Jun 6 2023
How to Boost Your 2023 Plan with Power-Packed Compensation Strategies

Powerful Compensation Strategies for 2023

Is 2023 the Year to Upgrade Your Compensation Strategies? Absolutely.

As 2023 progresses, employers are experiencing recruiting fatigue and facing low employee engagement scores. Adding to the pressure are employee preference for flexible work arrangements and management reviewing their policies to entice employees to return to the office. In addition, new pay transparency requirements in various states, including NY, CA, and Washington, have promoted employers to update their recruiting policies with greater urgency for up-to-date salary information so they can make informed offers to prospective candidates. To help organizations meet these challenges, Blue Whale Compensation has compiled a series of compensation strategies that can help companies best manage their labor and talent needs. 

We are living through a historical shift in the workplace with rising wages and inflation. At no other time in recent history has compensation taken a front seat as a means companies can use to retain, engage, and attract new talent. A compensation strategy, however, should not be confused with solely giving employees aggressive increases. Unwarranted increases with no other plan are likely to make issues worse.

The plan needs to be based on a comprehensive analysis of budgets, labor needs, current and future talent needs, and basic compensation planning.

A Market Analysis is a Must

Carefully examine market levels and set appropriate salary benchmarks. Based on that information, consider market adjustments. Market adjustments should aligned to market trends, inflation, employee performance, market position, and budget. With inflation eating away any substantial wage gains, forecasting reports indicate that most employers will grant increases above those in 2022. In 2023, pay increases ranged from 4.5% to 5.7%. Furthermore, a preliminary analysis of Blue Whale clients’ plans suggests that a majority of them are inclined to offer a one-time bonus to address the substantial inflation witnessed over the past 18 months.

Merit-Base and Market-Driven Increases based on Performance

Combine your performance management information with an employee’s market position if you have ranges and midpoints. Using a merit-driven grid, you can justify larger, above-average increases to high-performing, underpaid employees.  Conversely, the matrix helps you develop a policy to slow down salaries that are way above market midpoints.

Download Matrix

Is setting merit based on employee performance and market position tricky? Blue Whale can help. We provide BlueComp, a freeware app that helps organizations manage their compensation program, including merit-based pay. For more information, click here to view how BlueComp can help you manage your compensation program.

Identify Employees at Risk

Mine your employee data and identify the employee population that is most at risk of leaving your company. Use your compa-ratios! Employees with the lowest compa-ratios are twice as likely to be looking for employment. Review your employee population via existing interview data: what departments, units, or types of employees are leaving at a faster pace, and what trends can you derive from their exit interviews?  

Closely examine your labor stats and compare them to specific benchmarks. For example, voluntary turnover rates are between 10% and 17%. Are your higher or lower? Employee tenure is another key barometer to measure at-risk groups. Employees who have more than four years with a company as twice as likely to stay with the company for another three to four years. Employees who have less than two years of experience are twice as likely to be looking for another job. In addition to critical stats, check data from your employee opinion or engagement surveys. They often contain valuable information that can help you identify at-risk employee populations.  

Implement a Basic Compensation Plan with Guidelines, Grades, and Ranges

Unlike the rapid wage movement that employers experienced in 2022, pay increases in 2023 have slowed down. Your plan must be appropriately aligned with current market conditions. The plan must include grades based on job leveling; ranges reflecting reasonable hiring salaries; policies addressing promotions and demotions; and, most importantly, a basic outline of your company’s compensation philosophy.

View Sample Comp Philosophy

Upgrade Your Performance Management System 

Over the last few years, AI-driven solutions have come into the marketplace with innovative technologies that have simplified the often complex and disliked world of performance management tools. Many tools exist to offset companies’ great challenges with their existing program. Most app-based solutions tend to be affordable, flexible, and easy to deploy.   

Consider Bonus for High Paid Employees, Not Increases

For high-paying employees versus additional salary, examine the market, and follow the following strategic budget: For employees over the midpoint, offer them a one-time bonus; for employees under the midpoint, add to their base.  Over time, this strategy will keep your costs even with the market, and you can target at-risk employees and perhaps even keep them. 

Selling your Plan

The biggest mistake companies make when resetting a compensation program is focusing their message on how the new plan will make the company more productive, efficient, and ahead of the curb. Instead, The message should focus on giving the employees the information they need to trust the process and the overall plan. This effort requires a significant public relations strategy that cultivates the organization’s needs for the immediate future and long-term success.

Let’s Start the Conversation

Blue Whale offers a full range of compensation services to help you achieve your business goals. Whether you’re looking to design a new compensation plan, analyze your current program, or stay up-to-date with the latest trends, we have the expertise and resources to meet your needs. Contact us to learn more about our compensation services and how we can help you take your program to the next level. Let’s start the conversation!

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Feb 12 2023
Pay Transparency – Quick FAQs

Pay Transparency & Wage / Salary Posting Requirements:

The Essentials

SALARY RANGE POSTING – The states of Colorado, Washington, New York, California, and Rhode Island all have similar requirements regarding posting salary ranges. That is, employers should post the minimum and maximum that they genuinely believe will be paid for the position. There are also several requirements based on the size of an organization. New York requires salary posting for companies with four or more employees. California’s pay transparency requirement applies to companies with at least 15 employees.

RECORD MAINTENANCE – Companies are asked to maintain pay transparency records, including a history of their salary ranges. For example, New York state law requires employers to maintain a “history of compensation” for posted positions and job descriptions (to the extent they exist). Employers should consider assessing how they store, aggregate, and categorize compensation records for each advertised job opportunity or position. Washington, California, and Colorado have enacted similar requirements.

BEYOND COMPENSATION: BENEFITS, BONUSES & EQUITY – Some states, including Washington and Colorado, require posting compensation information beyond salary ranges. Employers of these states must post the benefits offered with the position, including bonuses, equity, and any additional employee compensation. California, however, does not currently require this.

PAY COMPARABILITY PROTECTION – Most states to enact pay transparency legislation have done so in part to protect employees from gender discrimination. These protections forbid employers from the following: “Paying an employee of one sex a wage rate less than the rate paid to an employee of a different sex for substantially similar work, regardless of job title, based on a composite of skill; effort, which may include consideration of shift work; and responsibility.” In addition to gender, in 2017, California Senate Bill 1063 added extensions to Fair Pay Act protections to prevent race- and ethnicity-based disparities in pay.

Contact us for additional information on navigating your plan with pay transparency and job posting requirements!

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Feb 5 2023
CA, NY, CO: Dealing with Pay Transparency in 2023

How to comply with Pay Disclosure Rules

The First Month & Key Takeaways

Posting of Ranges – Most Companies Publish Subsets

  • A review of ranges posted in January 2023 indicates that most companies have opted to post a subset of the range, not the full range. Most advertised ranges present gaps between 20% and 30%. Generally, the difference between the minimum and maximum range is between 40 and 60%.

Why Post the Full Range?

Companies mainly post the full range to avoid potential liability from only posting a subset. It must also be stated that companies who only post a subset may also have to develop a plan to provide the applicant with the full range to avoid a negative hiring experience. Additionally, it is still too early to determine how companies handle hiring requests for the full salary range. Suppose companies are providing the full salary range. In that case, they must ensure a cohesive policy for responding to employee inquiries aligned with the ranges posted in their job ads.

Using Posted Data to Market Priced Jobs

CA’s Labor Commissioner Provides Guidance on Pay Ranges

  • CA Labor commissioner added interpretations and additional guidelines for pay range. A pay range is what the employer expects to pay an individual. This could be the actual pay or a range. Since the definition does not distinguish between a hiring range and a full compensation range, companies have interpreted that they will be within the new posting requirements if they only post the hiring range.

CA’s Labor Commissioner Releases FAQs.

  • The California Labor Commissioner’s office released the much-anticipated FAQs on the state’s new pay scale disclosure requirements under the Equal Pay Act, which became effective on 1/1/2023. These FAQs have been added to the DLSE’s guidance for the California Equal Pay Act (Labor Code section 1197.5) and Labor Code section 432.3. There are now 40 FAQs, which are important for all employers operating in CA. Among them:
    • Salary Scale, Definition
    • Employer size threshold
    • Remote Workers
    • Posting in other states
    • Displaying the Range
  • The full article can be found here: CA’s Labor Commissioner’s FAQs, Release, Dec. 2022

Compliance, CO

  • Concerning compliance, Colorado -one of the first states to pass pay transparency legislation- has seen few compliance issues. Since the legislation took effect in 2019, only a handful of Colorado companies have been fined. In fact, according to a survey conducted by Pay Clarity, about two-thirds of US employers are either planning to or considering disclosing pay rate information in future job listings, even in states and municipalities where they are not required to do so.

Job Descriptions and Compliance

  • The most difficult obstacle employers will likely face is updating their job descriptions. Given that the New York State law requires disclosure of existing job descriptions, employers should consider updating job descriptions to ensure that the description identifies the position, where it can be—or must be—performed, along with any other information required by this law and relevant to the compensation range or listed salary. As employers review other postings, including ranges posted by other companies, they should compare their descriptions’ requirements and salary ranges and update the job information accordingly.

In summary, pay transparency is emerging as one of HR’s best practices for the near future due to its numerous benefits. In fact, pay transparency is one of the top considerations for Gen Zs when considering where to apply. Firstly, it promotes fairness and equality by eliminating wage gaps and disparities, ensuring employees receive equitable compensation for their work. This transparency fosters trust and engagement, as employees have a clearer understanding of their value within the organization. Moreover, pay transparency enhances internal communication and reduces the likelihood of wage discrimination, contributing to a more inclusive work culture. Additionally, it enables organizations to attract and retain top talent by showcasing their commitment to fairness and providing a competitive edge in the job market. Overall, pay transparency aligns with the principles of social justice and yields positive outcomes for both employees and organizations, making it a crucial HR practice for the future.

2/5/2023

Comp Plan Review: How’s your Comp Plan? Schedule a plan review. Let’s start the Conversation. Contact us

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Dec 20 2022
How to Boost Employee Morale With Powerful Pay Strategies

How to Increase Employee Engagement in 2023

Talent and Cost Balancing Management Tips

In the last three years, it has been common for HR professionals to face new challenges and opportunities in the ever-evolving world of human resources. Next year will not be the exception. One of the most pressing concerns that many organizations will face in 2023 will be managing labor costs while maintaining a competitive edge and providing employees with fair compensation and working conditions. This can be especially challenging in the current economic climate, where changes in the job market, shifting business strategies, and other factors can impact the bottom line.

Keeping labor costs under control for HR professionals requires a strategic approach that balances the business’s needs with the talent and resources needed to stay competitive. In this post, we highlight easy wins to keep costs under control. Whether you are an HR manager, director, or someone interested in the field, this post will provide valuable insights and information to help you stay ahead of the curve.

Talent and Cost Balancing Strategies for 2023

In conclusion, by implementing strategic measures to save labor costs, companies can maximize their savings and revolutionize their approach to managing their workforce. Embracing technology, optimizing scheduling and staffing, fostering employee engagement, and investing in training and development are just a few strategies that can drive significant improvements in productivity and efficiency while reducing labor expenses. By taking a proactive stance toward labor cost management, businesses can pave the way for long-term success and profitability in today’s competitive landscape. So, why wait? Start implementing these strategies today and witness their transformative impact on your bottom line and overall workforce management.

12/20/2023

Need Business expert advice on how to manage your compensation program? Call us today!

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Oct 21 2022
Total Rewards: How to Find Compensation Strategies that Work

Raise your Company’s Engagement Index: Compensation Strategies That Work!

In today’s rapidly evolving employment market, it is imperative for organizations to place a strong emphasis on their compensation and benefits offerings to engage their existing workforce and attract prospective candidates effectively. Recent research conducted by the Society of Human Resources has highlighted the undeniable influence of compensation as a key determinant of job satisfaction among employees. A comprehensive and competitive package has a direct correlation with higher rates of employee retention and improved productivity. By minimizing turnover and fostering an environment of enhanced morale, productivity, employee satisfaction, and organizational culture, companies can optimize their financial resources and cultivate a more positive and flourishing work environment. So, what are the necessary steps that can help you raise your organization’s engagement index?

Find out what your employees want

Finding out what your employees prioritize will also help determine if your organization is in line with what employees are looking for to better capitalize on the funds utilized for compensation and remain competitive.

One method of determining your employees’ wants and needs is to distribute surveys among a wide variety of staff members. Alternatively, employers could coordinate interviews of focus groups to facilitate open discussion.

During this process, question what your employees’ value and account for variations based on different groups and demographics.

Do an Inventory of the latest Compensation Trends

Studies show job candidates and employees look for a key component: the compensation and benefits package.  In addition, several aspects that affect compensation can change over time, such as the size, revenue, or location of an organization or each employee’s role. Therefore, organizations must regularly review compensation and benefits to retain and attract employees. As you review the latest trends, highlight your comp and benefits program under a total rewards strategy. Employees may overlook the value of total rewards programs if they are not presented within the framework of a comprehensive total rewards strategy.

Leverage The Value of Your Employee Benefits

It is important to help employees better understand what benefits are offered to them in order to avoid dissatisfaction due to pay.  Once employees clearly understand their total compensation package, they will most likely focus on all the compensation and benefits offered. Remember, 40% of your labor costs are associated with your benefits package. The cost includes not only medical benefits but all employee insurance programs, time-off, pension, and mandated employer-related taxes

Develop A Strategy that blends your organization’s Culture and Value

Once recommendations have been accounted for, account for your organization’s values and pay philosophy.  Also, account for the return on investment and how changes could address attraction and retention.  Be prepared to act or explain why such benefits are or will not be offered.

Flexible Solutions

To stay relevant and reach a widescale workforce, it is recommended that your organization offers flexible benefits that are customizable to your workforce. For example, there are a lot of different options to choose from when it comes to selecting a benefits package.  Some options include health insurance, paid leave, retirement benefits, flexible scheduling, or tuition reimbursement.  Also, flexible work arrangements are highly priced by employees: They offer the flexibility and cost-saving options often sought by employees.

Top Performer Benefits

Lastly, consider adjusting your compensation strategy for top performers and those that exceed expectations to further incentive good behavior and increase attraction and retention.  Consider offering additional pay or an employee bonus. Employees are more likely to apply or stay at an organization that invests in their performance.

In conclusion, adopting a systematic approach to developing an engaged workforce can yield numerous benefits for companies. By implementing a well-defined process, organizations can create a culture of employee engagement that enhances productivity, fosters loyalty, and drives innovation. This process involves understanding employees’ unique needs and aspirations, aligning goals and values, providing regular feedback and recognition, promoting professional growth opportunities, and fostering a positive work environment. Investing in employee engagement improves job satisfaction and retention rates and directly impacts the company’s bottom line, as engaged employees are more committed, motivated, and willing to go the extra mile. By prioritizing the development of an engaged workforce, companies can position themselves for long-term success in today’s competitive business landscape.

10/15/2022

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