Compensation Cafe

Ban the Box for Crime but Discriminate Over Past Pay

Stop asking job applicants about criminal records but continue to discriminate against those with an unacceptable past pay history. Does that make sense to you?

One state proposes to "Ban the Box" on employment forms that must be checked to disclose any criminal background. At the same time, they have no problem with permitting instant discrimination against applicants with unacceptable prior income levels.

Killed someone before? No problem, if the justice system says you have paid your debt to society and are safe to walk free to lead a productive life henceforth. A few (or even many) mistakes should not automatically make you ineligible for a job. After all, how are ex-cons expected to rehabilitate themselves if they are arbitrarily denied employment over some bad decision that has now been rectified, repaid or properly punished? The proposed protective anti-bias legislation is sensible, with obvious exceptions.  It also permits exploration of criminal history after initial screening suggests the candidate appears to have the qualifications for the opening.

If malefactors have paid their debt to society, their candidacy for a paying job would be judged on the basis of their positive qualifications rather than their worst negative acts. Applicant knowledge, skills, abilities, experience and potential should be the primary employment criteria. Job seekers should not be disqualified by an aspect of their past life that has no bearing on their ability to perform the specified duties. Simple justice argues that employment applicants should not be immediately excluded from consideration by the exposure of mistakes for which the price has already been paid.

Sadly, the same logic applied to criminal mistakes is not carried over to "the mistake" of earning a prior amount that upsets the hiring manager. No crime was committed. No earlier economic decision by a different employer in different circumstances has any bearing on the applicant's qualifications for this particular open position, either. Disclosed prior pay amounts will still be used against the interests of the candidate, even when the prospective employer refuses to mention its anticipated offer figure or share its existing pay range.

Doesn't the free open market for labor demand parity between the parties conducting economic transactions? Employers who refuse to reveal hiring rates have no right to demand that applicants disclose their prior income levels. If someone wants a job at the pay rate offered by the employer, they should have the opportunity to get it instead of being disqualified before they ever get a chance.

Why are hiring managers so unwilling to disclose the amounts they plan to offer for the opening? Let the candidate reject the amount if it is unacceptable or negotiate a total reward package that is mutually agreeable. Applicants who earned far less in other enterprises will be enthusiastic about a new job with a far higher value. Any hiring manager who low-balls an excellent candidate so as to land them at a discounted rate is being stupidly shortsighted.  That will only disrupt internal equity and threaten market competitiveness. The inevitable eventual embarrassing rotten equity adjustment can be avoided by paying right at the start. Those who earned a lot more elsewhere might be happy to be paid correctly rather than remain uncomfortably employed waiting for the axe to fall. Outfits with really bad work conditions often "compensate" with extraordinary guaranteed cash amounts which make escape very difficult.

Irrelevant questions about past pay history introduce bias, making it impossible for those who are paid "wrong" to ever get a chance for a serious interview. When someone reveals prior pay that is too high or too low, their resume goes into the round file. Ex-cons who escaped the electric chair might advance towards final consideration while those whose prior income fell outside some magic range are toast. Without ever knowing the reason, perfectly competent applicants are regularly and routinely excluded for reasons that have nothing to do with their competence, qualifications or willingness to work. A career death sentence can be rendered without any fair trial.

This is wrong. Why do human resource professionals allow this?

E. James (Jim) Brennan, former Compensation Editor of the Personnel Journal and Senior Associate of pay surveyor ERI, recently returned to consulting. Author of the Performance Management Workbook and frequent expert witness in executive compensation trials, Jim also serves on the Advisory Board of the Compensation and Benefits Review. 

"Application" image by Elissa Pulliam, courtesy of Creative Commons

Cafe Classic: Let’s See... Should it be Euros? Pesos? Yen? Rupees?

Editor's Note:  In today's Classic, contributor Jacque Vilet confronts  misunderstanding and misapplication of the notion of "consistency" in compensation -- including some of the interesting ways it is applied to international remuneration.  Bet a few (or more) of you have similar stories to tell!

Being consistent; that is usually the mantra of HR, especially when it comes to compensation.  Many managers understand “consistency”.    Which means that all that time you’ve spent on compensation training and communication with management has paid off, right?  

Has it?

There are occasions where the consistency mantra can get us into trouble.  Let me share an example that happened to me several years ago at Company X.    I was cruising along one day at work, putting the finishing touches on merit budget recommendations for all the company’s operations outside the U.S.    I had been working feverishly to finish in order to give the information to the CFO before he went ahead and plugged in the U.S. merit budget increase worldwide.   (We’ve all had that happen haven’t we!).

I received a phone call from a manager who sounded panicked.   He wanted to talk to me right away.   I recognized his name as an Engineering Manager who had recently been promoted to a position with responsibility for an entire product line --- including employees in 5 different countries.   This international “stuff” was all new to him.

When he arrived at my office he showed me a spreadsheet he had prepared with all his employees worldwide and their salaries.    In one column he had their local salaries in local currency.   In another column he had their salaries converted to U.S. dollars.

He was agitated and told me that we had to “fix” the salary problem immediately.    When I asked him what the problem was, he looked at me with disbelief and pointed out their pay was not “consistent”.    For example his employees’ salaries in Japan were averaging US$30,000; employees in Germany were averaging US$120,000 and his employees in the U.S. were averaging US$80,000.  He couldn’t believe that I couldn’t see the problem.

I blessed him silently for caring enough about his employees to at least review their compensation.   He was taking his new responsibilities seriously and trying to do the right thing.   I knew I could go into a lengthy explanation about why his issue was not relevant and even give a little economics lecture.  But realizing that he needed just a simple answer, I told him that his employees in every country were being paid competitively for their jobs.  If they transferred to another country permanently, then we would have to make adjustments.  But, for now, their salaries were very competitive in Japan, Germany, the U.S. and all the other countries where they happened to be working.

I showed him survey data for each country so he could see how his employees’ salaries compared to the same jobs in that market.   I told him that the issue of “consistency” does not mean that we pay employees in the same job the same salary worldwide.   It just means that we pay employees competitively in their own country.

After poring over the surveys he felt much better.    After all, as an engineer he couldn’t dispute “data” could he? 

I have had the same issue with C level management as well.   They just can’t seem to wrap their head around anything but US$.   From a cost to the company perspective they are right.   But when it comes to paying salaries, setting policies for vacation time, setting annual bonus targets ---- they need to understand the importance of local competitiveness and cultural impact.

The lesson I learned here was that as simple as we try to make compensation concepts for managers, there are still issues they don’t understand.   While these may be the things that are second nature to us as compensation professionals, we need to practice getting “outside” our own heads and trying to see the world as our managers see it.

Jacque Vilet has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She typically works with companies that are growing overseas either organically or through acquisitions. Her expertise encompasses many areas of HR --- compensation, benefits and wellness, labor law, learning/development, strategic workforce planning and mergers and acquisitions. Her true passion is studying globalization and its current/future impact on companies and jobs. She has managed both local/ in-country national and expatriate programs and has been an expatriate twice during her career. She has certifications from HCRI, World at Work and Human Capital Institute as well as a B.S. and M.S. in Psychology and an MBA. Jacque has been a speaker in the U.S., Asia and Europe and is a regular contributor to various HR and talent management publications.

Creative Commons image "International Currency" by Warriorwriter

Prevailing Wage Determinations Are Good for Us

Don't worry that the foreign worker who works legally in the United States will displace you. If the sponsoring employer follows the law, imported talent is a lot more valuable than you are. The Prevailing Wage Determination rules typically require proof that a higher wage than normal will be paid to any non-citizen qualified for a job where local native viable alternative candidates do not exist.

Concern about foreigners being imported at cut-rate pay levels to displace citizens of the United States lies at the heart of the rules for Permanent, H-1B, H-2A, H-2B, or D-1 visas. Politicians pass laws to discourage employment practices that harm voters. In fact, elected officials are swiftly voted out of office by their constituents if they do not guard and protect local jobs in their communities. Keeping American work for Americans is a foundation bedrock principle for every American politician, reflected in the Davis-Bacon Act, Fair Labor Standards Act, the Immigration and Nationality Act and other protective legislative regulations.

"The Immigration and Nationality Act (INA) requires that the hiring of a foreign worker will not adversely affect the wages and working conditions of U.S. workers comparably employed."

Rather than going into long and boring details about how these government constraints on employers (both public and private) operate to choke a horse ... to enrich immigration attorneys .. I mean ... to curtail unconscionable abuses of economic power, I will summarize. The Prevailing Wage Determination regulations are carefully crafted to tilt the playing field in favor of citizen voters. For example, I always felt it is quite difficult (and always expensive) to come up with good current competitive pay figures that can overrule the deliberately high government threshold hurtle figures that are skewed to the high side. My professional opinion on that was confirmed in a private conversation with a former INS Commissioner. 

Consciously forcing American employers to pay a premium rate to import foreign laborers actually seems to be a quite sensible punitive step in a deterrent policy. The more you pump up the hiring specifications to support your claim that local talent is absent, the higher the wage target for imported talent becomes.  Unless the employing organization pledges to pay at or above the prevailing wage set by the government's interpretation of the duties specified in the justification documentation, no legal permission will be granted to permit someone not a USA citizen to work here. Those federal rate enforcement rules are adjudicated by a local State Workforce Agency (SWA) for many visa types. Such state employment departments are quick to offer candidates registered with them for unemployment insurance as alternatives to an expensive foreign hire. Thus, citizens seeking work in the community get first shot at a high-paying position before the SWA is forced by lack of available local talent (one of the usual INA requirements) to approve the employment visa application of any outsider. The number of foreign work visas are also strictly limited and get snapped up very swiftly, which is a related but different story similarly fraught with controversy. Conflicts are inevitable between protective government agencies charged with maximizing citizen employment and talent-hungry prospective employers indifferent to the nationality of their workers.

The bottom line is that many obstacles are placed in the way of enterprises that seek to give domestic work to foreigners. The United States is not as bad in this regard as many other nations, but our barriers are already strong enough to discomfit both public and private organizations desperately seeking competent candidates here, especially for certain STEM positions. American human resources, employment and compensation people still need to warn their management that a long, complex and expensive gauntlet of paperwork must be endured to successfully import human talent. That's probably good for us, too.

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience in most industries.  After corporate HR posts and consulting CEO roles, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review. 

"Liberty" image by Russ Allison Loar, courtesy of Creative Commons

The Consultant Dilemma: Make Your Own or Go with Store-bought?

Much of what we do in compensation is logical and systematic. Once you know the steps for a process or a report, why would you spend money on a consultant? Just get the work done and move on. After all, isn't this stuff in your job description?

Odds are, it is. Whether we're talking job pricings, salary structures, gender/minority analysis or you name it, it's all in our job description somewhere. And yet, in my experience, hiring a consultant doesn't mean you're shirking your job. In fact, if you do it well, working with a consultant often demonstrates your ability to lead by making an investment that will provide returns for many years without having to reopen your wallet.

Here's the case for investing in consulting assistance that I made to a colleague recently:

Become as sophisticated as the consultant's best clients. You may have worked for two or three companies. Your consultant will have worked for dozens. Each one had a problem to solve that you do, too. Work on a new or vexing project on your own, and you might as well be unfolding a paper map and uncapping a highlighter. Invest in a consultant and you get a GPS that shows you the two or three best routes, and enables you to avoid dead ends and accidents.

Meet hard deadlines. Most of our work is very time consuming. Especially if you are a small shop, odds are you will get interrupted by a zillion other things and probably should. Consultants not only have more experience than you do in creating realistic project plans, they also contract with you to meet specific deadlines.

Learn a lot. Consider this. Even if you know how to cook, the Barefoot Contessa offers tested techniques and recipes that you may never discover on your own. In compensation, the best consultants consider themselves teachers, showing you how everything is done and prepping you to do it yourself, so you can build on the results of your current project without further help from them.

Make your attorney happier. Can you even imagine that? Here are a couple of reasons. When employee legal challenges occur and work becomes discoverable by a court, consultants' work tends to be far more documented than in-house work. When it comes to questions of equity, guidance by a third party (who has no skin in the game) often has more street cred than your company's self-assessment. From an experience standpoint, consultants have typically worked with attorneys on these issues in the past, so they know how to address formal requirements. In addition, some consultants provide expert testimony. Having been on the "hot seat," they can help you avoid practices or documentation that can be easily challenged.

Unsubscribe when you're ready. Most consulting work is once and done. You decide if you want to invite them back.

Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career paths and communications at the Café. Her firm, re:Think Consulting, provides services that include market pay information, base salary structures, incentive plan design, career paths and new plan implementation. Margaret is a Board member of the Bay Area Compensation Association (BACA). Earlier, she was a Principal at Willis Towers Watson. Margaret coauthored the popular ebook, Everything You Do (in Compensation) Is Communications, which can be found @ https://gumroad.com/l/everythingiscommunication.

Relocation Differential or Relocation Package? What's Your Policy?

Feel like banging your head against the wall? If you don't have a relocation policy when you need one, you can easily feel there are no good answers to your employees' questions.

But there are good answers, and it's up to you to make them clear and straightforward -- and dare I say, fair. Let's take a look at what's involved.

First, recognize that employees move to other locations for many different reasons, each of which should qualify for its own policy guidance. If your company has asked Alice to move because her department is being relocated, the financials will be different than if Alice has chosen to move closer to her family. Alice should be able to rely on your company for moving assistance in the first case, not so much in the second. And what if Alice is moving for a career development opportunity? Yep, that calls for a third angle on the policy.

Unless your company has a compensation program that pays no attention to geographic differentials between your various locations, relocation will require you to make a pay differential decision for Alice's base salary. And since variable pay programs, and sometimes equity award guidelines, can vary quite a bit from location to location, your policy will need to include the steps to either transfer, cash out, rollover and/or qualify the employee for mid-year participation in incentives.

Whatever you do, don't mix up "cost of living" with "cost of labor" when developing your policy, even though you may be tempted to. Cost of labor alone is the driving factor for addressing base pay issues. When you're talking about competitive pay levels, you're talking about the cost of labor for specific skills, based on the supply of individuals with those skills in a given location. Salary surveys, or your existing salary structures, are your go-to references here.

Cost of living is all about the relative ability to buy stuff in the given location. It is a completely separate issue from how much people are being paid. While CNNMoney tells me that a $28,392 salary in Asheville, North Carolina is comparable to a $50,00 salary in San Francisco, it really means that it would cost me almost twice as much to buy groceries, see a doctor and rent an apartment in the Bay Area. It really, really doesn't mean I'm going to be paid almost twice as much to do the same job in San Francisco -- and salary surveys will bear me out.

If you hold too tight to your budget when you move Alice to San Francisco and  manage to underpay her, you'll have an unhappy transplant with her unhappy family -- making it difficult to recruit for other comparable positions. If you let the sympathy you feel for Alice's new sky high housing costs influence the salary you assign her when you move her from Asheville, you're bound to overpay her. She'll be resented by her coworkers, create compression in her department and make it difficult to recruit for other comparable positions.

Say Alice's salary is uncomfortably high compared to others in her department because you're moving her from San Francisco to Asheville. You and she could agree to keep her salary the same over a set period of time while she is working in Asheville, thus managing this type of compression. You could also pay her certain types of cash relocation incentives like a relocation bonus, cost of living allowance and/or first-year performance target to smooth her transition. The application of these optional payments should be documented and described in your policy, of course, along with when and how you cover the direct costs for moving and residence.

Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career paths and communications at the Café. Her firm, re:Think Consulting, provides services that include market pay information, base salary structures, incentive plan design, career paths and new plan implementation. Margaret is a Board member of the Bay Area Compensation Association (BACA). Earlier, she was a Principal at Willis Towers Watson. Margaret coauthored the popular ebook, Everything You Do (in Compensation) Is Communications, which can be found @ https://gumroad.com/l/everythingiscommunication.

Cafe Classic: Beware of Lemming-itis!

Editor's Note:  Being a lemming is never the way to career success in rewards (or any field, I suspect), but it can be particularly perilous when it comes to programs and practices outside the U.S.  Jacque Vilet schools us, in this Classic post.

Benefits outside the U.S. are the most complicated thing an international HR person has to learn.  Each country has its own mandated, or government required, social plans --- healthcare, "death" benefits, retirement, etc.    However, in most countries government benefits are not enough to take care of people's needs.

Multinationals have provided supplemental or company benefits for local employees for years.    One U.S.company that is a household name with an acronym of three letters has had operations overseas for 40+ years.    When they set up their first operation overseas, they immediately put in company benefits ---- including a defined benefit (pension) plan.   They didn’t think twice about it.   As the company grew they continued to put in pension plans in each country.    Eventually they realized the huge cost associated with what they had done.     Their employees didn’t understand what pensions were or how they worked, nor did they really seem to care about them.    A big cost and very little appreciation.   To add insult to injury, other companies told them they had implemented pensions because they wanted to be competitive.  It was like “follow the pack”.

After U.S. consulting firms ramped up their survey offerings overseas, they became the “bible” for international HR people.    Many, including myself, dutifully compared company benefits with competitors and hastily put benefits in place where we were found lacking.      I won’t soon forget communicating to employees in Spain that they now had a couple of new benefits ---- life and long-term disability insurance.  I received emails thanking me, however, no one understood what they were.   Not only that, they did not seem to care very much.  When I explained that the majority of our competitors in Spain had these benefits, they still weren’t very enthusiastic.   Was this another example like the above?  Did a competitor start a benefit and all the others follow suit?   Lots of lessons learned with that incident.

The same company had a large design center in Shanghai with almost 80 engineers.   90% of them were young men in their 20’s and early 30’s.  When I visited, they always wanted to talk with me. A group of them took me to lunch on every visit.    One day they started talking about a “housing fund”.    I thought they meant the mandated government benefit.    No --- they were talking about a supplemental company benefit.    A couple of competitors had set up a separate housing account funded by both employee and company contributions.   They all asked whether they could have one.

Understanding the background here is important.   Housing was and is very expensive in Shanghai and other major cities in China.   In addition, these were young men that wanted to buy an apartment and get married.  The typical method for buying an apartment:   50% paid for by parents, 25% paid by employee and 25% financed.   While the government housing fund was nice --- it didn’t grow very fast.  So a few of our competitors were beginning to offer an additional fund to help employees accumulate money faster.

Now this benefit did not show up in any of the surveys for China.   But the employees provided me with the names of companies that offered it, and I verified it when I returned to the U.S.   There were only a few, but they were all competitors.

For those of you who don’t know --- retention is a big problem in China ---- especially for technical employers.    I began to see the wisdom in offering this new benefit.   After learning all the details and conferring with Finance, we put one in place.   There was a huge reaction!    I have never seen employees so excited about a benefit!   I could hear wedding bells all the way from China!   I didn’t think we would have to worry about retention for a while.

The point I want to make is that while competitive surveys are all well and good, we need to get our noses out of them and start looking around at other factors that may be just as important.    Surveys are just one data point.   Employee demographics are important.   Listening directly to your employees is also a good way to get information.   There may be other important issues to consider as well.

I’ve had a rule for years:   Never use just one data point to make a decision ---- and hopefully have at least three.  The more the better.

Let’s all take a vow not to become lemming-like and offer benefits just because other companies do.    

Companies are not all alike, and there is nothing in my HR manual that says we all have to do exactly the same thing.

I would love to hear your thoughts.

Jacque Vilet, President of Vilet International, has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, Texas Instruments and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expatriate twice during her career. Jacque has the following certifications: CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology plus an MBA. She belongs to SHRM, Human Capital Institute and World at Work. Jacque has been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.

Image courtesy:  sipseystreetirregulars.blogspot.com

Santa, Where Do Best Practices Come From?

Much as we like to believe that our compensation processes are objective, even numbers have a way of being influenced by human nature. If we are not aware of them, our vulnerabilities can affect our decisions all the way from job pricings to cost projections to talent assessments. After all, much of what we deal in is probability, and other forms of statistics, and we all know what kind of reputation statistical interpretations have.

One proven foible of our quantitative work is worth being talked about openly and often. We're likely to pay more attention to findings that support our beliefs and to ignore competing facts and patterns in our data. This is called the "confirmation bias," and we all suffer from it, with personality traits and other social influences impacting our bias.

Think about the wrangles you have with certain executives about salaries, from their own to their teams'. The exec is often waiting for you to confirm his/her beliefs, and has little interest in competing facts. We suffer from the same habits, we just exhibit them  less loudly.

Even though our own personal confirmation bias is not that obvious, it's there whether we like it or not. We often tell our bosses or internal clients how we expect our work to turn out. (Tell the truth: We do the same within ourselves with our inner voice, whether we are aware of it or not.) Of course, our predictions are based on experience but they can just as easily be incorrect.

Notice how high we set the bar when we run into evidence against our own hypotheses. This tendency is called the "disconfirmation bias" and it has also been supported through experiments.

You may think these biases have little importance to your work, but you can literally make mistakes that cost money and cause mischief if you do not formally examine your thought process each time you are asked to give a prediction. Fortunately, there are time-tested actions that you can follow including these three listed in a recent Harvard Business Review "Management Tip of the Day."

Start by following a data and analytic approach that is specified ahead of time. Document how this approach is followed -- including how judgments should be made using the data -- and hold everyone who is doing data analysis on the project to follow the same approach. This will govern the tendency we all have to cherry-pick data that agrees with our point of view and, for the same reason, the full process should be itemized for the person to whom you present the data.

Another step to include in your approach is to actively look for findings that disprove your belief. This is often called "shooting holes in the data," where you identify other patterns in the data and determine whether they indicate that other judgments could be more correct, or correct in a different way, from your own.

Treat your findings like predictions and test them. Even a single job pricing can benefit from this validation process -- how high can it go and how fast? What does this say about pay for other jobs that share the same salary grade? And so on.

In my experience, in-house compensation staff have the hardest time with the last two actions on the list. In comparison, while many in our field are biased against consultants, you can count on most to challenge potential biases. In fact, that's part of the rationale for hiring a consultant. We're trained to do it, and consider our bias checks as part of the service that a client is paying for. (Not all clients like this part of our service, by the way.)

For more on this particular topic, check out the recent WorldatWork video, "Advice on Working with Consultants from Consultants." And for the most jaded consultant-basher -- you know who you are -- allow the speakers to challenge your disconfirmation bias!

Margaret O'Hanlon, CCP collaborated with Ann Bares and Dan Walter to create the DIY guide to compensation leadership, Everything You Do (in Compensation) Is Communications @ https://gumroad.com/l/everythingiscommunication. Margaret is founder and Principal of re:Think Consulting. She brings deep expertise in compensation, communications and leadership to topics like the CEO Pay Ratio, performance management and compensation implementation discussions at the Café. Margaret is a Board member of the Bay Area Compensation Association (BACA). Before founding re:Think Consulting, she was a Principal at Willis Towers Watson. 

 

 

Ever Wonder How to Estimate Turnover Costs?

You just never know when a conversation will turn to the topic of turnover costs. Here's how the pros are doing it these days. Three factoids from a 2016 Willis Towers Watson report that will come in handy for analysis and planning:

•  It takes between five and nine months for a new employee to achieve full productivity, depending on job level.

•  New employees create a productivity drag on managers and team members. We all know this too well, of course, but we frequently don't take this cost very seriously. In most organizations, new employees adjust to knowledge work relatively quickly. We are them, and they are us, so we know their habits only too well.They may even be considered valuable innovators during the time period that could be considered their orientation. But the productivity drag can cost dearly in teams with volume output or customer experience responsibilities. Once you take this seriously, you can create new, less costly, ways to support the employee and minimize the costs.

•  It's possible to estimate the financial cost of employees at risk of turnover. I'm sure Towers would be willing to use your company's data in a customized analysis, but here's their thought process:

 

 

The research indicates, for example, that the global cost of Professional turnover is 59% of their annual compensation and that the percent at risk of turnover is 25%. Predictable turnover of that size, in that job level, will cost those companies 15% of the annual compensation for that group. The costs at the senior manager level, who leave with considerable institutional knowledge, is much higher at 23% of annual compensation for that high earning group.

Knowing this amount could also help you in your budget negotiations. If you know the dollars at risk, why not campaign for a portion of them to invest in avoiding the turnover? Or maybe you want a certain level of turnover. This approach could help you budget for it.

Worrying about a brain drain, poaching or high growth? Take some data out for a spin!

Margaret O'Hanlon, CCP collaborated with Ann Bares and Dan Walter to create the DIY guide to compensation leadership, Everything You Do (in Compensation) Is Communications @ https://gumroad.com/l/everythingiscommunication . Margaret is founder and Principal of re:Think Consulting. She brings deep expertise in compensation, communications and leadership to topics like the CEO Pay Ratio, performance management and compensation implementation discussions at the Café. Margaret is a Board member of the Bay Area Compensation Association (BACA). Before founding re:Think Consulting, she was a Principal at Willis Towers Watson. 

Minimum Wages Amid Maximum Variation

Not all minimum wage laws are the same. Rules for overtime (OT) and rates of pay are not identical but vary by location.

A substantial minority of all American States have special overrides that offer superior worker treatment beyond the U.S. Department of Labor Wage-Hour Division Fair Labor Standards Act (FLSA) terms.  Those with oddball pay rules add up to maybe 1/3 of the total at present but that count is constantly changing.

A handful of States have crafted specific exceptions worthy of another full free-standing article.  Folks operating in the affected industries in those areas probably already know complete details of the local terms, but HR people everywhere should be aware of the broad types of variations. After all, workers come from all sorts of places where their pay would have been subject to different regulatory schemes and therefore may be puzzled by your particular practices. Different State (or Canadian Province) usually means different rules.

Keeping track of all existing local variations is a challenge. U.S. Federal wage rules are quite consistent, with only a few oddities:  American Samoa was granted special exemption advantages for the movie industry, for example.  Beyond having different minimum wage levels, some State overtime rules also vary by the kind of job involved.  

States that run amok on their OT laws' occupational exceptions include DC, KS, MO, AK, CA, CO, and the Virgin Islands.  They declare certain jobs exempt regardless of FLSA treatment.  Here's a test:  Guess which state makes prisoners exempt?  Which say professional actors and babysitters are not entitled to overtime?  And guess why?!

What: CO, CA, WV, WI WA and maybe IN declare certain jobs non-exempt overtime eligible despite their federal exempt status.  

Why: Reasons are politically determined per the State.  CA, CO, KS, MO, VT and VI follow the general pattern of exempting some or all workers in high-employment industries critical to their State economic welfare.  Cynics may add that maybe some lobbyists are just more persua$ive than others.

Note that I haven't even addressed the local provisions based on the size of the employer.  

Canadian minimum wage and overtime regulations might require a separate future article. Don't let the (fairly) common language fool you; different nations have different laws, cultures, practices and value systems. That all shows up in pay and therefore compels different HR approaches.

Canadian federal law is much weaker about specific minimum wages while extremely onerous in other respects. Canada forbids the exempt supervisor to do ANY of their nonexempt subordinates' work. Furthermore, the ten component Canadian provinces and three territories pretty much determine the norms and can make pay rules even more confusing there than in the United States.

Overall, states, provinces, cities and counties can all have their own separate minimum wage and overtime laws that exceed their respective federal rules. Feel free to correct my recollections or mention any unique provisions that I skipped over, especially those that made your professional life more interesting.

It's a legal jungle out there.  Only way to be completely safe is to pay OT to every worker; but no one does that, do they? We just have to accept the hazards of dealing with ambiguity, where no one rule applies universally.

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience. After corporate HR jobs and consulting in every industry throughout North America, he was Senior Associate of pay survey software publisher ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness, Jim testified in many reasonable executive compensation cases. He also serves on the Advisory Board of the Compensation and Benefits Review.

Image courtesy of U.S. Department of Labor

Think Brexit Has Nothing to Do With You? Think Again

I had doubts about writing this column, but I just couldn't get it out of my mind. Then I realized that I might be on to something that you would find interesting when my Board of the Bay Area Compensation Association (BACA) invited Gary Schlossberg of Wells Capital Management to speak about, 'From "Goldilocks" to "Alice in Wonderland:" The U.S. and Global Economies in a ""Post-Brexit" World.'

I'm no economic or financial wiz, but I just came back from Europe where I spent a decent amount of time listening to the BBC. Here are important issues relating to our employment and compensation work that I thought I should pass along in case you haven't run into them yet. I'm sure there are many more. Even though Brexit hasn't really been initiated yet, people are acting as if it will be.

The new UK Prime Minister, Theresa May, has promised to raise wages (at the same time that she has promised to cut taxes). While this may seem a typical political gambit, she is known to be an interesting combination of tough conservative politician with liberal instincts toward social policy areas like living wage and housing.

There is a strong feeling among British economists that Britain is heading for a recession. The Financial Times is already reporting on how growing inflation will hit low wage earners. Others are reporting on the financial impact on Germany and other EU partners.

Recruiting issues will grow. EU employees in Britain who are not British are worried about their career prospects, both because of the potential economic disruption in the UK but also because of real barriers to working in the countries that remain in the EU. In other words, I won't be able to easily transfer from my customer service job in London to the sales job I wanted in Paris. Now there will be limits to the number of employees allowed into the EU from Britain and paperwork to be approved. Ireland is emerging as one of the EU partners with appealing tech and biotech job opportunities that will have no such barriers (and it's a convenient place to move).

Commonwealth countries are questioning their "special relationship" with the UK that allows easy trade and employment access so they don't experience guilt by association. Specifically, Australia is discussing a withdrawal from the Commonwealth which would also cause staffing issues due to additional limits on employee mobility.

Having cut themselves off from the EU, Britain now has to negotiate its own trade agreements. The problem is, they have no trade negotiators because they haven't needed them since they joined the EU. If you employ people with these skills, keep an eye out for poaching as Britain has been clear that it will bring in people from outside the country. They need warm bodies right now and will no doubt pay handsomely for them.

On the day-to-day level of employee relations, people continue to write in to The Guardian and The Financial Times for advice on how to handle divided politics that have hurt the office climate. The vote was so close and was so clearly divided between urban and rural and immigrant vs. non-immigrant rights and so on, that feelings are still raw. If you think you understand this, think again. For instance, in spite of the immense diversity in London the immigrant population that is being pressured, at least initially, are the Poles. (And hate crimes have already begun to climb.)

--I hope this short briefing will come in handy. If you find it helpful given your own business and talent requirements, it may be time to invite your local economist or business strategist to visit with you as BACA has done. I'll return to my series of articles on pay transparency in my next blog.

Everything you do in compensation is communication, so why not do everything better? The popular ebook, Everything You Do (in Compensation) Is Communication @ https://gumroad.com/l/everythingiscommunication belongs on your summer reading list. Margaret O'Hanlon, CCP collaborated with Ann Bares and Dan Walter to create this DIY guide to compensation leadership. Margaret is founder and Principal of re:Think Consulting. She brings deep expertise in compensation, communications and leadership to topics like the CEO Pay Ratio and performance management discussions at the Café. Before founding re:Think Consulting, Margaret was a Principal at Willis Towers Watson.