Compensation Cafe

Global Nomads: What Are They And What Do We Pay Them?

Sometimes I like to think about possible new scenarios in the business world that will stretch compensation specialists' ability to find creative solutions.  Lately I've been thinking about one scenario that is already happening in a few companies.   I'm talking about a group of people called "global nomads".

Global nomads are detached from country and culture. They may have been born in Algeria, lived as a child in Brazil and the UAE, gone to school in Switzerland and are multilingual.   They have worked in multiple countries ----for example China, Argentina, Germany and Saudi Arabia.   They may not be sure what country to call their homeland.    

They are travel-ready at all times.   They are on the road 70%-80% of the time.  Because of their chaotic life, most are single, divorced or widowed.  They may be in one country for one year; move directly to a second country for three months; and then to a third country for six months.  Many times they report directly to the CEO, and are used mainly as “trouble-shooters” and “problem-solvers”.   They provide top management feedback and recommendations on strategic issues such as projects, markets and competitors. They are high enough in the corporate ranks to have decision-making authority.

The big issue is that these skills are highly sought after and highly transferable from company to company. Global nomads know their value. To CEOs they are like gold.

Read carefully: 

1)    I am not talking about C level executives who have had global experience, reside at headquarters and whose role is part of top management (although it would be nice to have more globally experienced top management).

2)    I am not talking about expatriates who may once/twice in their career reside/work overseas and then return home.  

3)    I am also not talking about young employees that are being groomed for future management positions by providing them several overseas assignments.

Now that we understand who they are ---- how in the world do we pay them?   Currently, the few global nomads that exist have contracts that are individually negotiated.

For the vast majority of employees, compensation specialists rely on compensation surveys for each country where employees work/live.  This includes traditional executives.  With global nomads, traditional compensation models are best left on the shelf.  Why?  The emphasis on local country benchmarks as the sole determinant of competitive pay breaks down.  What country are you going to use for a competitive market when they may be working/living in multiple countries during the year?

I know what you must be thinking:    “Vilet is crazy.  This would never work due to legal and tax issues from country to country.”   I may be crazy, but there have been all sorts of issues in the business world that have strained credulity in the past, and I’m sure this one won’t be the last.   In fact there is a school of thought that says over time CEO pay will converge worldwide.  That will be a very complex issue too.   But that’s a different subject.

In the meantime let’s ask ourselves some questions:

1)    Where does the global nomad “live” when not on the road?  If he/she always goes back to the same country, maybe we could just treat him/her as an expatriate from that country?

2)    In what currency do we pay him/her?

3)    Will there be so few of them we should just ignore creating a policy and treat each one as a “one off”--- with a compensation package that is individually negotiated?

4)    If we do create a policy/structure, how do we benchmark  externally to arrive at a competitive compensation package?

5)    What is their career path?  Do they not even want one because they love their “nomadic” life?   Maybe they don’t want to become part of management and have to “fit” within a corporate system.

6)    How do we create a retirement plan for them?

7)    How are other companies that have global nomads handling these issues?

I’m sure that corporate and labor laws and taxation will act as obstacles along the way. Laws and tax issues are not typically “show-stoppers” for most companies.   There is usually a legal way to make things work.  The usual "culture" issue won't be a problem as these people are adaptable to any culture.

If global nomads are hired, it will definitely send the lawyers and tax specialists scrambling---- along with compensation specialists!  But I firmly believe that where there’s a will, there’s a way.

What do you think?

Jacque Vilet, President of Vilet International, has over 20 years’ experience in International Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career.   Her true love is working with local national issues.  Jacque has the following certifications:  CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology and an MBA.    She belongs to SHRM, Human Capital Institute and World at Work.   Jacque has also been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.  She lives in Dallas and has 3 four-legged children and one Chinese daughter (it’s a long story).  She’s had a life-long love of animals and the ocean.   So why is she living in Dallas?

Image courtesy:  http://web.ash.nl/echo/index.php?option=com_content&view=article&id=127:whats-so-great-about-being-a-global-nomad&catid=4:opinon&Itemid=9

 

 

 

The 'God Particle' of Total Rewards

How well do you understand your compensation system? Probably better than you understand the inner workings of the cosmos, right?

I propose that it's easier to wrap your mind around how the universe was born. Why? Because the universe plays by a well-defined set of rules.

I've been fascinated by the discovery of the Higgs boson (aka the "God Particle") that CERN announced earlier this month. The empirical detection of this particle could shed light on how the universe came into being. In layperson terms, the Higgs boson would explain why things lump together, why things have mass. Without something like the Higgs boson to hold everything together, nothing in the universe could exist.

What holds the various elements of your compensation system together? That's not so easy to answer...

Each of the pieces of your total rewards program plays a role. Base pay and incentive compensation are like neutrons and protons - they're the nucleus, at the center of everything. Benefits and perquisites are the electrons, spinning around the nucleus, giving your total rewards program its unique characteristics.

Your compensation communications are like photons - visible carriers of the electromagnetic force and your total rewards program. Performance management systems can be thought of in terms of exotic particles; there are many different kinds playing varied roles. 

All of these elements have rules. Base pay is subject to minimum wage requirements, your internal grade/step system, external benchmarks, etc. Incentive compensation is governed by performance objectives. You have handbooks, fact sheets and Summary Plan Descriptions for your benefits and perquisites programs.

You have internal guidelines for compensation communications. You also have (or should have) well-defined and objective criteria for evaluating performance, formal policies for performance improvement plans, and so forth.

But what holds all of these elements together? What gives each of these pieces mass, and causes them to cease being individual elements and coalesce into "The Total Rewards Strategy"?

It's not the compensation equivalent of the Higgs boson, with defined properties and interactions. It's people. Beautifully ugly, messy, unpredictable people, each one as unique as the next, each one variable from minute to minute.

There are no definitive rules governing a person and his interactions. What motivates me today may not motivate you at all, and it may not motivate me tomorrow. Incentive plans that work well now may be obsolete when market dynamics change (as a result of changing behavior of people). Different styles of communication and evaluation become necessary when the characteristics of your workforce change (think about the "millennials" conversations...). Everything is constantly changing, and if everything is constantly changing, there can be no well-defined properties and interactions.

This is why there is no such thing as "THE" total rewards strategy, only "a" total rewards strategy. What coalesces in one organziation with one group of people at a particular point in time flies apart into oblivion in another organization with another group of people at a different point in time. 

We may never truly understand how the various elements of a total rewards strategy bind together and, almost magically, transform into a Total Rewards Strategy. It's different for every program at every point in time. I don't think it's possible, from a total rewards perspective, that such a thing like a "God Particle" exists...

Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. Since 1999, she's been working with businesses and government agencies providing expert quantitative analysis. Stephanie's articles on examining compensation systems for internal equity have appeared in professional journals and she has appeared on NPR to discuss the gender wage gap. Stephanie is the founder of Thomas Econometrics Inc. and is the host of The Proactive Employer. Follow her on Twitter at proactivemployr. 

Photograph: Fabrice Coffrini/AFP/Getty Images

Pay as a People Manager

There is no keener disappointment, it sometimes seems, than when managers discover they can no longer rely on a compensation program to manage their people for them.  Try taking away an incentive plan, however ineffective or dysfunctional, from a manager who is convinced it is the cornerstone of motivating his or her staff.  The level of pushback can be surprising.

That, of course, is because managing people is hard.  Really hard.  So hard that the last decades have seen an entire industry emerge for the sole purpose of helping us do a better job of it.  Even with this, however, many managers seem loathe to embrace their management responsibilities.  And certainly not when the right pay program can get them off the hook!

Can pay - and specifically incentives - ever function as a true proxy for management?  Not to my mind.  It is true, though, that some roles (like that of the traditional outside sales rep) do seem to function well with strong direction from a heavily leveraged (smaller base, bigger variable component) compensation plan.  Although these situations are increasingly the exception to the rule, they are enough to give some managers hope that the same magic can work for them.

Under what circumstances is it reasonable to rely on pay - particularly incentives - to play a prominent role in focusing and directing employee efforts?  I came up with the following short list in working with a client recently.  I share it here on the possibility that it could be a helpful reference to any colleagues fighting their own "pay as a people manager" battles.

(1) The position must have a very singular focus, so that it's all about doing one thing and doing it well.

(2) There must a strong, reliable performance metric(s) available which creates direct "line of sight" between the employee's efforts and the singular purpose of the position.

Very few positions meet both criteria, you say?  Yes.  And that would be my point.

I know many of you are out there waging your own "pay as a people manager" battles.  What perspectives, advice and stories could you share?

Ann Bares is the Founder and Editor of the Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School, reads incessantly and is an aspiring cook (when the opportunity presents itself).  Follow her on Twitter at @annbares.

Image courtesy of onlineinvestingai.com

3-Year Compensation Plan

Imagine you’re the CHRO at an innovative global company and the Board has asked you to put together a 3-year compensation plan as part of a strategic initiative to attract and retain top talent.  How cool would that be?

So what kind of information do you need to begin planning?  First of all, you need to know how much you spend on compensation today.  You’ll want to look at total compensation across the organization and break it down by various dimensions such as region and organization.  For budgeting purposes you’ll also want to include open positions with the assumption they will be filled.

Next you’ll want to look at market variance by location to ensure your pay practices aren’t putting your company at a competitive disadvantage.  It’s also a good idea to check market variance against high turnover locations to help determine if it makes sense to pay a premium over market in those locations. 

You should also check market variance for critical jobs around the world to make sure you’re paying enough to attract and retain key skills.  Remember, for many jobs location doesn’t matter like it used to.

It's a good idea to analyze pay practices against individual and team performance to understand how you’re rewarding performance to make sure company goals are supported by your approach.  For example, in some companies the delta between high and medium performers tends to be fairly negligible, in others only ‘top talent’ is rewarded.  

Also interesting is where the company isn’t paying for performance, i.e., people who are underperforming but paid on the high end of their salary grade.  These are - in a negative sense - people to watch.

Now it gets fuzzy because you may be able to pay less than market if you offer other benefits, such as flexibility or growth opportunities.  Although it’s difficult to quantify, you should include this in the analysis before making a final recommendation.  That means looking at things like turnover by job role as well as organizational movement, i.e., promotions and transfers. 

In other words, if your workforce is largely static in terms of organizational movement and you have high turnover you may have to pay more to attract and retain people.  But if the organization is thriving and turnover is low you may be able to pay below market.

You also need to understand key talent segments in the organization to make sure you’re paying appropriately.   For example, even if you pay competitively, you want to be able to identify at a glance anyone with in demand skills at the top of their pay grade.  You also want insight into the handful of people the company literally can’t afford to lose - before they start exercising options.

Last but not least, it’s important to understand the overall business plan of your company.  For example, if your company is starting a new line of business or entering a new market, the compensation plan must support this.  Few things are as off putting to a hot candidate as the hiring manager scrambling to figure out base pay while they’re waiting for a contract. 

This isn’t the definitive guide to the kinds of information you’d want when planning for the next three years but you get the idea. 

Now the actual planning begins…

Laura Schroeder is a global talent specialist at Workday, headquartered in Pleasanton, CA.  She has nearly fifteen years of experience envisioning, designing, developing, implementing and evangelizing global Human Capital Management (HCM) solutions and holds a certificate in Strategic Human Resources Practices from Cornell University.  Her articles and interviews on HCM topics have been published in the US, Europe and Asia.  She lives in Munich, Germany and enjoys cooking, reading, writing, kick boxing (well, kicking things) and spending time with friends and family. If you want to read more from Laura, check out her talent management blog Working Girl or follow her on Twitter @WorkGal.

Blind Guesses

Wondering how the blind participate in the reward systems of the new online internet culture, I thought there may be differences in compensation programs dealing with sightless or visually-challenged employees.  My first step was to assess the dimension of their presence. That search produced a new problem:  numbers don’t lie but statisticians do.

Well, maybe that is a bit harsh.  Those who count are not always statisticians; they are frequently economists.  Uh, oh.  I was in the audience when former chair of JFK’s Council of Economic Advisors Walter Heller snapped off a stream of hilarious in-jokes about economists to a national conference of HR people.  Sample:  “If you had every economist in the world lie down head to toe on the equator, no two would point in the same direction.”  Whatever.  No matter what the occupation of the counters, the numbers frequently seem to reflect their specific bias. 

The first three hits discovered on the web showed supposed numbers of blind people in the US that varied by orders of magnitude.

21.0 mil. (http://www.numberof.net/number-of-blind-people-in-us/)
03.4 mil. (http://wiki.answers.com/Q/What_percentage_of_American's_are_blind_and_or_deaf)
01.3 mil. (http://nfb.org/blindness-statistics) 

That’s a lot of variation (see standard error) between and among those counts.  With about 140 million Americans employed out of a population of approximately 313 million, those estimates vary from a low of one-third of one percent to a high of 6.7% of our total population.  The high figure probably came from someone applying generous extrapolations from rough numbers estimating an approximate total number with some kind of significant visual impairment in the United States.  From half (50%) to three-fourths (75%) of all Americans use some kind of visual correction, so there is a lot of slack available in any definition of “blind.”  One of my younger brothers got his degree in computer science using magnifying screens while legally blind. 

Compensation people know that surveys with such wide disagreements in their findings require careful examination.  Real professionals, of course, will always document their methodology and assumptions.  Those details must be shared so their information can be peer-reviewed, replicated and verified, if necessary.  Courts won’t even accept expert witness testimony without proof of the reliability of the underlying data researched. 

But who cares, anymore?  Ad agencies (who want to persuade a particular point of view) and polemicists (folks who write those catchy sweepingly simplified sound bites intended to spur a lizard-brain emotional response) can’t be bothered to supply footnotes.  Impatient readers seeking instant gratification won’t read them, anyway.  Driven by an unquenchable thirst for content that will grab attention, the mainstream media shows an increasing indifference to boring facts when a juicy detail emerges that might give them an edge in audience share.  Although the phrase began as a joke, reality has found a legitimate place for the adjective, “truthy.” 

My initial idle inquiry into a potential sociological situation that could affect the field of compensation has now been transformed into a study of “where did these numbers come from?”  That brings us back home again to the total rewards arena where we are constantly deluged with figures and claims and assertions of variable validity.  Stay skeptical.  The numbers thrown around in top management discussions may come from shakier origins than you could ever imagine.  Yet, they might still be really accurate.

Even a blind hog finds an acorn now and then.

E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired after over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.) and will express his opinion on almost anything.

 Image courtesy of ineedmyfix.com

Celebrating Success: Who Do You Reward?

The last few years have been difficult, indeed, for many organizations. Layoffs, pay cuts, pay freezes – these were the norm across organizations of all sizes and industries of all types. In recent months, we’ve begun to see a turnaround as struggling companies see a return to profitability.

How organizations react to that success is quite telling. And that reaction usually takes one of two forms:

1. Recognize and reward the top performers only
2. Recognize and reward appropriately all those who contributed

Reward Top Performers Only

Ron Thomas recently related the story of Benjamin Moore. Theirs was the typical story of layoffs, slashed commissions and frozen salaries for five years. Then, as a way of celebrating the first quarterly sales increase in years, the CEO decided to “fly the senior team down to Bermuda, charter a yacht, have a sumptuous meal, and live large.”

Sadly, this is not unusual or unexpected, though it is a bit unique in that the top sales reps don’t seem to be included. I’m sure most readers see familiarity in a rewards program that honors only those in the top 10%.

But what about the rest? The Benjamin Moore executive team didn’t achieve quarterly sales increases in a vacuum. I’m sure sales team members had marketing reps, administrative assistants, and yes, HR Pros, behind them.

Reward Appropriately All Those Who Contribute

It's time to take down the these false barriers to recognition and reward. I had the opportunity to see Pixar’s latest movie, Brave, this past week. A friend told me to be sure to watch the credits in full to see the secret scene at the end. I’m very glad I did. While I enjoyed the movie, I was truly astounded to see listed in the credits the entire staff of Pixar Studios – Marketing, Accounting, HR, everyone. I’m told this is standard in Pixar movies and one reason they usually include a “secret scene” at the end – to ensure everyone involved in creating their award-winning movies receives the recognition they deserve. I know of no other studio that does this, and it’s a hallmark of Pixar’s strong culture of recognition.

My Compensation Café colleague, Jacque Vilet, related another strong case-in-point just last week when describing how team members in Japan chose to address the “collectivist” culture in which individual rewards are counter to cultural expectations.

“He said that each salesperson was given his quota (no saleswomen here!) and at the end of each quarter was awarded his commission. All the salesmen then took their awards, decided as a team how to divide the money up and paid every person in the office ----- customer service reps, inside sales reps, administrative assistants, IT people, field techs, accountants -- even HR! Everyone received something. The rationale was that the salespeople could not succeed without the help of everyone. So this was not just about the sales team ---- the ‘team’ was the entire office.”

Jacque’s post highlights two important considerations in appropriate rewards: (1) honor the local culture, and (2) reward appropriately. No, every employee does not deserve the exact same reward as their contributions where likely very different. That’s why it’s important to reward appropriately while ensuring the opportunity for recognition and reward is available for all.

The Fallout of Inappropriate Rewards

What happens when you get this wrong? In many companies that emphasize the top 10% only, the only fallout is the loss of exponential returns they could realize by expanding the opportunity for recognition and reward to the vast majority of employees. Think how the quality of movies coming out of Hollywood might change if all studios had a culture similar to Pixar’s.

In the case of Benjamin Moore, however, the story ended far more justly in my opinion. As Ron Thomas related in the article referenced above: “Warren Buffett, who owns Benjamin Moore, made the decision to oust the CEO basically for being clueless. He flew in a group of officials and they fired Benjamin Moore CEO Denis Abrams on the spot.”

What approach to rewarding success does your organization follow? Recognize the many or the few? Which approach do you find to be more effective?

As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.

Why Self-Help Doesn't Help

Doesn't it seem that everywhere you turn these days you face a bombardment of professional how-to advice from self-proclaimed “experts”?   Especially in Human Resources these people assure you that they understand your problems, and that they have the right solutions for you and your business.  All you need do is read a book, attend a webinar or better yet contract for their consulting services.

Sounds like a diet pill, doesn’t it?  Simple and quick.

Promises of such quick fixes and overnight solutions cover every aspect of our business and personal lives.  Pick an issue and the answer is out there.  Someone can help us, and that someone is our “answer man.”  We only have to listen, watch or read whatever it is that they’re offering.   For a fee, of course.

You can’t escape the TV infomercials, the newspaper advertisements, magazine articles or even blogs and social media sites without an endless flow of subject matter gurus telling you that they have the answer you need.

• “Guaranteed to quadruple sales within twelve months”

• “Maximizes HR effectiveness and value through the use of . . .”

• “Keeping Leadership Talent Engaged"

• "Designing Employee Policies for an International Workforce"

• “The Five Causes of Low Morale – and how to avoid them”

• "Our products, services and advice are certified, hospital-tested, government sponsored"

• Etc, etc, etc

You get the point.

Now, here’s the but . . . .

If that’s the case, that the answer is out there – and for a price waiting for you - why do we continue to face the same problems over and over again?  Why are managers still making poor decisions, wasting money and creating employee morale screw-ups from dawn to dusk?  Why are the business headlines constantly reporting litigation over wrongful or illegal management behavior, or dubious business decisions that send companies spiraling into financial trouble?

Isn’t anyone paying attention to the answer man?  Or is the advice simply a load of horse manure?  Are these experts really just spouting head-game theories and viewing business problems from an academic vs. practical viewpoint?  Are they rehashing old methodologies with new language and passing off their solutions as "new" thinking?

Whichever it is, these “I have the solution” messages never seem to stop.   Like a constant propaganda campaign radio-beamed across the border – the broadcast light is always on.  The buzz phrases may change from time to time, but our appetite for quick fixes doesn’t seem to ever diminish.

My theory or yours?

If the “experts” do have the answers - color me skeptical - we need to ask why their message is so often ignored.  Several scenarios are possible:

• Subject matter authorities often speak over our heads, using buzz phrases and $100 words

• Reading or listening to this stuff is hard work; the text is dry, boring and not often engaging

• Too much of the advice is contradictory to what you read / heard already – so who is right?

• Academics often lack credibility in the real world; they “just don’t get it”

• Folks aren't paying attention, on account of their own ingrained biases and personal agendas

Whatever the reason, the drumbeat of advice, whether new or traditional,  is not being absorbed and acted upon – because the problems are still there.

Therefore . . . .

I’m struck by the merry-go-round aspect of constant advice without real solutions.  We see a continuous need to enlighten people and businesses on how to be effective, but it’s a need that never seems to end.

Maybe the analogy to a diet holds some truth; consider how many books are out there on that subject – yet up to 30% of the population remains obese.

There’s an old saying, that if you build a better mousetrap, the world will make a path to your door.   If common sense and up-to-date technical knowledge point the way to a better tomorrow, why do so many companies and their leaders stay in the dumb zone?

If the cure is out there, why is the patient still sick?

I’m thinking that the message is wrong, the audience isn’t listening, or perhaps we’re all being scammed by re-packaged “new” thinking.

Which is it?

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats.

Creative Commons image courtesy of Fontourist

An Innovative "Win-Win" in Japan

If you know how different countries view annual bonuses or commission plans, you know that the Japanese don't feel comfortable with plans based on individual performance.  Their culture is "collectivist" which means that they view themselves as a "team" and prefer group harmony over individual self-interest.  In other words, satisfying the group is more important than satisfying the individual.

Although this is a deeply engrained value, the Japanese have grown used to the American penchant for “individualism” and the fact that American multinationals design compensation programs with this in mind.  Therefore, pay-for-performance, bonuses, incentives, performance ratings, salary increases are all geared to the individual employee. This does not mean the Japanese like it, but they accept it.   In reality, however, in Japan you will typically find that employee performance ratings, salary increases, bonus/incentive awards, etc. are clustered very closely together so that, for all practical purposes, every employee gets about the same amount of money, rating, etc.

There is one company I know where the clash between “collectivism” and “individualism” resolved itself in a very clever way.   The company was U.S. based and had a sales operation in Japan.   The sales commission was geared to achievement of individual quotas and paid quarterly --- a very traditional plan.   One year a new Managing Director of the Japanese operation petitioned top management to allow the sales team to have a group commission plan.   In other words the entire sales team would be assigned one quota as a group that would match the sum of all the individual quotas.  At the end of each quarter, the bonus would be awarded to the team, not to individuals.   The team would then decide how to allocate the award.

Top management vetoed the proposal.   Score one for corporate and zero for Japan.  Later I asked the Managing Director how he felt about what had transpired.  After a few minutes of silence, he smiled and told me he had turned the decision into a win-win for both parties.

He said that each salesperson was given his quota (no saleswomen here!) and at the end of each quarter was awarded his commission.   All the salesmen then took their awards, decided as a team how to divide the money up and paid every person in the office ----- customer service reps, inside sales reps, administrative assistants, IT people, field techs, accountants -- even HR!    Everyone received something.   The rationale was that the salespeople could not succeed without the help of everyone.  So this was not just about the sales team ---- the “team” was the entire office.

The Managing Director said, “Now we have a win-win for corporate and our sales team”.

I never did tell corporate, and frankly hoped they would never find out.   Some things are better left alone.   But I couldn’t help but think that the subterfuge could have been avoided if top management had been a little more flexible.  Quotas would still have been met --- and that's the most important thing in management's mind don't you think?

Jacque Vilet, President of Vilet International, has over 20 years’ experience in International Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career.   Her true love is working with local national issues.  Jacque has the following certifications:  CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology and an MBA.    She belongs to SHRM, Human Capital Institute and World at Work.   Jacque has also been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.  She lives in Dallas and has 3 four-legged children and one Chinese daughter (it’s a long story).  She’s had a life-long love of animals and the ocean.   So why is she living in Dallas?

Image courtesy:  cbjohnson.me

Benefits Pros: What "UPHELD" Means For You

Listen up, benefits professionals - this one is for you.

Last Thursday (6/28) the Supreme Court of the United States upheld The Affordable Care Act.

To keep you from having to wade through the 193-page opinion (read it here) complete with tons of LawyerSpeak, a convoluted discussion of the "essential features of a tax", and a total of twelve - TWELVE! - references to broccoli, I thought I'd put together a summary of the top five implications of the decision for employers.

1. Reporting value of health benefits. Beginning with 2012 W-2 statements distributed in 2013, employers are required to report the value of health benefits. Seems like a no-brainer, right? It's just an additional box and an extra number. But filling in that extra number is going to take a good amount of coordination between payroll, benefits, and HR. Start planning now to gather the information you need and update your payroll systems so you can get your W-2s out on time. 

2. Automatic enrollment. Under the Affordable Care Act, employees who are eligible for group health plan coverage will automatically be "opted in" to coverage. This is in contrast to the current "default" state, where employees are required to affirmatively elect to participate in group health plan coverage. The thinking behind this requirement is as follows: automatic opt-in is likely to increase plan participation, which will in turn lead to higher plan subsidy costs for employers. Most employers with 200 or more employees will be affected by the automatic enrollment requirement, which is expected to be implemented in 2014. Implementation has been delayed to allow regulatory agencies adequate time to issue guidance on this requirement.

3. Non-discrimination requirements. The Affordable Care Act prohibits most group health plans from discrimination in favor of highly-paid employees. If an employer's plan does discriminate, significant financial penalties may be imposed. If employers offer different plans, eligibility periods, premium subsidies, etc., to different groups of employees, in most cases offerings will have to be adjusted to comply with this requirement. As with the automatic enrollment requirement, implementation has been delayed to allow regulatory agencies to issue guidance. Implementation is expected in 2014.

4. Employer "Play or Pay" mandate. This is a big one. Employers with 50 or more full-time employees (including full time equivalents) are required to provide "adequate" and subsidized group health plan coverage to all full-time employees - and their families - beginning in 2014. Failure to do so will result in penalties of $2,000 per full-time employee per year (the first 30 employees are excluded from the calculations). But just offering coverage to full-time employees and their dependents isn't enough - there's the "Unaffordable Coverage" clause that says the coverage offered has to be both "affordable" and "valuable." If at least one full-time employee enrolls and is certified to receive government subsidies because the employer's coverage is considered unaffordable and/or of low-value, the employer is subject to a financial penalty of $3,000 per full-time employee eligible to receive government subsidies.

5. Summary of Benefits and Coverage. This is another big one, and word on the street is that employers are focusing most of their efforts on this requirement. Beginning with the next open enrollment period, employers must distribute a Summary of Benefits and Coverage. The content requirements for this summary are very detailed - they must be "culturally and linguistically appropriate", contain cost-sharing details, a glossary with uniform definitions of specific medical and coverage-related terms, etc. There's even an overall maximum page length for the document! The requirements are very granular, and penalties for noncompliance are sizable. Be sure to get some guidance from your benefits advisory team and/or legal counsel to make sure your SBC satisfies all of the detailed requirements.

Many employers have held off on making modifications to their group health plans and related documentation because they were waiting to see how things would shake out with the Supreme Court's decision. Well - the Court has officially spoken, and it's time to get started on making those modifications.

There's a lot of hard work that needs to be done to get plans in shape and compliant with the new rules and regulations. Failure to do so could result in some pretty steep penalties. You're probably going to be spending more on your group health insurance plan anyway - don't throw away precious dollars unnecessarily on fines and penalties.

There's one other lesson to be learned from the Supreme Court's decision last Thursday - mistakes happen when we try to be "first", rather than trying to be "correct". Just like the word problems of homework we all completed decades ago, you have to read the WHOLE THING before you can answer the question! It's just as true today as it was back then.

 

Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. Since 1999, she's been working with businesses and government agencies providing expert quantitative analysis. Stephanie's articles on examining compensation systems for internal equity have appeared in professional journals and she has appeared on NPR to discuss the gender wage gap. Stephanie is the founder of Thomas Econometrics Inc. and is the host of The Proactive Employer. Follow her on Twitter at proactivemployr. 

Really? 5 Critical Tasks To Do In July and August?

If everything we do in compensation is communications, our best months are July and August (if your company runs on a calendar year). It's a two-month break between "Let's get our act together" and "How did we do" when we can take some time to be creative.

We'll have some fun with this because it's the summer. But let's be candid first. These 5 things may seem fluffy to you, but you would be kidding yourself. That is, if you're serious about HR programs that advance the business strategy and help deliver annual financial objectives.

Where to start? Picture two whole summer months with a vacation itinerary to get out of town. Lose the HR offices to visit the real world that your employees and managers inhabit.

While we were in our HR offices, we cooked up performance and reward strategies. So on our trips we'll travel with eyes open, listening with pen in hand, to learn whether our strategic stories are coming true. It should be fun.

Here's the plan.

• Go out and grab a cup of coffee or two or five. I'd love it if you could have focus groups so you could chat with employees. But if you can't, don't give up. Take some time to hang around the places where employees take breaks. Listen to what they're talking about. Better yet, offer to buy some of them frozen yoghurt or coffee or iced tea or or or, and chat them up -- not about what's going on in their department, but about what their reactions have been to the year, their hopes and their imaginings about how their career is going and their opinions about how compensation decisions get made in this business climate.

The outcome? You'll find out whether your strategies have been speaking out loudly and clearly.

• Put your ear to the ground. This is a lot like step 1, but this time you're touring around to HR business partners and/or friendly managers for a chat. You'll get an earful, so you may need to offer lunch, too.

The outcome? You'll get better insight into the capabilities of the people on whom you rely for person-to-person communications with employees. You'll also find out who your friends and supporters are.

• Shove your Magic 8 ball back into the drawer. You do need to know the future, but there's no need to make it up. Your managers would love to tell you about their plans for the next 18 months. New capabilities, new talent sources, new opportunities for existing staff. Even though the current trend is to focus compensation rewards on high performers, these decisions can be near-sighted if you are not considering the full range of business needs.

The outcome? You'll build your own business knowledge so you can be a more effective advisor at merit budget time.

• Put your money where your mouth is. Which is meant to be a pun -- here's why. Words on emails, words on paper, PowerPoint presentations are all handy when it comes to getting managers to wake up and smell the roses. Except the hard cases. And depending on your company, you either have a small number or a majority of hard cases. If you haven't seen real change in manager capabilities around performance, recognition and reward, why not invest their time and your money differently this year?  Person-to-person coaching will make an impact -- count on relationships to influence manager's thoughts and actions. Include training as the kick off, perhaps, or in the coaching tools, but don't make it the focus. And make sure that manager and coach acknowledge their commitment via objectives in their performance plans.

The outcome? You'll disconnect performance, recognition and reward from HR and connect them to business issues.

• Learn to share. Team up with Benefits and whoever else in HR makes announcements and sends requests to employees at the end of the year. Build a common communication plan now and look for places you can collaborate on integrated communications. Be especially sensitive to Benefits communications plans this year, as many organizations need to brief employees on Health Care Reform.

The outcome? A breath of fresh air.

Margaret O'Hanlon is founder and Principal of re:Think Consulting. She joined Ann Bares and Dan Walter of the Compensation Cafe to speak the unspoken -- "Everything You Do (in Compensation) Is Communication" -- at the WorldatWork 2012 Conference. Margaret brings deep expertise in total rewards communications and change management to the dialog at the Café. Before founding re:Think Communications Consulting, she was a Principal in Total Rewards Communications and Change Management with Towers Perrin. Margaret is a member of the Board of Directors of the International Association of Business Communicators (IABC) Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University. Creative writing is one of her outside passions, along with Masters Swimming.