Most Local Employers Plan to Hire in 2011

According to a recent survey conducted by ERC, nearly all (90%) of the Northeast Ohio employers surveyed plan to hire in 2011. Intent to hire was more likely among larger and for-profit organizations than smaller organizations and non-profits.

The survey shows that the most common positions employers are planning to hire are related to manufacturing, engineering, information technology, sales, customer service, marketing, and office/administrative, suggesting that such jobs are in high demand in Northeast Ohio.

12 Implications of Health Care Reform

In response to the 2011 health reform, insurance carriers increase premiums. As employers start dealing with the law’s new requirements, there is a heightened focus on providing better education and communication to employees, on negotiating and investigating alternative options, making smarter benefits decisions, and enhancing wellness programs. Here are 12 ways in which health care reform impacts how we do business now and in the future.

1. Increased cost-sharing

Cost-sharing between employers and their employees for health insurance continues to increase. This is one of the easiest ways to manage health insurance costs, but naturally has effects on employee engagement and morale that employers need to consider. The average cost-sharing arrangement has steadily increased in the years preceding 2011.

2. Education about health benefits

Education about how employees can be better health care consumers is becoming more imperative. Often employees do not understand how usage affects costs and need to be educated buyers when using their health insurance plans. Ideas for education efforts other employers have initiated include:

  • Explain the costs associated with health care decisions (i.e. going to the emergency room vs. their primary care physician).
  • Show employees the drivers of health care costs at the organization.
  • Communicate what employees can and need to do in order to maintain or reduce their current costs. Specific actions steps are recommended.
  • Expand education to spouses who are also users of the plan.
  • Provide employees with key questions to ask their doctor.
  • Make health insurance an on-going conversation and communication effort with quarterly meetings to discuss trends, employee forums to discuss suggestions, and other media to disseminate wellness and health insurance information.

3. Use of benefit statements

Benefit or total rewards statements are a widespread and important communication tool that show employees how much the organization is investing in their benefits, and particularly their health insurance. Showing employees actual dollar amounts and levels of coverage your organization has been shown to enhance satisfaction and improve understanding.

4. Review of plan design

Reviews of plan design are increasingly occurring. Plan design should be reviewed carefully and different scenarios should be run and analyzed. Raising deductibles or co-pays to offset other costs or providing a health savings account (HSA) or health reimbursement account (HRA) are options to consider. But it’s also important to pay attention to the level of benefits that other employers are providing. Conducting an annual benefits analysis can help determine where employer benefits could be modified without compromising competitiveness.

5. Negotiation of options

Taking responsibility for your health care costs and seeking additional bids from other carriers is a necessity. Inquire about other options from your broker that reduce costs and provide greater wellness resources to help employees better manage their health. Your broker may not freely offer this information, so take initiative and ask.

6. Implementation of restrictions or penalties

Increasingly, organizations are implementing more restrictions in their health insurance plans such as spousal carve-out provisions and higher premiums for smokers. Shifting additional costs or penalties to unhealthy workers, although not widespread, is becoming more popular and may help reduce or manage health care costs.

7. Offering of incentives

Incentive use for wellness program participation is expanding. A chief reason that wellness programs may not reduce your organization’s health care costs is lack of participation. Studies continue to show, however, that employees are more likely to participate in programs when meaningful incentives are offered, such as discounts on health insurance premiums.

8. Health risk assessments

Usage of these assessments is becoming very common as they can be valuable data-gathering tools for both organizations and employees. Employees can attain greater insight into health risk areas and organizations can receive an aggregate report of areas where employees need wellness assistance. Wellness programs can then be targeted to those needs. 

9. Free prevention services

Services like flu shots, health screenings, cholesterol and blood pressure checks, vaccinations, and other yearly screenings are increasingly offered in the workplace.  By providing free wellness services on-site, you can decrease usage thereby managing costs better. Also, educate employees to take advantage of the new provision of health care reform which provides free annual preventative services.

10. Wellness initiatives tied to health insurance costs

Wellness initiatives are obviously one of the best ways to reduce health care costs and the majority of employers either have one in place or are planning on initiating one. When planning wellness initiatives, be sure to not only emphasize how your organization is supporting employees’ well-being, but also how these programs are intended to assist employees in better managing and maintaining their health care costs. Employees need to see the connection.

11. Promotion of healthy habits

Recently, we’ve found that more organizations are promoting healthy habits to deal with increasing health care costs through internal nutritional standards, on-site fitness activities, and educational efforts like seminars, paper materials, and online information. Create the “norm” of healthy behavior in your workplace to manage health care costs.

12. Make it a team effort

Involving employees in solving health insurance problems can be effective. Encourage them to get involved in suggesting or implementing wellness activities and to provide their feedback on health insurance options. Collaborating and creating a conversation with your staff can help generate greater buy-in about health care decisions and limit negative perceptions of change.

Navigating health care reform and its effects won’t be easy, but we’re seeing many employers taking a proactive approach and implementing a variety of initiatives to cope, educate, and manage the law’s changes and effects on their businesses. 

Additional Resources

ERC Health
Visit www.erchealth.com to learn about our health insurance offerings for small and mid-sized businesses.

HR Help Desk
For more information and guidance pertaining to any of the content in this article, please contact hrhelp@yourerc.com.

Employees Sharing More of Health Insurance Costs

According to ERC’s 2011/2012 Policies & Benefits Survey, the average health insurance deductible paid by employees (as reported by Northeast Ohio employers) increased significantly from 2009. Employees' co-pay amounts and contributions to health insurance premiums also showed slight increases from 2009.

The results of the survey, which provided detailed information on a variety of health plans and health insurance practices, appeared to suggest that organizations continued to increase cost-sharing with employees to cope with rises in costs.

Specifically, the survey provided detailed information about eligibility for coverage, medical plan options, and detailed practices for HMO, PPO/POS, Indemnity, and High Deductible Plans including percent of medical premium paid; average amounts of co-pays, lifetime maximums, and annual deductibles; and in-network and out-of-network amounts. It also covered information about Health Savings Accounts in terms of average annual contributions, services covered, and out-of-pocket expense limitations, as well as Health Reimbursement Accounts, Prescription Drug Plans, and much more.

 

Employers' Use of On-Site Sales Training Rises from 2010

A 2011 survey shows that U.S. employers increased their use of on-site sales training from the previous year. The percentage of employers using on-site classroom training also slightly increased from 2010.

“Although the survey shows that employers are continuing to teach sales skills and techniques on-the job, we’re also seeing increased usage of outside training for sales professionals, including on-site classroom instruction and seminars,” says an ERC Sales Trainer & Consultant.

The Trainer & Consultant adds, “These methods of training are invaluable in helping sales professionals learn and practice different sales techniques like identifying needs, closing sales, and building relationships, and also support and compliment on-the-job sales training programs. In addition, skills coaching, delivered either one-on-one or in small groups, is another effective avenue for sales professionals to refine their skills and help ensure that on-the-job training translates into results.”

For more information on ERC On-Site Sales Training or Skills Coaching, please contact ckutsko@yourerc.com

Preliminary Findings - Hiring & Selection Practices Survey

The preliminary findings of ERC’s 2011 Hiring & Selection Practices Survey, which explored practices including background and drug screening, references, testing, and other hiring practices (including local hiring metrics), showed several clear trends in local employers’ hiring and selection practices.

  • Over three-quarters of employers plan to hire in 2011.
  • Over half of employers say that a job candidate’s current or previous salary (as reported on application) influences their decision to not hire an applicant.
  • About a quarter of employers report that a job candidate’s indication or request to not call a past or current employer influences their decision to not hire an applicant.
  • Over 70% of employers conduct reference checks, typically in-house versus using a vendor.
  • Employers most commonly use employment tests to evaluate administrative/clerical and management positions.

15 Ways to Reduce Hiring & Termination Liability

Issues involving hiring and termination liability are two of employers’ most common questions and concerns. Here are 15 ways that you and your managers can reduce liability when hiring and terminating employees. 

  1. Conduct a thorough and documented job analysis to determine the essential functions of each position in your organization and provide a foundation for selection and hiring practices. This analysis yields information about which duties are essential and also identifies the knowledge, skills, and abilities required. Documentation of the essential functions for each position is necessary to comply with the American Disabilities Act (ADA).
  2. Identify the actual qualification requirements needed for the position. Studies show that employers tend to overestimate degree and experience requirements, in particular, which may not truly be necessary for the position and could screen out potential candidates. This can lead to discriminatory practices.
  3. Ensure that you know the types of disabilities covered under the ADA. These have expanded over time and include a range of conditions that many employers often do not consider (i.e. depression, allergies, obesity, etc.). Current or prospective employees with the following disabilities may be covered by this law.
  4. Know your accommodation options. The Job Accommodation Network provides a great deal of information to employers on the types of possible accommodations that are appropriate to provide for certain disabilities. The sample accommodations cited on this website are useful and practical for many organizations to employ in order to make reasonable accommodations for employees with disabilities.
  5. Make sure that employment applications do not request certain demographic information including graduation dates (or other information that would yield data about the candidate’s age), questions about physical appearance and characteristics (such as height and weight), credit history, sex, gender, religion, national origin, marital/family status, schedules, and disabilities.
  6. Create a selection plan for each job you plan to hire for using the same selection procedures or consistently apply the same selection practices for all positions if standardized practices are necessary (i.e. if you use a background check for one applicant, use it for all applicants). All job applicants for a position need to be evaluated using the same criteria.
  7. Design structured and objective tools or processes to score applicants on job-related criteria, such as rating scales or interview forms. These can help prevent personal and non-job-related information from being used in the selection process.
  8. Pre-determine hiring questions so that hiring managers do not ask or consider inappropriate personal information. Training hiring managers in interviewing is also beneficial so that they are aware of appropriate and inappropriate questions and interview protocol.
  9. Avoid using non-job-related criteria to make selection decisions. Specifically, avoid using unemployment status or age (young or old) as factors when hiring employees. The EEOC is currently exploring these discriminatory practices in greater depth.
  10. Evaluate employment tests for validity, job-relatedness, and adverse impact. Selection tests need to be evaluated in terms of whether they are causing adverse impact for protected groups.  In addition, usage of certain cut scores can also cause liabilities, if it results in adverse impact. Selection tests also need to be validated and directly related to the job. The Uniform Guidelines on Employee Selection Procedures is a helpful set of guidelines on the use of testing in the workplace.
  11. Do not use genetic information for hiring purposes. GINA (Genetic Information Nondiscrimination Act) prohibits the use of genetic information, such as family medical history, for hiring. 
  12. Protect against negligent hiring. Employers should consider using screening practices such as background and reference checks and credential verifications (such as education, licenses, past work, etc.). Credit checks and motor vehicle reports may also be necessary for some jobs.
  13. Monitor pay practices, per the Equal Pay Act, which prohibits unequal pay for equal work. Per the law, all employees should be paid equal pay for equal work on jobs which require substantially equal skill, effort, and responsibility and is performed under similar working conditions. Pay comparisons and statistical tests should be conducted for employees completing equal work to ensure fair and equal pay practices.
  14. Document performance and non-compliance with policies. All incidents of performance (including conversations about the performance incidents, non-compliance with policies, corrective action taken, etc.) need to be documented in the event that your organization needs to terminate an employee. It helps to have an established performance management system to support supervisors and managers in documenting employees’ behaviors. Should your organization need to terminate an individual, it will need to have verifiable facts to back up its decision.
  15. Keep processes transparent. By providing job applicants or employees with fact-based reasons for your hiring and termination decisions, they are less likely to believe that other personal factors played a role in the decision (such as their race or gender). Oral or written feedback is advised.

We often find that liability problems emerge when employment decisions are not based on job-related and objective criteria, when practices lack consistency and equity, and when documentation is not being used. It’s important for HR and managers alike to be educated about how to prevent these liabilities.

Should your organization need more information or education on this topic, consider accessing our resources, training programs, and services below.

Additional Resources

Job Descriptions & Selection Assessments
For more information about how ERC can help your organization with job description projects or selection assessments, please contact consulting@yourerc.com.

HR Help Desk
For more information and guidance pertaining to any of the content in this article, please contact hrhelp@yourerc.com.

3 Tips for Updating Your Compensation Program

Updating your salary structure? Market data discrepancies, pay compression, and alignment with the compensation philosophy are all problems employers experience when updating their compensation programs. Here are some tips to deal with these problems:

Problem 1: Market data shows discrepancies

You’ve established pay rates for your organization’s positions based on a salary survey, but the next year the same survey shows that a given job encountered a moderate salary decrease or large increase. Market data discrepancies are a common problem many employers face when updating their compensation programs.

Salary surveys sometimes show discrepancies annually. These discrepancies occur mainly from differences in participation from year to year (different or new employers submitting data for the job). Other reasons for discrepancies may include organizational factors, such as pay decreases or large merit increases and higher or lower demand for certain skills or jobs in the labor market. To cope with market discrepancies...

  • Use multiple sources of market data (salary survey information) to establish market averages to benchmark your positions versus just using one source. By taking more data into account when benchmarking, you dilute the impact of these market differences on your pay decisions.
  • Although it may be tempting to use the most specific and targeted breakouts available to make pay decisions, these are often more susceptible to variance and discrepancies because they have lower participation. As a general rule, it’s important to use breakouts of data that have the most participation from employers (such as “all employers”). These are the most reliable figures and are unlikely to experience major differences year over year. 
  • Be cautious in making pay decisions annually. Continue to benchmark pay on an annual basis, but only make pay decisions based on distinct trends. Market data is highly susceptible to variance and trends are more likely to become evident over multiple years.

Problem 2: Jobs show pay compression

Pay compression is a common problem organizations experience when revising their pay structures. It results when there is a pay difference between positions requiring different skills and responsibilities – when lower-level jobs are paid as much or more than higher-level jobs. It often occurs when typical adjustments or increases have not been given and instead pay raises are only given to a select few employees (such as top performers). It may also occur when a salary structure is not used. To resolve the issue of pay compression…

  • Determine which positions show pay compression. Is it a job-specific issue, affecting only one or a few employees? Or is it a widespread problem?
  • Create a salary structure with formal pay ranges. This will set the upper and lower limits of pay that employees can earn for a given job or job family. Keep pay ranges updated once they are established.
  • Consider coupling your market analysis with a job evaluation. Job evaluation is often an under-used method of determine pay rates, however, establishes which jobs are most and least valuable to the organization and thereby encourages internal equity. It involves assigning points or ranking jobs according to their value to the organization.
  • If ranges are established, adjust pay ranges by the same figure each year – such as a cost of living or across-the-board increase to ensure that pay keeps in line with the market.
  • Consider using lump sum bonuses instead of merit increases to reward employees who have hit the maximum in their pay range. Similarly, for new-hires with special skill-sets, you may consider offering a lump-sum sign-on bonus.
  • Establish career paths. Pay compression is more likely to occur in organizations that do not have clear advancement opportunities and upward mobility. Such paths provide more opportunities to earn more pay and reward performance. 

Problem 3: Pay not aligned with compensation philosophy

Let’s say that your organization’s compensation philosophy is to pay all of your organization’s jobs at market, which means at the 50th percentile or median pay rate. Perhaps this philosophy has been newly developed or changed since the creation of your current pay structure. After analyzing the market, you find that you are actually paying above or below market for some positions. This is your organization’s position to market.

Your organization’s position to market should not necessarily determine its compensation philosophy. For example, if your philosophy is to pay “at market” and your organization pays “below market” for some positions, this should not lead you to change your compensation philosophy, unless it feels that this is best for the organization’s attraction and retention of talent. To address this problem...

  • Determine whether the philosophy applies to all positions. It’s important to be aware that a compensation philosophy does not need to apply for all positions.
  • Keep pay where it is and “red line” the employees paid above market until the market catches up to their pay rates.
  • Make pay adjustments to employees paid below market, unless reasons for this discrepancy are justifiable.
  • Hire new employees at the “at market” rate.

Updating a compensation structure presents its challenges for many employers, and can be one of the more complex tasks HR encounters. Should your organization need additional assistance with updating its compensation system, be sure to check out the resources ERC offers to support your compensation programs below.

Additional Resources

HR Consulting
Our compensation consulting services cover a broad range of assistance on the total rewards spectrum; from basic job description updates to the complete design of organization-wide base salary compensation systems and variable pay programs. For more information, please contact consulting@yourerc.com.

EAA Reports Northeast Ohio Sales Manager Pay

According to the 2010-2011 EAA National Sales Compensation & Practices Survey, Northeast Ohio employers report paying higher median total compensation for some sales managers. Specifically, Northeast Ohio employers report higher median total compensation for General Sales Managers and District Sales Managers than other U.S. employers.

 

Northeast Ohio Employers Report Higher Pay for Customer Service Jobs

According to the 2010-2011 EAA National Sales Compensation & Practices Survey, Northeast Ohio employers report higher median total compensation than employers across the U.S. for nearly all customer service positions surveyed.

Customer Service Managers and Supervisors, in particular, showed the largest differences in total compensation when compared nationally.

 

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