Companies Increase Their Use of Pay-For-Performance Incentives

Companies Increase Their Use of Pay-For-Performance Incentives

More than 60% of large-cap companies provide at least half of CEO equity compensation through performance incentives, up from just one-third five years ago, according to a report on equity compensation trends recently published by executive compensation benchmarking firm Equilar.

The report’s findings, released on September 20, are based on an analysis of the Equilar 500, an index that comprises the largest U.S.-listed companies by revenue adjusted to approximate the industry sector mix of similar large-cap indices. The study examined the equity compensation design and granting practices of Equilar 500 companies, and tracked these data for those companies over the last five fiscal years.

The results of the analysis showed that the percentage of companies in the index that provided at least half of CEO equity compensation based on performance awards increased from 52.5% in the fiscal year 2015 to 60.8% in 2016; and that the total share of Equilar 500 companies providing CEO performance awards has increased significantly over the past few years, from 69.7% of companies in 2012 to 82.1% of companies in 2016.

According to the study, the remaining portion of equity compensation was time-based, which means that awards vest at specific time periods, rather than being contingent on meeting particular performance goals to become eligible to receive allocations of stock or stock options. The research indicated that most CEOs continue to receive time-based as well as performance awards, with nearly 40% of companies in 2016 providing a majority of equity compensation in the form of time-based awards. However, the study also found that a growing share of these time-based awards are being provided as restricted stock, rather than as stock options.

Broken down by sector, the analysis showed that 90.5% of industrial goods companies, 86% of healthcare companies, and 84.6% of utilities provided performance awards to CEOs in 2016. The technology sector saw the largest growth in the percentage of companies offering performance awards to CEOs during the study period, increasing from 63.7% in 2012 to 82.3% in 2016.

From Benefit Trends Newsletter, Volume 60, Issue 10

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

A Range of Strategies Are Used to Manage Leave Programs

A Range of Strategies Are Used to Manage Leave Programs

As the legal statutes mandating and regulating employee leave grow in scope, complexity, and unpredictability, many employers are struggling to remain compliant, while continuing to use paid leave as a recruitment and retention tool, according to the results of a survey on leave management conducted by the Disability Management Employer Coalition (DMEC), an association that educates employers on managing their disability and absence programs.

The findings of the survey of more than 1,100 U.S. employers of various sizes and industries were released on March 6. The survey asked employers about the challenges they face as they seek to effectively implement and manage their leave policies, while dealing with the complexities involved in complying with the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act and Amendments Act (ADA/AA), and other Federal statutes; as well as state, county, and city leave laws.

The survey found that employers are increasingly choosing to outsource FMLA management, although relatively few are outsourcing the management of ADA accommodation. The results revealed that many employers are selecting a vendor that offers an integrated solution for managing FMLA compliance, short-term and long-term disability programs, and employee assistance programs (EAPs). The survey also showed that satisfaction with outsourcing is high, as employers believe it improves compliance, customer service, and efficiency.

The findings further indicated that while most of the surveyed employers report that they are increasingly skilled at managing a complex leave landscape, many believe that more manager training and online tools are needed. Significant shares of respondents also said they believe that training and other resources should be extended to legal staff, consultants, and third-party administrators (TPAs).

In addition, the survey found that as the uniformity and centralization of policies increases, employers are moving toward adopting more comprehensive absence management approaches that improve their preparedness for U.S. Department of Labor (DOL) and Equal Employment Opportunity Commission (EEOC) inquiries. The results showed that large employers have in-house legal resources for achieving uniformity and centralization, while smaller employers (fewer than 500 employees) are more likely to use external legal counsel.

The survey also indicated that large shares of employers are attempting to stay ahead of the legal and regulatory curve by asking legal counsel to help them construct leave programs that are more generous than required. More than three-quarters (78%) of respondents said their organization has paid leave programs that include parental leave and other family member leave, while 77% said paid leave is available to all of the employees in their organization. A further 35% of respondents said their company has a separate paid leave policy.

Moreover, the survey found that employer use of automated systems for FMLA management is growing, with the numbers of employers making electronic rather than manual updates to their human resource information system (HRIS), time and attendance, and payroll systems increasing slowly. According to the survey, respondents believe that in addition to providing much needed regulatory expertise, automation reduces the time and resource burden associated with managing these systems, and makes it easier to produce reports that provide useful and actionable data.

e leaders surveyed said they believe that employees are increasingly looking for development and coaching opportunities, and 53% said they think that personalizing feedback and coaching would significantly improve employee performance; 52% of the leaders acknowledged that the annual review process is often used as an alternative to engaging in actual performance development, and 73% of the employees polled reported that they have not seen performance management practices move away from a focus on paperwork to a focus on conversations.

Yet researchers observed that some companies are experimenting with new approaches to performance management: for example, rewards can be allocated based on real performance data or survey data from all of an employee’s project leaders, or employees can determine rewards for one another in a crowdsourced approach.

From Benefit Trends Newsletter, Volume 60, Issue 4

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Employers Should Do More to Retain Restless Employees

Employers Should Do More to Retain Restless Employees

As large shares of employees indicate that they are planning to look for another job in the near future, employers should seek to improve the job candidate experience during the hiring process, increase engagement and retention among current employees, and develop a more transparent culture and a leadership structure that align with the needs of today’s workforce, a report by recruitment firm ExecuSearch Group recommended.

Released on January 12, the report’s findings were based on the results of a survey of more than 1,000 job seekers, working professionals, and hiring decision makers across a number of industries. The survey found that 50% of the working professionals intend to stay at their current company for only two years or less, and that 61% of these respondents reported they had been interviewing for two or more roles during the interview process for their current position.

The findings also suggested that employers are struggling to retain and hire top talent. When asked why employees leave their company, the top reasons cited by the recruitment professionals surveyed were a lack of advancement opportunities, a lack of salary growth, a negative work-life balance, and a poor corporate culture.

The survey results further indicated that employers are not providing the hiring experience expected by job candidates: 75% of the recruitment professionals polled stated that their hiring process, from initial interview to offer, takes more than three weeks—even though the vast majority said they believe the process should take two weeks at most.

When asked about their experiences of the hiring process for their current job, 34% of the working professionals said their interviewer could not convey the overall impact that their role has on the company’s goals, and 45% said they did not feel that their interviewer made the effort to give them an introduction to the culture.

The survey findings also appear to suggest that employers should take a more active approach to culture, retention, and leadership development: of the working professionals surveyed, 42% said they feel that the executive leadership at their organization does not contribute to a positive company culture, and 48% said they do not believe that their company encourages younger employees to pursue leadership positions. However, more than half (59%) of the working professionals polled reported that having access to projects to help keep their skills up-to-date would keep them satisfied at their current company.

In addition, the survey uncovered a disconnect between the goals of younger employees and employers: while 76% of the millennial working professionals cited having professional development opportunities as one of the most important elements of company culture, 74% of the recruitment professionals said that millennials are not prepared for leadership positions.

When asked to rank the importance of various kinds of opportunities for professional development, the top responses from working professionals were an emphasis on work-life balance, collaboration with team members, and access to leadership/management. Moreover, when asked which benefits other than health benefits would make them happier at their current company, the most common responses of the working professionals were flexible scheduling, greater vacation allowance, recognition by supervisors, and interesting projects or work.

From Benefit Trends Newsletter, Volume 60, Issue 3

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Paid Time Off Banks Gain Ground On Traditional Paid Leave Systems

Paid Time Off Banks Gain Ground On Traditional Paid Leave Systems

While most employers continue to offer paid time off to employees, the percentage of companies that provide workers with banks that combine different types of paid leave is growing, while the share of organizations that offer traditional paid time off arrangements is declining, the results of a survey recently conducted by nonprofit human resources association WorldatWork indicate.

The survey of 667 WorldatWork members, most of whom work at the managerial level or higher of a large company in North America, was conducted January 20-February 5, 2016. The goal of the survey was to examine paid time off (PTO) bank-style and traditional paid time off programs and practices.

The results showed that 88% of respondents believe it is necessary to offer some type of paid time off program to be competitive in the labor market. The top three reasons cited for offering these programs were encouraging employees to rest and rejuvenate, improving employee attraction, and satisfying employee paid time off expectations. Just 10% of the HR managers surveyed said their company is required by law to provide some or all of their employees with paid time off, but a majority (61%) said their organization encourages employees to take paid time off.

Traditional leave systems allocate employee paid time off as separate entitlements, such as vacation, sick, and personal days. A paid time off bank, by contrast, offers a combined pool of days that can be taken at the employee’s discretion for a variety of absence types. The 2016 survey found that the use of PTO bank-type systems is gaining ground on traditional arrangements: 43% of respondents reported that their company has a PTO bank, up from 41% in 2014 and 28% in 2002; while 52% of respondents indicated that their organization has a traditional system, down from 56% in 2014 and 71% in 2002.

The respondents at companies with a PTO bank said they believe PTO banks offer greater workplace flexibility (63%) and are easier to administer (55%) than a traditional system. More than 40% of these respondents reported that the PTO bank improved absenteeism when it was first implemented, and 69% said their company features their PTO bank as a key employee benefit when attempting to attract new employees.

 

The survey also showed that at most organizations with traditional systems employee tenure determines total paid days off. On average, the respondents indicated that their organization offers each employee 10 to 22 days of vacation time, seven to 11 days of sick leave, and 3.5 personal days per year.

The findings further revealed that 26% of the respondents at an organization with a traditional system reported that their company is considering rolling various types of leave together to offer employees a PTO bank-type system. The top reasons they cited for transitioning to a PTO bank-type system were the simplicity of plan administration, cost savings, competitiveness, and flexibility.

Benefits Trends, Volume 59, Issue 7

The information contained in this post is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. The information in this post is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.

 

Concentration Difficult in Open-Plan Offices

Concentration Difficult in Open-Plan Offices

While open-plan offices are meant to encourage collaboration and contribute to a collegial workplace culture, the threats to productivity and worker peace of mind caused by open-plan layouts are greater than most companies realize, according to the findings of a survey conducted by Oxford Economics.

The survey, which was conducted in the third quarter of 2015, asked more than 600 executives and 600 employees working for multi-national companies what elements of open-plan office layouts they believe contribute positively to the work flow, and what changes to current office design they would like to see implemented.

The results clearly indicated that employees value having a quiet place to work: 64% said being able to block out noise and distractions increases their productivity, 52% said it reduces errors in their work, and 48% said it allows them to focus on the task in front of them.

When asked to rank the factors that are most important in their work environment, the top priority cited by employees was the ability to focus and work without interruptions, followed by having space to collaborate with colleagues and coworkers easily and effectively, and the ability to seamlessly connect their devices no matter where they are in the office. By contrast, far fewer employees rated as important having access to space to take breaks or eat meals, amenities like free or subsidized food, or natural light.

The respondents were also asked which factors they believe were taken into account in designing their organization’s office space. Large majorities said they think the top priorities were allowing and encouraging employees to interact with each other (85%), followed by improving employee productivity (81%) and satisfaction (81%), and allowing the organization to minimize costs; while somewhat smaller majorities said they thought minimizing distractions from excessive noise inside (69%) or outside (64%) of the office were considered.

The findings further revealed that in addition to ambient noise, constant connectivity to digital devices can distract both executives and rank-and-file workers. The survey showed that 43% of executives and 27% of employees experience pressure (either self-imposed or external) to be always connected to the office through digital technologies, and that 38% of executives and 27% of employees worry about information overload as a result of these technologies.

Workplace Giving Programs Can Help Attract and Retain Talent

Workplace Giving Programs Can Help Attract and Retain Talent

Research shows that effective corporate giving programs are beneficial for a range of stakeholders, including the company, employee donors, and the benefitting charities, according to a recently published analysis by corporate philanthropy software provider JK Group.

In an article entitled, “The Future of Employee Benefits: Employee Giving Programs,” JK Group director of client strategy Nita Kirby cited research showing that the presence of corporate philanthropy programs has the potential to increase revenue by up to 20%, reduce staff turnover by up to 50%, and can even have an effect on the overall mood and health of employees.

Kirby also reported that the results of a survey conducted by JK Group showed that employers recognize the benefits of strong employee giving programs, with over 80% of the participating companies and organizations agreeing or strongly agreeing that their company is committed to a giving program. The survey findings further suggested that employee giving affects a company’s ability to attract and retain talent.

In addition, Kirby cited a 2015 report that showed that 61% of millennials would rather work for a company that offers volunteering opportunities or a giving program, such as volunteer time off, skill-based and pro bono volunteerism, and matching gifts.

Kirby also outlined several steps companies interested in incorporating giving and volunteering into their employee benefit programs can take. For example, employers can find out what type of programs solicit the strongest interest from their employees using free survey tools available online, and can then use the results of the survey to identify an employee advocate to support the program, and to help introduce the program to the rest of the workforce.

In addition, she advised companies to team up with partners associated with providing software and services that offer a user-friendly environment that allows employers to speak to their employees in their own unique way. To improve the chances that the programs will be supported and recognized by the entire company, she suggested that employers consider getting marketing, communications, compliance, and IT involved in supporting and promoting the philanthropy programs.

Finally, Kirby recommended that when it comes time to finally implement corporate giving programs, employers should look at a number of issues, such as whether they are adequately informed about all of the charities that might be in line with the philanthropic interests of their employees, and how legitimate the charities that are being considered for the company’s corporate giving programs are. To ensure that employees have peace of mind that their donations are ending up in the right hands and that their financial security has not been breached, Kirby advised employers to investigate the safest way to facilitate employee giving.

From Benefit Trends Newsletter, Volume 59, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.