11 minute read
TRANSFORMING TEAMS
COMPENSATION PLANNING FOR THE YEAR AHEAD
------------ BY SUSAN PALÉ
UNDERSTANDING COMPENSATION is critical to staying competitive in today’s volatile labor market. As we prepare for 2023, real wage growth is a concept that is particularly important.
Overall wages are projected to increase 4.0% or more during 2022. Although this is the largest projected increase in several years, the current inflation rate of 8.5% (the highest recorded in 40 years) results in negative wage growth for many employee groups.
Q. A few of my employees have shown up for work sick. I appreciate their dedication, but I’d rather they not come to work when ill. Can I send them home and require that they use their sick leave? A. Yes, you can. Recognize that there may be reasons why employees are showing up sick that might include: • Not wanting to use sick or paid-time-off leave • Not being able to afford the lost wages due to illness • Fear that the workload will become overwhelming if work is missed • Fear of disappointing the boss
If you do send them home, reassure them that you want them to take the time to recover and that you will help to ensure their work gets done. Remind them that sick leave is offered so that they will stay home when they are sick. And if they are worried about lost wages, try to identify ways for them to make up the time once they return to health.
Consider allowing them to work from home temporarily if that is an option given their job duties and other operational considerations such as security, access to needed information, etc.
Remember, some states and cities require employees receive paid sick time and that some sick time, even if unpaid, is protected time off.
Real wages/income is calculated by dividing the current wage by 1 plus the current inflation rate. For an employee currently making $40,000, the individual’s real income is reduced to $36,866 when the current inflation rate is considered.
Staying competitive requires both short- and longterm planning. Some of the things you’ll need to think about include:
Salary Administration
Organizations frequently spend a lot of time (and money) setting starting salaries for new hires, developing salary ranges to accommodate new positions, and even developing and implementing formal salary structures. All of these are positive steps, but often they are implemented and abandoned. To remain competitive, ongoing salary administration is required. This includes:
SALARY REVIEWS should be performed annually, more frequently when recruiting and/or retention issues occur. Hopefully, you’ve done some market pricing during the year to give you a baseline understanding of salaries in your competitive market(s).
Combined with market pricing information, regular salary reviews will help to identify pockets of salary compression (e. g., new hires making more than long service employees doing the same work), the range of pay for employees performing the same work relative to performance and length of service, and other potential pay equity issues.
SALARY RANGE AND SALARY STRUCTURE REVIEWS are also a critical piece of successful salary administration. If you’ve developed salary ranges or more formal salary structures, you’ve most likely based them on market information. But the market can change
quickly. It is important to review and update those ranges and structures regularly. Affinity HR Group usually recommends this review be done every other year.
SALARY BUDGETS are the third important component to successful salary administration. Many organizations don’t prepare any type of salary budget, but those who want to anticipate future salary expenditures often prepare an annual salary budget that includes: • Performance based and across the board salary increases (more on those below) ee service anniversary. Awarding all increases at once has become a more commonly used approach, since it allows the organization the opportunity to view all employees at once and award increases that align with salary increase budget parameters.
When salary increase budgets are low (they’ve averaged around 3% for the last several years), it can become challenging to award true pay for performance increases. For example, a top performer earning $60,000 might get a 5% increase ($3000). An average performer earning the same might get a 3% increase ($1800). After taxes, etc., there isn’t a lot of difference.
ACROSS-THE-BOARD salary increases are generally given to all employees on a scheduled basis— most often at the end of the calendar year or the organization’s fiscal year. Often, the amount is determined based on the organization’s past performance, rather than determined through an advance salary planning/ budgeting process.
These increases are usually awarded as a percentage of base salary, and all employees generally receive the same percentage.
Giving all employees the same increased amount can perpetuate pay inequities that may exist in an organization.
LONGEVITY or LENGTH OF SERVICE salary increases are based
• Salary increases to address inequities as the result of reviews of paid salaries • Salary increases to address inequities as the result of reviews of salary ranges and/or salary structures • Anticipated payouts under bonus and incentive plans
Salary Increases
Once you’ve completed the basic salary administration activities described above, it’s time to think about salary increases. There are dozens of types of salary increases; some of the most common (and those that affect the most employees) are described below:
PAY FOR PERFORMANCE or MERIT INCREASES are common in all types of organizations. These increases are generally awarded for successful achievement of some measurable criteria. These criteria may be established and communicated in a formal performance review form or by less formal notes, discussions, etc.
Most organizations using a pay for performance increase system will award increases based on some type of schedule—end of year, end of organization’s fiscal year, or employsolely on an employee’s length of service with an organization. There is generally no performance component to these increases, which are often mandated by contractual agreement. These types of increases are most common in government and education.
COST OF LIVING ADJUSTMENT (COLA) salary increases are linked to a rise in the cost of goods and services. They are designed to help employees maintain (rather than increase) their purchasing power.
In the past, these increases have often been awarded to all employees. They are now used less frequently, because of vast differences in local and regional pay markets (e.g., pay in San Jose, Ca., is approximately 41% higher than the national average). The increase in the number of remote workers in multiple locations also reduces the effectiveness of this type of salary increase.
SUSAN PALÉ
Susan Palé, CCP, is vice president for compensation with Affinity HR Group. Reach her at (877) 660-6400 or contact@affinityhrgroup.com.
EAGLE BUYING OREGON PALLET MILL
Eagle Forest Products, Eagle, Id., is purchasing the lumber manufacturing plant of Family Pallet Lumber, Tangent, Or. This purchase will close by year end and will result in a significant increase in production at this facility going forward.
John Peaslee, previously with Idaho Timber, will serve as general manager of manufacturing operations for Eagle Forest in Tangent.
Eagle Forest Products is a lumber manufacturing and marketing company with production facilities in Tangent and Roseburg, Or.; Greenleaf, Wi.; Magnolia, Ar.; and Piedmont, Al.
The company also has sales and distribution operations in Eagle, Id.; Montgomery, Tx.; and Chesapeake, Va.
ROYAL PLYWOOD NOW OFFERING LAMINATION SERVICES IN ARIZONA
Royal Plywood Co., Cerritos, Ca., has started up a new Black Bros. cold lamination press at its Chandler, Az., facility.
The press is now fully operation-
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Ganahl Lumber, Anaheim,
Ca., has completed its purchase of 84-year-old Northridge Lumber Co., Northridge, Ca., from Patrick and Timothy Hawthorne.
HPM Building Supply,
Keaau, Hi., added a West Coast distribution center in Fife, Wa.
CALI Floors, San Diego, Ca., opened its first custombuilt distribution center in Summerville, S.C., with additional DCs in the works.
Digger Specialties is
now branding its columns as Westbury Columns.
Wahoo Decks has rebranded as Wahoo Building
Products, reflecting its broadening product offerings and customer base.
National Nail’s Stinger
EXO Synthetic Underlayment was recently listed as an acceptable alternative to roofing underlayment by the Texas Department of Insurance.
Hampton Lumber,
Portland, Or., has created a $100,000 Hampton Lumber Scholarship endowment to aid students in Tillamook Bay Community College’s forestry and manufacturing and industrial technology (MIT) programs.
US LBM will once again be the title sponsor of the Pac12 US LBM Coast-to-Coast Challenge. The college basketball quadruple-header will be held in Dallas, Tx., Dec. 18.
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After a major renovation, Miyake–HPM Building Supply opened its first full-service Home Design Center in Maui on Nov. 5, adding a wide array of kitchen, bath flooring, window and door product displays and design inspiration on the newly renovated second story of the Miyake–HPM branch in Kihei, Hi.
The design center spans more than 3,800 sq. ft. and features cabinets, countertops, flooring, plumbing and lighting fixtures, doors, windows, and finish hardware, with brands such as Bellmont Cabinets, Cosentino, Daltile, Delta, Milgard Windows & Doors, Pacific American Lumber/Radianz, Simpson Door, and Amerock.
It is Miyake–HPM’s fifth Home Design Center. Problem Seeker ROSEBURG RESTARTS WEED VENEER MILL Roseburg Forest Products resumed full operations Seek Thermal’s newest thermal imaging technology, Seek Shot and Seek ShotPRO, allows professionals to identify leaks, electrical shorts, mechanical of its veneer manufacturing plant in Weed, Ca., on Nov. faults and energy loss as a way to assess the health of 9, more than two months after the devastating Mill a structure in a non-destructive manner. Fire on Sept. 2.The device can save readers time and money by
The plant’s 145 employees returned to full schedidentifying otherwise “unseen” problems. This could ules after implementing new safety procedures, relate to water damage, leaking pipes, electrical or installing new ash-handling equipment, and conductHVAC malfunctions, or a loss of thermal energy due ing routine maintenance and planned capital improveto poor insulation or construction. ments. Specifically, Roseburg: • Removed the mill’s “ash mixer” that a manufactur er designed to mix and cool the mill’s ash with water. n SEEKTHERMAL.COM (844) 733-4328 • Installed a replacement mixer to mix the ash with water and cool the ash. • Updated how the mill produces, stores and removes its ash from the new ash mixer. • Updated emergency response processes. • Conducted team member trainings for handling ash with the replacement ash mixer and a new storage facility.
“We carefully considered the concerns our neighbors, regulators, investigators and our community may have had about the resumption of full operations,” said Pete Hillan, spokesperson for Roseburg. “We’ve trained our team members, tested the equipment, and updated our operational protocols so that we are confident in safely resuming operations.”
CalFire and the Siskiyou County Sheriff have not issued the results of their investigations into the cause of the Mill Fire. Choose Your Garage Style
ABC SUPPLY BUYS KAYCAN’S US DC’S Three months after purchasing siding manufacturer/ distributor Kaycan, St.-Gobain has sold Kaycan’s U.S. distribution unit to ABC Supply. Haas Door’s new SelectView option allows customers to place windows in almost any location they desire in a garage door. Designed to provide more aesthetic choices for garage doors to complement home styles, the system helps the user achieve their
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Not included are its manufacturing facilities nor its the bottom section of the garage door. This allows for 30 distribution centers in Canada. glass to be used in all panels of the garage door, giv-
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