The Anatomy of a Compensation Survey (And Why It Matters)

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The Anatomy of a Compensation Survey

Whether your organization is looking to market price a brand new position for a job posting, make an offer to a potential new employee, overhaul your entire salary range structure, check to see if your wages are keeping pace in your industry, or simply trying to stay true to your compensation philosophy, there is one tool that is indispensible—the compensation survey.
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How to Set Compensation in 5 Easy Steps

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Salaries are a business investment, and in order to make sure that you set fair and competitive compensation for jobs it’s important to use a structured method for setting compensation as opposed to choosing a random salary or simply using one salary survey or compensation source.

Employers generally determine salaries based on five (5) types of information: the job's responsibilities, what their competitors are paying, how valuable the job is to their organization, how they pay people in similar roles based on their pay structure, and their budget/organizational needs.

With this in mind, here are five (5) easy steps for setting compensation.
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4 Important Guidelines for Giving Pay Increases

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4 Important Guidelines for Giving Pay Increases

Pay increases are an important part of a compensation system as they aim to reward employees based on their performance achievements, but your organization should make sure you follow these four important guidelines when administering pay increases.

1. Base pay increases on your performance management and goal setting processes.

Pay increase practices should be aligned with not only your organizational culture and best practices for your organizational size and industry, but they also should align with your organization's performance management and goal setting processes to make sure that variations in employee performance are measured accurately and fairly rewarded.
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Pay Trends Emerge in Northeast Ohio

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The 2013 ERC Salary & Wage Surveys report salary data for 9,000+ individual employees from 200+ participating organizations and hourly wage data for 7,500+ individuals from 150+ organizations respectively. This unique local market data is a key resource for employers in the local business community looking to attract and retain top talent in to their organizations in Northeast Ohio.

While pay rates from these annual surveys remained fairly stable overall, certain industries did see more positive patterns of growth than others. Industry specific growth was strong in IT, Science/Research & Development, Customer Service/Sales, Purchasing/Distribution, and Business & Administrative Support. Each of these areas saw their average median salary grow by 4% or more overall from 2012 to 2013.
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3 Reasons You're Losing Employees Because of Pay

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In this article, we explore three current and critical compensation problems that cause employers to lose talented employees. These issues include low salary increases, lack of differentiation in pay by performance, and difficulties finding the actual "going rate" for jobs.

Problem 1: Low or modest salary increases

Salary budgets have been lagging for 3-4 years, pay increase budgets are not growing rapidly, and the outlook for significant pay raises is fairly bleak. This means that your employees' salaries probably aren't growing. What happens when the market doesn't match what your employees want? Should you keep your pay practices firmly aligned with the market, or adjust them to what your employees want?
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3 Frequently Asked Questions about FLSA

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Employers usually have a number of questions about the Fair Labor Standards Act (FLSA), which governs wage and hour rules - when and how employers are obligated to pay employees for time worked or not worked under law. Here are answers to 3 frequently asked questions about issues related to FLSA.

1. Can we dock exempt employees' pay?

Some employers seek to dock or withhold pay as a disciplinary measure for exempt employees, particularly for reasons such as absenteeism, tardiness, or performance. Under FLSA, however, employers may not reduce an exempt employee's pay for showing up late, leaving work early, or because they did not perform the quality of quantity of work expected of them. Other guidelines regarding the docking of exempt employees' pay include:

  • If your organization has a written paid sick time, paid leave, or other time off policy, it may reduce the employee's sick or paid leave account for absences due to illness, injury, or medical appointments. 
  • Once an employee's sick or paid leave account is exhausted for these absences, you must pay employees for partial day absences unless they qualify under FMLA and are using intermittent leave. 
  • If your organization does not have a sick or paid leave policy and it is implied that employees receive pay for their absences, it cannot deduct pay for full or partial day absences for exempt employees.
  • Exempt employees who are new to the organization and not yet eligible to receive holiday or vacation pay, should generally be provided with it, given these above guidelines.

There are situations where your organization has the ability to dock or reduce pay of exempt employees, such as if they did not work some days during their first or last week of employment, were absent for an entire week, or received an unpaid disciplinary suspension. Deducting pay for exempt employees is usually permissible under these circumstances, however, you can only dock pay if employees are not working (i.e. not checking email, voicemail, etc.) in these situations.

2. For what time do we need to pay non-exempt employees?

Unlike exempt employees who are paid to complete a job, non-exempt employees only need to be paid for time worked, so naturally, the issue of what constitutes "working time" for non-exempt employees is a common question and issue employers face. Job-related or required training, department or staff meetings, and time spent on work travel are all considered working time for non-exempt employees and must be paid. This even includes seminars, training, or meetings on job-related topics held after hours.

In addition, unauthorized working time may also be considered time worked. Even though an employer may not specifically authorize an employee to work, non-exempt employees must be paid for all work they complete. For example, if a non-exempt employee works at home off-the-clock on their own accord, that time must be considered hours worked even though the time was unscheduled. Additionally, if an employee starts work early or stays late, that time must also be paid. Non-exempt employees must be paid for all hours worked.

Employers are increasingly facing this issue when non-exempt employees access work at home, such as via electronic devices like a Smartphone. For example, if a non-exempt employee sends an email to another employee outside of work hours, they are entitled to be compensated for the time spent responding to that email.

3. Is this job exempt or non-exempt?

Employees exempt from both the minimum wage and overtime pay requirements not only include those that fall under the Department of Labor's  exemptions for executive, administrative, professional, outside sales, and certain computer professionals, but seasonal employees who are employed at certain seasonal amusement or recreational establishments also fall under those exempt from these provisions. Correctly classifying employees as exempt or non-exempt can be tricky given the many guidelines for exemptions.

Terming employees "hourly" or "salaried" can commonly lead to issues of misclassification. Salaried employees are not automatically "exempt" and hourly employees are not automatically "non-exempt." Also, a professional, highly-skilled, or managerial-related job tile (such as engineer, analyst, administrator, or supervisor) does not sufficiently guarantee exemption. Employers need to evaluate employees' specific job duties (regardless of how they are paid) and their job title to determine exemption status, as well as use specific tests to determine their status.

Outdated job descriptions can commonly lead to issues with FLSA compliance so it's important to regularly update them, determine their accuracy, and conduct FLSA audits or evaluations to determine if a job is exempt or not. Job descriptions should accurately depict what an employee actually currently does in the position because they are the most crucial element to deciphering a position's FLSA status according to exemption tests.

FLSA is a difficult and complex law to administer in the workplace, and as a result workplace violations are easily made. Understanding the common pitfalls faced by other employers, however, can help your organization stay compliant with the law's many provisions.

Please note that by providing you with research information that may be contained in this article, ERC is not providing a qualified legal opinion. As such, research information that ERC provides to its members should not be relied upon or considered a substitute for legal advice. The information that we provide is for general employer use and not necessarily for individual application.

Salaries in Healthcare Sector Reflect Demand

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Here in Northeast Ohio the prominence of our healthcare industry is often touted as one of the region’s greatest strengths. In terms of sheer volume, health care represents a significant proportion of the workforce- approximately 16% according to the 2012 Current Employment Statistics survey for non-agricultural jobs in the Cleveland-Elyria-mentor Metropolitan Statistic Area (MSA).

However, for those 155,400 individuals employed in healthcare/social assistance, being part of the workforce for this booming industry does not always translate into higher levels of compensation. In fact, using data from several ERC Compensation Surveys to perform an occupation specific analysis for 40 job categories placed two occupational subcategories within the healthcare industry, i.e. Patient/Client Services and Social Work, among the 10 lowest paying job categories in Northeast Ohio. Conversely, Clinical Healthcare Practitioners and Nurses came in as two of the 10 highest paying job categories in the region according to this 2012 data. 

Nursing, coming in as the fourth highest paid occupation in the analysis, is one of only a few positions that pay above the national median salary reported by the Bureau of Labor Statistics. As noted in a recent article from Crain’s Cleveland Business, registered nurses in particular can expect to remain in high demand across local healthcare systems. Clearly this demand for specialized, skilled talent is a key factor driving up rates of compensation within Nursing and among Clinical Healthcare Practitioners more generally.

At the opposite end of the spectrum the Patient/Client Services category includes a wide variety of jobs in healthcare, but with two important items in common, fairly low education and skill requirements and often highly repetitive job duties. A notable exception to this generalization that lower skills equate to lower pay, is in the field of Social Work. According to the 2011 ERC Non-Profit Benefits Survey, one way organizations often look to counteract this low market valuation of Health and Human Services positions such as Social Workers is to offer a unique array of other non-cash benefits that serve to enhance the total rewards package employees in these positions receive.

Additional Resources

ERC Non-Profit Compensation & Benefits Surveys
ERC, in partnership with United Way of Greater Cleveland, has created compensation and benefits surveys to help non-profits in Northeast Ohio gauge their compensation and benefits practices. Through this exclusive partnership, United Way Agencies that participate in these surveys will receive the survey results for no cost. Participate in our Compensation and Benefit Surveys by clicking here.

*The average median base salary figure for each occupation was calculated using data excerpts from the following surveys conducted by ERC: 2012 ERC Salary Survey, 2012 ERC Wage Survey and 2011 ERC Non-Profit Compensation Survey. Please note that the salary figure reported for each occupational category is an average of median salaries across applicable job titles from entry level up through management level positions.

How to Pay a Fair Salary: 5 Principles

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It probably seems like some of your employees are never satisfied with their salaries and that fair pay is always an issue needing to be addressed with either job applicants or current employees. If your organization and its managers haven’t heard the following questions and complaints from your current or prospective workforce, consider yourself among the lucky few...

  • “I do the work of 2 people, why aren’t I paid more?”
  • “If I’m doing a great job, why aren’t I getting a bigger pay adjustment than 2%?”
  • "Can you pay me 'x' for the job given my credentials?"
  • “The company had a record year last year and we didn’t receive a bonus or raise.”
  • “I haven’t gotten a pay raise in 3 years.”
  • “I’m working harder than ever with fewer resources and my pay doesn’t reflect my contributions.”
  • “Why don’t we get cost-of-living increases?”
  • “Why is she paid more than me when she does less work and performs worse?”
  • “The company down the street pays more for this job.”
  • “I found data on the internet which says that I should be paid 'x' for my position.”

These salary questions are tough and complicated for employers. They don’t have easy answers. Plus, with the wide availability of pay information on the internet, employees can quickly become skeptical of your pay practices if they don’t match or seem fair to what they see, hear and read online.

What’s an employer to do? Try to keep salaries as fair as possible and ward off perceptions of inequity as best they can, keeping in mind the needs of the business and market. Below are 5 widely accepted comp principles that employers have successfully used to keep pay fair and complaints to a minimum.

Principle 1: Play to the market.

The best way to stay on track with compensation is to know what your immediate, local competitors are paying and how they pay. Conduct thorough market analyses. Look at details like county and industry comparisons. Consider years of experience and education factors. Explore how other employers pay – do they offer variable pay, merit increases, pay premiums or bonuses in addition to base pay? These factors can lead to substantial differences in total pay.

Principle 2: Make internal comparisons.

What are you paying a premium for at your organization? Are certain skills, behaviors or job attributes more valuable than others to your business? Should they be paid a premium as a result? Who is most important to your company? Comparing the value of positions in the organization can help make sure that employees are paid fairly in relationship to their contributions to the business. Just make sure employees know what skills and attributes are valued.

Principle 3: Directly tie pay to performance.

One of the biggest criticisms employees have about their pay is when underperformers are paid as much as them and when working hard and performing well doesn’t necessarily bring a higher pay raise. It can be frustrating to your highest performers when better performance doesn’t equal better pay. That's why it's critical to accurately measure performance regularly and reward it with pay increases or variable pay.

Principle 4: Share the wealth.

If your organization is having record financial years, employees will eventually notice and become disenchanted if they aren't able to share in the wealth and success they helped create. The majority of employers share their business' financial success with their employees in some way, such as bonuses, profit-sharing and merit increases. Their pay should be tied to your organizational results. If pay can't be adjusted, consider other rewards to recognize employees.

Principle 5: Provide a living wage.

This means compensating employees in a way that allows them to meet their basic needs. When there is a consistent problem or complaint of not being able live on a certain amount of compensation, consider exploring your pay practices and how they meet your talent’s needs. If a segment of your workforce can't survive on what they are being paid, then it may be time to re-evaluate your pay practices, even if the market differs. Take care of your own.

Fair and competitive salaries are absolutely essential for attracting, motivating and retaining employees. When unfair pay is a main issue in a segment of your organization, use these five principles and adjust your pay practices accordingly.

View ERC's Wage & Salary Adjustment Survey Results

The survey reports data from Northeast Ohio organizations regarding their actual and projected wage and salary adjustments.

View the Results