In the last three years, it has been common for HR professionals to face new challenges and opportunities in the ever-evolving world of human resources. Next year will not be the exception. One of the most pressing concerns that many organizations will face in 2023 will be managing labor costs while maintaining a competitive edge and providing employees with fair compensation and working conditions. This can be especially challenging in the current economic climate, where changes in the job market, shifting business strategies, and other factors can impact the bottom line.
Keeping labor costs under control for HR professionals requires a strategic approach that balances the business’s needs with the talent and resources needed to stay competitive. In this post, we highlight easy wins to keep costs under control. Whether you are an HR manager, director, or someone interested in the field, this post will provide valuable insights and information to help you stay ahead of the curve.
Talent and Cost Balancing Strategies for 2023
In conclusion, by implementing strategic measures to save labor costs, companies can maximize their savings and revolutionize their approach to managing their workforce. Embracing technology, optimizing scheduling and staffing, fostering employee engagement, and investing in training and development are just a few strategies that can drive significant improvements in productivity and efficiency while reducing labor expenses. By taking a proactive stance toward labor cost management, businesses can pave the way for long-term success and profitability in today’s competitive landscape. So, why wait? Start implementing these strategies today and witness their transformative impact on your bottom line and overall workforce management.
12/20/2023
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Raise your Company’s Engagement Index: Compensation Strategies That Work!
In today’s rapidly evolving employment market, it is imperative for organizations to place a strong emphasis on their compensation and benefits offerings to engage their existing workforce and attract prospective candidates effectively. Recent research conducted by the Society of Human Resources has highlighted the undeniable influence of compensation as a key determinant of job satisfaction among employees. A comprehensive and competitive package has a direct correlation with higher rates of employee retention and improved productivity. By minimizing turnover and fostering an environment of enhanced morale, productivity, employee satisfaction, and organizational culture, companies can optimize their financial resources and cultivate a more positive and flourishing work environment. So, what are the necessary steps that can help you raise your organization’s engagement index?
Find out what your employees want
Finding out what your employees prioritize will also help determine if your organization is in line with what employees are looking for to better capitalize on the funds utilized for compensation and remain competitive.
One method of determining your employees’ wants and needs is to distribute surveys among a wide variety of staff members. Alternatively, employers could coordinate interviews of focus groups to facilitate open discussion.
During this process, question what your employees’ value and account for variations based on different groups and demographics.
Do an Inventory of the latest Compensation Trends
Studies show job candidates and employees look for a key component: the compensation and benefits package. In addition, several aspects that affect compensation can change over time, such as the size, revenue, or location of an organization or each employee’s role. Therefore, organizations must regularly review compensation and benefits to retain and attract employees. As you review the latest trends, highlight your comp and benefits program under a total rewards strategy. Employees may overlook the value of total rewards programs if they are not presented within the framework of a comprehensive total rewards strategy.
Leverage The Value of Your Employee Benefits
It is important to help employees better understand what benefits are offered to them in order to avoid dissatisfaction due to pay. Once employees clearly understand their total compensation package, they will most likely focus on all the compensation and benefits offered. Remember, 40% of your labor costs are associated with your benefits package. The cost includes not only medical benefits but all employee insurance programs, time-off, pension, and mandated employer-related taxes
Develop A Strategy that blends your organization’s Culture and Value
Once recommendations have been accounted for, account for your organization’s values and pay philosophy. Also, account for the return on investment and how changes could address attraction and retention. Be prepared to act or explain why such benefits are or will not be offered.
Flexible Solutions
To stay relevant and reach a widescale workforce, it is recommended that your organization offers flexible benefits that are customizable to your workforce. For example, there are a lot of different options to choose from when it comes to selecting a benefits package. Some options include health insurance, paid leave, retirement benefits, flexible scheduling, or tuition reimbursement. Also, flexible work arrangements are highly priced by employees: They offer the flexibility and cost-saving options often sought by employees.
Top Performer Benefits
Lastly, consider adjusting your compensation strategy for top performers and those that exceed expectations to further incentive good behavior and increase attraction and retention. Consider offering additional pay or an employee bonus. Employees are more likely to apply or stay at an organization that invests in their performance.
In conclusion, adopting a systematic approach to developing an engaged workforce can yield numerous benefits for companies. By implementing a well-defined process, organizations can create a culture of employee engagement that enhances productivity, fosters loyalty, and drives innovation. This process involves understanding employees’ unique needs and aspirations, aligning goals and values, providing regular feedback and recognition, promoting professional growth opportunities, and fostering a positive work environment. Investing in employee engagement improves job satisfaction and retention rates and directly impacts the company’s bottom line, as engaged employees are more committed, motivated, and willing to go the extra mile. By prioritizing the development of an engaged workforce, companies can position themselves for long-term success in today’s competitive business landscape.
Since Covid-19, the workplace culture has shifted, and employees at record numbers are pursuing remote work opportunities. According to a survey completed by FlexJobs in March of 2022, 77% of its respondents chose remote work as the second highest priority for their total compensation package. The popularity, however, is not shared by the employer community, who often see remote work as a drawback to enhancing work group dynamics. Most recently, a number of articles and studies have also pointed out that the popularity of remote work arrangments and their benefit may impact men and women differently.
FlexJobs surveyed more than 2,100 people between March and April 2021 to gain insight into these new perspectives. These respondents either worked or were still working remotely due to the pandemic.
Among those respondents, 550 were men, and 1600 were women, and while males and females share some similarities in their remote work experiences, some differences were also noted. Among a number of findings, females were more likely to view remote work as a greater necessity than men.
From Positive
Given these differences in opinion, employers may want to review their plans and incorporate their policies’ impact, how they are likely to be interpreted between men and women, and how they may impact the company’s pay strategy.
Compensation Strategies for a remote workforce
As remote work becomes more normalized, employers should consider adjusting their compensation strategy. Addressing remote workers’ pay combats pay equities issues that may arise where employees are over/under-compensated. In addition, recruitment and hiring may become difficult depending on the region where the applicant lives.
There are several strategies employers can take to address employees working remotely in several locations throughout the country.
Pay based on location
There are several approaches an organization can take to pay their remote staff based on location:
Set a pay scale based on the location of the main or corporate office. If multiple offices exist, assign your staff to the pay structure nearest their remote work location.
Pay is based on the pay zone that each employee lives closest to. Utilize a tiered US salary range. Take US national data and adjust based on the area. Add a 10 percent premium to employees who live in the five major metro areas, which include the District of Columbia, Los Angeles, Seattle, Austin, and Boston. Add a 15 percent premium to San Francisco and New York City employees since they live in a location with the highest cost of living and labor.
Utilize national data to set pay levels. This is recommended if the cost of living is similar to the national average.
Performance Based
Consider paying your staff based on their role and level of experience rather than their location. Pay should be based on job responsibilities and capabilities.
To accommodate this structure, a matrix can be developed to account for growth and the level of experience and skills.
Carve-Outs
Some jobs are in high demand and may be more critical than others. Consider carving certain classifications and setting a different pay structure for those groups so that they can remain competitive.
Equitable Pay
Employers need to communicate and document reasons for pay decisions due to remote work or performance, and employees need to be mindful of anti-discrimination laws to ensure that workers, including those within a protected class, are compensated equitably.
Define What Works for Your Organization
It is important to define your pay philosophy and structure clearly and what makes sense for your organization to help guide expectations. In addition, a competitive compensation philosophy can help attract and retain your workforce.
Also, consider the cost and administrative implications. For example, the financial impact for smaller organizations can be greater than a Fortune 500 company.
In summary,
As you navigate the societal issues around remote work, gender differences, and your organization’s needs, keep in mind that equality benefits everyone.
Courtney Geduldig of S&P Global summed it up best when she explained that “one of the biggest misconceptions about gender equality is that it only benefits women, but the data shows that this is not true.”
With companies focusing on recovery efforts following a pandemic, gender equality may recede in priority. Other priorities will inevitably emerge, but eliminating discrimination should never be put on hold.
By being proactive and aware of imbalances, businesses can become leaders against gender discrimination in all workplace settings.
California’s Pay Transparency Law-SB 1162 is making headway. The state legislature approved the bill on Monday, September 13, 2022. California’s Governor Gavin Newsom has until September 30, 2022, to enact the bill.
This new law would require all employers in California with fifteen or more employees to include the hourly rate or salary range on their job postings. In addition, upon request, employers would be required to provide the pay scale to their staff, and employers would be required to submit data payroll data to the state annually broken down by the demographics of their organization.
Groundbreaking State
The state of California is home to many groundbreaking changes in employment law. California’s Equal Pay Act requires employers in the state to disclose the pay range for positions they’re recruiting for to applicants upon request. In addition, employers within the state with at least one hundred employees are required to submit payroll data to the state annually.
California is now setting a groundbreaking precedent by adding an additional layer of transparency. California would be the first jurisdiction to require employers to distribute payroll data based on the demographics of the organization.
What are the implications of Law-SB 1162?
This new law would require all employers in the state of California with fifteen or more employees to include the hourly rate or salary range within their job postings
Upon request, employers would be required to provide information on what they’re paying their staff members
Employers with one hundred or more staff members would be required to report to the state annually the median and mean hourly rate for each job category broken down by race, ethnicity, and sex
In addition, employers with one hundred or more workers through labor contracts would also be required to submit similar data annually
All employers would be required to record their individual employees’ job title and wage history during employment and for three years post termination
California Fair Pay Act-SB358
The California Fair Pay Act-SB358, originally enacted in 1949, was amended on October 6, 2015, to address pay disparity among men and women within the workplace. The amendment requires employers only to rely on relevant factors to determine pay differences for their staff who perform substantially similar work. Such relevant factors include seniority, merit, quantity or quality of production, or a bona fide factor such as education or experience.
SB358 was also amended to protect employees who wish to discuss their pay with their coworkers openly, and it prohibits employers from retaliating against their staff for doing so.
Employer Liability
SB 1162-Failure to file the required reports or disclose the required information to the state of California would bring penalties to employers for non-compliance. In addition, employees would be eligible to file a complaint with the labor commission, which could lead to further fines and violations.
SB358-The division of labor standards enforcement enforces penalties for employers who violate SB358. Employers would be subject to back pay, interest, and liquidated damages.
To eliminate liability, employers are encouraged to document pay decisions within company policies and job descriptions based on relevant job factors, including job requirements, responsibilities, and working conditions.
Other Transparency Trends
Salary is an important factor for job seekers and, at times, can be a make-or-break decision whether to apply. Organizations are starting to recognize this, and the number of job listings with salary information has been increasing.
Some major companies like Microsoft plan to start disclosing pay on all their job listings more than mandated requirements to recruit qualified candidates.
In addition, to meet job seekers’ needs, popular job listing websites like Indeed recognize this trend and have acted. Indeed encourages employees to post their salary, and if not provided, they utilize an algorithm to atomically pull salary information based upon the job description and the characteristics.
Tools and Resources
Blue Whale has assembled articles and white papers to help companies best manage and guide their compensation program. In addition, at no cost, Blue Whale offers reviews that can help your organization best manage the challenges the pay transparency brings to the employer community.
Let’s Start the Conversation
Blue Whale offers a full range of compensation services to help you achieve your business goals. Whether you’re looking to design a new compensation plan, analyze your current program, or stay up-to-date with the latest trends, we have the expertise and resources to meet your needs. Contact us to learn more about our compensation services and how we can help you take your program to the next level. Let’s start the conversation!
