SalaryTrends 
 
FreshView
a publication of Cascade Employers Association
 

JUNE 2012    

   Dollars & Sense Poll

  In This Issue:

 

 

 

 

 

Setting Standards for Employee Excellence

By Jerry E. Bumgarner, CCP
Director, Research and Compensation Services
jbumgarner@cascadeemployers.com

While working as the Compensation Director for a large insurance company, I was once contacted by a Claims Office Manager who complained we were not paying his Claim Processors enough to retain them. He was training them and many were leaving to work for our competitors. After some research, I found the turnover among processors was high (40%) and pay rates were about 20% below the local market norms. Because it appeared that our turnover was due to low pay, I quickly secured pay increase approval for all Claim Processors in the office.

Problem solved? Wrong! One year later the manager called me back with the same complaint. Low pay was causing high turnover again.

Upon further investigation, I discovered that while Claim Processors were leaving because of low pay, the real problem had to do with performance expectations. We had been treating the symptoms and not the real problem. As it turns out, the manager had been applying the same performance standards to inexperienced and highly experienced processors alike … and their pay was linked to their performance versus those standards.

Are you beginning to see what the real problem was? Because the required standards addressed the volume, complexity and variety of claims processed, many inexperienced employees were “failing” to meet the standards and consequently were not receiving pay increases. To top it off, they quickly discovered they could take their experience and get higher pay elsewhere.

Good for the employees but not for the company. So how do you set up employees to experience success?

  • Set a foundation for excellence…

    Once we discovered the source of the problem, we were able to set standards for entry, intermediate and more advanced Claim Processors that reflected their experience and progress towards the Company’s high performance standards. Once the performance standards were adjusted, the focus shifted away from measuring degrees of failure, to a positive focus on performance successes.

    While we still moved the “bar” up as employees gained experience, new incumbents were able to gain confidence in their contributions over time and earn pay increases commensurate with their experience and progress. Once we started setting them up for success, the turnover rate declined sharply … and the processors felt a lot better about themselves and the company.

  • Never stop improving…

    On a side note, I recently competed in my first competitive distance race since high school. It was a 5k run that I had vowed to complete after shedding considerable weight in my quest to get healthy. My goal was to “run and complete” the race … not to finish in first place or even among the top fifty runners.

    Given my age, conditioning and limited experience compared to the other runners (I didn’t see many “seniors” out there) my goal was to simply run and finish the race. As it turns out, I placed 69th out of 209 runners who finished (finished in 24 minutes and 44 seconds … not bad for an aging “Comp Guy”).

    Did I fail because I didn’t finish first or among the top fifty? Of course not! Judging from the many congratulatory comments from family and friends, I believe I clearly succeeded - even exceeded. Should I be expected to perform better in my next 5k? I believe I can. I am encouraged by my placement … after all, only 68 people finished ahead of me and 140 finished after me.

  • Know some “failure” is inevitable…

    “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.” --Michael Jordan

  • When employees fail, encourage them…

    “What we call failure is not the falling down but the staying down.” --Mary Pickford

Contact Cascade if you would like guidance or assistance in setting performance standards and aligning your employees with the mission and goals of your organization. Our staff of experienced professionals is well trained and equipped to help you establish and maintain effective systems.

TOP

FreshView on Benefits

By Curtis Farmer, Director, Group Benefit Programs
cfarmer@cascadeemployers.com

Question: Can I pay for my employee's individual health insurance plan outside of our normal group coverage?

Answer: No, this practice is prohibited by federal law, though it is has been a very common question asked recently. While an employer may find very valid and rational reasons for giving an employee a stipend to cover outside insurance premiums, there are several reasons this practice is not allowed by law and is also not good business.

If an employer pays for an individual health insurance plan, it is basically endorsing that individual plan as part of its group offering. In many cases, this would put your group plan out of ERISA (Employee Retirement Income Security Act) compliance and could disqualify the tax-advantaged status of your group health plan.

Secondly, this creates “adverse selection” as it relates to risk to the group insurer. Putting it simply, no carrier wants to insure a plan where all of the young, healthy, low-risk employees opt out for the “better deal” of a lower cost individual health plan that is fully or partially subsidized by the employer. If this were allowed, an organization would just see its group premiums increase to even higher levels.

Finally, it's disadvantageous to both parties from a taxation standpoint. Any funds paid to the employee under this type of arrangement would be taxable at the state and Federal level, as opposed to group insurance premiums that are typically routed through an HRA (Health Reimbursement Account), making them tax free contributions for both the employee and the employer.

TOP

Survey Spotlight

By Tina Hamel, Survey Manager
thamel@cascadeemployers.com

SalaryTrends® surveys from Cascade Employers Association cover the pay practices of diverse organizations from various markets (Oregon, SW Washington, Northwest Regional, and National), and include multiple relevant data summaries. These valuable tools enable users to evaluate their competitiveness within specific talent markets.

Now Open for participation:

Contact us with questions at surveys@salarytrends.com.

TOP

More Audit Letters Sent by the OFCCP

By Jenna Reed, Director, HR & Compliance Services
jreed@cascadeemployers.com

Watch your mail! The Office of Federal Contract Compliance has recently (May 2012) sent out another new round of audit scheduling letters. Typically these letters are sent to the CEO/President or the top HR person in the company. Please make sure your CEO/President is notified that any correspondence from the Department of Labor should be opened and reviewed immediately.

As a reminder, contractors selected for an audit only have 30 days to respond to the initial notice, and the documentation required can be time consuming to pull together if your company is not maintaining its AAP in a timely manner.

If you receive a notice of audit or a scheduling letter, please contact Cascade Employers Association for assistance. We can also assist you if your company is a new federal contractor or subcontractor and needs an Affirmative Action Plan or if you are behind on developing your annual plan.

TOP

Guidance: Tips to Increase Direct Deposit Participation

Source: CCH/Cascade Staff

Direct deposit of paychecks provides many benefits, but getting “straggler” employees to enroll in an up-and-running program can be a challenging task. In Oregon it is not allowed to mandate participation in a direct deposit program for current employees, but there are some ways you can encourage participation.

Educate employees. Employees who are educated and informed about how direct deposit works and what the benefits are to them may be more likely to sign up for a program. Some of the benefits may be:

  • free and/or reduced-fee banking services;
  • elimination of a trip to the bank;
  • automatic deposit of funds when the employee is away from home;
  • elimination of “holds” on out-of-state checks;
  • elimination of lost or stolen checks;
  • minimization of delays due to delivery services outside company control; and
  • ability to deposit into multiple accounts.

Education can be creative, and doesn't have to be difficult. Payroll could conduct an analysis of where employees are cashing their checks and show them how much they could save by not having to pay fees to a check-cashing business. Another possibility is inviting a bank to conduct money management classes, including the advantages of direct deposit.

Provide opportunity to enroll. The most effective way to encourage enrollment is to include an enrollment form in with the employee's paycheck. A simple form with a way to return the information in a secure way may be all the employee needs to encourage them to enroll.


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