Happy New Year = New Jobs

The unemployment rate in the United States remained even for October and November, 2014 at 5.8 percent. As a frame of reference, the unemployment rate in the United States averaged 5.83 percent from 1948 until 2014. The all-time high of 10.8 percent occurred in November, 1982 and the low of 2.5 percent was reported in May, 1953. The unemployment rate is reported monthly by the U.S. Bureau of Labor Statistics. Economic forecasters are predicting that the unemployment rate will continue its decline during 2015. During the first quarter of 2015, the unemployment rate is predicted to be between 5.7 and 5.6 percent. Employers will be slow to ramp up employment numbers with the memories of recession layoffs still fresh in their minds. Seeing the national unemployment rate reach an historical average is welcoming news!

Several articles have been written by human resources professionals and business journals on how to manage employment growth post the 2008 to 2010 recession. Most of the articles encourage employers to manage expanding human capital needs with existing employees who are willing to fill hybrid positions or by hiring new employees with knowledge and skills that exceed the primary position role or focus. Human resources professionals may have greater value to their employer if they possess technology, statistical, financial, accounting and business sector knowledge in addition to primary human resources management experience.

While conducting some hybrid jobs research, www.indeed.com had 8,352 listings with hybrid mentioned in the job title or the brief job description.

Most of the nationally based market pay aggregators offer software to determine or assist in the job valuing process by using weighted percentages aligned with primary hybrid job title functions.

The DBCompensation software offers a weighted point-factor job rating process that supports valuing benchmark and hybrid positions. As employers increase the use of hybrid positions, our software can assist with placing internal job values that are validated by external market pay data studies and national pay aggregators’ databases.

Count Your (Job Description and Compensation) Blessings!

Thousands of ADA compliant job descriptions have been quickly generated by the DBDescriptions software subscribers. These job descriptions are being used for recruitment, interviews, orientation, performance evaluations and job posts. Our clients have told us that they truly enjoy creating job descriptions in minutes and appreciate the inexpensive annual subscription fee that is offered by DBSquared.

The comprehensive DBCompensation has given our clients job descriptions, job point ratings, the ability to import employee data quickly and accurately, and the ability to input up to 12 outside market pay resources. All of these items are integrated to determine if our clients’ base salary programs are internally equitable and externally competitive. DBCompensation is currently being used by organizations as small as 50 employees to as large as 8,000 employees and it can handle organizations with even larger employee numbers. Our clients are utilizing the various compensation reports (like having a virtual compensation expert on staff) to meet our clients’ compensation management goals as well as follow various regulatory laws.

Backing Up Before Going Forward

This week we demonstrated the DBCompensation (job evaluation and salary administration program) software with compensation and human resources professionals associated with a large university system.  This well-known university system has utilized a large number of market pay studies for the past ten years to evaluate external pay means and medians with over 400 university benchmark positions.  They moved toward external market pay studies exclusively with the advice of compensation consultants associated with a large national firm.  This movement from internal job evaluation to market pay comparisons for internal and external pay analysis has been well-documented through WorldatWork articles, case studies during the past two decades and accepted by a majority of human resources and compensation professionals across the country.

The lead compensation professional with the University system stated that though the University’s compensation system analysis was very dependent on the external market pay studies, he wished that he could utilize an automated job valuing system to help place unique and hybrid positions (non-benchmark) along an internal pay line and established compensation structure. He made a comment about “going back” to job evaluation so the University compensation system could “go forward” with more meaningful internal job analysis to support external market pay data points.

During the software demonstration, I stated that the combination of an automated internal job valuing and external market pay comparison system provides the best of both processes to build and maintain an equitable and competitive compensation program.  I mentioned that they may want to work with one of the national market pay data aggregator firms like IBM’s Kenexa CompAnalyst and our very competitively priced DBCompensation software to meet their compensation management system needs and leave behind the current use of extensive Excel spreadsheet analysis for automated job evaluation and market pay analysis.

Today, a growing number of new vehicles offer a front dash monitor that allows the driver to visually look forward while their car is moving in a reverse direction.
With time and greater confidence, the driver does not have to physically look backwards over their shoulder to direct the vehicle.  With software technology, compensation professionals are able to look forward with market pay studies analysis and integrated job valuing systems without physically returning to the labor-intensive and dated job rating days.

Important Compensation Items

Two important government requirements were recently released with one being effective October 1, 2014, and the other January 1, 2015. Both items apply to federal contractors. The definition of a federal contractor is an organization with 50 or more employees and $50,000 in annual government contract funds. Government funds include federal funds such as grants, loans, service contracts, etc.

The new OFCCP scheduling letter and itemized audit listing have officially been released and are effective immediately (starting October 1, 2014). The audit covers your current activity and practices in the areas of outreach and recruitment, disability accommodations, personnel (applicant flow, hires, promotions and terminations), and compensation. {{cta(‘c2b115b4-c90a-4c92-935f-90e6d5c94bad’,’justifyright’)}}Tim Orellano, President of The Human Resources Team in Little Rock, AR, has been working hard to keep his clients, the Arkansas ILG organization and others informed of these pending (now current) audit requirements. We appreciate him for his diligent efforts in this area. If you are required to comply with the OFCCP regulations and need someone to assist you with the audit process, Tim is highly qualified to provide that service to you. Our two companies, Johanson Group and DBSquared can assist you with your Compensation Audit needs. We specialize in Compensation Management at all levels of an organization.

The other requirement is the final ruling for Federal Contractor Minimum Wage. Effective January 1, 2015, all federal service and construction contractors will be required to raise their minimum wage from $7.25 to $10.10 per hour. This applies to any new contracts awarded on or after January 1, 2015. For most of our clients, the $10.10 is already being paid and the ruling won’t have an impact on them. However, we do have some banking clients that borrow fed funds from the government and have over 50 employees and have paid some of their entry level positions such as courier, teller, call center representatives, etc. below the new minimum. They will need to increase to the new minimums or eliminate the need to borrow funds from the government.

If we can be of service to you, please let us know. We offer two HR software solutions, DBDescriptions and DBCompensation and HR/Management Consulting services.

Should a Compensation Structure be Proactive or Reactive?

We recently had a potential client tell us that establishing a formalized compensation structure for their organization was only being reactive to the current government’s comparable worth push and they weren’t going to give in to this pressure. This company has been in operation for several years and has not felt the need to create a salary range structure based on job descriptions, job point ratings, employees’ pay data and outside market data.

It is our belief that a company, no matter the size, should have comprehensive ADA compliant job descriptions, a method to place an internal value on each position, and the ability to understand the current market pay levels within the organization’s geographical trade area. This proactive approach for compensation management comes with the following benefits.

  • Lower turnover as employer is more transparent about its compensation program including explaining the approach and employees participating in the job description process
  • Better budgeting and allocation of funds used for employee pay
  • Ability to identify any potential discriminatory compensation issues as relates to gender, ethnic background, age, hiring pay, promotions, etc.
  • Provides department managers with pay adjustment guidelines to assist with pay increases for performance, promotions, transfers, demotions, and outside the salary ranges. Promotes consistent and fare treatment for all employees.
  • Integrates several components (job point ratings, current employee pay levels and outside market data) to establish the salary range structure vs. outside market data only.
  • Meets the ADA guidelines (15 employees or more) for a listing of job duties and physical requirements for each position within the organization

There are a significant number of classification and compensation audits being performed by several government agencies including Department of Labor, OFCCP, and EEOC. These agencies will request a copy of the organization’s job descriptions and employee data to determine if the company is complying with various pay and disability laws. Based on our knowledge, organizations that have taken a proactive approach to compensation management tend to fair better in these audits vs. those groups that don’t have a formal plan in place. In addition, when a discriminatory issue is identified, the company is required to create job descriptions and a formal compensation structure going forward as a part of the audit resolution. For us, this is reactive and tends to cost organizations more in the long run over the proactive approach of establishing a formalized job evaluation and salary administration program. If an organization does not have a solid defensible compensation management program in place, we can assist the company with the implementation of one and/or provide our DBCompensation software program for internal program development.

Comparable Worth: Externally or Internally Decided or Both

Ann Barnes with Altura Consulting Group recently posted a blog entry about a dated column on Compared Worth. Ann stated in her Compensation Force blog, “According to WorldatWork’s Alison Avalos, who puts out a regular column called “What Your Colleagues Are Reading”, the 2010 workspan piece on Comparable Worth written by me, Paul Weatherhead and my Compensation Cafe cohort Jim Brennan is the top viewed article for 2014, so far.” Ann continued her blog entry with two questions, “What’s up with that, I wonder?  Is gender equity suddenly that big a topic among compensation professionals?

Ann’s question is noteworthy given that she, Paul Weatherhead and Jim Brennan wrote the column on Comparable Worth about 4 years ago. Why has a column on Comparable Worth written in 2010 become the top viewed article for 2014 year to date?

I would like to offer a few reasons why I believe Job Comparable Worth is a popular issue for compensation professionals as we enter the second half of 2014.

  • There is no doubt that President Obama’s administration has made gender pay equity a top priority among important national issues. Several speeches and legislative initiatives to address and solve the gender pay gap have been part of the President’s agenda during his time in office.
  • Pay equity has become one of the top if not the top issues for the U.S. Department of Labor. Additional DOL investigators were hired during the early years of President Obama’s administration and the number of pay equity investigations has increased with greater emphasis by the President as noted in the Client Alert – Employment advisor document generated by the Pillsbury Winthrop Shaw Pittman law firm. See below:

President Takes Action Meant to Increase Pay Equity for Employees of Federal Contractors – By Julia E. Judish and Keith D. Hudolin Pillsbury Winthrop Shaw Pittman LLP  April 15, 2014
On April 8, 2014, President Obama issued an Executive Order and a Presidential Memorandum aimed at “closing the persistent pay gap for women and minorities,” at least for employees of federal contractors and subcontractors. These two executive actions direct the Department of Labor to issue new regulations that will (i) prohibit government contractors from retaliating against employees and applicants for asking about, disclosing, or discussing their compensation with other workers, and (ii) require contractors to report summary compensation data for their employees, by sex and race, to the Department of Labor. By limiting the reach of these measures only to employers that are government contractors, President Obama was able to act on his own executive authority, without needing the cooperation of Congress. Government contractors comprise approximately a quarter of the U.S. workforce. Thus, these new regulations will directly affect a significant portion of employ ers, and may also have a ripple effect that extends even to wholly private-sector employers.

  • Businesses and organizations have realized a significant rise in the number of female executives that have experienced first-hand the systemic job and pay challenges and the transparent glass ceilings as they rose up the corporate ladder. Female CEO’s, COO’s, General Managers, SVP’s, VP’s and Directors are taking steps to address gender pay gaps and offer opportunities for women to move into more responsible positions with greater pay levels.
  • Market pay data offered by national and sector generated pay studies are limited to benchmark job titles with generic job duties and most employers have moved expediently into hybrid positions where internal job classifications across department lines have become inconsistent and blurred.
  • Organizations’ Board of Directors or Board Compensation Committees are being held accountable to ensure that base salaries, incentives and long-term compensation offerings are in line and not creating undue risks for their respective organizations.

We’re seeing a growing interest in our DBCompensation software where comparable worth is determined through the use of a proven internal point/factor job valuing process and external pay analysis. This automated software database system which uploads employee data from HRIS and Payroll platform software programs is very efficient and the ROI is realized in the first year of use. The following pay equity graph is garnering more viewings and discussions at the compensation and HR conferences in 2014 just like the Comparable Worth column written in 2010 has become the most viewed article for 2014.

DB2_comparable_worth.png

 

Who’s your Competition? The #1 Question at WorldatWork 2014

The principals of DBSquared worked the exhibitor booth at the 2014 WorldatWork Conference in Grapevine, Texas. The conference was one of the most well attended W@W conferences in the past several years. Counting attendees, sponsors and exhibitors, the conference attracted over 1,300 participants from the United States and numerous international countries.

This WorldatWork link offers some insight on the conference news, events, and other happenings.

We demonstrated and discussed our DBCompensation and DBDescriptions software products in booth #205 during the conference. The HR and Compensation professionals seem to be more aware of our two variable (employee pay and job value) pay line scatter graph process and image that the DBCompensation system produces. We showed the booth visitors how our integrated DBCompensation software is useful with pay policy structure development, pay equity analysis, market pay comparisons and compensation management planning while providing a return on investment for this important human resources function.

This is the link to our presentation slides on the DBCompensation software ROI

After showing the DBCompensation features and discussing some of the benefits, we were asked, “Who’s your competition?” If the DBCompensation software were divided into four sections,

1) Automated job description writer

2) Job valuing 15 factors and weighted levels/points

3) Market pay comparisons and analysis

4) Internal pay structure development, pay equity analysis and compensation management planning

DBSquared would have several competitors for each of the four sections. For the job description writer, DBDescriptions and DBCompensation would compete with DescriptionsNow, HRTMS, BLR, Ultimate Software and Halogen Software. For the job valuing feature, DBCompensation software competes with Hay, KnowledgePay, ERI and numerous compensation consultants using various forms of point-factor job analysis.

With market pay comparisons and analysis, the DBCompensation software offers a worksheet repository for capturing and providing internal and external pay line analysis from data sources that the software user obtains from published pay studies or data obtained from employee pay aggregators such as IBM Kenexa CompAnalyst, Compdata, Aon Hewitt, Towers Watson, Culpepper, Job Search Intelligence and other national and regional studies.

After sharing this information with the inquiring HR and Compensation Professionals, we told the booth visitors that DBSquared and DBCompensation do not have any competitors when offering an integrated compensation management software program with all four sections and a system that uploads data from the client’s HRIS or payroll platform system.

Sometimes it is great to not have any competition but it means that we have to provide more education and awareness for our unique and very productive compensation management program. One of my son’s favorite sayings is “Who’s Your Daddy?” which implies many questions of history and values. We hope that when we answer the question of “Who’s Your Competition?” we can offer an answer built on years of compensation management consulting and software development that brings value to our client users.

Removing the “I HATE” statement from Developing Job Descriptions

Chuck Csizma, CCP with CMC Compensation Group wrote a recent article for the Compensation Café blog where he described how managers HATE/Dislike having to write job descriptions for the positions under their authority. Chuck provided several reasons why the Managers and Supervisors avoid this laborious task like the plague.

Bruce and I have undergraduate degrees in Human Resources Management and a Master’s of Business Administration from the Sam M. Walton School of Business at the University of Arkansas Fayetteville campus. We each have in excess of 30 years of experience in HR and business management and we have observed and experienced Chuck’s description of how managers hate to develop or edit job descriptions. Our father, an HR professional and second career professor of management started our family consulting firm in 1973 and he encouraged his sons to find ways to improve the Human Resources function for our employers when employed during our early careers and now for our consulting clients.

DBSquared, LLC was formed when Dale Oliver, CTO/Principal of DBSquared joined with Bruce and me to develop an automated compensation management system that would improve our efficiency with job evaluation and compensation studies for our consulting company clients. Out of the DBCompensation software development, DBDescriptions was derived by offering an efficient online job description writer that would help HR professionals and all the directors, managers and supervisors that hate/dislike to develop or edit job descriptions.

We’re excited about the momentum of interest and the number of new DBDescriptions software subscribers and most of all, we know that DBDescriptions is taking away the angst of developing ADA compliant job descriptions which are a critical management tool for organizations and companies.

Welcome to our Job Description World!

Just this past week, we had an individual who was researching job description software to develop a few job descriptions for his organization. The HR professional told us that he had found two options before locating our automated job description writer. The first option/organization would have had him spend several thousand dollars at a minimum for a HRIS system that included an automated job description writer. The organization’s only option for meeting this need was the software platform system.  The individual’s business was of a size that it was not realistic or prudent to spend $14,000 for the software. The second option was an online job description software writer for $14 dollar per job description. However, the HR person indicated that the output format was clunky and they would have spent more than $14 in labor just to modify the job description into a useable format.

Our caller mentioned to us that the best and third researched option was our DBDescriptions product due to the reasonable $295 per user annual subscription, the comprehensive job description format, the ease of software use and functionality, and the user-friendly and professional looking outputs in several formats inclusive of MSWord and Adobe PDF.

Our HR professional was excited to find a job description writer for an inexpensive investment, especially one that is not labor intensive. We welcomed this individual to our Job Description World!

Why Use External Pay Survey Data?

The season of external survey data entry is about to blossom with spring. Numerous private, published and association driven surveys will open for compensation and benefits data submissions during the month of April. We’re working on several online compensation surveys while this blog entry is being written. Automation of the external survey process has improved participation and data assimilation.

There are several reasons why compensation and HR professionals acquire external employee pay survey data and I would like to offer some of the reasons based on our experience with compiling market pay studies, the use of market pay data for job classification, and compensation study projects and market pay analysis to evaluate internal and external pay equity and competitiveness.

  • Picture of Market Pay Comparisons and Competitiveness: The external survey data provides a snap-shot of the current median, mean and percentiles by benchmark job title and this data is compiled with pay data from additional surveys to calculate market pay comparable averages based on matching job titles. Based on compensation philosophies, organizations determine if their internal employee compensation averages are competitive with other companies and organizations within identified recruitment geographical areas. Including five or more external survey data comparisons by job title is a good practice and it helps to soften high or low pay outliers.
  • Market Pay Adjustments: Compensation and HR professionals are asked by management to provide annual employee pay adjustment budgeting recommendations based on average market pay adjustments. WorldatWork, with input from national and regional survey aggregators, business sector studies, and regional SHRM and Compensation associations, capture market pay adjustments data and offer annual average percentages by exempt, non-exempt and job classification groupings. This external survey data is used to determine the basis for annual employee cost of living and/or merit pool pay percentages.
  • Benchmark and Hybrid Positions: External pay surveys range from hundreds of benchmark positions to less than 50 job titles for custom surveys. Organizations using only external market pay data to evaluate benchmark and hybrid positions will need additional data since the organizations are void of an internal job valuing system. Some of the national survey aggregators have included software features to calculate market pay values for hybrid positions by utilizing percentages of two or more benchmark positions. If possible, it is a good goal to obtain external pay data on 50% or more of the organization’s job titles. This percentage can decrease if the organization is comparing internal pay lines with external data pay lines.
  • New Positions as the Economy Improves: Hybrid and new positions are increasing as organizations begin to hire and promote employees to meet increasing demand for products and services and/or increase the duties of existing employees by not backfilling previous positions placed on hold during the 2008-2010 Recession. Compensation and HR professionals are expected to determine pay ranges and starting pay for combination (hybrid) positions or new positions and their placement with the organization’s pay structure. Without an internal job evaluation process, there is greater pressure to obtain several market pay comparable matches that are valid and properly align with the organization’s pay structure.
  • Fair or Equitable Pay: Employees and regulatory agencies tend to evaluate fair or equitable pay on an internal basis and see external pay surveys as a means for validating pay competitiveness but not the basis for internal job comparisons based on several compensable factors. External pay survey data represents one half of a two part equation. Defensible and fair pay programs utilize the combination of internal job valuation and external pay data validation. The use of valid external pay data from a variety of reputable sources is a powerful tool for compensation management.
  • Prevent Overpaying or Underpaying: Usually managers and employees will frequently visit or email HR or Compensation professionals about pay equity or competitiveness issues. Some will present or send compensation comparisons from online survey organizations where employees provide pay salaries for the study’s data aggregation. Most employee generated pay study data is inflated compared to employer submitted pay data. Obtaining and maintaining external pay data from several sources helps to address pay questions from managers and employees and it will help organizations from overpaying or underpaying positions based on comparative studies.
  • Retain Top Performers: In 2012 and 2013, I gave several talks on retaining top performers as the economy improved from the 2008-2010 Recession. Organizations were at a risk of losing top performers due to improving economic conditions according to several studies shared by WorldatWork. Top performers were seeking to make more income especially if their current employers were unable to compensate them above market pay means due to decreased revenues during the recession. External compensation study data is helpful with keeping an eye on key positions and the value for these positions in the human capital marketplace.
  • Micro and Macro Job Valuing: We have some clients that will retain our services to provide external market pay studies for a few positions and other clients wanting to update their total organization’s pay structure and employee pay analysis. External pay survey data with significant data aggregation along with local and regional compensation data is useful in meeting our client’s needs. Most HR and Compensation professionals work to obtain and manage five or more external employee pay reports or database systems. Online systems, like IBM’s Kenexa CompAnalyst have robust pay data aggregation databases, researching capabilities and reporting options.
  • Validate Internal Pay Structure: Organizations are able to validate their internal pay structures with job classifications, grades and ranges by securing enough macro market pay data from external survey data sources to statistically evaluate their internal pay program. The amount of external pay data required is lessened when an organization utilizes an internal job valuing system.

It is important to note that an internal job valuing and external market pay compensation system is meant for assessing base pay employee compensation and pay structures. Differentiating pay for performance and merit systems are separate but they depend on solid and fair base pay foundational plans that are validated by external survey pay data from reputable sources.