COVID-19 Virus Pandemic Message

We hope that you and your associates are staying safe and well during the COVID-19 Virus pandemic social distancing period and now with the various staged re-opening plans for organizations and businesses across the U.S.

Both of our human resources software programs (DBDescriptions and DBCompensation) are internet hosted.  We offer access to the DB Squared programs from remote and/or office locations.   As employers are deciding which employees need to return to the office or work from home (WFH), our software programs are accessible and easy to use.

We hope that the remaining months in 2020 will be less stressful as we all work together for a new normal after experiencing the devastating and lasting impact of the World-wide COVD-19 Virus Pandemic.


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Taking Advantage of the Reset

We hope everyone that we have served over the past 35 years is safe and well and doing everything they can to protect themselves and others around them from the Covid-19 virus.  We have been able to take care of our clients’ needs during this time but are looking forward to the day we can all be in closer contact with our business associates, clients, family, and friends.

It has been our honor and joy to provide our copyrighted 15-factor Job Evaluation and Salary Administration Program (1985) in an automated format known as DBCompensation since 2005.  In addition, we have several clients using the DBDescriptions software program that was developed and offered starting in 2010.

In the coming weeks and months, many businesses that have been shut down or had to limit their business due to the pandemic will be returning to some level of operations in the coming weeks with the intent to be at full operation over the next few months.  We believe this is a great time to assess your compensation and benefits plans with the intent to ensure fair, equitable and competitive total reward packages are in place. 

If you aren’t sure or you desire a more formalized structure that we have implemented since 1985 and offered commercially in an automated format since 2005, please contact us.  Management and owners love the consistency, detail, defensibility and a realistic road map to follow.  Employees love the company’s commitment to create an equitable, competitive and growth potential structure.


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2020 “Living Wage” and “Minimum Wage” Intersection or Roundabout?

An intersection is a point at which two or more things intersect, especially roads. (Merriam-Webster)

A roundabout (also called a traffic circle, road circle, rotary, rotunda or island) is a type of circular intersection or junction in which road traffic is permitted to flow in one direction around a central island, and priority is typically given to traffic already in the junction. (Wikipedia)

After the nation is able to heal from the Coronavirus crisis and the corresponding forced economic recession to save human lives, government officials and employers will be working to bring our nation’s workforce back to pre-recession productivity levels and employees will be pushing hard to reestablish their previous compensation and benefit packages.

Compensation and HR professionals are keeping their eyes on two and maybe more things that are intersecting or circling and will have an impact on future compensation levels for the lowest paid jobs in our country.  Living wage discussions and new state minimum wage laws are raising compensation levels above the current Federal minimum wage rate of $7.25 for non-exempt positions.

Will Living Wage rates (Reference: M.I.T. Living Wage Rate Calculator) be given a right-of-way status at a four way intersection with state minimum wage laws, proposed Federal minimum wage rates from forthcoming legislation to gen up our post-recession economy and/or demand greater than supply job economic factors.  Using a roundabout circular intersection, which of the four mentioned items will take a priority lead position on compensation minimum wage policy decisions?

In our compensation consulting work with municipalities, we are seeing more requests by city council members for higher minimum wages or living wages for the lowest paid positions and employees that fill these jobs.

The next time you roll-up to a four-way stop intersection or press the gas pedal to enter a circular roundabout, we want you to think about the lowest paid employees and how they make a living and cover basic shelter and food expenses with $7.25 to $13.00 minimum hourly wage rates.

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Why Job Descriptions are Important?

As we have worked with our clients to assist them with establishing compensation structures over the past 47 years, job descriptions are where we start and the foundation of “getting it right” when it comes to employee pay.  There are also several other job description benefits listed below that employers should take advantage of with their employees.

Recruitment – once a pool of qualified candidates has been identified, a job description can be sent ahead of the phone and/or in-person interview.  Asking job related questions from the job description will assist the recruiter to determine who is best suited for the position.

Onboarding – a great way for the immediate supervisor and new employee to ensure both parties are on the same page together is to review the job description (especially job summary, duties, skills to be used/developed and goals to be accomplished) as a part of the onboarding process.

Job Valuing – since jobs can vary from organization to organization, it is important that job descriptions are created and maintained for what each employee is supposed to actually be doing.  In addition, a job description can be internally valued by using a job rating/valuing system such as our Johanson Group copyrighted 15-factor job valuing program creating a job point value for each position.  This process helps to create an internal value and is integrated with outside market data to establish a minimum, midpoint and maximum salary range.  This approach is very valuable when you have a hybrid or unique position where no market data exists for it.

Exempt vs. Non-Exempt – Based on how the job description is written, the employer can make a solid determination on whether the positon is exempt from wage and hour laws.  In addition, our job valuing system assists with determining the proper classification for each position within the organization.

Performance Appraisal – When it comes time to sit down with an employee to discuss how he or she is doing in the position, whether informally throughout the year and/or formally once a year, using the job description and the goals that were established for the review period can be beneficial for both parties.

Promotion Consideration – If a position is open and the organization desires to select the best internal employee, the job description can be provided to all potential candidates and used during the interviews to select the best individual for the position.

ADA – The Americans with Disabilities Act (ADA) doesn’t require job descriptions, but any organization with 15 or more employees is required to have a listing of job functions and job specifications that describe the position from a physical and environmental standpoint.  Job descriptions with the ADA terminology will be beneficial for determining whether an appropriate accommodation can be made for someone with a disability.

Safety Sensitive – Several states have passed medical and/or recreational marijuana laws and some positions within an organization will have a requirement where marijuana can’t be used.  Listing this requirement on the job description gives notice to potential and existing employees.

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PAY TRANSPARENCY (Internal Job Valuing and External Market Pay Data)

PayScale, a compensation and software firm, released a recent report titled, “Does Pay Transparency Close the Gender Wage Gap?” CEO Scott Torrey made the following statement based on the research findings related to their compensation study:

“This latest research shows just how powerful transparent pay practices can be for organizations.   When employers use real market data and talk openly with employees about their pay, it serves to challenge the underlying bias that can impact decisions about compensation. Most employers want to ensure they’re paying fairly, so we encourage HR departments and senior leaders to adopt transparent pay practices as an important step toward achieving this goal.”

As compensation consultants with several decades of client experience, we affirm Mr. Torrey’s statement about pay transparency and its impact on paying employees fairly, but we also believe that internal job valuing and the use of external market pay data provides for a higher level of pay transparency and pay equity.  Validating an internal job valuing process with external market pay data helps managers and employees to see more clearly how the base compensation process and structure and pay equity efforts are handled in their respective organizations and companies.

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Finishing Strong!

The baby boomer generation is in the middle of retirement age and several in this generation have already retired.  The most common age birth range for the baby boomers is 1946 to 1964.  As we start off 2020, those that were born in 1946 are 74 this year and the last year of the group will be 56.  The baby boomers born in the middle of the range will be 65 this year.  The youngest of the baby boomers have about eleven years left before reaching their normal Social Security retirement age of 67.   

My reason for writing this blog is to help organizations know how to best to assist their baby boomer employees with finishing strong as well as transitioning the next generations into various leadership roles.  We have at least two banking clients where the President/CEOs are in their early 70’s.  They both have succession plans in place and should be retiring in the next few years.  The average number of baby boomers retiring each day is around 10,000.  We do believe that the pace is going to pick up as we will be in the second half of the baby boomer years starting in 2021. 

Below are some valuable tips to allow baby boomers to finish strong, and at the same time, bring on the next generation of leaders to manage your organizations for effectiveness, efficiency and profitability.

  1. Ensure that the company and leadership knowledge that your baby boomer employees possess is being passed on to the next generations’ leaders.
  2. Allow your baby boomers to take more time off or work part-time to ease them into retirement and take some of the savings to pay competitive salaries and bonuses to existing/incoming new generation leaders.
  3. For the key baby boomers that are still in their mid to late 50s, consider some form of tax-deferred retirement plan to keep them from leaving and allow them some retirement cushion beyond the basic 401(k). This will allow this group to transfer their expertise and not worry about having sufficient funds at retirement.
  4. If you haven’t already, start now to identify key Generation Xs, Ys and new to the workforce Z’s and pay them a competitive base salary as well as provide them with performance-based year-end cash bonuses/stock where most of these funds are required to be placed in a five to ten year vesting account.  The key here is to create a balance quickly that the employee can’t access until at least five years out.  This gets the younger generation employee past the years where they tend to hop from one company to the next.

Proven high performance companies are good at allowing their employees to finish their careers and start their careers in a strong and meaningful manner.  Commit yourself to be in this league of companies.


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From Our Organizations to Your Organization

It’s December and we just finished Thanksgiving and we’re now on to Christmas! As we approach the end of another successful year in business, our two companies would like to say thank you for the many years that we have been serving you, our clients. 

Johanson Group was formed in 1973 by Dr. Richard C. Johanson (Dad) and Shirley Kathleen Johnson Johanson (Mom).  The two of them consulted to mostly Arkansas-based clients and a handful of organizations in other states from 1973 to 1989.  They both continued to provide wisdom and guidance from 1986 to 2010 when Dad passed away and Mom passed away this past month.  Their twins, Bruce and Blair Johanson joined the family business in 1986 and 1999 respectively and have enjoyed working with a vast number of public, private, government and non-profit organizations in a variety of sectors over the past 33 years.

DB Squared was formed in 2005, and we have been able to offer our two exclusive HR software products, DBCompensation and DBDescriptions to hundreds of clients over the past almost 15 years. 

Between the two companies, we have worked with clients in two-thirds of the 50 states.  We are excited about 2020 and look forward to supporting our existing clients and being blessed with new clients in the coming year(s).

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Our public organizational clients are experiencing supply and demand issues associated with jobs that require a commercial driver’s license. The counties and cities that require CDL’s for trucking and other road operated equipment are experiencing shortages in applicants that have CDL’s.  We have seen increased efforts by these public organizations to attract and retain employees with CDL’s.  Higher starting wages, increased pay grade ranges and additional pay for existing CDL employees are some of the actions being taken by employers that are competing in the marketplace for CDL-related jobs.  Annual salaries for local non-OTR CDL jobs are ranging from $35,000 to $50,000. The national annual median salary average for truck drivers is $45,570 (Heavy and Tractor-Trailer Truck Drivers) based on DOL – Bureau of Labor Statistics 5/2018 data.  Salary data found on the Truck Drivers Salary website notes that OTR CDL truck drivers will receive an average salary of $59,158 per year.

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That is the new annual overtime pay threshold figure that the U.S. Department of Labor (DOL) released on September 24, 2019.  The DOL issued their final rule, and the new rate will become effective on January 1, 2020.  To be classified as an exempt level employee, each employee must be paid at least the $35,568, which equates to $684 per week.  The previous weekly figure was $455.   In addition, the position that the employee holds must meet the Fair Labor Standards Act (FLSA) duties tests.  For employees in positions that are paid under the new figure, employers are obligated to pay 1.5 times their regular hourly rate for any time over 40 hours worked in a workweek.

Between now and the first of 2020 would be a great time to assess and reclassify any employees / positions that are in the gray or middle area to nonexempt or exempt status based on current pay and the duties tests.  Employers may need to increase some employees’ pay to get them at/over the new rate, given that they meet the duties tests.


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Exodus of Baby Boomers Helping to Fund Higher Employee Pay Adjustments

In a Forbes article titled, Baby Boomers Retiring Rapidly: Are Successors Prepared written by Maureen Metcalf, Forbes Council Member and CEO of Metcalf & Associates, she refers to research by Bonnie Hagemann and co-authors in their book “Leading with Vision” that baby boomers are leaving the workforce at a rapid rate of 10,000 per day or approximately 1 baby boomer every 9 seconds.

In our compensation consulting work, we’re seeing this phenomenon unfolding with our private and public sector clients.  We have a public government client that experienced an average $3.75 hourly pay difference between leaving employees’ average pay and their new hires’ average pay in 2018, and they are on-track for a $2.44 difference in 2019.  This may not seem like much money but it equates to $640,000 annual wage savings in 2018 and approximately $724,000 savings in 2019 based on a 15% turnover rate.

Some clients are redistributing these baby boomer exodus wage savings to help fund higher annual employee pay adjustments.  The 2019 annual WorldatWork Compensation study is projecting a national average of 3.3% for employee pay adjustments in 2020. The represents a new historical high after years of 3.0% or less average annual employee pay adjustments to base pay.

Human Resource and Compensation professionals need to help their management teams with strategic redistribution of baby boomer wage savings and succession planning during the next ten years.  The 3rd and 4th quartile wages will be out the door during the next decade and its recipients will be on the beach, traveling in an RV or parachuting out of a plane like past president George H.W. Bush did to celebrate his 90th birthday on June 12, 2014.

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