Risk Aversion & Executive Pay

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In an economy where compensation is increasingly driven by “pay-for-performance” strategies, executive pay is no different. According to the 2012 EAA National Executive Compensation Survey, base salary accounts for approximately 75% of the total compensation package in Northeast Ohio. In theory, by focusing on variable pay, such as bonuses and other short term incentives, organizations are able to more closely tie executive pay to performance. However, a new international report by PricewaterhouseCoopers suggests that for many of the executives surveyed, certain types of variable pay, namely those associated with high levels of uncertainty, may not be an ideal driver of performance.

In terms of bonuses, the study cites only 28% of participants opting for a riskier, but higher yield bonus structure over a potentially lower dollar base-pay figure of pre-determined value. Taking the inquiry to a more psychological level, the same study then presented participants with several other reward structures of increasing complexity. Once again, the results clearly point to a strong desire for certainty and clarity over total value. Sixty-six percent of participants expressed a preference for a rewards plan based on internally controllable measurements such as profit, over a plan utilizing external factors such as shareholder returns.
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OSHA Summary Must be Posted: February 1 - April 30

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As a reminder, OSHA rules require employers to post the OSHA 300 summary form of occupational injuries and illnesses occurring between January 1 and December 31, 2012 by no later than February 1. Employers, however, do not need to post the full log of workplace-related occupational injuries and illnesses.

Please note that the summary form needs to be completed even if no work-related injuries or illnesses were recorded and requires the certified signature of a company executive. Employers must keep the summary posted through April 30.

Employers can download these forms at the link below:
http://www.osha.gov/recordkeeping/RKforms.html

Employee Wellness Programs Flourish in Northeast Ohio

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With the start of a new year often comes many health related resolutions and a chance for employees and employers alike to take a fresh look at their wellness both in and out of the workplace. Perhaps most common among these resolutions are those related to weight-loss and exercise, particularly in a workplace more and more focused on relatively sedentary “desk-jobs”. Conventional wisdom would suggest that when it comes to weight management, it is these employees that would struggle most to maintain a healthy, active lifestyle. However, a recent article published in the Plain Dealer, reports that employers may actually need to be more concerned about the wellness of a very different group of employees.


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Five Steps to Prioritizing Your Health in 2013

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Tips provided by ERC Partner University Hospitals

1. Schedule time for exercise

And stick to it! Half the battle of getting fit is getting the motivation to do it. However, if it's scheduled in your phone or notebook like your other appointments, it's practically written in stone. You don't have to work out every day, but setting a reminder for at least three days a week will lead you on the road to a happier, healthier and fitter life.
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Ohio Training Grant Update

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ERC continues to work closely with the Ohio Development Services Agency (formerly Ohio Dept. of Development) to get the latest news regarding the Ohio Incumbent Workforce Training Voucher Program.

Since the announcement of the grant on 12/21/12 by Gov. Kasich, the Agency has received applications that have expended the $20 million budgeted for the state’s current fiscal year (July 1, 2012 - June 30, 2013). However, within the last week, we received this advice from the Agency:

 “We are still encouraging folks to complete the application. As we begin reviewing applications, there may be ineligible costs that will become available to those that might be in our queue.”

As always, we are here to answer your questions and to help with the application process. For more information contact Pete Bednar at 440-947-1293 or pbednar@yourERC.com.

Register NOW for 2013 NOHRC!

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ERC is proud to sponsor CSHRM's 47th Annual Northern Ohio Human Resource Conference (NOHRC) “Rhythms of Success.” The conference will take place on Friday March 8, 2013 at the International Exposition Center in Cleveland, OH. Join us to enhance your skills to lead, strategize, and become a business partner in your organization. They promise a terrific day with many reasons to attend:

Networking Opportunities - With 500+ HR professionals!

Recertification Credits - Earn HRCI credits for PHR and SPHR recertification - including those hard-to-get strategic management credits! NOHRC 2013 has been pre-approved for 5.5 General Credits, of which 3.25 credits are considered Strategic by the HR Certification Institute (HRCI)!

Quality Speakers - Listen and learn from HR experts including a dynamic opening session, luncheon keynote, and closing power session speakers, as well as 10 concurrent sessions. Please visit the NOHRC website at http://www.nohrc.org/schedule.cfm for the schedule of events.

Jim Knight: Opening the conference will be Jim Knight. Jim is the former head of global training & development for Hard Rock International. He will leverage great brands as a platform to discuss key strategies to build a rock star team. Learn more about Jim by clicking HERE or view Jim's video about how excited he is to speak at NOHRC.

Philip Solomon & Dan Thurmon: Philip Solomon and Dan Thurmon are the luncheon session speakers. They will present “Rhythms of Success,” a highly entertaining keynote presentation that will teach you how to build and strengthen your most vital relationships. Philip and Dan created a video for NOHRC as well - click HERE to view.

Chip Madera: Closing the conference is Chip Madera. Chip's topic is "How to Be an HR Rock Star." Let Chip show you how to be a ROCK STAR in your organization!

Also, be sure to catch ERC's own Susan Pyles!

The Exhibit Hall - In the market for new HR products/services? There will be nearly 90 exhibitors for you to visit.

Bookstore - Staffed by Horizontal Books, the bookstore will allow you to shop for books, CDs and other materials, as well as host speaker book signings.

Visit NOHRC's website for more information and the latest updates at www.nohrc.org. Don’t miss this opportunity to enjoy “Rhythms of Success.”

6 Q&As: Managing Flu Season in the Workplace

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6 Q&As: Managing Flu Season in the Workplace

With flu season in our midst, many employers face challenges in managing sickness in the workplace. These challenges can include managing absenteeism, reducing or managing the prevalence of sickness in the workplace, supporting employees who must care for sick children, and in more rare cases, dealing with longer-term medical issues. Here is a Q&A guide on some of your most frequently asked questions related to these topics.

Q: How many sick days do employers typically provide?

A: On average, organizations usually provide 6-8 paid sick days annually, though many employers incorporate sick time into a paid time off bank.

Some industries tend to provide more sick time, particularly healthcare and non-profit organizations, which typically offer double the amount of sick time that other organizations provide.

Q: How should we handle pay for exempt employees who are sick?

A: Under the Fair Labor Standards Act (FLSA), if an exempt employee misses less than one full day of work due to illness, you may not deduct his or her pay for the absence. This means, if they go home early or come in late due to illness, you may not dock their pay. Conversely, with hourly employees, your organization may deduct pay for any hours not worked due to illness, including a full day or less than full day.

Also, under FLSA, your organization is not obligated to provide pay for vacation or sick days (unless other state laws mandate this). Nonetheless, many employers provide these benefits to help handle pay situations when employees are sick.

Q: How can we prevent sickness from spreading in the workplace?

A: The workplace can be fertile ground for sickness to spread with employees working in close proximity to one another, especially common colds and flus. Here are a couple common ways to reduce the likelihood of this happening:

  • Provide flu shots once a year
  • Encourage sickness prevention via hand sanitizers and office cleanliness
  • Offer the ability for sick employees to work from home
  • Allow sick employees to stay at home and use their sick time if they are ill or contagious
  • Support employees' well-being by providing wellness resources/education and work-life balance

Q: What should we do when employees need to care for sick children?

A: Missing work to care for sick children is a challenge facing many working adults, who often feel they don't have enough paid sick time or flexible work arrangements to cover the days they need to take care of them.

There are a number of options you can offer in these circumstances. First, you can allow them to work at home, if possible, to care for their child. Second, you can provide a back-up/sick child care option or resource for employees to use. Third, you can allow them to use paid time off, make up work hours, work a flexible schedule, or provide family leave. Finally, if the situation warrants a serious health condition, providing FMLA leave may be advisable.

Q: What should we do about excessive absenteeism?

A: As a business, you need to institute and enforce acceptable boundaries for absenteeism in order to run your business smoothly via internal policies and procedures, such as an attendance policy.

But excessive absenteeism due to illness may actually be due to a legitimate medical condition which is covered by federal and state laws. In these cases, employers are obligated to comply with the Family Medical Leave Act (FMLA) or the Americans with Disabilities Act (ADA), and must pursue the appropriate course of action.

For other more common illnesses and issues that are acute in nature, if an employee is not complying with your policy or if you have a legitimate reason to believe that abuse is taking place, you may pursue whatever disciplinary action is necessary, so long as it's consistent with past precedents and documented policy.

Q: How should we handle issues of work coverage when an employee is sick?

A: Make sure your organization has the appropriate back-up coverage for when an employee is out of the office ill. Succession and workforce planning of this nature is essential to the ongoing productivity in your organization.

Q: How should we manage a longer-term illness?

A: Unfortunately, sometimes illnesses that affect the workplace are not just common flus and colds. Prolonged illness brings many unanticipated challenges to the workplace: arranging for medical leave (short term disability, FMLA, personal leave, etc.) preparing for return to work, dealing with short or long-term accommodations, and handling staffing or work coverage issues.

These situations can often be stressful and difficult for the employer and employee alike, so it's important to approach them with as much patience and support as possible. Usually, when employers make collaborative arrangements with employees to help them in these situations, to the extent that it business operations are not significantly affected, they tend to be effective.

Employee illness is one of the most common issues employers face in the workplace, and in our experience, one of the most difficult ones to manage. Approaching this flu season and employee illness in general in a supportive but tactical manner can help you better manage your employees, their needs, and those of your business.

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.

View ERC's Absence Management Practices Survey Results

This report summarizes the results of ERC’s survey of organizations in Northeast Ohio on practices related to attendance and unscheduled absence.

View the Results

Upcoming National Holidays Largely Overlooked In Northeast Ohio

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If you happen to have the day off on January 21, consider yourself lucky. Here in Northeast Ohio the percentage of organizations observing Martin Luther King Jr. Day as a paid holiday has consistently fallen well below the national average and 2013 is no different. According to the 2013 ERC Paid Holiday Survey only 11% of the 202 participating organizations include Martin Luther King Jr. Day in their paid holiday allocation. This falls 21 percentage points below the national statistics recently reported by BNA.

Where the two surveys do see eye-to-eye, is in terms of the clear industry specific differences seen between the types of organizations that offer Martin Luther King Jr. Day and those that do not. For example, the BNA survey reports that manufacturers are by far the least likely to give the day off at 7% and non-business (i.e. non-profits/government) organizations are the most likely to give the day off at 56%. The ERC survey saw a similarly wide discrepancy between manufacturers and non-profit (i.e. non-business) with non-manufacturing employers falling somewhere in between the two extremes.

These industry specific variations are particularly noteworthy as they may be responsible for at least some of the discrepancy observed between the overall averages reported by the national and local surveys. In terms of the demographics represented by each survey sample, the national BNA survey included primarily non-manufacturing organizations, while over half of ERC’s local survey respondents represented manufacturing organizations. While this over-representation of manufacturers and non-profits in the local and national surveys, respectively, accounts for some of the discrepancy, the fact remains that Northeast Ohio employers are observing Martin Luther King Jr. Day at a lower rate than the national average.

Looking  ahead to February, President’s Day will be observed as a paid holiday by even fewer Northeast Ohio organizations, only 8%. Industry specific differences are slightly less prominent as the overall percentage of organizations offering the day off are lower, but a similar trend can be seen with manufacturers once again ranking last out of the three industry breakouts reported.

For more information on how many and which paid holidays Northeast Ohio employers are offering their employees in 2013, download the entire 2013 ERC Paid Holiday Survey free of charge.

Health Care Reform's Employer Mandate: 3 Things You Need to Know

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In 2013, the IRS has proposed regulations which further clarify employer shared responsibility, specifically the requirement of employers with at least 50 full-time and/or full-time equivalent employees to offer affordable healthcare coverage with a minimum level of coverage or pay a penalty.

1. Employers must determine if they need to offer a minimum level of healthcare coverage.

According to the regulations, each year, employers will need to determine if they must offer healthcare coverage with a minimum level of coverage or pay a penalty by averaging the number of employees they employ across months in the year, which accounts for fluctuations in the workforce. If the average is 50 or more full-time equivalent or full-time employees, the employer must offer healthcare coverage or pay a penalty.

There is a $2,000 penalty for each full-time employee not covered by the plan beyond the first 30 full-time employees. There are additional large penalties for coverage that is not deemed to be "affordable."

2. Employers must use a specific calculation method to determine how many full-time/full-time equivalent employees it has.

The proposed regulations also offer a calculation method for determining how many full-time and full-time equivalent employees an organization has.

  1. Employers need to calculate the total number of hours of service per month for all employees who were not employed an average of 30 hours of service per week for that month.
  2. Employers should divide the total hours of service by 120 to yield the number of full-time equivalent employees employed in a given month.
  3. Employers should add the number of full-time employees (those working 30 hours or more each week) to the number of full-time equivalent employees.

*If employees in excess of 50 FTEs were seasonal workers for a period of no more than 120 days, an employer is not subject to the shared responsibility requirement.

3. A calculator will be provided for employers to use to determine if they meet affordable healthcare coverage requirements.

In addition, the regulations state that the IRS and Department of Health and Human Services will provide a calculator for employers to use to determine if they meet the “affordable healthcare coverage” requirements.

Health coverage is considered affordable if the plan has a single employee premium no more than 9.5% of the employee's household income. Additionally, a healthcare plan must meet the requirement of minimum essential coverage when the policy pays out at least 60% of the actuarial value of the covered benefits (Source: Buckingham, Doolittle & Burroughs, LLP).

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.