KeyHR is the KEY to Your Success
How successful could you be if you could focus on what you do best? It’s a question worth asking. And we not only HAVE the answer… We ARE the Key!
KeyHR is aligned with preferred provider companies to offer new and innovative ways to meet out clients’ payroll, employee leasing, benefits and insurance needs.
Our relationship with these companies helps business owners reduce costs, save time, optimize their workforce, increase revenue and minimize risk. If your company needs to save money, address compliance issues, improve efficiencies and increase productivity, we have the solutions.
If your company needs to save money, address compliance issues, improve efficiencies and increase productivity, we have the solutions and the key to your success.
Trust Key HR to provide you with…
- Access to more service providers than any other business of our kind
- Specialists in every area of Human Resources
- Solutions for companies at all stages of development – from startups to fully mature
- A firm commitment to stay current on the laws that affect your industry and business
- Savings from 20 to 40 percent off your bottom line
- It could be one of the smartest business decisions you ever make!
June Economic Outlook: Buried in Data, Looking for Positive Signs
- Many companies have strong balance sheets. The daily ups and downs of the market may not reflect the fundamentals of corporate well-being.
- The peaks and valleys of all the economic data have happened before. How that data intersects at this moment in time is what experts are watching.
If we told you that nothing new is happening in the economy—would you believe it? Take inflation. Been there (1974, 1980, 1990). Too many jobs and too few workers? Check (1954). Weird supply-demand issues leading to speculation and over-valuation? Done (housing in 1996). Economic data points run in cycles, but one data point’s cycle doesn’t necessarily match another. For example, sometimes inflation makes a quick turn up, then down, while employment numbers grow or decline gradually. They don’t make sense together until later when a clearer picture emerges. It’s not unlike an Impressionist painting: Up close you see only dots and swirls, but step back and the image comes into view.Right now, in June 2022, we’re buried in data. Everyone, everywhere is trying to figure out what makes sense. Some insights are encouraging. Some are vexing. Let’s take a look.
Corporate earnings are mostly OK. Based on the current state of various stock markets, you might guess company balance sheets are doing poorly. For the most part, you might be wrong. According to first quarter earnings, nearly eight out of 10 S&P 500 companies reported positive earnings per share. Profitability over the past 12 months is at record levels because a lot of big companies enjoyed booming growth during the pandemic. Here’s some helpful insight, though, about the disconnect between earnings and stock price: If a company outperforms in one quarter, expectations for the same quarter in the following year might get a little skewed.
Take Alphabet, the parent company of Google. In the first quarter of 2022, profits were $16.44 billion and revenue $68.01 billion. That’s even taking into account economic pressures such as inflation and geopolitical conflicts. And yet the Alphabet stock value fell 4% because analysts forecasted profits of $17.33 billion and revenue of $68.05 billion. Alphabet is just one of the thousands of companies that has an excellent balance sheet. Investors, however, are wary for several reasons, and the markets reflect that. Inflation, supply chain issues, and geopolitical conflict all play roles. But a big cause: On May 4, the United States Federal Reserve (Fed) raised interest rates. It also forecasted an aggressive outlook for future increases in the hopes of reining in inflation.
Your wallet: Publicly held companies withstand much balance sheet scrutiny. But when it comes to your expenses and income? It’s up to you how often and to what detail you inspect those numbers. It might be a review of transactions weekly or monthly so you can adjust as needed (and catch mistakes, too). At a macro level, knowing what your cash flow looks like at any point in time can be beneficial in case unexpected wants and needs come up. These budget-planning steps and worksheet can help.
Creating a Motivational Cash Compensation Program
Salary Structures Should be Appropriate, Flexible and Legally Defensible
Variable pay incentive bonuses are becoming a larger part of employee compensation, but that doesn’t mean organizations can ignore their base pay salary structures. Before paying bonuses, organizations “must first have appropriate base pay as an anchor,” said John A. Rubino, founder and president of Rubino Consulting Services, a global HR consulting firm based in Pound Ridge, N.Y. He spoke June 14 at the SHRM Annual Conference & Expo 2022 (SHRM22) in New Orleans.
This year, salary budgets in the U.S. have been increasing, on average, by around 5 percent to 7 percent, up from around a 3 percent average increase over several years prior to the pandemic. These increases represent “growth in fixed expenses that compound year after year” as employees receive annual raises, Rubino said, highlighting the need to get salary-setting right. Salary structures should be appropriate for the organization, flexible enough to respond to future developments and legally defensible, Rubino said. They should align employees’ efforts with business objections while serving to attract, retain and motivate workers.
Base Pay Strategies
When structuring pay, the initial decision is whether to give primacy to internal evaluations of a position’s value to the organization or to market-based pay rates, which reflect supply and demand, Rubino said during the concurrent session “How to Create a Motivational Total Cash Compensation Program (Base and Variable Pay) for Your Organization.”
“Organizations care about pay equity and have a hierarchy of values. Markets don’t,” he said. “Companies need to decide which approach is going to be primary” when creating salary structures.
Rubino favors determining internal equity first by considering intrinsic factors that add value to the organization, then folding in market data. But some organizations prefer to begin with market pay rates and then adjust with job content data based on internal evaluations, he noted. Either way, compensation managers should define relevant labor markets for determining comparable pay rates by looking at factors such industry, organization size, revenue and geographic location.
Job descriptions should be in a standardized format and be reviewed annually to keep them up-to-date, Rubino emphasized. Determine the organization’s benchmark jobs—easily identifiable positions such as “financial analyst”—to serve as the anchor points in pay structures. At least half of the jobs in an organization should be identified as benchmark jobs, Rubino advised.
When sourcing market rate data for benchmark positions, participating in surveys published by third parties can bring costs down. Customized pay surveys have higher costs but higher reliability, as well. Online data that is free and based on input from site visitors can be fun for potential job candidates to peruse “but unreliable for building pay structures, no matter how insistent job applicants are that they found the appropriate pay for the spot they’re applying for on one of these sites,” Rubino noted.
Job Evaluation Methods
Another key decision for compensation managers is choosing an appropriate job content evaluation method, leading to the creation of a hierarchy of job positions. Popular methods include ranking, classification, job component and point factor.
Regardless of the method applied, the data from job content evaluations can be used to assign job grades “using professional judgment with an underpinning of mathematics,” Rubino said.
Next, develop pay ranges, again referring back to the underlying pay strategy decision regarding whether internal evaluations or market rates will be the primary consideration. Set pay policy by determining whether the organization will align pay more closely with market rates, pay above market such as at the 75th percentile, or pay below market, perhaps at organizations where other factors—e.g., mission or generous benefits—take precedence over cash compensation.
Variable Pay Rewards
With a solid base pay structure, organizations can consider Rubino’s advice for developing a variable pay program. More organizations are removing performance considerations from base pay increases, “redefining salary increases as across-the-board market adjustments only—determined by competitive position analyses—and rewarding individual performance within a variable pay framework,” Rubino said. This reduces the problem of salary increases compounding annually, which can lead to “exponential growth in fixed pay costs,” he noted.
Variable compensation is paid in lump sums only when performance warrants, he explained, considerably reducing ongoing fixed expenses.Variable pay can more easily reward the extra value employees add to organizations during a given quarter or year. The reward is also viewed as more tangible.
“A 3 to 5 percent base pay increase spread out over 23 pay periods per year, minus taxes, may not seem like much of a motivator, compared to a $5,000 incentive bonus lump sum,” he said.
Inflation is Soaring. What Does That Mean for Salary and Raise Negotiations?
From shopping for groceries to dining out, Americans’ wallets took another hit as inflation rose for the seventeenth consecutive month in April. The silver lining? That undeniable data may be an advantage in upcoming salary negotiations.
As consumer prices soar — with energy costs up 30.3% and food prices up nearly 10% in the last year, according to the Bureau of Labor and Statistics — employers are also feeling the heat. According to BLS’ quarterly Employment Cost Index, wages and salaries increased 5% for the 12-month period ending in March 2022, and the cost of benefits increased 4.1% for the same period.
But adjusted for inflation, private sector wages and salaries declined 3.3% year over year, while benefits dropped 4% in that same period, points out Bruce Bergman, a regional economist for BLS’ New York-New Jersey Information Office. That’s making it a challenge for workers and prospective employees to effectively negotiate salaries and raises.
“It’s important to do research to determine what the fair market value is for your skill set and experience,” says Toni Frana, career services manager at FlexJobs, a search platform dedicated to flexible and remote work opportunities.
Bergman suggests that employees arm themselves with the latest cost of living data to create more up-to-date wage proposals that show employers how their earnings stack up against their costs, using BLS’ statistics on real earnings. Released monthly, this data allows employees to view average hourly earnings for their industry and occupation, compared to the Consumer Price Index.
He also points to the ECI as another valuable negotiation resource. “The ECI is an objective measure of changing industry standards [when it comes] to how much employers are spending on wages and benefits,” he says. “Everybody wants to make decisions that are based on facts, and these are clear facts that someone can refer to in a compensation discussion.”
While ECI numbers are averages, the index is still a good tool to help employers and employees gauge what compensation rates will be within their industry, occupational group, and region, Bergman says. Those reference points might change from year to year if, say, an employee starts out fully remote in one region and moves to a different region to work in-person at a future date.
But as valuable as it is to come to a compensation discussion armed with data, for employees who will be continuing in a role with an employer, the interactions and conversations that happen throughout the year are equally critical to the success of the negotiation, says Frana.
Regular check-ins empower employees to position themselves for higher raises by making changes as needed to better align with expectations, she say. “It’s not helpful [for an employee] to hear about areas for improvement for the first time during an annual review. Employers should [maintain] a dialogue all throughout the year, at whatever rate and medium of conversation feels appropriate.”
- Posted by admin
- On June 21, 2022
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