Show Me the Freaking Money - Sharing Pay Ranges With Associates...

Sharing pay ranges with your employees - do you do it?

Three schools of thought here:

1.  We share nothing.  Maybe we have nothing (by way of comp ranges, etc.)

2.  We have stuff, but don't share it broadly.  We'll share it with the individual employee if they are interested, during the merit review, and certainly if pay issues come up with an employee who feels underpaid, etc.

3.  We share it all.  Our range structure is published to all employees, and employees might even have access to know the grades for all the jobs in the company.

Ann Bares got me thinking about this with her recent post on the sad state of Pay Communication. 

Markets drive pay.  Companies value jobs based on those markets, and also make determinations about how much skills in a specific profession are worth, based on the ranges that are developed.  So for me, #1 (we have nothing, we share nothing, and we value jobs on the fly) isn't a practical solution, at least for companies with any size and scale. 

I don't think #3 (we share it all) is a realistic alternative either.  The problem with sharing it all is the loss of productivity and angst regarding OPR (other people's ranges).  I've worked for big companies that took this approach, and a significant amount of time is spent with the angst of knowing someone else's range.  No matter that the person with the angst doesn't know the salary or if the comp ratio is .8 or 1.2.  Their range is higher than mine! 

So for me, we're left with #2 - Share range information with the individual employee at natural times, like the merit review.  Tell them how the company creates and updates ranges, and tell them why they are where they are within the range.  Tell them the plan and the room to grow, if they stay in the same position.

Or go with Option #4 - just post a list of all the employees' salaries on the bathroom door.  I joke, but I'm sure that's happened somewhere, sometime, with a frazzled HR Pro ready to go on stress-related FMLA leave at the center of the storm.

Go with option #2....

To All You Hardcore Managers - Pay the OT Already!!

I'll say this again for the managers out there who read the Capitalist... You have to pay OT to hourly employees; it's never optional because of a policy or procedure violation...

If an employee is classified as non-exempt or hourly, you have to pay overtime for all hours worked past the normal 40 hour work week.  You can't withhold overtime because they didn't get it pre-approved.  Withhold overtime, even if it wasn't approved, and you're running the risk of legal action and you'll end up paying it anyway.

Seriously - the law doesn't care if you didn't approve it - you have to pay it... 

Here's how the scenario usually works at most companies:

1.  Non-exempt or hourly employee in question reports hours worked and includes overtime.  Supervisor/manager in question has limited desire/time to micro-manage hours reported, so lots of overtime gets paid over a multiple month period.

2.  Finance/Accounting runs reports, correctly communicates the overtime situation.  As a result, the edict goes out top-down that all overtime must be pre-approved moving forward.

3.  Managers do a "mixed" job of communicating pre-approval process to hourly employees in question.

4.  Employee who is used to working a lot of overtime continues to work the overtime, sometimes without approval.  Reasons for not gaining approval can range from "the customer demanded it" to "my supervisor's never around"...

5.  Since the need for pre-approval was communicated to employees, the first reaction of the manager in question is to not pay the overtime.

That's the natural reaction to that course of events.  But it's wrong.  The law doesn't care if you had pre-approval in place and the employee didn't follow it.  It just calls for all hours past 40 to be paid to hourly employees (note - I'm not digging in here on deep FLSA regs, and whether you can spread the hour count over a bi-weekly pay period, etc. - I'm just working the pre-approval objection I hear most).

So, what do you do?  Your only option is the following:

1. Pay the OT...

2.  Pay the OT... 

3.  Use your corrective action/progressive discipline policy to document the policy violation, and hopefully send a message to the employee that pre-approval for OT is required and not optional.

4.  Repeat as necessary.

That's it.  Pay the OT, document any policy violation to send the message and move on.  The employee either gets the message or they ultimately move out of the company.

Any questions?

Big Bonuses - Good For Driving Everyday Performance?

Do Big Bonuses drive performance and behavior in general?  I've always broken this question up into two camps: the sales and non-sales camp. 

First, the easy one - Sales.  We can split hairs and argue whether commission to salespeople is a bonus or part of an incentive plan that's expected, but isn't that what bonus plans are supposed to do - drive behavior?  For me, the sales angle is the purest play in bonus and incentive pay.  You make enough sales, you get paid for your performance, usually monthly, which is also key. 

The harder call for me is for non-sales positions.  A big bonus is certainly attractive and desired by all of us in the workforce.  The real issue for me is the timing of the bonus and how the plan is structured.  Is it monthly, quarterly or annual in nature?  My guess is that most companies still work on the concept of the annual bonus, and most let company performance drive the majority of the payout. 

A focus on an annual payout, based on company-wide performance, seems pretty macro to me, meaning while it's expected and desired, it may not drive day-to-day performance of non-sales types, with the exception of causing employees to be careful spending money.

More from Paul Hebert at Incentive Intelligence:

"Here's the I2 spin - if the bonus is sufficiently large, participants in the program will behave in a way that reduces their risk of failure thereby reducing their desire to work in a way that might cause that failure.  In other words they start working much more "safely."  They start to think about each individual step in the process, instead of getting into the "flow" of the process where work becomes fluid and easy.  Too big a bonus and the idea of trying something "new" goes out the window in favor of the tried and true.  A pretty big problem today where innovation is the new black.

Therefore, if the bonus is big enough, the participant actually increases their chance of missing the goal by increasing their focus on not failing.  Counterintuitive, eh?

The key point in this is that there is a balance between the objective and the reward.  We need to look at business performance problems from a behavior point of view and not a results point of view. 

Break down the chain of behaviors that lead to a result and rewarding ongoing mastery of the few important behaviors in that chain - with smaller, more frequent rewards.  This will allow participants to focus on those important few things.

I agree with Paul's analysis, and think the best thing to do to truly engage non-sales professionals with a bonus program is to make it monthly in nature.  That would keep everything laser-focused.

Of course, the reason sales commission can be monthly is because it's the one area where performance is unquestioned.  You either made the sale or you didn't.

Measurement can be very messy for the rest of your key spots in the company.  The one set of numbers that never lies for the rest of the company?  Revenue and Cash Flow.  The combination of measurement being problematic and Revenue and Cash Flow being king means the annual bonus is probably here to stay for the rest of us....

I'm Stealing Your Talent With Cold, Hard Cash....

I love stats on what it's going to take to steal your talent from a comp perspective.  Latest data is from Salary.com via the Working section of the Washington Post:

"If you're like many employees, you'd expect at least 16 percent more money to jump ship. 

More than one-third of workers would move for a 16 to 30 percent raise, according to a Salary.com survey. Another third would walk for 8 to 15 percent more in the pay envelope. And one in six said it would take a raise of 31 to 50 percent.

Oddly, most employers think it would take less -- 15 percent or less -- to lure away talent.

And employers offer, on average, only 7 percent to persuade a valued employee to stay. Half of employers said they sometimes make counteroffers, but more than a third said they never do."

I think those numbers ring pretty true.  Here's how I get my head around it:

1.  The chronically unhappy or those in danger of losing their job will leave for a lateral pay move or a very small bump.  This number is broken out in the above numbers, but based on the other figures, this is about 20% of the average workforce.

2.  Those who are at least somewhat content by open to hearing the message from recruiters?  The bidding starts with the equivalent of a promotional pay bump, which is the 8 to 15% group.  That's a third of those surveyed...

3.  Those who are happy and content?  They're still willing to listen, but like the Godfather, you'll have to make them an offer they can't refuse - a 16 to 30% bump in pay    (33%) or maybe more than a 30% increase (16% of those surveyed).  So that equals 50% of the workforce.

So the bottom line for those of you following at home...  About 50% of workers are available for the equivalent of a promotional increase.  The rest will be more expensive.

Of course, as with all data coming from Salary.com, it's self-reported data.  Raise your hand if you've ever had an employee print out data from a job that didn't match the one they were in and present it to you as scientific comp data showing a pay issue on their behalf....

Taking a Job In Another City - Cool, Unless You Have to Sell a Home...

Had dinner last Friday with a good friend from a company I worked for in the past.  He's moving on to his next challenge and GET THIS - the company is offering the holy grail of relo - the home purchase program, if he doesn't sell it after 90 days.

That's increasingly unheard of these days, so my friend is fortunate.  The list of companies that will do the home purchase thing has been steadily shrinking over the past decade, and if recent numbers are any indication, the current economics of selling a home in America will surely push the final ones out.  From last week's New York Times:

"The rapid decline in housing prices is distorting the normal workings of the American labor market. Mobility opens up job opportunities, allowing workers to go where they are most needed. When housing is not an obstacle, more than five million men and women, nearly 4 percent of the nation’s work force, move annually from one place to another — to a new job after a layoff, or to higher-paying work, or to the next rung in a career, often the goal of a corporate transfer. Or people seek, as in Dr. Morgan’s case, an escape from harsh northern winters.

Now that mobility is increasingly restricted. Unable to sell their homes easily and move on, tens of thousands of people like Mr. Kirkland and Dr. Morgan are making the labor force less flexible just as a weakening economy puts pressure on workers to move to wherever companies are still hiring."

A telling chart to the right, perhaps a chilling one when you compare it to the last slowdown in the early 2000's after the dot.com crash. 

What about the consequences for HR and recruiting jockeys?  If relo becomes even more problematic than it has been in the past, what's that mean?  Settling for a candidate who's not a perfect fit?  Expanded time to fill stats?

Any way you shake it, the numbers and the consequences are ugly. 

It's a poster child for remote work with periodic travel, whenever and wherever possible.

Skycaps - Now earning 60K at an Airport Near You....

A couple of weeks ago, Starbucks was in the news, ordered by a California judge to cough up a bunch of cash related to practices surrounding tips.  The hits keep on coming for companies who compensate a portion of their workforce related to tips.

Today's jury verdict related to tips?  American Airlines was ordered to pay 9 skycaps in Boston 325K for lost tips when the airline imposed a $2 per bag surcharge for curbside check-in.  From the Boston Globe:

"A federal jury yesterday ordered American Airlines to pay nine skycaps at Logan International Airport a total of more than $325,000 for tips they lost when the airline began charging passengers $2 a bag for curbside check-in service in late 2005.

In what is believed to be the first legal challenge of baggage fees imposed by several airlines in recent years, the jury in US District Court in Boston found that American Airlines violated the state's tips law by keeping the $2 fees. The jury also found that the airline had made it harder for skycaps to earn a living.

"We're very pleased that the jury saw what American Airlines is doing here, which is digging into the pockets of some of its lowest-paid workers to boost its own profits," said Shannon Liss-Riordan, who represented the skycaps, several of whom hugged one another and brushed away tears after the verdict.

Since the fee went into effect in September 2005, skycaps testified, daily tips have plunged because many customers mistakenly thought the workers keep the $2 fee charged for handling bags at the curb and were reluctant to tip on top of it. One of the skycaps testified that his daily tips fell from about $200 to about $70 or $80."

Interesting verdict.  Solid comp professionals keep an eye out for the impact of business decisions on total comp, but this is the first decision I can recall that questions a company's ability to establish prices for services.

Also - by my math a skycap earning $200 a day in tips with a $5.15 hourly rate is earning about 60K a year.  WOW - I didn't expect that.   Shout out to all my peeps with multiple degrees who aren't earning that... Once you cut it to $80 a day, I come up with total comp in the 34-35K range, which still seems OK... But $60K?

My standard for the skycap tip was always a buck a bag, minimum of $5.  That's how I roll.  Of course, I never saw the surcharge....

Who's next?  Doormen?  The Valet? 

Ann Bares of Compensation Force Joins the Workforce Lineup...

Ann Bares has a post up announcing the fact that her blog, Compensation Force, is joining the lineup at www.workforce.com.

Congrads to Ann, who is the best interactive brand available in the critical world of compensation.  It's good to see her join the team at Workforce, bringing the stability and measured approach long lacking in renegades like this blog, also featured at Workforce.

If you haven't checked out Compensation Force, subscribe via email or add to your reader today.  It's all you need to stay on top of trends in compensation, which is critical to recruiters, HR pros and corporate types - and anyone else who has to figure out how to value positions and people in any type of organization.

Ann Bares has a post up announcing the fact that her blog, Compensation Force, is joining the lineup at www.workforce.com.

Congrads to Ann, who is the best interactive brand available in the critical world of compensation.  It's good to see her join the team at Workforce, bringing the stability and measured approach long lacking in renegades like this blog, also featured at Workforce.

If you haven't checked out Compensation Force, subscribe via email or add to your reader today.  It's all you need to stay on top of trends in compensation, which is critical to recruiters, HR pros and corporate types - and anyone else who has to figure out how to value positions and people in any type of organization.

Dropping Some Science - the Merit Matrix...

Ever had someone ask you for a reasoned explanation of pay for performance and the standard merit matrix?  I think I do a pretty good job of explaning it, but the esteemed Ann Bares of Compensation Force rocks out this topic over at her site.  Check it out and throw the link into a folder.  I guarentee you'll use it in the future.

Ann's nickname - "The Foundation" - she's solid....

I can't resist the tease with a quick chart from Ann's post.  See below and click through....

Is Your Strategy Entry Level Talent or Superstar?

Baseball season's here, and it reminds me of the talent/economics lesson that occurs each season in Major League Baseball.  This year's compensation lesson?  A-Rod is making more in 2008 than the entire roster for the Florida Marlins. 

From Yahoo Sports:

"Alex Rodriguez makes more this year than his hometown Florida Marlins. Boosted by his new deal with the New York Yankees, A-Rod tops the major league baseball salary list at $28 million, according to a study of contract terms by The Associated Press. The 33 players on the Marlins' opening-day roster and disabled list total $21.8 million.

For the first time in baseball history, the average salary topped the $3 million mark. The 855 players on opening-day rosters and the DL averaged $3.15 million, up 7.1 percent from last year's starting average of $2.94 million.

Florida's highest earner doesn't even make the average. Pitcher Kevin Gregg tops the Marlins at $2.5 million."

Always interesting to see the battle of haves and have nots in MLB. 

Meanwhile, teams with low payrolls always pop up (more randomly, of course) as huge successes in a given season.  Last year's examples?  The two teams playing in the National League Championship - the Rockies and the Diamondbacks.  With payrolls of $54 and $52 Million respectively, these franchises took the Moneyball approach, seeking to use less proven talent to deliver wins via on-base percentage, base hits and defense.   The result for those teams?  A greater degree of success than the Yankees last year, which drives an owner like Steinbrenner crazy.  Thus the Joe Torre firing...

Who will be this year's Rockies, doing more with less?  As a Missouri guy, I can only hope the Kansas City Royals...

(Hat Tip to Capitalist reader, Heather, for the link)

Lose 2.7 Billion, Get a Bonus?

I'm just sayin.... You lose 2.7 Billion and give out bonuses?  From Workforce:

"Ford Motor Co. is paying every U.S.and Canadian employee a $1,000 bonus even though the automaker lost $2.7 billion last year.

In a company wide e-mail to all employees on Wednesday, March 5, CEO Alan Mulally said that although Ford fell short of its sales goals for 2007, the automaker “met or exceeded” its objectives in every other category.

The bonus also will be paid to managers outside the U.S. and Canada. Mulally said the “performance awards” are based on improvements in cost performance, quality, automotive cash flow and financial results."

I know the cash isn't a lot on the individual level but it's a nice gesture.  Still - bonuses when the loss is 2.7 Billion?   From where I come from, we'd be rallying around the barrel for heat, so we could save on the energy bill.

For my Austin Powers peeps out there - that's Billion, not Million.  Perhaps a recap is in order.....  Feedburner or Reader subscribers click through for the video tutorial...

Only in Cali - Hourly Team Leads at Starbucks Get Jobbed Out of Tips...

You know what's cool about having this site?  When readers, who could write for this site, chime in with more information than I can find in the mainstream media.

A great example?  The Starbucks article I posted from yesterday on the 100 Million Dollar tip judgment.  I struggled to find deeper information on the exact classification of the workers judged to have been taking tips illegally.  No sweat - because an attorney who is a reader of The Capitalist in SoCal pitched in to drop the following science/knowledge:

"Chou v. Starbucks is a great example of why no one would do business in California if the market weren't so darn large.  The class at issue are shift leads.  These are the folks who are responsible for making sure everyone shows up for their shift, calling the manager or assistant manager if there are any problems, making bank drops if the managers can't do so, and handling other administrative duties in addition to providing direct customer service.  Starbucks classifies these employees as non-exempt because they have no authority to do anything: they can't hire, fire, promote, or demote employees.  They spend most of their time making 1000 varieties of coffee, just like the baristas (some baristas are even paid more than shift leads). 

But the law regarding tip pooling in California says that "agents" cannot participate in tip pooling.  Judge Cowett decided, without legal, historical, or factual support, that if a store is open, someone at the store must be (sic) Starbucks's agent.  And because the leads were sometimes the highest ranking individuals, they must have been the agents.  So now, Judge Cowett has created a weird class of non-exempt employees who service customers but cannot share in tips.  They aren't managers, so they don't get the full manager perks or responsibility.  But at times they have more responsibility than Baristas so they can't be tipped. 

My bet is Starbucks and other coffee shops will do away with the "shift lead" title all together and assign administrative tasks based on seniority.  How Judge Cowett's ruling works in that case, I have no idea.  Either that, or Coffee shops will ban the tip jars (probably the safest way to go).  Also, Starbucks didn't get any advantages from allowing all their non-exempt employees from sharing in the tips.  Starbucks Corporate didn't see a dime, and neither did the store managers or assistant managers.  But the Judge has now ordered Starbucks to pay over $100 million dollars!  Only in California."

So here's the three possible outcomes I see regarding what Starbucks and others might do in the face of this strange, but true, court decision:

1.  Let the "leads" suck it up with no tips and watch this class of workers fade over the next three years as leads leave the company and no one will accept a promotion into this classification...

2.  Move the leads to exempt status, along with some type of adjustment (typically not dollar for dollar) to appease the group regarding the change.

3.  Eliminate tips altogether, which would be a stange outcome to all the baristas who were cheering on Friday.

#3 is unlikely since an uprising would result.  No one wants to see suburbia without their latte.  I'm guessing #2 is the play, if the ruling stands, since operationally you'll need the same approximate number of folks to get the administrative work done...

Only in California... Tips taken away from hourly workers!!

Valuing Human Capital - Do You Tip at Starbucks?

From the jump, allow me to reassure you that I am a pretty good tipper.  Rarely when I get good service do I lay down the minimum 15%.  Always more - that's me - gracious like the Dali Lama...

That said, one tipping situation gives me cause for pause.  Do you tip at Starbucks?  Even if you are just dropping by for a brewed coffee? 

Really?  Even for a brewed coffee?  Why don't you tip at McDonalds?  Or at Taco Bell?

Apparently, the tips you are laying down at Starbucks are incorrectly going to support the rich lifestyles of Starbucks supervisors, if you believe a recent court decision in that always interesting state of California... From the LA Times:

"Starbucks got caught with its hand in the tip jar and was ordered Thursday to pay California baristas more than $100 million.

In a San Diego County class-action lawsuit, a judge ordered the coffee giant to pay back tips, with interest, that the company had handed over to shift supervisors. Some baristas could receive more than $10,000, according to their attorney.

The ruling was met with cheers by California baristas. "I'm stoked," said Leekeisha Smith, who makes coffee drinks in the Starbucks at Sunset Boulevard and La Brea Avenue in Los Angeles.

Starbucks Corp. said it was outraged and vowed to appeal. In a statement, the company said the decision "is not only contrary to law, it is fundamentally unfair and beyond all common sense and reason.

Money collected in tip jars was put into safes at each Starbucks and apportioned weekly to each employee based on the number of hours they worked, said attorney Terry Chapko, who represented the plaintiffs. The average tip distributed to baristas and supervisors was $1.71 an hour, San Diego County Superior Court Judge Patricia Cowett said.

Cowett's ruling said Starbucks' practice was a violation of a state law that prohibits managers and supervisors from sharing in employee tips. Her ruling Thursday on penalties followed her Feb. 28 decision in favor of the baristas in the class-action lawsuit."

From what I know about the restaurant industry, pooling tips is a common practice, but the real issue here seems to be classification.  Who are the hourly workers?  Can hourly workers be supervisors?   My guess is that Starbucks crossed the invisible line based on classification issues that are, at least, indirectly related to that statute you know and love - FLSA....

Here's my take - I know who the supervisors are at the 3 Starbucks I frequent, and they seem to be very active from a service perspective.  They work the register, they make drinks, they work the drive thru.  They need a piece of the pie, whether it is tips, an advanced wage compared to the other workers, or some type of bonus plan.  Since I don't know and can't seem to find out what they make on the base rate compared to other workers, I don't know if I support pulling tips from them.  It all depends on the differential of what they make versus the barista... 

As for the need to tip at Starbucks, I think I have figured it out.  The tips are the grease in the system that prevents your local barista from treating you like you just special ordered a Whopper...

Kermit the Frog Says - Forget the Prius and Start Kicking People Out of the Office...

Readers of my riff last week entitled "Are you working remotely or remotely working?" correctly identified the primary issue with managing teleworkers - if they are out of sight, they can't be out of mind.  Manage performance of the remote assets, and you shouldn't care where they are at any hour of the day.  Even if they are enjoying a long lunch in flip flops at Outback.

Of course, that's the main rub with telecommuting.  Managers should manage performance and not worry about the other stuff - but they're human.  They see someone out in public with shorts on, and the alarm bells go off.  Thus, my take that you play the game and not ruin telecommuting for everyone else.

Of course, the burden isn't simply on the employee.  Managers and companies will come under increasing pressure to get comfortable with telecommuting.

Not because they'll need it to attract talent, although that might end up being part of the deal.

Because like a great management guru once said, it's not easy being green.

If you buy into the fact that the US needs to become more independent and self-sufficient from an energy standpoint, then telecommuting is one of the silver bullets.  Here are the stats on the potential of you doing email in your bathrobe from a new blog called The Telework Journal:

"Telework ExchangeSM, a public-private partnership focused on telework in government, today announced the results of the “Telework Eligibility Profile: Feds Fit the Bill” study.

The study reveals that Feds are telework friendly, based on responses to the Telework Exchange Online Telework Eligibility Gizmo, a quiz-based calculator that helps employees determine telework eligibility. An overwhelming majority – 96 percent – of respondents should be teleworking, yet only 20 percent currently do.

Extrapolating from the Online Telework Eligibility Gizmo participants to the total Federal workforce, the study reveals that if all Federal employees who are eligible to telework full time were to do so, Feds could realize $13.9 billion savings in commuting costs annually and eliminate 21.5 billion pounds of pollutants out of the environment each year."

Now I haven't clicked through to see the study, so if you have a jones for detail, be my guest.  Regardless of the methodology of this study, it's hard to discount the fact that telecommuting holds some strong potential to reduce the corporate carbon footprint.  Think reduced gas usage and smaller real estate needs. 

Don't call me Al Gore - just call me Kermit.  It's not easy being green....

Union Membership is Up, But Quality of Jobs Represented is Down...

With the ill-advised Employee Free Choice Act likely making a comeback in 2009, I feel obligated to revisit the topic of Union membership at least once a month to keep it on everyone's radar screen.

One thing you might have seen over the last couple of weeks is the fact that Union membership actually increased last year.  The U.S. Department of Labor's Bureau of Labor Statistics reported that in 2007, the number of workers belonging to a union rose by 311,000 to 15.7 million.

From the Workforce analysis of the report:

"It represents part of the seismic shift in the makeup of America’s unionized workforce. Today, a union worker is more likely to be a low-skilled, low-paid service worker than a skilled, well-paid manufacturing employee.

“The future of the unions is the $8-an-hour home health care worker,” says David Gregory, professor of law at St. John’s University. The unions may have regained membership with lower-wage service workers, but they cannot regain the dues lost along with higher-paid jobs, Gregory says."

Seth Borden at the Union Free Employer took a look at the trend, the union's own organizing site, and came up with the following take:

"If a job cannot be done from Bangalore or Mexico City (outsourced outside of the U.S), it is in a sector likely to become a significant union organizing target in the next few years.  Health care, construction and education are examples.  We would add hospitality, food service and retail to that list; and, we suspect Mr. Hoffa would add transportation."

Solid analysis from Seth.  So the jobs at Ford and GM are out of reach, and organizing efforts at the new age automakers like Mercedes and Toyota have largely failed.  It makes sense that the growth (in quantity, if not in revenue) would come from lower-paid service jobs.  After all, frustration with wages, career pathing, etc. are going to be highest in those sectors.

Of course, if the EFCA comes back in 2009, it's likely that growth would come from sectors much higher up the food chain.

Educate yourself on the EFCA today if you haven't yet....

IBM Responds to FLSA Suit by Cutting Base Pay for 6% of Workforce....

Here's an ugly one for you....

In 2006, IBM got hammered in a FLSA suit, and was ordered to pay 65 million in unpaid, overtime, back pay to workers included in the suit, who were deemed to be incorrectly classified as "exempt".

With that in mind, you expect a company like IBM to reclassify those employees as non-exempt and start making them OT eligible, right?   

As expected, the good news for those workers is that IBM now plans to grant them non-exempt status so they can collect overtime pay.

The bad news: IBM will cut their base salaries by 15% to make up the difference.

IBM's taking this path with 6% of its total workforce...

In a move that is legal but full of employee relations potholes, IBM apparently looked at the entire situation, and decided to remain cost neutral by cutting base pay of the workers upon the transition.  That way, if the expected amount of OT comes in, the workers will be earning the same total compensation.

That's hardball from a compensation perspective.  Glad I'm not the HR Manager handling those conversations - "Ricky, we're moving you to hourly/non-exempt status.  As a part of that, we've taken your salary and converted it to an hourly rate, then reduced it by 15%, since that's the average amount of compensation we project you'll earn through overtime this year".

Ugh.   

Don't Just Pay Me - Pay Me Like A Rocket Scientist...

Remember that common cornerstone of childhood mocking growing up?  "What are you, some sort of Rocket Scientist"?

If you persevered though the taunts and actually became a rocket scientist, I bet you thought it would pay a lot more than it does.   From the Wall Street Journal:

The job: Aerospace engineer

The pay: The average annual starting salary for recent bachelor's degree graduates is $54,008, according to a National Society of Professional Engineers survey. Those with 25 or more years of experience average $121,679, the trade group says.

The hours: Eight-hour workdays, Monday through Friday, are common, though overtime may be necessary for time-sensitive projects.

Other incentives: "You get to see a lot of cool things a normal person would never get to see," such as stealth fighters and test sites, says Jonathan Nikkel, an aerospace engineer specializing in navigation theory for Raytheon Corp.

That's still pretty good pay for a college grad.  It's just that after hearing the intelligence-challenged openly mocked as "rocket scientists" growing up, I would think the market would bear more for this position.  After all, it's the standard by which raw intelligence (or lack thereof) is measured....

What Pecentage Increase Does It Take to Steal a Sales Rep From Your Competition?

Every time I think of sales reps, I think of Glengarry Glen Ross.  Always... Be... Closing.  Get them to sign on the line which is dotted.  Could it be that there is more to motivating sales reps than cash?

Ann Bares at Compensation Force has an interesting post up regarding the motivation of sales representatives.  Ann cites a recent Rewards of WorkSM (ROW) Study that points to the fact that sales reps may be motivated by more than just money.  Here are the details from the study:

The ROW Study found that sales employees, compared to non-sales employees, are:

• More engaged (57% versus 51%)
• More committed to their company (68% versus 62%)

And, of course,

• More motivated by compensation (82% versus 62%)

Moreover, they have:

• A greater sense of affiliation with their organization (67% versus 60%)
• Higher career satisfaction (57% versus 52%), and
• More trust in management (59% vs. 55%)

Interesting numbers, and Ann correctly points out that the data is worth pondering.  First up, Sales people ARE more motivated by money than your normal employee.   That's good to know.  I might have lost faith in the basic instincts of humanity if that were not the case...

More importantly, since sales reps put it on the line to sell your product/service everyday, they're more engaged, satisfied and committed to your company than other types of employees.   They also have a higher degree of affiliation with the company (and whatever brand you are selling as an employer) than other types of employees.

It's interesting data, and certainly contrary to the stereotype of the mercenary sales rep.  It's good to know that sales reps have all these positive attributes when it comes to engagement and affiliation. 

Here's the 64K question.  Look at the spreads noted above when comparing sales reps to all other types of employees.   The motivation of compensation still dominates the landscape, so what type of percentage increase will it take for the normal sales rep to give up the warm nest of affiliation and satisfaction for more money?

I'm guessing that number is 20+% if all other items (benefits, product, perks, etc.) are equal.

What's your number? 

Comparison of 100K Jobs in Organizations.....

Budget season is pretty much past us at this point, which means headcount budgets are set for 2008.  Of course, that doesn't mean the need for staffing justification is final.  Some organizations cut new headcount to zero as part of the budget process, and some organizations allow business units to layer in additional headcount, then vigorously track revenue to determine if the new headcount will be hired in the upcoming year.

Make your revenue early in the year, and maybe you'll get to hire the additional headcount.  Struggle and chances are the new talent isn't going to be joining the organization.

One additional exercise used, when needed in headcount discussions, is the creation of staffing metrics.  Customers per Customer Service Rep, Revenue per FTE - you name it, there's a staffing metric that can be created.  Some are useful, some aren't - it's all in the context.

Here one you may or may have not seen - comparison of the raw number of 100K jobs in your organization compared to similar organizations.  Organizations routinely take a look at this simple metric to determine if they're top heavy or not.   Of course, the number itself really doesn't tell you a lot - you've got to have some type of comparison with other organizations (or divisions in the same company) to make it mean anything.

Here's an example.  In my hometown, a new mayor is comparing the Birmingham School Systems to other school systems regarding this metric.  From a Birmingham news editorial on the results of the analysis:

"Look around the area, and it's plain to see that Birmingham taxpayers pay a premium for the top administrators in their school system.

That's especially true when you have an assistant principal making more than the principal at the same school. Also, when the school system has 22 employees, most of those in the central office, making more than $100,000 a year while at Jefferson County, which has 8,000 more students, only half that many administrators make $100,000-plus. Mobile County, the state's largest school system with 65,000 students (almost 2X as many as the Birmingham City District), has just 12 administrators making more than $100,000 a year."

When you see this type of analysis, it's clear which side you want to be on - the lean side. 

Just like analysis of CEO pay, the raw number of highly compensated individuals in an organization is an emotional topic.  More importantly, since it deals with multiple positions, it's a barometer of how efficient an organization is compared to its peers.

Of course, the time to control what the Birmingham school system is experiencing is before the additonal group of highly compensated indviduals is hired.  At that point, it's voluntary.   Later, it usually becomes involuntary.

Have You Tried to Relocate A Candidate Lately?

Cross one category of candidates off your prospect list - homeowners you have to relocate...

Relocating employees has always had a "haves" and "have-nots" type of feel.  Back in the 90's, most Fortune 500 companies had the "gold-plated" standard of employee relocation - covered physical moves, lump sums to handle all types of misc. costs and the ultimate in closing remote candidates - the home purchase program.   Throw that package at a candidate, and you were closing business regardless of their financial situation..

Flash forward to 2007.  Since the market crash of 2000, Fortune 500 companies have been steadily eliminating relocation packages including a home purchase program.  Eager to slash the expense associated with such programs, big companies first moved to reserve home purchase programs for director-level and above candidates only.  Over time, many Fortune 500s have restricted the availability of these programs even further, and many have eliminated the programs altogether.

That means most of us don't have a home-purchase program in our arsenal as we try and recruit candidates requiring relocation.    So we limp by with these components at our disposal - usually a physical move (perhaps capped at a certain $$ amount to limit the exposure) and a lump sum to handle misc. costs and to provide assistance, to the extent we can, with realtor's fees and the potential costs of having two residences at the same time (which frequently occurs until the candidate gets their house sold on their own).

That package worked OK when the housing market was hot.  Of course, now it's not, which means you won't be relocating many candidates for a while.    Here's data on the drop in home values via the New York Times:

"Prices fell 6.1 percent from October 2006 in 20 large metropolitan areas, according to Standard & Poor’s/Case-Shiller indexes, compared with a 4.9 percent decline in September. On a monthly basis, prices fell 1.4 percent in October, the fastest they have declined in at least the last seven years.

All but three of the 20 regions experienced a fall in real estate values, and even the three areas — Seattle, Portland, Ore., and Charlotte, N.C. — where prices were up from a year ago, had a decline from a month earlier.

Prices have fallen the most in Miami (down 12.4 percent from a year ago), Tampa (11.8 percent) and Detroit (11.2 percent). Prices are also falling in the nation’s two largest metropolitan areas — Los Angeles (8.8 percent) and New York (4.1 percent)."

That data means two things.  Homes will take much longer to sell, and many candidates will find themselves scrambling to cover drops in overall home values.  Many will consider the potential loss unacceptable as they consider selling.

Which means they won't be accepting your limited relocation assistance offer.

Time to add "are you a homeowner" to your initial phone screen when talking to remote candidates, if you haven't already. 

Impact of Mutual Fund Fees in Your 401k to Employees....

Think the fees charged by the mutual funds in your 401k don't matter?  Think again.  Fees always matter, as evidenced by the following chart provided by Alliance Bernstein via the Retirement Plan Blog.  The skinny of the chart?  Lower fees by 1% (which increases return by 1%) translates into about $220,000 extra at retirement—and an extra 10 years of spending.

Curious about the methodology to arrive at the findings?  Here's the breakdown of the AB chart courtesy of the Retirement Plan Blog:

"For the mathematically inclined, following is the methodology Alliance Bernstein used to develop their chart:

Results are simulated. This is a hypothetical illustration only and its results are not indicative of any specific investment, including any AllianceBernstein mutual fund. The savings phase simulates a defined contribution participant salary of $45,000 at age 25, linearly increasing to $85,000 by age 65, making yearly contributions of 6% of salary at age 25 increasing by 0.5% per year to a maximum 10% with a 50% company matching contribution up to the first 6% of salary. In the spending phase, $63,750 (75% of final salary) is deducted at the beginning of each year. A yearly investment return of 9% is assumed at age 25, linearly decreasing to 6% at age 80 and remaining constant thereafter. In the “1% Greater Return Scenario” a yearly investment return of 10% is assumed at age 25, linearly decreasing to 7% at age 85 and remaining constant thereafter. Inflation is assumed to be a constant 3% and dollar values are expressed in real purchasing power terms."

So buck up and make sure your 401k fund selection includes some low-fee funds.  For me, fiduciary responsibility can be summed up in 2 words:  Index Funds, which typically feature low fees with returns beating 70-75% of actively managed funds. 

HR Capitalist Off Today - If You Are Working, See How Your Holiday Policy Stacks Up....

I'm off today, so if you are reading this on Christmas Eve, welcome to the world of automation. 

If you're working today, I suspect it's going to be a light productivity day for you.  So, you may as well dig into the details about what workers across the country receive in the way of official paid holidays.  From AL.com, examining the 13 official holidays in the state of Alabama:

"The Bureau of Labor Statistics survey, released in August, said the average number of paid holidays per year, for private-sector workers who get paid holidays, was seven in businesses with 99 or fewer workers and nine in larger businesses. The survey said 12 percent of full-time workers in the private sector don't get paid holidays."

Not really sure what to make of the numbers, since comparing one staple of Paid Time Off (with the other components being vacation, personal day and sick time as well as official holidays) is basically useless.

For example, I thought for a split second about getting on my high horse regarding Alabama actually granting some workers Fat Tuesday (that's Mardi Gras parade day for you teetotalers), but then I reconsidered.  After all, the State of Alabama has 13 paid holidays, which sounds like a lot, but I don't know if they grant any personal days.  If I add up my company's official holidays (7) and personal days (7), I have 14 days, half of which I can take when I need them.

If the state workers in Alabama have 13 paid holidays but no personal days and vacation and sick time schedules are comparable, I have a better benefit.  I can use half of the holiday/personal days when I want to.   So I got that going for me, which is nice (hat tip to Bill Murray in Caddyshack).

If you're working, here's hoping you're out of there by at least 2pm.  Merry Christmas.

No Love from SBC to AT&T Employees - Gas is $3/Gallon and Telecommuting is No Longer an Option...

OK, here's the situation.  Gas costs $3 per gallon, companies are under increasing pressure to show their "greenness" and studies show that telecommuting can boost productivity in most, if not all, jobs.

Based on those facts, would you increase the amount of telecommuting, keep it the same, or start making your current crop of telecommuters come back to the office?

Right!  You would increase the amount of telecommuting or at least keep it the same...

Unless you just got acquired and the winner of the merger doesn't like telecommuting.  From Network World:

"AT&T, a company that once was a poster child for telecommuting, is downsizing its long-running telework program and requiring thousands of employees who work from their homes and other virtual offices to return to traditional AT&T office environments, according to sources.

“It is a serious effort to reel in the telework people,” says Chuck Wilsker, president and CEO of the Telework Coalitions, an organization in Washington, D.C., that promotes telework through education and legislative efforts.

“We have been getting calls and e-mails from very unhappy AT&T teleworking employees who are being told that they will no longer be allowed to telework,” says Wilsker, who has heard that as many as 10,000 or 12,000 full-time teleworkers may be affected.

A spokesman in AT&T’s San Antonio, Texas, headquarters denies there are broad-scale plans to end teleworking arrangements, but acknowledges there may be some isolated cases. “Teleworking is at the discretion of the business,” says Walt Sharp, the spokesman.

He says AT&T is in the process of reconciling the human resources policies of the legacy AT&T, SBC Communications, which acquired AT&T in 2005; BellSouth, which was acquired in late 2006; and the former Cingular wireless operation, previously co-owned by BellSouth and AT&T."

Here's a primer in the merger.  SBC is the winner, acquiring both the AT&T and BellSouth operations/brands.  While the AT&T brand will be used moving forward, managers from SBC are clearly calling the shots - and from what I read and hear, they don't like or don't get the concept of telecommuting.

Living in the Southeast, I have a lot of friends at BellSouth, and they report that there have been long conference calls announcing that if you live in a metro area with BellSouth office space, you're expected to report to the real estate and your assigned cube/office.   The only way out?  If you have a manager with the chops to get you in under the rug as an exception - and apparently those are few and far between.

What a nightmare - DSL and network providers forcing telecommuting workers back to offices as over-arching policies. 

Better firm up the dress code while you are at it.  What happened to the ties?   Is that programmer wearing (gasp..).... flip flops?

Have you workers no shame?

Why You May Add 7 Sick Days to Your PTO Policy in 2009...

Went to a local SHRM chapter meeting this week and heard Mike Aiken, a Governmental Affairs expert from the National Office of SHRM, talk about what was going on in Washington.  Great talk, very knowledgeable guy...

One of the things that caught my attention was the proposed Healthy Families Act (HFA), which would require employers with more than 15 employees to offer full-time employees seven days of paid sick leave.  The HFA would also mandate the sick time could be used for the employee's illness or to care for a child/parent/spouse/individual related by blood/domestic partner.   Here's some commentary on the merits of the bill....

It's a broad bill that is likely to get a lot of traction in 2008/2009, if Congress continues to be controlled by the Democrats and the White House goes "blue state" as well. 

My take?  Who can be against providing paid sick time for employees?  Most employers already do this.  My company offers 10 sick days a year that can be rolled over year after year, providing a nice cushion for those that have to go out on FMLA leave related to a health condition for them or their families.  Package the sick days with a benefit like Short-Term Disability, and you've got a great safety net for employees, in addition to what's required by law.   

Employers of choice already do this since they have to compete for talent.  Organizations with mostly entry level jobs - food service, poultry processing plants, etc., probably don't offer that type of leave.  You show, you get paid, you don't - tough - regardless of the circumstances.  That's harsh and worthy of trying to come up with a better way.

Here's the catch and why more government isn't always the best solution - the bill as currently written would also prohibit employers from eliminating existing leave coverage in order to comply with the Act.  That can get complicated.  Early readings suggest that if you are an employer trying to do the right thing by offering a Paid Time Off (PTO) plan, you couldn't adjust the total number of PTO days to reflect the legal requirement for a stand-alone sick-time policy.   You would have to simply add the seven to what you currently offer to be in compliance.  For those of us offering a great benefit, that's crazy talk...

Here's hoping someone gets to the bill's sponsors and explains that if an employer is already offering 3 weeks of PTO to new employees, they're taking care of people.   Otherwise, expect companies to start breaking out their PTO policies into vacation/sick designations, if it looks like the bill will pass. 

Circuit City - We Fired You, Please Present This Coupon to Get Your Old Job Back for Less Pay...

OK, I realize I have beat this Circuit City thing to death, but the hits just keep on coming... To recap for you newbies, here's the HR/Talent related news of note on Circuit City, reported by this site and others in the last 10 months:

-March 2007 - Circuit City announces layoffs of thousands of employees along with plans to backfill the positions with lower-paid talent. 

-November 2007 - Circuit City reported by the Wall Street Journal to have mailed letters to the ex-employees inviting them back to their old redesigned jobs, at a lower rate of pay.

Most of the commentary I have seen (as well as what I have written) has focused on all the drawbacks of  this plan.  They're pretty obvious, since it's a bad idea for ex-employees and Circuit City alike.  Returning employees would be going back into an environment that seemingly didn't value them, and Circuit City would be putting employees, who are likely disgruntled with the company, back on the floor.  How does that work for the employees or customers, and subsequently, Circuit City?

Over the last week, I started getting notes from ex-Circuit City employees, many of whom have received the letter from Circuit City.  Read the comments to the last post here, which include the feelings of a couple of the ex-employees impacted by the layoff and who are now in receipt of said letter. 

A couple of the ex-employees were nice enough to share the letter with me.  The letters matched, so I am sharing the text of the letter below with the names changed to protect the innocent.  Here's what it looks like the letter to all laid-off employees said:

Dear [redacted],

This letter is a special invitation to rejoin the Circuit City team. We're a new Circuit City with a lot to offer our customers...and you. If you're interested - and I hope you are - we have a position waiting for you at any Circuit City superstore.

Over the past eight months, we have improved our customer service model, created new positions, and defined career paths for every store role. This means that at each stage of your career, you'll know the steps that can get you to the next level. The new Circuit City delivers a superior experience for customers and associates, and that's why we're reaching out to former associates like you. You have the skills, talent, and experience required for this level of service, and we want you back.

Be a part of the new Circuit City, and join us just in time for the holidays - the most exciting time of the year. Because of your skills and experience, we're excited to offer you a position comparable to your previous role at the most competitive rate possible. Simply present this letter to any manager at any Circuit City superstore. We will quickly complete the process and establish you as a regular - that is, not seasonal - associate.

Thank you and we hope to see you soon.

Sincerely, [signature] [redacted]- RVP

Is this the letter that went out to all employees?  While I can't be sure, the two letters matched and also matched another report on the Consumerist, so it looks probable that this is the letter.

Now for the analysis.  I think the whole idea of bringing employees back, at a lower rate of pay is a bad idea, so I'm not sure there is a good way to do this.  With that said, I would have included some type of acknowledgment about the economic/business conditions that lead them to make the decision they did.  After all, if things are so great, why was I gone in early 2007?  Did you improve your customer service model by walking me out the door?

Above and beyond all else, I'm blown away by the text that I bolded in the letter above.  "Simply present this letter to any manager at any Circuit City superstore..."?   That sounds like a coupon I can present for 10% off any iPod Zune (Apple doesn't discount their stuff), not the concierge treatment I would expect as a candidate from a company that really wanted me to be an associate in one of their stores...

What can I say besides....wow...

Kicking Myself In the Groin By Forcing Managers to Make Offers...

I'm HR.  I get that.  I also get the fact that as a HR professional, most of the world expects me to lock down control of everything my department touches, like a security checkpoint that just found a secret compartment in Mick Vick's water bottle.

But other than compensation information and personnel files, I'm not really in the mood to lock down control of anything.   

Case in point - making offers to candidates. 

Lots of HR/Recruiting departments take control and make all offers on behalf of managers.  I'll do that from time to time, but I like to handle the details and prep the hiring managers to make their own offers.  My logic behind this is that I want the future employee to seek out their manager when they have questions and issues.  In my opinion, it's the best way to set up the manager to have an open door policy and have the ability to resolve issues/concerns/needs their employee might have in the future. 

Plus, HR making all the offers has that Darth Vader/Death Star feel to it to me.   Need a pencil?  HR made the offer, so they probably control the pencils.  Go ask them.  Pretty soon you're mediating the request for the new printer.   

Based on that philosophy, my team tries to proactive source, screen and present final candidates to managers so they can concentrate on running the business, while we run the early stages of the talent acquisition process.  Once they make the call on who they want to hire, we get the offer package together and presto!  All they have to do is call the candidate, make the offer, and then press send on a pre-packaged offer packet that's emailed to the candidate.

At that point, it generally goes one of two ways.  The managers who are communicators take the opportunity to sell the position and the company, and they close the candidate.  Sweet.  Just like we drew it up... The managers who struggle with the art of communication, and might be a little intimidated with the whole compensation thing, generally stumble through it and hopefully emerge without needing to be medicated.  For the ones that struggle, I can see the probability of closing the offer folding like the New York Knicks under the direction of Isiah Thomas.

But yet I persist in forcing the less experienced managers to get repetitions in making offers to candidates.  Call me a masochist, but repetition is the only way it gets better.  And isn't speaking to employees (both potential and real ones) part of the gig for managers?

Or I could just centralize operations to the Death Star and start making everyone request all items from HR via paper forms...

Termination 101 - When Direct Reports Vote a Manager Off the Island...

Remember when reality shows were fresh?  Back in the day when Survivor was the big Kahuna?  Long before Trump started giving people "the Cobra" on The Apprentice, people were getting voted off the island on Survivor..

..and getting voted off the island happens all the time in the workplace...

Think for a couple of seconds and you'll agree you've seen it happen.  The typical version of getting voted off the island is when a manager who's incompetent or has severe conduct issues finally wears out their welcome.  Whether it's a lack of competence or crazy (but consistent) misconduct, dissension among that manager's direct reports builds over time, finally erupting into a flurry of employee relations issues across the team.  Once someone like you gets involved (you're HR, so you'll get to go in and figure it out), it's generally too late.  The natives have spoken, and the situation is irreversible.  Whether it's a resignation or termination, the situation can't be overcome by apologies, focus groups or any other solution.  The manager's out.

Of course, managers can get voted off the island by their team for just being around too long.  Abrasive styles and ego-driven managers with lots of talent can simply wear out their welcome.  It's not about competence or misconduct in these cases, it's about shelf life and staying past your expiration date.

Want a real life example of getting voted off the island because the natives are tired of your act?  Look no further than NFL coaches, where Brian Billick of the Baltimore Ravens has lost control of his team.  Billick has been a historic success in Baltimore, racking up wins, a Super Bowl Title and a 13-3 record a year ago.  Pretty good track record.

But he's got an ego that rubs lots of players the wrong way.  Towards the end of the the 12/3 Monday night game against the Patriots, the Ravens defense made a huge 4th down stop to win the game - only to find out the coaching staff had called time out before the ball was snapped.  Their reaction?  To pull off their helmets and start pointing and screaming at Billick, who remained stoic and had to be thinking to himself, "I need to get out of this job before these people run me out of here involuntarily".

Of course, unlike the workplace manager who finds himself still in rotation long after his personal expiration date, Billick has something that might save him from be voted off the team - a 3 year contract.

Which can lead to arrogance and even more dysfunction in the workplace - even if that workplace is the NFL.  Check out the video below of Billick blowing a kiss on Monday night to an opposing player who dared to attempt to show him up on national TV...  If you don't like the direct reports ripping off their helmets and screaming at you, it's probably a good idea to try and set an example and not taunt the opposition.  Just a thought...

Stay classy, Baltimore....

What? Non-Profit Rainmakers Can't Get Paid For Making It Rain??

Definition of Rainmaker - An employee who creates a significant amount of new business to a company.  Example of a rainmaker - A Sales Rep...

Most rainmakers get paid in the business world.  Most, but not all, especially if you follow ethical codes in specific industries.

Ann Bares at Compensation Force is smart.  So I need to take her word on matters related to compensation I have little to no experience with.  Like compensating professional fundraisers... who happen to be rainmakers...

Here's one that blew me away a few days ago from Ann - Fundraising Professionals are Prohibited from Receiving Pay Based on Contributions.  Here's a clip from Ann's post:

"I continue to bump into people who design - or oversee the design of - compensation plans in non-profits and who are not aware of this potential issue, so I thought the topic worth a post.

The Association of Fundraising Professionals, as part of its Code of Ethical Principles and Standards, specifically prohibits its members from accepting compensation that is based directly on fundraising contributions.

Specifically, the code states:

(21) Members shall not accept compensation or enter into a contract that is based on a percentage of contributions..."

Ann goes on to say in her post that contribution-based incentive plans, many of them commission-like in their structure, continue to proliferate in fundraising and related fields.  She even points to some IRS Code (Intermediate Sanctions regulations - IRS 4958) which prohibits any revenue-sharing arrangements as cases of private inurement.

I know why the commission-like plans continue to proliferate.  It's because people, like me, enter th