New Graduate and Intern Compensation Trends

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The 2013 ERC/NOCHE Intern & Recent Graduate Pay Rates & Practices Survey, conducted annually through a partnership between the Northeast Ohio Council on Higher Education (NOCHE) and ERC, reports that 57% of the organizations surveyed have a formal internship program in place. In addition, the same proportion of respondents are either in the process of hiring or are planning to hire new college graduates in 2013. This strong connection between the area’s higher education institutions and local employers also seems to be translating into positive compensation trends for many interns and new graduates, particularly in highly technical fields of study such as engineering.

Compensating Interns

Although there is still some debate over paid versus unpaid internships, the 2013 survey indicates that the vast majority of internships are paid. In fact, after stagnating from 2011 to 2012, the average hourly pay rate for interns across all fields of study saw an increase of nearly one dollar in 2013. While certain fields saw larger increases than others. For example, engineering interns are making more than interns working in the non-profit sector- but these differences were largely unsurprising and fall largely in line with overall compensation trends for their respective industries more generally.
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Companies Share Common Internship Program Goals

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As the school year begins to wind down, your organization may be looking to hire some additional support over the summer in the form of a college intern. While each organization will undoubtedly vary in terms of the specific needs the internship is designed to fill, the results of the 2013 ERC/NOCHE Intern & Recent Graduate Survey strongly suggest that in general, organizations hiring interns are doing so with a common set of goals in mind.

Top among these goals are “developing a talent pipeline”, “assisting with special project work”, and “obtaining affordable workforce support”. Reaching the two latter goals sounds fairly straight forward- hire an intern for a few months over the summer and hand off some administrative busy-work. However, this conventional approach to internships fails to help, and in many cases may actually hinder, organizations looking to realize the lasting benefits associated with “developing a talent pipeline”. Instead of taking a passive approach to internships, developing a talent pipeline requires a more actively engaged employer.
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What Truly Motivates Employees (Besides Money)

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Leaders want motivated employees, but often believe that money is the main motivator. Misunderstanding what really motivates employees can have negative consequences when it comes to engaging employees and motivating higher performance.

For example, researchers Teresa Amabile and Steven Kramer interviewed over 600 managers and uncovered that the widespread majority of managers misunderstood what motivates employees. Managers viewed making money and receiving raises and bonuses as the primary motivators, when in fact, upon analyzing over 12,000 employee diary entries, the number one work motivator was actually emotion and not financial incentives. Positive emotions were linked to increased motivation. Meanwhile, negative emotions were linked to decreased motivation.
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Keeping Pay Adjustments In Perspective

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In a 2013 overview of the state of compensation, Steve Bruce, contributor to HR Daily Advisor, makes a less than rosy comparison of where businesses stand today versus where a full economic recovery would have put businesses in terms of their compensation options. Employment overall is up and voluntary separations are beginning to increase, but for businesses looking to attract and retain top performing employees, rewarding these individuals through traditional compensation methods remains a challenge.

With merit increases averaging right around 3% according to World at Work, and several local surveys also pointing to the 3% mark, Bruce suggests that in fact, 3% may be the new norm. While it may not seem like much on paper, it is worth noting that 2012 was the first post-recession year that pay adjustments, merit based or not, hit that 3% threshold. At the macro level, 2012 also saw the percentage of Northeast Ohio organizations predicting at least some pay increase to 89%, a significant recovery in comparison to the all time low of 45% in 2009 (2012 ERC Pay Adjustment & Incentive Practices Survey).
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Compensation Rising for Recent Graduates

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With graduation day only a few months away, the pressure is on for many soon to be college graduates in need of full time employment. This flood of new job seekers on the market come May offers employers a great opportunity to take on these highly educated, enthusiastic potential new employees- and, even better, in most cases, these new employees can be brought on board at entry level compensation levels.

Benefits of Recent Grads

In fact, ERC/NOCHE’s 2012 Intern & Recent Graduate Survey reports that 42% of employers make their entry level hires directly from this pool of new college graduates. Their reasons for doing so are fairly consistent from year to year with the vast majority of employers recognizing new graduates not only as a great value (strong educational background, again for entry level compensation levels), but also as an opportunity for their organization to develop a talent pipeline, infuse the workforce with new energy, and boost the level of tech savvy among their employees.
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How Healthcare Reform Will Affect Your Wellness Program

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Healthcare reform is bringing several changes to how employers administer healthcare benefits as well as their wellness programs in 2013. Here are a couple key items you need to know about how healthcare reform affects your wellness program.

Larger wellness incentives

The Affordable Care Act (ACA) creates new incentives for employers to build wellness programs in their workplace and encourage healthier habits.

The Department of Health and Human Services, the Department of Labor, and the Treasury Department released proposed rules for employer-based wellness program incentives, which apply to plan years beginning on or after January 1, 2014.
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Skilled Manufacturing Salaries Gain Ground

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Despite multiple reports of optimism about Northeast Ohio’s manufacturing sector growth rate, the widely publicized quarterly economic indicator report published by Team NEO for the fourth quarter of 2012, further analysis offered by the report’s research team concedes that growth does not translate directly into job growth. The quarterly report cites data from Moody’s, placing the region above the national average for manufacturing sector growth rates. But, the researchers point out that increased production does not guarantee job creation at those same levels.

At least in the short term, manufacturing job growth here in Northeast Ohio does seem to be accompanied by slightly more competitive salaries when compared to national averages (2013 EAA National Wage & Salary Survey). Although the increases are small, only a few percentage points each year, skilled manufacturing positions such as welders and CNC machine center operators are among those that are consistently gaining ground and ultimately becoming more competitive when compared to national averages.
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3 Pay Problems Most Companies Face And How to Solve Them

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Pricing new and highly specialized jobs, salary discrepancies between sources, and making pay adjustments based on mixed rates of salary growth are three common compensation problems many companies are facing. Here's how to resolve them.

Pricing new and highly specialized jobs

New and "hybrid jobs" are increasingly being added to workforces and often include unique and highly specialized IT, marketing, and technical positions (i.e. Social Media Manager). Employers find that current compensation information sources may be limited because do not have specific pay data that directly match the job and are challenged in setting a competitive salary.
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Executive Pay: The Power of Indirect Incentives

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In a PricewaterhouseCoopers study of 1,106 individual executives across 43 countries, researchers found ample evidence to suggest that the effectiveness of executive pay hinges not only on a total dollar amount, but also on several key intangibles. Despite much focus on variable pay as a key element of executive total rewards packages, the PwC study reports that as a performance driver, variable pay is only a part of the story.

Instead, for this group of executives, their motivation to excel at work appears to stem from a combination of factors including, perceptions of fairness, job satisfaction, recognition and of course, to some degree, the final dollar figure. For example, when asked how much of a cut in pay they would be willing to take if offered their “ideal job”, on average, participants indicated that they would take a cut of up to 28% for the opportunity to pursue a more personally fulfilling job. However, it should be noted, that when asked the same question for someone beside themselves, their threshold for pay cuts was significantly higher in this less personal hypothetical scenario- with some breakouts as high as 70% and averaging at a 60% pay cut.
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Recap: Employment Law - The Year Ahead

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ERC's 2013 "Employment Law: The Year Ahead" program featured presentations from three attorneys at Buckingham, Doolittle, & Burroughs LLP which covered major topics in employment law related to the NLRB, Affordable Care Act, and expected regulations for 2013.

1. NLRB

Unconstitutional Board Appointments

Neil Bhagat led the program with an update on the NLRB. While the Federal Appeals Court invalidated decisions made by the National Labor Relations Board (NLRB) when it determined that President Obama acted unconstitutionally by making recess appointments to the Board, Bhagat explained that employers should use the Board's recent decisions as guidance until a decision is made on whether the Board's decisions are binding or not.
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