What is the question?
April 20, 2010
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Discussion Points
Philosophy Total Rewards Elements Company Statistics Compensation Basics Communication
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Philosophy Do you want to have a philosophy? What do you want to accomplish with your rewards & recognition program(s)? Link to company’s mission & values? Link to Talent objectives / needs? Link to Performance? Do you want to pay at Market, below, above? What else? 4/20/2010
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Rewards & Recognition Philosophy Example A Rewards and Recognition Program that supports our performance culture that aligns individual performance with the achievement of our business goals and individual rewards. Employees who perform at higher levels receive greater rewards.
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Compensation Basics Market
Surveys Analysis Ranges Geographic differentials/zones Minimum wage rates
Job Evaluation Salary Analysis Hiring; promoting; equity
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Total Rewards & Recognition Elements Benefits
Spot Awards
Base Salary
Safety Awards
Commissions
SPIFFS
Service Awards Bonuses / Incentives
Total Rewards 4/20/2010
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Total Rewards & Recognition Elements - Competitors
In du B u e s z i s t S I r n y y n e a s p – s y n m a m un Ho w Co ” I t n t e r e f s if
Who are your “d u o y o d s n u o i ito s o p y competitors? o ? d e e v a r h e h L ? o W ui t c a r t c i o re n
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Total Rewards & Recognition Elements - Positions List of all positions Basic job description to be used to match surveys Evaluation system Various – point factor, internal equity, market Use market for today’s examples
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Total Rewards & Recognition Elements – External Equity Competiveness
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Total Compensation Base Salary Incentives Commissions – $ per lease, % of lease value Mix – lower base and higher incentive
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Market Comparisons / Mix
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Other Considerations Minimum Wage Rates National - $7.25 http://www.dol.gov/dol/topic/wages/minimumwage.htm
States Vary
Geographic Differentials Impact on Pay References: NMHC survey ERI (Economic Resources Institute) http://
www.erieri.com/
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NMHC
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Base Salary Issues Attract, Retain, Motivate Competitive Pay Level Pay for Results (Performance), Knowledge, or Team Membership
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Base Salary Issues
Pay for Job or Person (Skill Sets) Performance: Team Role Control vs. Decentralize Lateral vs. Vertical Movement
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Questions, Questions and More Questions . . .
Affordable vs. conventional Transaction vs. operations Accountant vs. community manager Degree required vs. no degree Sales vs. non-sales Internal customer service vs. external customer service Union vs. non-union
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Compensation Structures Kinds of structures unlimited Driven by several factors: Company size Objective Positions – career path
ONE SIZE FITS ONE 4/20/2010
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Pay Structures – Traditional Example Grade
Minimum
25th
Midpoint
75th
Maximum
6
$12.00
$13.00
$14.00
$15.00
$16.00
5
$10.80
$11.60
$12.40
$13.20
$14.00
4
$9.80
$10.40
$11.00
$11.60
$12.20
3
$9.00
$9.45
$9.90
$10.35
$10.80
2
$8.40
$8.75
$9.10
$9.45
$9.80
1
$8.00
$8.25
$8.50
$8.75
$9.00
Entry Newly Promoted
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Market
Compensation is the Answer
Highly Experienced SME
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Structure Examples Traditional $ P A Y
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Grades 4/20/2010
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Pay Structures – Modified Traditional Example Grade
Minimum
1st Third
2nd Third
Maximum
6
$12.00
$13.00
$15.00
$16.00
5
$10.80
$11.60
$13.20
$14.00
4
$9.80
$10.40
$11.60
$12.20
3
$9.00
$9.45
$10.35
$10.80
2
$8.40
$8.75
$9.45
$9.80
1
$8.00
$8.33
$8.66
$9.00
Entry Newly Promoted
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Market
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Highly Experienced SME
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Structure Examples Modified Traditional $ P A Y
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Grades 4/20/2010
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Pay Structures – Band Example Band
Minimum
Maximum
4
$18.00
$40.00
3
$13.00
$24.00
2
$9.80.
$16.00
1
$8.00
$10.80
Entry Newly Promoted
1
2 3
Market
4
Highly Experienced SME 4/20/2010
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Structure Examples Band $ P A Y
1
2
3
4
5
Band 4/20/2010
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Pay Structures – Step Example
Steps can be earned by tenure, demonstrated experience , specific skills, certifications or any combination of these.. 4/20/2010
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Pay Structures – Position Example Position
Minimum
Midpoint
Maximum
Tech
$9.00
$10.00
$11.00
Leasing Consultant
$7.25
$8.00
$8.75
Bookkeeper
$12,000
$15,000
$18,000
Community Manager
$35,000
$50,000
$65,000
Regional Property Manager
$50,000
$70,000
$90,000
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Pay Structures – Position Example
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Pay Grade Development The salary and grade structure is reflective of the internal equity, external equity and individual equity of the organization. This combined with your willingness and ability to pay, determines the career ladder that will give us the appropriate allocation of pay dollars across all job categories.
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Pay Grade Development
Minimum
Midpoint
Maximum
Entry Level
Fully Competent
Extraordinary Skills
New and Performance undetermined
Fully Satisfactory Performance
Superior Performance
Inexperienced
Market competitive
25th
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Seldom Used
75th
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NHMC Data
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Data Selection Surveys
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Many available Select to fit your need Compensation Data Industry Function Policy Data Metrics
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Survey
Area
Type
NMHC – National Multi Housing Council (Towers Watson)
National
Apartment Professionals
NAREIT – National Association of Real Estate Investment Trusts (FPL & Assoc)
National
Executive, Global, Senior Management, Corporate Services, Asset Management, Capital Markets, Construction, Development, Engineering/Security, Investments, Leasing, Marketing, Property Management, Technology, Transactions
Towers Watson – Reports Package Comp Data Bank
National
General Executive, Accounting/Finance, Human Resources, Information Systems, Administrative Services, Marketing, Property Management, Security, Maintenance, Brokerage & Leasing, Legal, Business Development, Acquisitions & Asset Management, Construction, Real Estate Appraisal
National Real Estate (CEL & Assoc)
National
Corporate, Office/Industrial, Residential, Retail
Mercer – Benchmark
National
Executive & Non-Executive
MSEC – Mountain States Employers Council: Front Range & IT
Colo
Executive, General Support, Financial, Human Resources, Legal, Sales/ Marketing, Engineering, Scientific & Technical, Maintenance & Facilities, Procurement/Material Handling, Information Technology
RIMS – Risk & Insurance Management Society
National
Risk Management; Claims
Empsight
National
Legal
ACR – American Compensation Resources Inc: Tax Planning & Tax Compliance
National
Global, Domestic, International, Sales/Use/Property,
ACR – American Compensation Resources Inc: Investor Relations
National
Investor Relations, Shareholder Services
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Survey Data What information are we going to use? 1. What positions? a. All b. Benchmark positions
2. Philosophy a. Average / Mean b. Median c. 75th ile
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NHMC
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Example – Maintenance Positions
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NMHC Survey All Orgs.
Base Salary
Total Comp
Position
Weighted Avg
50th Percentile
Weighted Avg
50th Percentile
Maintenance Tech
$31,900
$31,300
$32,700
$32,500
Make Ready
$28,900
$28,500
$29,800
$29,100
Groundskeeper
$23,700
$22,500
$24,400
$23,100
Painter
$30,400
$29,500
$31,100
$30,300
Next step is charting or graphing.
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Survey Data When conducted When needed Adjust for market movement by: Aging the Data
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Survey Data – Aging the Data Three stances: Lead – Lead Lead – Lag Lag - Lag
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Collect & Analyze Survey Data
GRADE 4/20/2010
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Survey Data - Midpoint Regression analysis (linear trend line) Best-fit straight line that is used with simple linear data sets Pay and Assigned grade or position
Estimate Use the charted data and draw the line.
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Collect & Analyze Survey Data - Midpoint Trendline
Drawn Midpoint
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Survey Data - Range Basic Considerations In deciding the range from min to max – think about the time you would expect someone to stay in the range. The shorter the time, the closer you would pay to
market at hire or promotion. The longer someone is in a position, the greater the range from min to max
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Pay Structures – Traditional Example Grade
Minimum
25th
Midpoint
75th
Maximum
Range Spread
6
$12.00
$13.00
$14.00
$15.00
$16.00
33.33%
5
$10.80
$11.60
$12.40
$13.20
$14.00
29.6%
4
$9.80
$10.40
$11.00
$11.60
$12.20
24.5%
3
$9.00
$9.45
$9.90
$10.35
$10.80
20%
2
$8.40
$8.75
$9.10
$9.45
$9.80
16.67%
1
$8.00
$8.25
$8.50
$8.75
$9.00
12.5%
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Collect & Analyze Survey Data - Range Development Maximum 75% Midpoint 25% Minimum
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Actual Pay Data – Next Step 1. Match all incumbents against the Market Data for their position.
Watch for variances between job families and/or skill level. Are your maintenance techs paid closer to market than your community managers? Are the property level employees paid below market and your corporate level employees paid above?
2. Calculate the difference (dollars & percent) between actual pay and market pay. 4/20/2010
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Collect & Analyze Survey Data - Actual Pay Maximum 75% Midpoint 25% Minimum
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Actual Pay Data – Next Step 3. Calculate the difference (dollars & percent) to appropriate pay based on performance / skill.
For instance, you may not need to increase a new hire’s salary automatically to the midpoint. Your SME may need to be paid in the upper portion of the range and may need a larger increase. If your philosophy includes a performance factor, make sure you have all the performance ratings available.
4. Compile research from various surveys on projected merit and structure increases. 4/20/2010
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Survey - Market Projections
Survey
Area
Type
NMHC – National Multi Housing Council (Towers Watson)
National
Apartment Professionals
Towers Watson
National
Increase Projections
World at Work
National
Salary Budget Questionnaire
The Conference Board
National
Salary Increase Survey
MSEC – Mountain States Employers Council: Planning Packet
Colorado
Salary Budget/Increase Questionnaire
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Actual Pay Data – Next Step 5. Compare the market research % against your internal calculated %.
How close are they? If you applied the projected market range increase, what is the $ impact? What is your budget?
5. Decision point
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Actual Pay Data – Next Step 7. Budget is approved – How do I allocate the money?
One approach – everyone gets the same amount, OR
8. Performance Based
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Dollars are allocated to: Top Performers High Potential Position in Range Compensation is the Answer
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Merit $ Allocation Example Potential Codes Performance Rating
1
2
3
4
5
Up to 2.5%
0%
Up to 3.25%
Up to 2%
0%
Outstanding
Up to 6% Up to 5% Up to 4%
Exceeds
Up to 5% Up to 4%
Full
Up to 4%
Up to 3.25%
Up to 2.5%
Up to 1.5%
0%
Improvement Expected
0%
0%
0%
0%
0%
Unacceptable
0%
0%
0%
0%
0%
Too New to Rate 4/20/2010
Too New to Rate
Up to 2%
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Merit $ Allocation Example Range Penetration Performance Rating
Min to 25%
25% to 50%
50% to 75%
75% to Max
Over Max
Up to 2.5%
0%
Up to 3.25%
Up to 2%
0%
Outstanding
Up to 6% Up to 5% Up to 4%
Exceeds
Up to 5% Up to 4%
Full
Up to 4%
Up to 3.25%
Up to 2.5%
Up to 1.5%
0%
Improvement Expected
0%
0%
0%
0%
0%
Unacceptable
0%
0%
0%
0%
0%
Too New to Rate 4/20/2010
Too New to Rate
Up to 2%
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Merit $ Allocation Example Pay below Minimum More frequent increases (every 9 months versus 12 months) Increase to minimum
REMEMBER TO PAY ATTENTION TO MINIMUM WAGE
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Merit $ Allocation Example Pay over Maximum No Increase Lump Sum Increase
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Other Options to Merit Allocations Stretch time between increases Adjust time between increases based on performance Outstanding performance – 10 months Exceeds performance – 12 months Meets performance – 15 months
Delay range adjustment Adjust “Aging” factor 4/20/2010
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Communication What are we communicating? Job title? Grade? Range structure – minimum, midpoint, maximum? Pay ? Opportunity for advancement? Career paths? More? 4/20/2010
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Communication Several Forms 4/20/2010
Town hall Webcasts Group Meetings – HR, Manager, Sr Management One-on-one meetings Pamphlets Booklet Flyer Company Newspaper Compensation is the Answer
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Communication
PRIORTY 4/20/2010
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Other Considerations Total Rewards Cash + Benefits
Benefits Health & Welfare Retirement Defined Benefit & Defined Contribution (401 (k))
Paid Time Off Others (e.g., perquisites, alternative work arrangements, etc.) 4/20/2010
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“Usually, keeping a plan simple is stupid.� Ed Lawler
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Compensation works best when…
IT DOESN’T GET IN THE WAY!
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Questions 4/20/2010
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For follow up questions, please feel free to contact us at: Marc M. McBrearty, CCP North American Leader, Data Services
Sherlyn Keiling, CCP SPHR Multi-Family Compensation Consultant
Towers Watson Data Services 218 Route 17 North Rochelle Park, NJ 07662
9734 Raleigh St Westminster, CO 80031
T +1 201 843 1177 D +1 201 226 3405 M +1 201 921 8850 F +1 201 843 1764 dataservices.towerswatson.com
+1 303-887-4486
4/20/2010
Sherlyn.keiling@gmail.com
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