem without making your employees feel like they’re in an Orwellian monitoring nightmare?

    How time theft happens

    Time theft can occur in a variety of ways, especially now that employees are both highly connected and often working away from a central location. A few minutes spent checking Facebook or shopping on Amazon can easily add up to hours of unproductive time. Or perhaps an employee who’s "working from home" is doing no such thing. And then there's the old-school problems, from innocent but lengthy water cooler chit-chat sessions to deliberate "buddy punching" at the time clock.

    With remote work, it’s a lot harder to control what employees are doing and know whether they’re being productive, according to attorney Michael Puma, a partner at Morgan, Lewis & Bockius, LLP. And employees themselves may not fully grasp the extent of the problem.

    "Employees don’t always understand why it’s such a big deal — a few minutes here or there, we’re human," said Gretchen Van Vlymen, vice president of HR at StratEx, an HR service company. "But on a larger scale, it adds up and costs [employers] money. It seems dramatic to call it 'theft,' but it really is because we’re paying you for every single minute."

    Can technology help?

    Puma said he's seen clients turn to advanced time-tracking tools. "You can see what employees are doing — are they reviewing files or sending emails?"

    Deputy, a workforce management software platform, still sees employers using systems like paper time cards but many are using technology alone to reduce time theft. According to the company's VP of business development, Derek Jones, Deputy sees a payroll contraction of about 4% when its solutions are implemented "probably due to a reduction in buddy clocking."

    StratEx works primarily with employers in the restaurant and hospitality industry that have large nonexempt hourly workforces and uses technology that takes a photo of each employee during his or her time punch. While there are occasionally some issues, Van Vlymen said, especially if employees are moving quickly, the system generally works well: "It’s hard to fake your face."

    It's hard for employers to spot time theft without some kind of technology, Van Vlymen said, but systems can be imperfect. Biometrics, for example, can be expensive and lead to backups at the time clock. "There are also compliance issues relating to biometric punch-in/punch-out procedures," she said.

    A potentially greater concern

    Puma said while employee time theft can be a concern for employers, class actions for off-the-clock work should be a bigger worry. For a while, he said, plaintiffs' lawyers were focusing on employee misclassification. Now, they have "moved on to a second round," shifting to suits alleging that employees aren't being paid for all hours worked. "Every single day I see class and collective actions for unpaid overtime all around the country, and that may not even include similar state actions."

    Everyone is under increased time pressures, he said, and supervisors are expected to keep overtime expenses down. Employers, therefore, should be careful that time is not being underreported. "You need a good policy that reported work hours must be accurate; you don’t want over- or under-reporting."

    To achieve this, it's important to be clear on what "working" means, Puma said. For example, if an employee is at home planning for the day, emailing with a supervisor and going over action items, that time may need to be compensated. Work must be compensated even if it’s outside scheduled hours or not asked for or approved. "There may be a concurrent discipline issue," he said, "but that time must be paid."

    And in working to curb time theft, it's important that employers not overreach in a way that encourages employees not to report all time worked, Puma advises. "If an employee stops working for 10 minutes to take a call from their mother, plan a vacation or smoke a cigarette, they are generally still on the clock, legally," he said. "Even for exempt employees, you can lose [their exemption] if you start taking partial-day deductions."

    Puma said he recommends that employers maintain an accurate policy — with an acknowledgement signed every year — and should regularly audit, train and correct any problems. If you do this, he said, "it will be hard for a large group of employees to establish the commonality needed to file a class action."

    Employers as educators

    That seems to be the key, according to the experts. Employers must educate front-line employees and managers alike on both employee and employer time theft. 

    "On the employer side, it's not the business's intent to steal time, but there is a massive problem with training," Jones said. Many small business owners are not fully clear on the complex rules for paid breaks, premium time accrual of any applicable paid sick leave and so forth, he noted.

    "The employer has to assume an educational role with employees and schedulers," Jones continued, adding that training should be explicit. Employees should be told, "You need to take your full break, you need to leave the worksite." The more transparent a business can be, he said, the better. "If you are investigated, you want to be able to prove you covered this stuff with employees. This staves off 99% of the issues employees might claim and prevents them from feeling baited by a plaintiff’s attorney, because they know the employer was open with them." 

    Additionally, Jones said, timekeeping systems that require affirmative attestations from employees — such as "Yes, I had my meal break" — give employees a feeling of control. "Without this, resentment builds up." HR should want employees to own their stake in this, to know that they play an active role in getting paid correctly.

    And on the employee side, Van Vlymen said she recommends training employees on why employers track time and why time theft is such a problem. She also said employers should hold employees accountable for infractions like buddy punching and inappropriately long breaks; "it becomes a disciplinary issue," she said

    Jones agreed. Accurate timekeeping "starts with the employee manual and new-hire training, then your timekeeping system," he said. "If you don’t have the first two, tech can’t solve for this."

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    Source: HR Dive

  • 05 Mar 2019 6:56 AM | Bill Brewer (Administrator)


    Jennifer Carsen


    Feb. 27, 2019

    Can unlimited vacation be too much of a good thing?

    On paper, it’s an intriguing idea: Unlimited paid time off means no vacation banks or caps — workers take as much or as little vacation time as they see fit. Employees like that they're not being nickeled-and-dimed, and HR professionals like the idea of having one fewer thing to track. But is it really that simple?

    A growing trend

    Unlimited PTO policies are certainly a growing trend, according to Daniel F. Pyne III, a shareholder at Hopkins & Carley. And "I would expect it to continue to grow," he told HR Dive.

    After all, the notion of unlimited PTO "has a lot of appeal to employees; it sounds good," said Rich Fuerstenberg, a senior partner at Mercer. He said he believes it helps with attraction and retention of employees, whether they are mid-career or just out of college: "If your vacation policy for new hires is two or three weeks, they will wonder, 'What if I want more time?' Unlimited means you don’t have to negotiate."

    Three days jam-packed with what’s now in compensation and total rewards and what’s on the horizon. Network at top-notch golf and social events. May 6-8, Orlando.


    Switching over

    "It’s great to not have to pay out [accrued vacation] when people leave," Maggie Grover, a partner at Wendel, Rosen, Black & Dean LLP told HR Dive. Because people are so connected and working even when they’re technically off, they tend to take fewer full vacation days. So even if you cap a vacation bank at 1.5 or 2 times the annual accrual amount, she said, the payout at the end of the employment relationship can still be significant. (Not every state, she noted, requires employers to pay out accrued vacation.)

    But here’s the rub: When you switch to a unlimited vacation policy from a traditional policy, you need to deal with that existing bank of accrued time. "What you do with those balances can be a challenge, but once that process is over it’s not a problem going forward," said Fuerstenberg.

    Pyne said there’s no one-size-fits-all recommendation for how to handle the accrued time, but "you can leave a bad taste in employees’ mouths in terms of morale" if you don't consider all the angles. If there's a substantial amount of accrued PTO, Pyne said, employers may elect to take the hit in terms of morale and draw an employee's time off against that bank until it’s paid out, at which point you shift to the new unlimited PTO system. If there is any unused accrued leave left over when a worker's employment ends, that can be paid out. If there is not a huge balance, Pyne said he's had some clients decide to just pay it out. "It depends on how many dollars you’re talking about," he said.

    The 'unlimited' PTO paradox

    A seeming paradox of "unlimited" vacation time is that employees may get timid about taking time off. Fuerstenberg said that in a recent Mercer survey, most employers who had switched over to unlimited vacation policies reported that employees took the same amount of vacation as they did before. Some said workers took less time, but few said they took more.

    "Some employers say, 'It’s unlimited but you must take no less than two weeks,' but that can be a slippery slope," he said. "If you start saying things like, 'no fewer than two weeks and and no more than four weeks,' that starts to sound like a traditional vacation policy."

    Fuerstenberg also raised the challenge of equity. An employee with a good manager can satisfactorily arrange his or her time off, he said, but "a bad manager always says no." He said employers must trust both employees and managers and provide them with the tools they need to make unlimited leave work.

    Potential abuses

    A number of Fuerstenberg's clients have moved away from the term "unlimited vacation" and are now using terms like "untracked" because "'unlimited' sets you up to fail," he said. "Employees think, 'I can take as much time as I want.' But you still have to do your job. If employees have performance targets, they still have to meet those targets." He also noted that unlimited time off may be unmanageable for certain types of businesses and employees, such as call centers, retail and hospital nurses; "You need some rigidity there to run the business."

    "With nonexempt employees, you start seeing more taking off here and there, including Friday/Monday absences," said Grover. "It’s really difficult with unlimited time off to say, 'this is too much.'" Instead, employers should be clear about expectations, she said, especially with planned time off.

    Grover also cautioned that unlimited leave policies may mask underlying issues that should be examined: "You don’t know if it’s a performance issue, a substance abuse issue or a burned-out employee issue, but any of those are things you might want to address."

    Compliance concerns

    Employers are obligated to adjust certain production and performance expectations when employees take protected leave under, for example, the Family and Medical Leave Act (FMLA). It is a problem, Grover said, when employers with unlimited leave policies refuse to similarly adjust expectations when employees take time off for potentially protected reasons, such as having a baby or caring for a family member with a serious illness.

    Employers may think putting time off into the proper "bucket" no longer matters if you have an unlimited leave policy, but it does, she explained: "If you don’t appropriately categorize the protected leave, you may not apply it correctly, may not know when that particular leave is expiring, and may not give the appropriate notices."

    Additionally, posited Grover, "When is the leave paid, and when is it unpaid? If you don’t write the policy correctly, the employee will have the expectation that the time is paid; the employer certainly won’t."

    Pyne agreed that employers need to watch for unlimited being used for unintended purposes. "The intended purposes are short-term leaves, such as the vacations we all take. It is not meant for serious, disabling illness" — and he said he's seen policies that don't account for that distinction. "Be sure to clarify that it is not intended to be used for a leave that might qualify under something like FMLA or disability benefits under an employer’s insurance policy. You don’t want it to become a permanent paid leave."

    Too much of a good thing?

    Unlimited vacation policies sometimes improve morale and sometimes don't, and it often depends on how they're rolled out and how managers behave, Pyne said. "If your manager takes three days a year, employees get the message that they shouldn’t take much. But if managers take two to three weeks per year, employees feel more comfortable doing the same." Some of his clients have reported employee anxiety because workers don't know what the expectations are anymore.

    Grover, too, has seen some pushback from employees relating to unlimited vacation. "They don’t really like it. They want something in the bank for when they leave for a new job, or the ability to take time off — it’s a trade-off."

    For employers interested in testing such a benefit, Fuerstenberg ​recommends starting with a small group of employees. You can always expand the policy, he said, but "taking away an 'unlimited' benefit feels like a major takeaway."

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    Source: HR Dive

  • 07 Feb 2019 9:41 PM | Bill Brewer (Administrator)

    Image result for How student loan repayment became an employee benefit

    February 6, 2019

    When college graduates enter the workforce, they're increasingly bringing a boatload of student loans along with them. So along with 401ks and insurance benefits, some employers have started offering up options to cut students' massive debts, Bloomberg reports.

    Across the U.S., 44.2 million people currently carry debt from a student loan, with a total value of $1.5 trillion, Forbes notes via the Federal Reserve statistics from 2018. That works out to an average of $37,172 in individual debt.

    Employees at insurance company Unum Group average slightly less in loans, racking up an average of $32,000 each, Unum tells Bloomberg. So Unum devised a plan to give students an average of $1,200 per year toward loans in exchange for giving up five paid vacation days. Those payments can also go to parents if they're paying for a child's loans.

    Of course, it doesn't hurt than employees at Unum get a minimum of 28 paid days off each year. That's "nearly double the 15 paid days the average U.S. worker gets, according to the Bureau of Labor Statistics," Bloomberg writes. But not all of the nearly four percent of large companies with student loan repayment programs require employees give up vacation time. If employees put two percent of their wages toward their student loans, health care company Abbott matches five percent and deposits it into their 401k. Others simply match any payments employees make toward their student loans. Read more about them at Forbes. Kathryn Krawczyk

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    Source: The Week Publications, Inc.

  • 23 Jan 2019 8:17 AM | Bill Brewer (Administrator)

    Adjusted for inflation, real wages are expected to rise only one percent worldwide in 2019. A new workforce report by Korn Ferry offers a region-by-region breakdown of anticipated wage growth on the horizon, and it may not be what you want to hear. Let’s take a look at the latest findings.

    January 23, 2019 – When it comes to compensation, this may well be a year that will make neither companies nor their workers very happy. Companies are expected to keep raising salaries this year — 5.1 percent, on average, according to the recently released Korn Ferry’s annual global salary report. But after accounting for inflation, real salary growth will only be one percent, even lower than last year’s 1.5 percent forecasted increase.

    “The percentage of salary increase or decrease will vary by role, industry, country and region, but one thing is clear, on average, employees are not seeing the same real pay growth they did even one year ago,” said Bob Wesselkamper, Korn Ferry’s global head of rewards and benefits solutions.

    Analysts say the situation is bound to create some frustration. Companies are spending more money on employees, but that extra cash isn’t really helping workers build much wealth.

    In North America, for instance, the average salary growth is predicted to be 2.8 percent in 2019, according to Korn Ferry. But when adjusted for inflation, the real-wage growth is expected to be 0.6 percent, down from last year’s one percent. The outlook for South American salaries is slightly better, with salaries rising 4.6 percent, on average, or 1.3 percent after inflation. Nevertheless, 1.3 percent is still lower than the 2.1 percent growth that was projected for 2018.

    Eastern Europe employees, meanwhile, are expected to get higher real salary increases than their Western European counterparts, said the report. Salaries in Eastern Europe are expected to rise 6.6 percent in nominal terms and two percent after inflation, an improvement on last year’s 1.4 percent increase. In Western Europe, salaries are expected to grow only 2.5 percent and just 0.7 percent after inflation.

    The best real salary growth will happen in Asia, according to the report. Salaries are forecast to increase by 5.6 percent, up from 5.4 percent last year. Inflation-adjusted real wage increases are expected to be 2.6 percent, the highest globally, but down from 2.8 percent last year.

    The rest of the world will not see anywhere near as much growth. In Africa, companies will be raising salaries 7.7 percent —the highest increase in the world. Go past the headline, however, and the raise is a modest 0.9 percent after inflation. In the Middle East, after-inflation salaries are expected to rise just 0.4 percent. Salaries in the Pacific region (which includes Australia and New Zealand), will grow only 0.3 percent after inflation.

    In response to the mediocre wage increases, Korn Ferry’s experts said that leaders regard salaries as part of an overall compensation package. Because inflation is eating away gains, employees might appreciate different benefits, such as more days off, a flexible work schedule, or increased pension plan contributions.

    Or, as Benjamin Frost, Korn Ferry’s global general manager for pay, said: “We recommend that companies take a broader perspective by defining and agreeing upon their own measures of cost drivers, business strategy, and local trading conditions.”

    A Different Take

    U.S. employers are projecting slightly larger pay raises for employees in 2019 as the unemployment rate has fallen sharply and the job market has tightened, according to a recently released Willis Towers Watson report. The survey also found employers rewarded their top performers with the biggest raises this year and are projecting modestly larger discretionary bonuses next year in their ongoing effort to reward and retain the best performing employees.

    The “General Industry Salary Budget Survey” found that U.S. employers expect to give exempt, non-management employees (i.e., professional) average pay increases of 3.1 percent in 2019, compared with three percent this year. Non-exempt hourly employees can also expect larger increases next year — three percent in 2019 vs. 2.9 percent last year.

    “After a decade of consistently flat pay raises, we are witnessing a slight uptick as companies are feeling pressure to boost salaries, given the low unemployment rate and the best job market in many years,” said Sandra McLellan, North America rewards business leader at Willis Towers Watson. “While companies have been able to hold the line on raises, the tides are changing.”

    “Many companies are establishing slightly larger salary budgets while at the same time focusing on variable pay such as annual incentives and discretionary bonuses to recognize and reward their best performers,” she said.

    CEO Wage Growth

    According to a recent report by Korn Ferry, CEOs at the largest companies in the U.S. last year received the highest compensation increases since the recession. “Even with the anticipation of the CEO pay ratio disclosure mandate, so far we haven’t seen it dampen organizations’ willingness to pay for performance, including strong shareholder value and net income increases,” said the search firm’s 11th annual “CEO Compensation Study.”

    Related: Increasing Demand for Talent Spurs Steady Wage Growth

    The study examined pay for CEOs at the nation’s 300 largest public companies, included. Median revenues for the 300 businesses were $18.7 billion.

    Median total direct compensation (TDC) for CEOs increased 8.7 percent to $13.4 million, said Korn Ferry. That is twice as much as last year’s 4.2 percent increase in TDC and the highest percentage increase since 2010, the first year of recovery from the Great Recession. While year-over-year base salaries remained relatively flat, with a 1.5 percent increase to a median of $1.3 million, a large percentage of the TDC increase came from performance-based compensation growth, said the study. Annual bonuses were up 4.1 percent. And LTIs (long-term incentive value) were up 7.4 percent.

    “In years past, we’ve seen LTI increases but not bonus increases,” said Donald Lowman, Korn Ferry executive pay and governance practice leader for North America. “However, this year we are seeing increases in both areas. Even with the anticipation of the CEO pay ratio disclosure mandate, so far we haven’t seen it dampen organizations’ willingness to pay for performance, including strong shareholder value and net income increases.”


    Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media

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    Source: Hunt Scanlon Media

  • 22 Jan 2019 12:57 PM | Bill Brewer (Administrator)


    Pamela DeLoatch


    Jan. 22, 2019

    While employers may have legitimate concerns about such initiatives, experts say the rewards outweigh the risks.

    Every pay period, your employees can look at their pay stub and see how much they're earning. But do they see the whole picture?

    Pay stubs may contain standard employee information such as salary, bonuses, taxes and other deductions, but many receive additional benefits and perks not listed on a pay stub. Some of those perks may be obvious, like the use of a company car, but others may be overlooked or forgotten, like a flexible work schedule, commuter subsidy or a gym membership.

    Total compensation statements (also called total rewards statements) give employees a broader look at what their employers provide.

    What is a total comp statement and why does it matter?

    In short, a total compensation statement is an annual statement that communicates the total value of all the rewards an employee receives for their time, effort and talent, according to Alison Avalos, director membership and total rewards strategy for WorldatWork.

    The broader focus on total compensation has evolved over the last few decades, Avalos said in an interview with HR Dive. "What started to [emerge] in the latter part of the 90s and into the 2000s was the idea that there are a lot of other levers, if you will, that an organization can pull to offer something of value to its workforce," Avalos said. But offering more perks isn't enough; companies have to make sure employees are aware of what the business provides, she said. "The idea of thinking broadly about what you communicate to your employees about that value became seen as a real opportunity."

    In addition to salary, total compensation statements should outline medical benefits, flexible spending accounts, stock options, bonuses, flexible spending account, disability, employee assistance programs, tuition assistance, and paid leave, she said. But other benefits that may be harder to quantify should be included as well, such as flexible schedules, the opportunity to work remotely, use of an on-site concierge, pet insurance, on-site child care, company-provided lunches and company discounts.

    With a tight labor market, it's especially important for employers to make sure employees consider all aspects of their job benefits. When you come back to the core, Avalos said, you want to include the things that are deciding factors in an employee's mind.

    Who uses total compensation statements?

    According to PayScale's 2018 Compensation Best Practices Report, 36% of U.S. organizations use total compensation statements.

    Employers are finding statements to be useful tools for communicating with employees about compensation, Lydia Frank, PayScale's vice president, content strategy, told HR Dive via email. Compensation conversations can be highly charged, she said, and providing a total compensation statement gives employees information to which they can refer back. "Total compensation statements can fill in those blanks in memory and reinforce your organization's compensation approach — if that's something you’ve outlined in the report," she said.

    Frank said that according to the PayScale report, 40% of top performing companies are likely to use total compensation statements, compared to 36% of typical companies. Larger companies with 5,000 or more employees are more likely to use the statements than smaller ones. And employers in the finance and insurance industry are most likely to use them (51%) while those in the food, beverage and hospitality industry are least likely (26%).

    The statements may well be worth considering: "We've received incredibly positive feedback from organizations who choose to start utilizing total compensation statements saying that it absolutely helped with compensation communication and overall employee retention," Frank said.

    Concerns about total comp statements

    But if total compensation statements are so useful, why don't more organizations use them? Some employers worry that employees will be dissatisfied with the information in the statements, or will compare their benefits to those of co-workers and others in similar jobs in the market. But that worry shouldn't be an excuse to avoid the conversation, Frank said.

    "I'm a fan of open communication, so I believe any potential downsides are easily overcome," Frank said. "If you include comparisons to market data and an employee's pay is lower than market, it's critical to ensure you're explaining why that's the case as well as what the employee can do to impact their earning potential at the organization." This means that total compensation statements can help open the door to performance and career path conversations, she said.

    Avalos agreed. Communicating regularly and transparently about what you're offering will improve retention. "The organizations that do this best do it once a year," she said; "they want employees and employers to come and ask questions anytime.”

    Companies also may hesitate to provide total compensation statements for fear of making errors. Accuracy is monumental, Avalos said, and planning is critical before launching the process. The process can be a lot of work, she added: "If you're an organization that has never done a total reward, total compensation statement, know what you want to say." If you have a large company, field test the statement with 100 to 200 employees using fake data, if necessary, to get feedback and make improvements, she suggested. Even a perfect endeavor can lead to questions, she said, but most successful organizations feel that's a good thing.

    "A company can invest a lot of money into its workforce but if that workforce doesn't feel that investment, doesn't identify it, recognize it and place the same value on it, really the organization is wasting money," Avalos said.

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    Source: HR Dive

  • 17 Jan 2019 9:08 AM | Bill Brewer (Administrator)


    Valerie Bolden-Barrett


    Jan. 17, 2019

    Dive Brief:

    • A new O.C. Tanner poll found that one-third of respondents admitted calling in sick when they weren't ill to get out of work. And of those who faked an out-sick call, January was the most popular month for call-ins. Respondents said the top excuses for staying out are rest, relaxation or the need to spend time with their families. Survey results suggested, however, that an underlying cause for their playing hooky was their dissatisfaction with their organizations.
    • The survey also found that most respondents don't call in sick often — 68% call in less than once a year and 12% call in once a year. More than one-third of respondents who have called in sick agreed that their work situation keeps them from being happy in other areas of their lives and 40% of those who called in sick said they don't trust their senior leaders. Slightly more from the same group agreed that their organization cares more about bottom lines and productivity than people.
    • O.C. Tanner recommended that, as the new year begins, employers should think about using this time of the year to assess team satisfaction and be sensitive to employees' frustrations and the potential for burnout.

    Dive Insight:

    The O.C. Tanner poll may have found that employees' faking sick doesn't happen often, but that doesn't mean employers should ignore the phenomenon entirely. Employers can intervene by regularly gauging workers' satisfaction through internal polling. Hidden dissatisfaction among workers could turn into chronic absenteeism, which, in turn, can lower productivity and lead to burnout. When managers suspect their employees are burned out, they may want to adjust employees' workloads, encourage them to take their allotted vacation time or refer them to employee assistance programs.

    It might be hard to determine when employees are being truthful when calling in sick, especially if it occurs infrequently. For example, illness might be weariness; 74% of respondents in an Accountemps poll come to work tired. Offering sufficient paid time off, flexible work schedules and remote-work options might allow employees to get the rest and relaxation they need to supply them with energy for work.

    When employers allow dissatisfaction to fester, it can spread, creating a toxic work environment. In a recent poll, negative people were rated as the worst kind of coworker, one who often forces others to quit their jobs. Organizations should listen and respond to workers' complaints immediately and create a workspace in which employees feel heard and valued.

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    Source: HR Dive

  • 11 Jan 2019 8:03 AM | Bill Brewer (Administrator)

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    Seattle, WA – January 9, 2019 – Today, PayScale Inc, the leader in precise, on-demand cloud compensation data and software for businesses and individuals, released the Q4 2018 PayScale Index, which tracks quarterly and annual trends in compensation and provides a U.S. wage forecast for the coming quarter.

    The most recent Q4 Index revealed nominal wages grew 1.1 percent since Q3 and 1.0 percent year over year. However, the modest uptick in nominal wages failed to bring real wages out of the red for the year. As a result, real wages fell by 1.3 percent since the end of 2017 which means the average person can purchase less than they could last year when wages are measured in relation to inflation.

    “There is no question this is a turbulent period for the U.S. economy which means uncertain wage growth across many jobs and industries and a continual decline in real wages for most workers,” said Katie Bardaro, Chief Economist at PayScale. “Our most recent Index shows technology jobs – along with cities which have a heavy emphasis on technology – are some of the few, consistent winners when it comes to increasing wages in these volatile times.”

    Here are the key findings from the Q4 2018 PayScale Index:

    Wages for most blue-collar jobs, including manufacturing and transportation, fell last year:

    •       The largest annual wage losses occurred in transportation and manufacturing which fell 3.9 percent and 2.4 percent since the end of 2017, respectively.
    •       In addition, the Energy & Utilities, Construction, and Transportation & Warehousing industries all experienced a decline in annual wages.

    The technology industry and marketing jobs remain a bright spot of positive wage growth:

    •       The technology sector topped the list of growth by industry with wages up 2.7 percent over the past year.
    •       Meanwhile, marketing and advertising jobs continued to post impressive wage growth in Q4 with an increase of 5.5 percent over Q4 2017.
    •       In addition, the Real Estate and Finance & Insurance industries also experienced wage growth with both sectors experiencing year-over-year wage growth of 2.4 percent.

    California metro areas lead in wage growth:

    •       San Francisco again experienced the largest increase in wages with 4.9 percent increase since last year.
    •       San Jose and San Diego also topped the list of metros with annual wage growth of 3.3 percent and 3.0 percent, respectively.

    Wages in Canada were up:

    •       Nationally, wages in Canada grew by 1.9 percent over the past year.
    •       Vancouver topped the Canadian list of metros with increased annual wage growth of 3.2 percent in Vancouver while the oil city of Calgary experienced the slowest wage growth of just 0.6 percent in 2018.

    The PayScale Index is a different economic measure than the Employment Cost Index (ECI) reported by the Bureau of Labor Statistics (BLS). While the ECI tracks employment costs within organizations, the PayScale Index tracks workers’ wages across various organizations. This means the PayScale Index will capture changes in employees’ wages when they move to a different company, while the ECI does not. There is value in using both the ECI and the PayScale Index to determine relative wage growth in the U.S. economy.

    To view the entire interactive Q4 2018 PayScale index which reflects wage trends across various industries, job categories, company sizes and major metros, including Canada, please visit:  For information about the methodology of the PayScale Index, please visit:

    About PayScale:

    PayScale offers modern compensation software and the most precise, real-time, data-driven insights for employees and employers alike. More than 7,000 customers, from small businesses to Fortune 500 companies, use PayScale to power pay decisions for more than 18 million employees. These companies include Dish Network, Getty Images, Skullcandy, Time Warner, T-Mobile, Macy’s, Sunsweet, UnitedHealth Group, Stihl and Wendy’s. For more information, please visit: or follow PayScale on Twitter:

    Press Contact:

    Phyllis McNeice


    Tel: 206-954-1481

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    Source: PayScale

  • 10 Jan 2019 3:06 PM | Bill Brewer (Administrator)

    Image result for executive compensation

    Thursday, January 10, 2019

    Institutional Shareholder Services (ISS) has issued new FAQs addressing U.S. Executive Compensation Policies and U.S Equity Compensation Plans for the 2019 proxy season, for annual meetings held on or after February 1, 2019.  Significant executive compensation and equity plan updates for U.S. listed companies are summarized below.  Companies should be mindful of the impact, if any, that ISS’s updates may have on their existing and proposed executive compensation and equity and incentive-related plans, policies, agreements and arrangements, in addition to Glass Lewis & Co.’s updated proxy guidance, which we have summarized in a previous client alert.1

    ISS Issues 2019 U.S. Executive Compensation Policies FAQs  

    On December 20, 2018, ISS released its U.S. executive compensation policies FAQs for annual meetings held on or after February 1, 2019.2  Key updates include:  

    Refinement of ISS Review of Board Actions in Response to a Low Say-on-Pay Vote.  Generally, when a say-on-pay proposal receives less than 70% support of votes cast (for and against), ISS will conduct a qualitative review of the compensation committee’s responsiveness to the low support at the next annual meeting.  ISS has refined its policy to add that in cases of low support in connection with an unusual situation, such as a proxy contest or bankruptcy, ISS will review how the board considered investor dissent and whether the board took actions to meaningfully respond.

    Quantitative Pay-for-Performance Screens Remain Unchanged.  While the quantitative screens remain unchanged for the 2019 proxy season, ISS will continue to explore Economic Value Added (EVA) metrics to round out the market performance (TSR) and accounting performance (GAAP) measures utilized in ISS’s financial performance analysis.  EVA data will be displayed in ISS research reports on a phased-in basis, but will not impact ISS’s quantitative pay-for-performance analysis at this time.  

    Neutral View of TSR as an Incentive Program Metric.  ISS does not endorse or prefer TSR or any specific metric in executive incentive programs, although ISS recognizes that investors prefer programs that emphasize objective and transparent metrics.  ISS believes that boards and compensation committees are generally in the best position to determine the incentive plan metrics that encourage executive decision-making that promotes long-term shareholder value creation.

    Refinement of Qualitative Pay-for-Performance Analysis.  In addition to the key factors that ISS will consider in performing its qualitative pay-for-performance analysis, ISS will look for an emphasis on objective and transparent performance metrics, and it will also look at the actual results of financial and operational metrics, including any non-standard adjustments to such results.   

    Scrutiny of Front-Loaded Awards.  It is unlikely that ISS will support front-loaded equity awards that are intended to cover more than four years, due to ISS’s concern that such awards limit a board’s ability to meaningfully adjust future pay opportunities in response to changes in performance or strategic focus, or unforeseen events.  ISS expects any front-loaded awards to include a firm commitment not to grant additional awards over the covered period.  ISS will more closely scrutinize the pay-for-performance considerations for front-loaded awards, including, without limitation, completeness of disclosure, emphasis on transparent and rigorous performance criteria, and stringent vesting conditions that limit windfall risk.   

    “Good Reason” Resignations that Fail to Qualify as Constructive Terminations as a Problematic Pay Practice.  ISS will view a “Good Reason” definition that may trigger CIC severance payments in situations where no adverse constructive termination exists as a problematic pay practice.  As a result, “Good Reason” definitions should be carefully drafted to avoid any potential windfall risk to an executive, such as a definition triggered by a performance failure, company bankruptcy or delisting.  In addition, ISS will no longer view a

    “Good Reason” definition triggered by a successor’s failure to assume a specific agreement as a problematic pay practice. New Problematic Pay Practices.  ISS will consider shifts away from performance-based compensation to discretionary or fixed pay elements, such as changes made in response to the elimination of the Internal Revenue Code Section 162(m) performance-based compensation deduction that remove all performance-based criteria, as a problematic pay practice.  In addition, insufficient executive compensation disclosure by externally managed issuers that prevents a reasonable assessment of the pay programs applicable to the executives of such issuers will likely result in a negative say-on-pay recommendation.   

    Scaled Compensation Disclosure for Newly Qualified Smaller Reporting Companies.  ISS may be unlikely to support a say-on-pay vote if a newly qualified smaller reporting company (SRC) avails itself of the scaled disclosure requirements and the scaled disclosure does not allow shareholders to meaningfully assess the board’s compensation philosophy and practices or enable investors to make an informed say-on-pay vote.  As a result, SRCs may feel increased pressure to provide disclosure that exceeds what is required under the SEC’s scaled disclosure requirements in order to address concerns from ISS and Glass Lewis.

    Excessive Non-Employee Director Compensation.  ISS has delayed the implementation of its policy, initially scheduled to go into effect for the 2019 proxy season, to issue adverse voting recommendations for companies with excessive non-employee director (NED) pay without a compelling rationale.  Instead, beginning in 2020, ISS will recommend withhold votes for board members responsible for setting and approving director compensation when there is a pattern of excessive NED pay for two or more consecutive years, absent a compelling rationale.  Acceptable rationales, if reasonable and adequately explained, include (i) onboarding grants for new directors that are clearly identified as one-time in nature; (ii) special payments related to corporate transactions or special circumstances, e.g., special committee service; and (iii) payments made for specialized scientific expertise.  ISS will assess payments in connection with separate consulting agreements on a case-by-case basis, and will not view payments to reward general performance or service as a compelling rationale.

    ISS’s revised methodology to identify NED outliers will focus on individual NED pay above the top 2-3% of all comparable directors within the same index and two-digit GICS group, recognizing that nonexecutive chairs and lead independent chairs, as board-level leaders, are often recognized with additional pay compared to other NEDs.  ISS’s revised methodology also acknowledges that in certain sector and index groupings, NED pay is narrowly distributed, and for such groups where there is a very small difference in pay magnitude between the top 2-3% of directors and the median director, the narrow distribution of NED pay may be a mitigating factor.

    CEO Pay Ratio.  ISS will continue to display a company’s disclosed median employee pay figure and the CEO pay ratio, compared to the prior year (as available), in ISS research reports.  However, these data points will not impact ISS vote recommendations at this time.

    ISS Issues 2019 U.S. Equity Compensation Plans FAQs  

    On December 19, 2018, ISS released its U.S. equity compensation plans FAQs for annual meetings held on or after February 1, 2019.3  Key updates include:  

    Liberal Change in Control Definition Combined with Single-Trigger Vesting.  ISS will now view a liberal change in control (CIC) definition that could result in the vesting of awards by any trigger other than a full double trigger (i.e., a termination of employment in connection with a CIC) as a negative overriding factor, which may result in ISS’s recommendation against an equity plan proposal, regardless of the plan’s Equity Plan Scorecard (EPSC) score.  Therefore, companies should take steps to update any liberal CIC definitions and single-trigger CIC vesting provisions contained in existing equity plans (if a share pool needs replenishment) or proposed new plans in light of ISS’s updated guidance.

    Updates to CIC Vesting Factor.  ISS will assess the CIC vesting factor for its EPSC models to award points based on the quality of disclosure of CIC vesting provisions, rather than based on the actual vesting treatment of awards.  Full points will be earned where the equity plan discloses with specificity the CIC vesting treatment for both performance- and time-based awards.  If the plan is silent on the CIC vesting treatment or provides for discretionary vesting for either type of award, then no points will be earned.  As a result, new equity plans or amendments to plans that require shareholder approval may need to “hard-wire” the CIC vesting treatment for performance- and time-based awards in order to receive full points.

    New EPSC “Negative Override” Factor.  ISS announced a new negative override factor for excessive shareholder dilution under the S&P 500 and Russell 3000 EPSC models only.  The new override will be triggered when a company’s equity plan is estimated to dilute shareholders by more than 20% (for the S&P 500 only) or 25% (for the Russell 3000 only). The override factor measures share capital dilution rather than voting power dilution, and is calculated as (A + B + C) ÷ CSO, where A = # new shares requested, B = # shares that remain available for issuance, C = # shares underlying unexercised/unvested outstanding awards, and CSO = common shares outstanding.     

    No Changes to EPSC Passing Scores.  Passing scores for all U.S. EPSC models have not changed from the 2018 proxy season (which remain 55 points for S&P 500 companies, and 53 points for all others), although companies should expect that, consistent with past practice, ISS will reallocate the points and weightings among some of the individual factors within each EPSC model.  ISS has indicated that weighting on the plan duration factor has increased to encourage plan approval resubmission to shareholders more often than listing exchanges require, to counter the elimination of shareholder approval for Code Section 162(m) purposes.   

    The chart below summarizes the maximum scores by EPSC models and pillars effective for shareholder meetings held on or after February 1, 2019.

    Elimination of Code Section 162(m) Performance-Based Compensation Deduction.  The Tax Cuts and Jobs Act of 2017 eliminated the performance-based compensation deduction under Code Section 162(m), subject to a grandfather rule which allows a limited category of performance-based compensation to continue to be deductible.  As a result, ISS had updated its guidance to allow for incentive plan amendments that remove general references to Code Section 162(m) qualification as administrative or neutral amendments.  However, ISS may negatively view removal of incentive plan provisions that represent good governance practices, which were previously required to qualify performance-based compensation under Code Section 162(m), as negative changes when ISS evaluates plan amendments.  Therefore, plan amendments to remove individual award limits and allow the plan administrator upward discretion in determining award amounts may be viewed negatively.



    Vivian L. Coates


    Clients rely on Vivian to help design and implement compensation systems to drive success by attracting, motivating and retaining top talent. Vivian is a dynamic member of the Firm’s Corporate and Securities Practice Group and a member of the Public Company Advisors Team.

    Vivian has worked on deals in the US, UK and beyond for public and private companies and venture capital/private equity firms in numerous sectors, including technology, hospitality, health care, manufacturing, consumer goods, and banking and finance. Her experience extends to...


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    Source: The National Law Review

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