by Worksite Wellness on July 30, 2010
Variable compensation may be a great way to satisfy demand for higher pay while addressing upper management’s need to increase productivity and keep base salaries under control.
But there are some major pitfalls. Here are two proven ways to avoid the most common legal and return on investment risks.
Non-exempt employees
Beware if you use variable comp as a pay-for-performance strategy for hourly employees. Reason – It’s easy to inadvertently run afoul of the Fair Labor Standards Act (FLSA) overtime rules.
Under FLSA, you must recalculate employees’ hourly wages to include all variable pay (like individual or departmental bonuses) when figuring overtime compensation.
Failure to do so could cost your organization more in penalties and back-wage payments than the variable comp plan saved on the front end.
So it’s a good idea to double-check with Payroll to make certain the department knows to make OT adjustments after hourly staff members receive bonuses.
Reward the right things
In order to make the criteria for bonuses easier for employees to understand and management to measure, many firms prefer using strictly objective measurements. Example – the plan may pay out based on how much money employees save their department in a year.
But what happens if staff members cut corners – on safety, service, quality, etc. – to reach the goal?
At some firms, employees are still rewarded with additional pay, even though their actions potentially did more harm than good to the bottom line. for best results –
• set behavioral criteria for bonuses in addition to economic ones, and
• consider using a mix of firm-wide, departmental and individual economic performance measures.
by Worksite Wellness on July 29, 2010
Shopping for health plans through a broker is a fact of life for the vast majority of companies. But how well is your broker meeting your needs?
And how can you work together better to minimize costs while getting maximum bang for your organization’s benefits buck?
What’s New in Benefits and Compensation conducted an exclusive survey of 195 subscribers to find out how they view their company’s relationship with their brokers. Here’s what they said –
Half see room for improvement
The good news – Almost half of your peers rate their relationship with their current broker as “excellent.” But that means the other half see some room for improvement.
Thirty-nine% of respondents rated their broker relationship as satisfactory and said they were at least “reasonably happy.” the remaining 11% noted “unpleasant surprises” while 4% are actively considering a switch.
Tools for making buying decisions
Of course, the No. 1 reason any organization works through a broker is to find the best deals on health benefits. But many of your peers pointed to a few areas where their brokers could help make their lives a little easier.
First and foremost, your coworkers say they’d love for their brokers to provide user-friendly – but thorough – return on investment data they can use to benchmark different plans.
It’s worth discussing with your broker how much arm-twisting the broker can do with medical plan carriers to get key data in your hands. Two specific areas of data benefits pros say they’d like help from brokers –
• obtaining and sharing claims cost data to compare to premiums, and
• benchmarking your average plan costs against those of similar-sized firms in the region.
Regretfully, claims cost data is often hard to pry loose from insurers, at least for smaller employers’ plans.
Reason – Without this data, it’s tougher to judge when your premium rate adjustment at renewal time is fair. Fewer than half of respondents (46.3%) say they’ve ever discussed such information with their brokers.
Obtaining benchmarking data on similar-sized plans helps you see how comparably your costs and plan designs stack up in your area. Roughly 43 percent of respondents say they’re armed with at least some of this info when it comes time to decide whether to stay with the existing plan.
Earlier renewals
It’s worth talking with your broker about ways to push for the earliest possible renewals – and strategies for making sure your carrier doesn’t hit you with any unpleasant surprises.
One notorious game insurance corporations play with companys’ plans is to wait until the last moment to reveal the new premiums at renewal. That way, there’s less time for negotiation – or to shop around with the insurer’s competitors.
About 28 percent of respondents report getting their renewals about 30 days before the rate kicks in. Different brokers use different benchmarks for securing renewals. A minority of respondents (19.5%) have seen them as early as 90 days ahead.
Taking work off HR/Benefits’ plate
The benefits brokerage marketplace is highly competitive. Some brokers attempt to set themselves apart by offering patrons so-called value-added services.
Among your coworkers, the most well-liked services are those which relieve the company’s HR/ benefits manager of time-consuming tasks. Some examples –
• assessing plan documents
• auditing (and, when needed, reconciling) carrier bills for errors
• monitoring plans for compliance (HIPAA, COBRA, etc.)
• offering tech support for a benefits intranet and/or staff member self-service software, and/or
• helping with worker education.
