Michael F. Maciekowich presented on retaining and motivating long term employees without increasing pay. He discussed understanding the wants and needs of long term employees, such as recognition, wellness benefits, and career development opportunities. He also covered the dilemma of pay range maximums and potential alternative reward programs including flexible work arrangements, phased retirement, and transitioning to part-time work. Finally, he reviewed sample programs such as flexible work schedules, job sharing, teleworking, and training opportunities that can appeal to older workers.
Retaining Long Term Employees Without Increasing Pay
1. When the Money
Runs Out:
Retaining and Motivating
Long Term Employees
Without Increasing Pay
Guest Presenter:
Michael F. Maciekowich
National Director
Astron Solutions
TalentTakeaways
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✓ Resource Library
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The Sponsor
Talent Takeaways Series
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4. AGENDAWebinar Info
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✓ We are informal (and fun)
✓ Ask Questions!
✓ Q&A Session at end
✓ HRCI & SHRM Credits
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5. AGENDAAbout the Presenter
Talent Takeaways Series
Michael F. Maciekowich is a National Director for Astron
Solutions. His areas of expertise include the
development, design, and implementation of executive,
physician, & employee base pay systems; short- and
long-term incentive programs; sales incentive programs;
and performance management systems in all industries.
Michael has 39 years of compensation experience.
Michael is an active member of WorldatWork and the
Society for Human Resource Management. Michael
received a lifetime achievement award from
WorldatWork. Michael received bachelor’s degrees in
political science and philosophy, and a master’s degree
in industrial relations, from the Loyola University of
Chicago.
6. Learning Objectives
• Understanding the Wants and Needs of Long Term
Service Employees
• The Dilemma of "Maximums" in Salary Structures
• Alternative Reward Design Process
• Review of Sample Programs
7. Total Rewards “Tools”
External Position
Equity
Internal Position
Equity
Employee Pay and
Recognition Equity
Total “Non-Cash”
Compensation –
Benefits/ Retirement
Ability to Fund all
Aspects of the
Program
• Competitiveness in
terms of Geography.
• Competitiveness in
terms of industry.
• Level of
competitiveness by
organization and
position.
•Recruitment and
Retention Trends.
• Determine
organizational value
of positions
regardless of market
value.
•Determine value of
positions not matched
to the market.
•Determine the
differences among
“families” of jobs.
• Determine
internal pay
levels of
employees based
on seniority,
performance, or
other methods.
• Determine
appropriate
methods to
recognize
employee
performance and
contributions.
• Understanding
the impact of
“Generations” in
compensation
decisions.
• Addressing the
rising cost of
insurance in plan
design.
• The need to have
more employee cost
sharing.
•Understanding
pressures from
organized labor.
•The need for
flexibility in
addressing
“generational”
differences in both
benefit and pension
design.
•Impact of fluctuating
stock market on
pension design
strategies.
•Funding all aspects
of the program
understanding the
impact of current
industry trends.
•Determining the
“ROI” of all programs
to demonstrate the
impact on effective
recruitment and
retention of staff
required for the
organization to
succeed.
•Proactively
developing strategies
that reduce cost
impacts while
remaining effective.
8. Decentralization of Total
Rewards
• By Generation
• By Profession
• By Market
• By Strategic Contribution
• Implications for the HR Professional and
Employee Morale
9. Focus of Discussion
• VETERANS (born between 1909 and 1945)
▪ Sense of accomplishment
▪ Strong sense of self
▪ Motivated by pride in knowing what they can accomplish
▪ Act to take charge, make decisions, & delegate responsibility
▪ Operate in a command-and-control decision-making system
• Translates as “having all the answers”
• BOOMERS (born between 1945 and 1965)
▪ Involved because it is the right thing to do
• One should give back to their community
▪ Strong sense of hope
▪ Value tradition, teamwork, and loyalty
▪ Have volunteer time, as many stayed home to raise families
12. What is Our Understanding
• How important are these employees to
our organization?
• What do these employees want?
13. SHRM – HR Attitudes Towards
Older Workers
• Advantages:
– More willing to work different schedules (72%)
– Serve as mentors (72%)
– Invaluable experience (72%)
– Stronger work ethic (69%)
– More reliable (68%)
– Add diversity of thought (61%)
– More loyal (58%)
– Take work more seriously (58%)
– Have established networks (51%)
• Disadvantages:
– Don’t keep up with technology (53%)
– Cause expenses to rise (36%)
– Less flexible (28%)
14. Astron Solutions’ Focus Group
Research Findings:
Most Desired Elements
Time Wellness
Benefit Cost
Longevity
Recognition
Options
15. • Pension plan changes
• Use of pay range maximums / caps
• Lack of information sharing about the organization and its finances
• Lack of senior team visibility
• Lack of HR visibility
• Pay compression with new staff
• Health insurance co-pay adjustment
• Lack of strong supervision – not responsive to employees
• Unfriendly senior management team
• Stress from turnover and staffing issues
• No pay recognition of performance and effort
• Strong messages that long term employees are not valued
• No career advancement opportunity
• Pressure not to apply for other jobs if you are needed in the unit
• No staff involvement in changes that impact them. Left in the dark
about changes until the last minute.
Astron Solutions’ Focus Group
Research Findings:
Most Common Weaknesses
17. What is Our Understanding
Group Discussion:
• Do we utilize formal pay ranges with a
range maximum?
• If so, how do we deal with employees
who are at or above the maximum of
the pay range?
18. Typical Compensation Policy
Employees whose salaries reach the maximum of their salary ranges and whose performance is
satisfactory or better may be eligible to receive range maximum lump sum payments in lieu of
increases to their base salaries.
These payments are not part of the employee's base salary. However, employee and employer
retirement contributions are calculated on both the employee’s salary and range maximum
payments; this is the only employee benefit impacted by range maximum payments. Lump sum
payments are not to be compounded from year to year. The first payment is processed on or
around the employee's review date and the second payment is processed 6 months later.
An example of how to calculate a range maximum lump sum payment is shown below:
Example:
Employee's Pay Rate: $10.25 per hour
Maximum of Range: $10.50 per hour
Salary Increase %: 4.0%
$10.25 (employee's current pay rate) x 1.04 (salary increase percentage) = $10.66
$10.66 - $10.50 (range maximum) = $ .16
$ .16 x 2080 hours (for a full-time employee) = $332.80
$332.80 / 2 = $116.40 (amount of each lump sum payment to be processed)
In the example above, the employee's pay rate should be brought to the range maximum of
$10.50 and the employee should receive a payment in the amount of $116.40. Six months
later, the employee should receive the second $116.40 lump sum payment.
19. 3 Key Issues
Legal considerations (FLSA)
Maximum job value real?
Cost savings?
20. Poll Question #1
Does your company “cap” or “freeze” base
pay at the maximum of the pay range?
21. Overview of Federal Legislation
Impacting Compensation
Key Federal
Legislation
FLSA
Equal Pay
Act
Equal Pay Between
Sexes for Equal
Work
Title VII
Civil Rights Act
Apply Equal Pay
Provisions
Among Protected
Classes
Race, Religion
National Origin
Age Act
Apply Equal Pay
Provisions
To Over 40 – 70
Years Old
Americans With
Disabilities Act
APPLY Provisions
of
Equal Pay Act to
Disabled Americans
Lilly Ledbetter Pay
Equity Act
22. FLSA and the Regular Rate of Pay
Section 7(e) of the Act requires the inclusion in the regular rate of
all remuneration for employment except seven specified types of
payments.
Among these excludable payments are:
discretionary bonuses, gifts and payments in the nature of gifts
on special occasions, contributions by the employer to certain
welfare plans and payments made by the employer pursuant to
certain profit-sharing, thrift and savings plans.
Bonuses which do not qualify for exclusion from the regular rate as
one of these types must be totaled in with other earnings to
determine the regular rate on which overtime pay must be based.
Bonus payments are payments made in addition to the regular
earnings of an employee.
24. What is Our Understanding
• How do we currently recognize long
term service in our organization?
• Are special pay / benefit / time off
programs in place?
• If so, how successful have they been?
25. Step by Step Alternative Rewards
Design Process
• Audit Current Recognition
Programs & Meet with Senior
Management
• Review Potential Alternatives
Available to Current Systems
• Form a Recognition Program
Development Committee
• Identify a Program Purpose
• Define Award Themes &
Selection Criteria
• Determine Award Eligibility &
Award Frequency
• Select Types of Awards &
Publicity
• Establishing and Monitoring
the Program
26. Poll Question #2
Has your company established “alternative reward
programs” for employees with long tenure?
29. Flexible Work Arrangements
Flexible work arrangements may appeal to older adults who no longer wish to
work traditional full-time schedules, either because of additional personal
obligations (such as the need to care for aging parents or spouses or to help
with grandchildren), worsening health, declining physical energy or stamina,
or a preference to sacrifice some income for more control over their time
without giving up paid employment entirely. Flexible work arrangements
include the following:
• part-time employment;
• flexible work schedules, including flextime (which grants employees some
control over the timing of the workday) and compressed work schedules
(which allow employees to work longer days but shorter weeks);
• job sharing;
• changing jobs within the company, which can facilitate shifts to part-time
work and offer new opportunities to older employees seeking new challenges;
• telework arrangements, which enable employees to work from home or
teleworking centers closer to home than their normal workplace.
30. Phased Retirement Options
• Many workers prefer to phase into retirement gradually with their current
employers instead of changing employers or moving directly from full-time
work to full retirement. But traditional defined benefit (DB) plans inhibit
these arrangements. Many older employees cannot afford to reduce their
work hours unless they can draw on their retirement benefits, but federal
law restricts employers’ ability to pay benefits from DB plans to workers
who remain on their payrolls.
• However, the movement by many private employers from traditional DB
plans to defined contribution retirement plans and hybrid plans (such as
cash balance plans) that do not discourage work past the traditional
retirement age should make phased retirement options easier to
implement.
• Some employers are also pursuing other strategies to accommodate their
workers’ interest in phased retirement, such as allowing employees to
continue working without losing traditional pension benefits, creating
formal plans to move older employees to part-time work, rehiring retired
employees as part-time workers, and using former employees as
contractors.
31. Transition to Part-Time
Employment for Older Workers
Before enactment of the Pension Protection Act of 2006 (PPA), IRS
regulations did not allow firms to pay retirement benefits from DB plans
before termination of employment, except in a limited way. PPA allows
payment of benefits to in-service workers who are age 62 or older, although
new regulations under PPA are still pending.
Even before this change, some firms have been able to institute programs that
allow older workers to reduce their hours gradually while still receiving some
pension and health benefits. Other employers are able to meet regulatory
requirements and pay retirement benefits to older workers by terminating the
employees and rehiring them part time.
The law is unclear about what constitutes termination of employment, but it
would seem that some time would need to elapse between terminating and
rehiring before the former employee could be considered a new hire.
32. Hiring Former Employees as
Independent Contractors
As an alternative to paying pension benefits to active employees, the
firm could terminate employment and then rehire the former
employee as a consultant or independent contractor.
Independent contractors do not receive employee benefits, but they
can receive full retirement benefits while working for their previous
employer.
Although there are no restrictions on paying pension benefits to
former employees who are independent contractors, issues arise in
determining whether the provider of labor services is really an
independent contractor.
33. Training Opportunities for Older
Workers
Publicly funded training programs have been serving older workers
for decades. Although previous legislation authorized special funding
blocks for older workers, many states have consolidated these funds
into a single funding stream for all adults in an effort to provide
universal access to these services.
This legislation does, however, allow states and local areas to give
priority to special populations, such as older workers, when allocating
training funds.
Community colleges are leading efforts to develop job training
opportunities for older workers. Such colleges are recruiting workers
age 45 and older, creating educational and vocational training
programs tailored to older peoples’ learning styles, and offering
student advisor and supportive services for older students.
34. Outlook for Older Workers
The key issue for future employment prospects is how the business
community will respond to the increased availability of older workers.
Relatively few employers have actively begun to recruit older workers,
primarily because they do not yet foresee worker shortages.
The industries that have most vigorously recruited older workers, such as
health care and energy, already face imminent labor shortages. As the
population ages and worker shortages develop, more employers may adapt
workplace polices to appeal to older people.
However, some observers who believe that globalization will enable people
working overseas to meet the U.S. economy’s employment needs dispute
claims that labor shortages are inevitable and that the demand for older
workers will soar.
37. When the Money Runs Out: Retaining and
Motivating Long Term Employees Without
Increasing Pay
Presented by:
Michael F. Maciekowich
National Directors
Astron Solutions, LLC
www.astronsolutions.com
800-520-3889