Employers Increasingly Offering Health Savings Plans

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According to the results of the 2011 ERC/Smart Business Workplace Practices Survey, the percentage of Northeast Ohio employers offering health savings plans continued to increase from its current 35% – the highest percentage reported by the survey since 2003. The survey, conducted in partnership with Smart Business Magazine, showed a steady increase in the percentage of Northeast Ohio employers offering health savings plans over the years, indicating that this benefit is increasing in popularity.

The results of the survey also showed that health insurance premiums were continuing to rise, and more employers said that health insurance costs are a growing challenge for their businesses. Specifically, organizations report a 10% increase in health insurance premiums from 2010, an increase of 1% from 2010, and the highest increase from 2007 based on the survey results. Employers appeared to be turning to alternative health care options, such as health savings plans, to manage rising costs.

 “The increase in Health Savings Plans (HSA’s) is not surprising as more employers are seeking ways to balance providing competitive benefits with gaining more control over rising health insurance costs,” says Patrick Perry, President of ERC.

To download the free results of this survey, please click here

Most Maintenance Jobs See Pay Increases

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According to the 2011 ERC Wage Survey and the 2011 ERC Salary Survey, the majority of maintenance jobs surveyed have experienced pay increases since 2009. Both hourly and salaried maintenance jobs showed consistent rises in pay from 2009.

Maintenance Jobs with Hourly Rate or Salary Increases from 2009
Hourly Jobs

 

2009

2010

2011

Janitor/Custodian

$11.76

$11.85

$12.68

Machine Maintenance Mechanic - Senior

$20.02

$19.53

$21.00

Machine Maintenance Mechanic - Junior

$17.50

$18.21

$20.40

Maintenance Electrician - Senior

$21.64

$22.30

$22.77

Maintenance Electrician - Junior

$18.40

$18.66

$25.68

Maintenance Worker - General

$16.49

$17.90

$18.59

Source: 2011 ERC Wage Survey

Salaried Jobs

 

2009

2010

2011

Facility Maintenance Manager

$62,980

$65,046

$70,835

General Supervisor – Maintenance/Trades Function

$48,969

$63,247

$66,897

Supervisor – Custodial Services

$33,262

$33,434

$45,464

Supervisor – General Maintenance

$54,216

$55,828

$59,030

Source: 2011 ERC Salary Survey

For more information about our ERC Wage Surveys, please click here, or for more information about ERC Salary Surveys, please click here

Mixed Salary Trends for Engineers

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According to the 2011 ERC Salary Survey, engineering jobs have shown mixed salary trends from 2008. Many engineering jobs showed modest or no increases, while others, particularly high-level engineering jobs, showed higher increases from 2008.

 

Engineering Jobs with the Highest Salary Increases from 2008

 

 

2008

2009

2010

2011

% Increase from ’08

Engineering Cost Estimator

$49,504

$56,360

$56,055

$59,600

20.4%

Engineering Project Manager

$75,712

$81,441

$84,169

$89,685

18.5%

Engineer III

$65,300

$71,520

$71,208

$77,027

18.0%

Engineer IV

$77,295

$82,000

$81,400

$87,476

13.2%

Manufacturing Engineer Manager

$84,678

$83,991

$83,991

$92,500

9.2%

 

Among the jobs that showed more modest increases from 2008, and only slight increases or no increases from 2010, were Application Engineers, Electrical Engineers, Industrial Engineers, Manufacturing Engineers, Mechanical Engineers, Plant Engineers, Process Engineers, Quality Engineers, and lower level Engineers (Engineer I and Engineer II). Salaries reported for engineering technician jobs followed a similar trend.

For more information about the ERC Salary Survey, please click here

Elements of an Incentive Program

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Looking for a way to motivate or incentivize employees to meet a goal or objective? Whether it’s sales, productivity, service, quality, teamwork, or just a change in behavior, incentive programs can be an effective tool to meet your organization’s needs and objectives. Here are the most important elements of an incentive program.

 

Clarify the objective of the incentive program.

What is the purpose of providing the incentive? Will it be designed to improve the productivity of your production staff, increase sales, improve customer service, and enhance management? Usually, the objective of an incentive plan is tied to meeting some organizational or departmental goal or objective or motivating/changing a specific behavior. This may be general or specific to a certain work group or department.

Define the incentive.

Define the type of incentive you will provide and make sure that it aligns with the objective. Individual incentives should be tied to individual goals and performance, team incentives should be tied to team goals and performance, and so on. Also, will it be offered in addition to a salary increase or instead of one, and will it be considered part of the total compensation package? Below are three (3) types of incentives to consider.


Type of Incentive

Description

Individual incentives

  • Tied to the achievement of individual and/or organizational goals
  • Typically only distributed to specific individuals
  • Differentiates top, average, and bottom performers

Gain-sharing

  • Tied to the margin of profit or savings attained through a group or team’s performance
  • Typically only distributed to certain groups or teams
  • Rewards and encourages teamwork

Profit-sharing

  • Tied to the margin of profit attained by entire organization
  • Typically distributed to all employees or certain executives/managers
  • Provides employees with “line of sight” – how their contributions impact the organization’s success

 

Create a measure for the incentive.

Having a clear objective will make measurement easy. Measurement could be as simple as determining whether the goal was achieved or not achieved. You may also weight what percent of an objective was met (i.e. 75% of goal achieved or 110% of goal achieved). One key question your organization will need to consider is if you will payout for not reaching goals completely or if you will payout extra for exceeding goals.

Determine who is eligible to receive the incentive.

If the objective of the incentive plan is specific to a certain work group or department, eligibility should be constrained to only employees in those areas. If the objective is general, eligibility may be widespread, applicable to nearly all of the workforce. We find that incentive plans typically follow one of these two tracks.

Establish the size of the incentive.

This is, first and foremost, dependent on what your organization can afford to pay – which may vary from year to year and depend on cash flow, revenue, and profitability. The size of the reward may be a fixed dollar amount or a percentage of salary. On average, we find that variable pay costs account for 3% of revenue (variable compensation divided by total revenue) – compared to compensation costs which typically account for 25% of revenue. Below are average target percentages, maximum threshold percentages, and percentages of total cash pay that incentive/bonus pay represents.


Type of Employee

Average Target %

Max. Threshold %

% of Total Cash Pay

Production, Maintenance, Service

4.4%

6.6%

4.1%

Clerical, Technical

4.0%

7.7%

4.3%

Supervisory, Managerial, Professional

8.1%

12.1%

6.6%

Source: 2011 ERC Pay Adjustment & Incentive Practices Survey

Identify the form of payment.

Some incentive/bonus payments are paid out in lump sums annually, while others may be distributed across paychecks throughout the year. Annually is by far the most common frequency of payout, but quarterly is a close second. Monthly and semi-annual payments are extremely rare.

Incentive programs can be effective in promoting the behavior and results we want in our organizations, but in order to do that, they need to constructed effectively. This starts with clearly identifying the objective of the program and then aligning all of its pieces and parts (type, work groups eligible, size, form of payment, etc.) with that purpose.

Additional Resources

Pay Adjustment & Incentive Practices
Benchmark your organization’s pay adjustment and incentive plan practices with our ERC Wage & Salary Adjustment Survey. For more information about this survey (including pricing information), please click here.

Consulting & Project Support
For assistance in developing incentive/variable pay plans and compensation systems or benchmarking compensation practices, please contact consulting@yourerc.com.

Over 2/3 of Local Employers Still Offer Incentives/Bonuses

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The results of the 2011 ERC Pay Adjustment & Incentive Practices Survey show that the majority of employers are still offering an incentive/bonus plan. However, the percentage is down from the past few years.  

The survey reports that 67% of organizations surveyed have an incentive/bonus plan, compared to 79% in 2010 and 89% in 2007. Although this is the lowest percent reported in years, it’s important to note that the majority of respondents continue to offer an incentive/bonus plan.

The survey also shows that incentives including annual bonuses, profit sharing, spot-achievement awards, and individual incentives remain the most common incentives offered by employers. Gain-sharing, small-group incentive pay, and stock options continue to be less common.

Additional Resources
More info about this survey and other compensation surveys: click here

Some HR Management Jobs See Salary Increases

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The results of the 2011 ERC Salary Survey show the rising of some HR management salaries – mainly those specializing in a certain aspect of HR such as compensation, training, and recruiting.

According to the survey, the median salary for a Compensation/Benefits Manager rose 32% from 2009 and 12% from 2010. Additionally, the median salary for a Training Manager increased 24% from 2009 and 3% from 2010. Recruiting Managers also experienced a modest increase of nearly 7% from 2009.

The survey, however, shows that salaries for HR Managers continue to remain flat. The median salary for HR Managers showed no significant change from 2009 or 2010, remaining around $65,013.

Median HR Management Salaries

Additional Resources

More info about ERC Salary Surveys: click here
Other compensation surveys: click here

Majority of Local Employers Hiring New College Graduates

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The results of the 2011 Intern & Recent Grad Pay Rates & Practices Survey, conducted by ERC and NOCHE, showed that slightly over two-thirds (67%) of Northeast Ohio employers were in the process of hiring or planning to hire new graduates for positions in their organizations. The widespread majority of employers hire these graduates for entry-level positions, though some organizations hire them for mid-level/non-supervisory roles.

According to employers, the most common criteria they look for when hiring new graduates is work experience, interpersonal/communication skills, professionalism, major, and work ethic.  Many of these factors are also used to determine salary, along with professional credentials (such as certifications and internships/co-ops).

The survey also shows that average starting salaries for recent graduates vary depending on the type of degree. An engineering degree showed the highest average starting salary, while a communications degree showed the lowest average starting salary in the survey.

Average starting salaries for college degrees

Degree Obtained

Average Starting Salary

Bachelors, Engineering

$51,455

Bachelors, Management

$50,000

Bachelors, Computer Science

$47,250

Bachelors, Information Technology

$43,500

Bachelors, Accounting

$43,400

Bachelors, Sales

$40,000

Bachelors, Marketing

$37,333

Masters, Business Administration

$37,000

Bachelors, Business Administration

$32,571

Bachelors, Communications

$31,000

View the Intern & Recent Graduate Pay Rates & Practices Survey

This survey reports data from Northeast Ohio employers about their internship and recent graduate employment and pay practices.

View the Results

10 Ways to Manage Pay & Performance

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10 Ways to Manage Pay & Performance

Most employees want the opportunity to earn more pay based on performance, but such initiatives can be difficult for employers to create and administer. Here are 10 things to consider when managing pay and performance.

1. Does your culture align with a pay for performance program?

To be effective, your organization’s culture should align with a pay for performance program. This means that your organization should be committed to rewarding, recognizing, and promoting top performance, and employees should be aware of this commitment. It’s also important that your culture conveys an atmosphere of fairness and objectivity. Otherwise, pay for performance programs will fall prey to perceptions of subjectivity and bias, limiting their effectiveness.

2. What are the goals of the pay for performance program?

A pay for performance program can have many types of goals such as to improve productivity; increase customer satisfaction; enhance product quality; generate more innovation; boost revenues and profits; or reward top performers. Most goals for a pay for performance program focus on improving individual, team, and/or organizational performance. Be sure that the goals of this program are relevant to the business’s goals and needs.

3. What types of performance criteria will be rewarded?

The goals you define for the pay for performance program help determine what types of performance criteria will be rewarded. For example, if your goal is to increase customer satisfaction, the performance criteria may be customer satisfaction scores, number of customer complaints, or general customer feedback. If your goal is to improve productivity, the performance criteria might be quantity of products created, number of processes streamlined, or behaviors that enhance efficiencies. You may also consider making the performance criteria number of goals achieved or the impact of goals reached.

4. How will performance criteria be measured?

Often employers rely solely on performance reviews to measure criteria for a pay for performance program (i.e. a rating of “5” gets the highest incentive). While performance reviews can be a helpful measure, more objective measures of performance that aren’t as susceptible to rating error, supervisory perceptions and biases, or an ineffective form, should also be considered and used to measure performance criteria. Examples of such measures include goal setting, observable behaviors, and actual results (financial, quantity, or quality measurements).

5. Who will measure the performance and make pay decisions?

Sometimes performance can be measured without an individual, but other times, especially in the case of goal setting, observation, and performance reviews, an individual will need to measure performance , typically a supervisor, manager, or leader. Because these measurements are subject to human error, it’s critical that individuals are trained appropriately. Additionally, your organization will need to determine who will make pay decisions. Will you leave this discretion to your managers, providing them a fund to distribute these rewards?  Will HR or senior leaders be involved in the process, and to what degree? Most organizations involve all three groups at some level.

6. What type of pay for performance will you offer for meeting this performance criteria?

Not surprisingly, the most common types of pay for performance are merit pay, individual incentives, and bonuses. These programs tend to be easiest to administer and focus on individual performance. Increasingly, however, we are seeing some employers offer profit sharing, gain sharing, and employee stock ownership programs. While more complicated to administer, these programs have tremendous value, providing greater transparency and line of sight into organizational performance, reinforcing teamwork and collaboration, and offering employees a greater stake in the organization – giving them a true sense of autonomy and ownership. We find that organizations are offering multiple types of pay for performance for different segments of their workforce. This is ideal when different behaviors or results are desired that don’t necessarily fit one reward approach.

7. How much pay will be based on performance?

The trick to determining how much pay will be based on performance is determining what percent or portion of pay will have an impact on employee motivation or specific results you are seeking. Generally, studies find that when only 2-3% of pay is tied to performance, this is not enough to motivate desired behaviors or results. We have seen organizations reserve 2-4% for salary increases (i.e. cost of living, across-the-board, or merit) and 5-15% for incentive/bonus payout (with 15% typically targeted for executives). For example, NorthCoast 99 winners, provide an average of 10.3% incentive/bonus payout to top performers, 5.6% to average performers, and 7.3% overall.

8. What is the timing of payout for the rewards?

Most employers pay out rewards annually, but depending on the type of program a monthly, quarterly, or biannual payout may be more beneficial. Annual payouts may help your organization better manage costs and ensure that you have the funds to pay incentives to employees; however, there are advantages to paying out more frequently. When rewards are distributed closer to the time they were achieved, employees are more likely to view them as objective and relevant to their performance. In addition, paying out more often reinforces an on-going performance culture in which performance matters all year – not just at year-end – and makes supervisors manage performance on an on-going basis.

9. How will the program be funded and what are you willing to pay (the budget)?

Most pay for performance programs are funded using organizational profits or revenues. In this way, organizations frequently make pay for performance dependent on at least two factors: individual or team performance and organizational performance. Each year, you may budget for a percentage of revenues or profits that will be used to pay for performance. Organizational performance would dictate whether payout can occur.

10. How will the program reinforce other HR programs?

Pay for performance, at its best, reinforces and complements other HR programs and total rewards initiatives. What you reward in a pay for performance program should be similar to what you reward in a recognition program and how you promote people. Be sure to send your employees consistent messages about the results and behaviors you’re looking for, otherwise, your message will be lost.

Variable Pay Plans and Incentive Programs

Variable Pay Plans and Incentive Programs

Variable pay plans can be used as a motivation and retention tool for top performing employees.

Learn More to Get Started

Local Trends in Compensation Policies & Strategies

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According to a research study conducted by ERC, the majority of employers (58%) have no written compensation policy. Twenty-percent of respondents indicate having a compensation policy that is confidential, and 21% have a written or published policy that is made available or distributed to employees.

Despite not having a compensation policy, 62% of employers report having a strategy to stay even with the area labor market and 49% have a strategy to stay even with industry competitors.

ERC's HR Help Desk notes that “the foundation of an effective compensation system is a philosophy, policy, and strategy for how your organization will pay employees relative to the market – whether that is above, at, or below market rates. This helps HR make decisions about pay and guides an organization’s compensation practices."

Additional Resources

Preliminary Findings: Intern & Recent Grad Survey

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The preliminary findings of the 2011 ERC/NOCHE Intern/Recent Grad Pay Rates & Practices Survey show several trends in intern and recent grad employment and compensation practices.

  • Over 70% of employers plan to increase or maintain the number of interns they employ, consistent with trends seen over the past three years.
  • 68% of employers are in the process of hiring or have plans to hire new college graduates this year.
  • Organizations are increasingly using interns and new graduates to develop their talent pipeline rather than using them for simply workforce support and special projects.
  • Nearly three-quarters of employers say that they offer at least some of their interns employment after the internship.
  • Work experience is becoming an even more crucial criterion for employers when hiring interns, rising in importance from years past.

View the Intern & Recent Graduate Pay Rates & Practices Survey

This survey reports data from Northeast Ohio employers about their internship and recent graduate employment and pay practices.

View the Results