A Bridge to Tomorrow. 75 th Annual NHRMA Conference & Tradeshow. Presented by

Transcription

1 A Bridge to Tomorrow 75 th Annual NHRMA Conference & Tradeshow Presented by

2 Compensation Trends Update for 2014 Catherine Dovey, CCP, SPHR, GRP, CECP Founder and CEO

3 Speaker s Background CCP, SPHR, GRP, CECP and MBA 20 years with compensation as primary specialty Wide industry experiences including professional services, health care, financial services, tech, bio tech, non-profit, manufacturing, public sector, education Past SHRM Total Rewards Panel member NHRMA Distinguished Member Award LWHRA Member of the Year Award

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5 Compensation Trends Budget Pay Trends Variable Pay Trends Practice Trends

6 Separate into groups of 3. Share your industry, company size and key compensation issues with your group.

7 Part 1 Budget Trends Pacific NW Economy 366 Metropolitan Areas 2013 Seattle-Tacoma-Bellevue, WA 5 Kennewick-Pasco-Richland, WA 11 Olympia, WA 25 Portland-Vancouver-Hillsboro, OR-WA 45 Anchorage, AK 53 Bellingham, WA 75 Spokane, WA 133 Yakima, WA 217 Wenatchee-East Wenatchee, WA 274 Salem, OR 281 Eugene, OR 295 Policom Corp 2013

8 % 2014~4% Private 2014 ~10% Public sector organizations

9 Salary Budget Increases ALL ORGANIZATIONS Actual Median 2013 Projected Median 2014 Compensation Works (8/ Puget Sound) 2.6% 3.0% Hay Group (6/ National) 3.0% 3.0% Kenexa (6/ Pacific NW) 3.0% 4.0% Mercer (07/ National) 2.8% 2.9% Milliman Mgmt & Prof (6/ Puget Sound) 2.7% 2.9% Milliman Non-Exempt (6/ Puget Sound) 2.6% 2.8% World at Work (8/ National) 2.9% 3.1% Both Mercer and WorldatWork reported that 2014 projected increases for top performers will be greater than the norm, at 4.6% and 4.1% respectively, as compared to 2.9% and 3.1%. Average Projected Median %

10 2014 Projected Industry Salary Budget Increases Milliman M&P All Orgs Only Orgs with Increases All Orgs 2.8% 3.0% Tech 3.5% 3.5% Distrib/Wholesale/Retail 3.0% 3.0% Health care 2.7% 2.7% Manufacturing 3.0% 3.0% Banking 2.8% 2.8% Services 2.9% 3.1% Gov't/Education 2.2% 2.7%

11 Pay Structure Adjustments Position Type Average % All Responses Executives 1.68% Managers 1.54% Exempt Ees (Non-Mgrs) 1.65% Non-Exempt Ees 1.64% AVERAGE 1.63%

12 Seattle CPI versus Labor Market Seattle CPI-U (COLA) Pay Increases (Market)

13 Separate into groups of 3. What are your hot skills jobs or what jobs are you having difficulty hiring for?

14 Hot Jobs Software Developers & Engineers IT positions (solution architects, highly technical roles) Medical positions (nurse practitioners, physicians, cert. techs, clinic managers, EMTs) CFOs and Financial Analysts Maintenance techs * In spite of these hiring difficulties, only 4.5% of respondents have increased the use of sign-on bonuses in the last 12 months.

15 National Highest & Lowest Increases

16 Relative Cost of Salaries to Salary Survey Data Estimated Salary Costs $ 13,809,250 Estimated Salary Survey Costs Radford $ 5,000 Culpepper $ 2,500 Milliman $ 1,000 Total for All Three $ 8,500 Percentage of survey cost to salary expense %

17 Survey Data Varies Widely! Local and Internet Survey Data Comparison 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% Job A Job B Job C Variance from Average

18 Key Salary Survey Factors Is the survey used by your competitors for critical talent? Do a large number of survey participants reflect your organization size, industry? How many of your benchmark jobs are included in the survey? Is the data stable and reliable? Validate the data for any new surveys you consider using!

19 Part 2 Variable Pay

20 Value of Employee Performance 250.0% 200.0% 191% 150.0% 100.0% 100% Contribution 50.0% 0.0% 8.6% Below Average Average Above Average Source: Relative Economic Service Value Michael Shuman 2011

21 Does your organization currently use variable pay? No 39.2% Yes 60.8%

22 If not currently in use, do you plan on adopting variable pay in the next two Not Sure 37.8% years? Yes 18.9% No 43.2%

23 Variable Pay 2013 Estimated Target Percent Position Type Average % All Responses Average % Excluding Zeros* Executives 14.68% 20.07% Managers 6.97% 9.44% Exempt Emps (Non-Mgrs) Non-Exempt Employees 3.62% 6.34% 1.98% 4.16% Compensation Works Comp Trends Survey 2013

24 Do you use variable pay in your organization? What s been the most effective within your group??

25 Long-Term Incentive Plans 90% 80% 70% 60% 50% 55.8% 69.2% 72.5% 76.5% Not Offered Stock Options 40% Restricted Stock 30% 20% Performance Based LTI 10% 0% Other (ESPP, ESOP, SAR, Phantom) Executives Managers Exempt Employees (Non-Mgrs) Non-Exempt Employees Compensation Works Comp Trends Survey 2013

26 Stock Options What percentage of stock options are underwater? Response Percent Less than 25% 9.6% Between 25% and 50% 3.8% Between 50% and 75% 0% 75% or more 1.9%

27 Equity Trends Number of underwater stock options continues to drop Executives - more performance shares, restricted shares/units, fewer stock options Stock options continue to be the most common equity vehicle for individual contributors roles.

28 Part 3 Practice Trends

29 What changes are you making to your compensation plans for 2014?

30 Recruitment & Retention Strategies Signing bonus Relocation packages Continuing education Positive working environment

31 How much of a pay increase is needed to make up for your job s Benefits Working Conditions Lack of Advancement Discrimination Lack of Recognition Lack of Development Boredom Corporate Mission Impact on Health Impact of Personal Life Management Coworkers 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Towers Watson 2012

32 Top Five Reasons Employees Will Quit 1. Stability 2. Compensation 3. Respect 4. Health Benefits 5. Work-Life Balance Corporate Executive Board Quarterly Global Labor Market research 2013

33 Sign-on Bonuses 0.0% 4.5% Increased number of sign on bonuses offered % 27.0% Decreased number of sign on bonuses offered. - 0% 68.5% Stayed about the same with regards to number of sign on bonuses offered. - 27% Not applicable. No sign on bonuses offered %

34 Flexible Work Arrangements Flex work hours 90% of organizations offer flex work hours 100% perform at or above Telecommuting 88% offer telecommuting 94% perform at or above Benefits Company reduced office space, electricity, lower turnover, higher performance Employee reduced commuting, food, parking, and clothing costs Telework Research Trends 2011

35 CW Survey - Practice Trends 48% - Top performers are staying 44% - Offer increased employee training 36% - Increased hiring 27% - Improved performance management system 21% - Changed PFP linkages 20% - Implemented a more aggressive compensation strategy

36 Value of Employee Performance 250.0% 200.0% 191% 150.0% 100.0% 100% Contribution 50.0% 0.0% 8.6% Below Average Average Above Average Source: Relative Economic Service Value Michael Shuman 2011

37 Top Performers Get More For 2014 Average Increase Top Performer World at Work 3.1% 4.1% Mercer 2.9% 4.6%

38 Merit Increases Awarded 2011 % of employees in this category Average merit increase (WorldatWork 2011) High Performers Middle Performers Low Performers 24% 69% 7% 4.0% 2.7% 0.7%

39 Carve Outs

40 How will the Affordable Care Act affect your organization?

41 2013 KENEXA CORPORATION Benefit Trends

42 2013 KENEXA CORPORATION Benefit Trends

43 Patient Protection and Affordable Care Act (PPACA) Answer Options Response % Change healthcare coverage or status options for part time and contractors. Wait to see the cost impact of PPACA and make changes, if needed, at a later date. 9.1% 33.0% No changes anticipated. 58.0%

44 Recap Budget increase is ~ 3% for most employers Variable pay awards coming back strong Top performers get higher increases PPACA will have limited impact for 2014

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46 Questions? Thank you! Contact information: Catherine Dovey, CCP, SPHR, GRP, CECP Founder & CEO Compensation Works LLC