Integrating Incentive Pay into Your Performance Management Process

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When structuring an effective Performance Management process at any organization, including some type of incentive to help drive performance is a key step. Particularly in recent years, large financial incentives are not always feasible, nor are they always found to be the most impactful driver for incentivizing employees. Nonetheless, a consistently strong majority of organizations both across the region and nationally, tie pay to performance either directly or indirectly.

For a closer look at how organizations in Northeast Ohio are implementing these financially based incentives, we turn to the 2013 ERC Pay Adjustment & Incentive Practices Survey.

Types of Incentives

Annual bonus plans remain the most common type of incentive pay, with individual incentives and profit-sharing filling the second spot, depending upon the employee group being compensated. Other less common incentives reported include, longevity service awards, retirement-based profit sharing, and executive performance bonus plans for select executive level positions.
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2013/2014 Salary & Benefits Planning & Budgeting Guide

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We’ve compiled a brief compensation and benefits planning and budgeting guide to help your organization make important pay, health care, and benefits decisions this fall and into 2014. The guide summarizes the latest and most important trends we’re seeing related to administering compensation, health care, and benefits, which affect your organization as it plans for 2014.

Employers project 2.9%-3.0% pay increases for 2013/2014.

Salary budget planning surveys for 2013/2014 consistently report average actual pay increases of about 2.9% for 2013 and project pay increases of 2.9%-3.0% for 2014 for most levels of employees, in line with increases of last year. A breakdown of the projections from these surveys is summarized below.
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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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Northeast Ohio Keeping Up with National Pay Adjustment Trends

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The 2013-2014 ERC Wage & Salary Adjustment survey results found an average projected pay adjustment of 2.9%- basically more of the same from 2013. The results from this local survey of Northeast Ohio employers are very much in line with national reports from organizations such as Hay Group and WorldatWork which repeatedly indicate that employers are hovering right around the 3.0% mark, much as they have for that past several years.

One bright spot here in Northeast Ohio is that out of the 139 participating employers only 7 indicated they are not giving any pay increases to their employees or a full 95% of employers that are providing increases in 2013. 2014’s numbers are shaping up similarly, with only 6 out of the 139 employers projecting that they will not give increases, again that’s 96% projecting increases for 2014.

As the chart below illustrates, in terms of the overall percent of employers providing increases, 2013 and 2014 (projected) have finally met and even exceeded the pre-recession levels. Seeing these adjustments continue to expand across the region’s employers is a positive sign for the region’s business community and in theory means these increases (even if small) are reaching a larger proportion of the total workforce as a result.
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The 15 Attributes of a Great Workplace

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The 15 Attributes of a Great Workplace

ERC's NorthCoast 99 program recognizes great workplaces that excel at the attraction, retention, and motivation of top performers. ERC is proud to have recognized great workplaces in Northeast Ohio, and has accumulated a great deal of insight into what makes a workplace truly great through the research we conduct as part of the program.

What makes a great workplace that draws extraordinary employees to love coming to work every day? What makes a great workplace that attracts, retains, and motivates the very best talent?

Here are 15 attributes that we believe are characteristic of great workplaces for top talent, based on our research over the last 15 years.

1. Offer Challenging and Meaningful Work

Great workplaces understand the importance of keeping employees' work interesting, exciting, challenging and meaningful, because consistently, top performers say that challenging and meaningful work is the number one attribute they seek in a job.

2. Hire and Retain Great People

Great workplaces are made up of great people. Within great workplaces, top performers work alongside other top performers who are positive, hardworking, committed and loyal, believe in what the organization does, and participate in making the workplace great.

3. Provide Competitive Compensation

Great workplaces offer competitive and fair compensation, above-average pay increases, and opportunities to earn more pay based on performance, such as bonuses, profit sharing, and other incentives to keep and reward top performing talent as well as attract new talent.

4. Value and Reward Employee Contributions

Great workplaces show they appreciate and value employees and their contributions. They celebrate success often, and praise, recognize, and reward employees in a variety of formal and informal ways. They never miss an opportunity to say 'thanks' for employees' hard work.

5. Invest in Training and Development

Great workplaces invest in training and development for their workforce to grow their talents and capabilities. They make time for learning and support it by paying for employees to participate in various opportunities and offering/delivering a variety of training and career development programs.

6. Guide, Support, and Develop Top Performers

Through performance management practices that help guide, support, and develop exceptional performance, great workplaces provide clarity on how to be a top performer, help other employees become top performers, and assist existing top performers in sustaining top performance. Reaching for excellence each and every day is what makes great workplaces successful.

7. Encourage Work/Life Balance

Great workplaces are flexible to employees' work/life needs and encourage work/life balance by offering flexible schedules, providing generous paid time off, accommodating individual requests and needs, and creating a supportive work environment that is understanding of personal and family obligations.

8. Invest in Employees' Health and Wellness

Great workplaces genuinely care about their employees' well-being. They offer wellness options that help employees develop healthy lifestyle behaviors as well as provide an array of benefits which support their employees' health and personal welfare.

9. Involve and Empower Employees

Great workplaces involve and empower employees by listening to their input, involving them in moving the organization forward, and giving them opportunities to lead initiatives, collaborate with one another, participate in decision-making, and make a meaningful difference at work. At great workplaces, employees believe that their opinions matter and that they can positively impact their organizations.

10. Share Information About the Organization's Performance

Leaders frequently share information about the organization's performance, its financials, the vision and direction of the organization, and other critical information and updates at great workplaces. In addition, leaders regularly interact with and communicate with employees one-on-one, in small groups, and as an entire staff. Additionally, great workplaces help everyone understand the mission and purpose of the organization, and how their work connects to the big picture.

11. Are Led by Exceptional Leaders

Great workplaces are led by exceptional and inspiring leaders. Leaders set the example from the top and lead the organization well. They genuinely care about and value employees. Relationships between leaders and employees are characterized by mutual respect, trust,  honesty, and support.

12. Encourage Innovation and Growth

Great workplaces are successful, growing, and innovative. They hold themselves to high standards, are focused on delivering exceptional customer service and quality, and strive to innovate and continuously improve their organizations. They are always raising the bar in their businesses and in their workplaces.

13. Hire the Best of the Best

Great workplaces hire the best—and only the best. They recognize that a great workplace and culture results from great people. They define the talent they need, strategically recruit it, and put into place selection practices that identify top performers, as well as on-boarding practices that engage top performers and set them up for success from the start.

14. Create and Sustain a Unique Culture

Great workplaces have a unique culture that is their own, often described as fun, congenial, collaborative, positive, passionate, and creative. Their work environments, people, and workplace practices all help create a vibrant, positive, magnetic, and infectious culture.

15. Serve the Community

And last but not least, great workplaces make an impact on and give back to their local community. Not only do they generously donate their company resources to the community, but they also serve their communities by helping others in need and offering their staff's time and talents.

There is no magic formula for achieving a great workplace, and these are just some common attributes of many that great workplaces seem to have. While no workplace is perfect, many organizations strive to become a truly great workplace and come close. The NorthCoast 99 winners are among these organizations, and they, as well as all other organizations that strive everyday to be great workplaces, should be applauded for their efforts to become employers of choice in Northeast Ohio. They are truly making a difference.

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Employers Struggle Most with Tracking FMLA

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Organizations could cite a countless number of reasons that they find FMLA administration challenging, but according to a 2013 ERC survey, top among these reasons is “tracking”. According to the 2013 ERC FMLA Practices Survey, “tracking” is the number one challenge for 40% of the participants, up 12% since the survey was last published in 2011. Other somewhat less common challenges include overall compliance (23%), determining overall costs associated with FMLA absences (17%) and determining what constitutes a serious health condition (12%).

Variable Administration Practices

Given the difficulties employers face with tracking FMLA, the fact that their methods for doing so continue to vary from organization to organization is largely unsurprising. For example, over half of the respondents (56%) reported using a rolling 12 month period measured forward, but nearly one-third use a rolling 12 month period measured backward and 10% us a calendar method.
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Payroll Cards Facing Legal Scrutiny

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In 2013, New York’s Attorney General began investigating companies that pay hourly employees using prepaid payroll cards, with the concern that fees associated with pay card withdrawals may be insufficiently disclosed or excessive, and that the cards may decrease employees’ take-home pay which may, in some cases, result in pay below the minimum wage.

There was also concern that these cards may not comply with state laws governing printed payroll statements and written consent for using the cards; federal law which prohibits mandatory use of prepaid payroll cards as a condition of employment; and collective bargaining agreements.
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Local Wellness Programs and the ACA

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Based on the results of the 2013-2014 ERC Policies & Benefits survey, Northeast Ohio employers are well positioned to take advantage of the recently released Affordable Care Act (ACA) regulations increasing the maximum rewards employers may offer employees for participation in wellness programs. Local employers have consistently outpaced the national averages in terms of their wellness initiatives, with specific programs illustrated in Figure 1 below.

One key program that is particularly relevant to Northeast Ohio employers within the context of the ACA regulations is smoking cessation classes. More and more local organizations are placing restrictions on tobacco use as part of their hiring policy and 31.1% of local employers do not allow smoking anywhere on the premises of their organization. In comparison, the national average is 10% lower at 23.1%.
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New Pay Adjustment Projections Line Up With 2012 Data

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Based upon the results of the 2013 ERC Pay Adjustment & Incentive Practices Survey, many Northeast Ohio employers are approaching their compensation decision making plans from a very similar, if not slightly more fiscally conservative viewpoint as in 2012.

After hitting an average wage and salary increase projection of 3.0% in 2012, pay adjustment projections remain largely in line with this same number for 2013. However, within certain employee groups and breakout categories; most notably among executive employees, larger organizations with more than 200 employees, and non-profits; 2013’s projected increases dipped by as much as 0.3% from 2012’s projections. Conversely, smaller organizations with 1-50 employees and other non-manufacturing organizations saw the strongest increases, particularly among the exempt supervisory, management, and professional employee group.
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Demand for Technical Skill Sets Help Deliver Strong IT Salaries

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Information Technology (IT) continues to be an area of exceptional growth in the job market, both nationally and locally. Using data from the 2013 ERC Salary Survey, the average median salary growth of various occupational categories within IT, as set by the Bureau of Labor Statistics, can be seen below. The positive salary growth this figure illustrates is unsurprising when two key factors are considered.

Job Growth

Nationally, the field of “computers and mathematics” is predicted to see job growth as high as 22% between 2010 and 2020. Locally, the MSA (metropolitan statistical area) encompassing Northeast Ohio falls just short of those job numbers, projecting 16.1% job growth during the same time period. When compared to the overall job growth projections encompassing all occupations, nationally (14.3%) and locally (1.7%), it becomes clear that IT is seeing much more positive job growth than other industries in Northeast Ohio.
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