DOL proposes new rule clarifying, updating regular rate of pay
The Department of Labor (DOL) recently released a proposal that defines and updates what forms of payment employers can include and exclude in the time-and-one-half calculation when determining overtime rates. Read this blog post to learn more.
For the first time in 50 years, the Department of Labor has proposed changing the definition of the regular rate of pay.
The proposal, announced Thursday, “defines and updates” what forms of payment employers include and exclude in the time-and-one-half calculation when determining workers’ overtime rates, according to the DOL.
The regulations the DOL is proposing to revise govern how employers must calculate the regular rate and overtime pay rate, including the types of compensation that must be included and may be excluded from the overtime pay calculation, says Tammy McCutchen, a principal at Littler Mendelson and former administrator of the Department of Labor’s Wage and Hour Division.
The regular rate of pay is not just an employee’s hourly rate, she says, but rather includes “all remuneration for employment” — unless specifically excluded by section 7(e) of the FLSA.
Under current rules, employers are discouraged from offering more perks to their employees as it may be unclear whether those perks must be included in the calculation of an employees’ regular rate of pay, the DOL says. The proposed rule focuses primarily on clarifying whether certain kinds of perks, benefits or other miscellaneous items must be included in the regular rate.
The DOL proposes that employers may exclude the following from an employee’s regular rate of pay:
- The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes and employee discounts on retail goods and services;
- Payments for unused paid leave, including paid sick leave;
- Reimbursed expenses, even if not incurred solely for the employer’s benefit;
- Reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
- Discretionary bonuses;
- Benefit plans, including accident, unemployment, and legal services; and
- Tuition programs, such as reimbursement programs or repayment of educational debt.
The proposed rule also includes additional clarification about other forms of compensation, including payment for meal periods and call back pay.
The regulations will benefit employees, primarily, ensuring that employers can continue to provide benefits that employees’ value — tuition reimbursements, student loan repayment, employee discounts, payout of unused paid leave and gym memberships, McCutchen says.
“Remember, there is no law that employers must provide employees these types of benefits,” she adds. “Employers will not provide such benefits if doing so creates risk of massive overtime liability.”
Knowing when employers must pay overtime on these types of benefits, how to calculate the value of those benefits and overtime pay are all difficult questions, she adds. “Unintentional mistakes by good faith employers providing valued benefits to employees is easy. With this proposed rule, the DOL is embracing the philosophy that good deeds should not be punished.”
She notes the proposal does not include any specific examples of what reimbursements may be excluded from the regular rate.
“One big open question is whether employers must pay overtime when they provide employees with subsidies to take public transportation to work — as the federal government does for many of its own employees — I think around $260 per month in the DC Metro area,” she adds.
The DOL earlier this month proposed to increase the salary threshold for overtime eligibility to $35,308 up from the current $23,660. If finalized, the rule would expand overtime eligibility to more than a million additional U.S. workers, far fewer than an Obama administration rule that was struck down by a federal judge in 2017.
Employers are expected to challenge the new rule as well, based on similar complaints of administrative burdens, but a legal challenge might be more difficult to pass this time around.
SOURCE: Otto, N. (28 March 2019) "DOL proposes new rule clarifying, updating regular rate of pay" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/dol-proposes-new-rule-on-regular-rate-of-pay-calculation?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
A guide to managing employee website usage
With remote workers, employers need to be mindful of the types of websites their employees are accessing on company-issued technology. Continue reading for key considerations and best practices to review when properly managing employee website usage.
Whether employees are working from home, the coffee shop or the office, employers need to be mindful of the types of websites workers are accessing on their company-issued technology.
New accessibility creates greater flexibility, but employers need to be vigilant to ensure workers maintain the expectation of productivity and workplace privacy. Now more than ever, the workplace heavily relies on technology and companies must understand how to manage it to avoid risk.
Nowhere is the tension between technology and privacy rights more prevalent than in today’s workplace. At the forefront of this discussion is whether employers should block access to certain websites on company-issued technology. Here are key considerations and best practices to review when properly managing employee website usage.
Creating boundaries between work and personal affairs, without invading privacy. Employees typically emphasize that their private affairs should not be accessed by their employer. But the federal Electronic Communications Privacy Act (ECPA) states an employer-provided computer system is the property of the employer, so when an employee visits certain websites during typical office hours using company-issued technology, what is accessed by the employee becomes the employer’s business as well.
There is no denying that placing blocks on certain websites is an effective way to separate work and personal matters, maintain professionalism, protect the company’s security, respect company property and utilize work time appropriately. However, employers should beware of potential legality issues regarding privacy. For example, employees are given some protection from computer and other forms of electronic monitoring under certain circumstances.
Productivity distractions. Blocking certain websites will not prevent an employee from utilizing company time for personal reasons, but doing so reminds employees to have integrity, focus and discipline when it comes to using technology in the workplace. Some employees will use company-issued technology to visit a plethora of websites such as social media platforms, personal email accounts, instant messengers, financial institutions, sports, entertainment and music sites, as well as inappropriate websites. It is easy to become distracted with an overabundance of virtual activity at our fingertips, and blocking sites sends a serious message to workers that business technology and time is for business-purposes only.
Security of confidential company data and information. In today’s interconnected world, employers recognize the importance of protecting confidential company information. Employers often choose to block certain websites because of the risk of a security breach. Employers are concerned with the exposure of any release of its data, work products, ideas and information not otherwise disclosed to the public or its competitors. Blocking certain websites gives an organization an opportunity to decrease the risk of its confidential information being accessed by external influences.
What employers can do to be more transparent with staff
There are no foolproof methods to preventing an employee from using their work time for personal reasons or inadvertently exposing the company to security breaches.
Employees can still access many websites of their choosing through their personal technology. However, the aforementioned reasons are convincing enough for employees to take more accountability in using company-issued technology for business purposes only. An employer that endorses a policy and practice of business technology for business reasons sets a clear expectation for employees to remember and follow.
- Enforce a written policy that sets clear expectations for in-house and remote employees about not using company-issued technology to visit certain websites and explain the reason for such policies. Policies and procedures should be well-defined, widely communicated and reviewed at least annually.
- Inform new employees that certain websites are not accessible via company technology. Highlight the written policy for both new and existing employees. Again, explain the reason for this policy.
- Offer training and other educational opportunities that motivate productivity during times when work focus suffers.
- Work with the company’s internal IT department to ensure that websites are properly blocked.
Usually, when employers remain transparent with staff regarding why a policy exists, employees are more receptive. In general, employers are encouraged to consult with an experienced HR professional or employment lawyer to avoid any potential legality pitfalls in the workplace.
SOURCE: Banks, S. (11 March 2019) "A guide to managing employee website usage" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/a-guide-to-managing-employee-website-usage?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
Do paycheck advance apps improve financial health?
Do you allow your employees access to draw money from their paycheck before payday? Many apps now let workers have early access to their money. Read this blog post to find out more about paycheck advance apps and how these may improve financial health.
Fintechs that let workers draw money from their paycheck before payday through an app are having a moment.
Such apps, including Even.com, PayActiv, EarnIn, DailyPay and FlexWage, are designed for consumers who live paycheck to paycheck — roughly 78% of the U.S. workforce according to one study.
More than 300,000 Walmart employees, for example, use this feature, called Instapay, provided by Even and PayActiv. PayActiv, which is available to 2 million people, announced a deal with Visa on Thursday that will let people put their pay advances on a feeless prepaid Visa card.
Earnin, which lets consumers retrieve up to $100 a day from upcoming paychecks, received $125 million in Series C funding from DST Global, Andreessen Horowitz, Spark Capital, Matrix Partners, March Capital Partners, Coatue Management and Ribbit Capital in December. The Earnin app has been downloaded more than a million times.
In theory, such apps are useful to those who run into timing problems due to large bills, like mortgage and rent, which come due a few days before their paycheck clears. Getting a payday advance from an employer through an app can be less expensive and less problematic than taking out a payday loan or paying overdraft fees.
But do these programs lead to financial health? Or are they a temporary Band-Aid or worse, something on which cash-strapped people can become overdependent?
Volatile incomes, gig economy jobs
One thing is clear — many working poor are living paycheck to paycheck. Pay levels have not kept up with the cost of living, even adjusted for government subsidy programs, said Todd Baker, senior fellow at the Richman Center for Business, Law and Public Policy at Columbia University.
“That’s particularly evident when you think of things like home prices and rental costs. A large portion of the population is living on the edge financially,” he said. “You see it in folks making $40,000 a year, teachers and others who are living in a world where they can’t handle any significant bump in their financial life."
A bump might be an unexpected expense like medical treatment or a change in income level, for instance by companies shifting to a bonus program. And about 75 million Americans work hourly, with unstable pay.
“Over the last several decades, we’ve changed the equation for many workers,” said John Thompson, chief program officer at the Center for Financial Services Innovation. “It’s harder to have predictable scheduling or even income flow from your job or jobs. But we haven’t changed the way we pay, nor have we changed the way bills are paid. Those are still due every month on a certain date. This income volatility problem that many people experience hasn’t been offset by giving the employee control of when they do have access to these funds.”
Where on-demand pay comes in
Safwan Shah, PayActiv's CEO, says he has been working on the problems for consumers like this for 11 years. The way he sees it, there are three possible ways to help: by paying these workers more, by changing their taxes, or by changing the timing of when they’re paid.
The first two seem out of reach. “I can’t give more money to people; that’s not what a Fintech guy does,” Shah said. “I can’t invent money. And I can’t change the tax laws.”
But he felt he could change the timing of pay.
“I can go to employers and say, your employees are living paycheck to paycheck,” Shah said. “They’re bringing that stress to work every day. And you are suffering too, because they are distracted — a Mercer study shows employers lose 15 hours a month in work from these distracted employees.”
Shah persuades employers to let their employees access a portion of the wages they have already earned. His early wins were at companies whose employees frequently request paycheck advances, which generates a lot of paperwork. Employees can access no more than 50% of what they have already earned — a worker who has earned $300 so far in a month could at most get $150.
Employees pay $5 for each two-week period in which they use PayActiv. (About 25% of the time, the employer pays this fee, Shah said.)
PayActiv also gives users unlimited free bill pay and use of a Visa prepaid card. In July, PayActiv became part of the ADP marketplace, so companies that use ADP can use its service.
PayActiv's largest employer is Walmart, which started offering it via the Even app in December 2017. In October, Walmart began allowing employees to pick up cash through the app in Walmart stores, so users who were unbanked could avoid ATM fees.
Shah said the service helps employers reduce employee turnover, improve retention and recruit employees who prefer real-time pay. He also has a guilt pitch.
“I was first in the market to this, in 2013,” Shah said. “People looked at me and said, ‘What? I’m not going to pay my employees in advance. Let them go to a payday lender.’ Then I’d show them pictures of their offices surrounded by payday loan shops. I’d say, ‘They’re here because of you.’ ”
Does early access to wages lead to financial health?
When Todd Baker was a Harvard University fellow last year, he studied the financial impact of PayActiv’s earned wage access program. He compared PayActiv’s $5 fee to payday loans and bank overdraft fees.
Baker found that a $200 salary advance from PayActiv is 16.7% of the cost of a payday loan. Payday lenders typically charge $15 per $100 borrowed, so $30 for a two-week, $200 loan. If the borrower can’t pay back the amount borrowed in two weeks, the loan gets rolled over at the original amount plus the 15% interest, so the loan amount gets compounded over time.
With PayActiv, "there is always a full repayment and then a delay before there is enough income in the employee’s payroll account for another advance," Baker said. "It never rolls over.”
Baker also calculated that the PayActiv fee was only 14.3%, or one-seventh, of the typical $35 overdraft fee banks charge.
So for people who are struggling to manage the costs of short-term timing problems and unexpected expenses, Fintech tools like PayActiv’s are a lot cheaper than alternatives, Baker said.
“Does it create extra income? No. What it does is help you with timing issues,” he said.
Aaron Klein, a fellow at the Brookings Institution, said workers should have access to money they’ve already earned, whether that’s through real-time payments or through apps that provide pay advances.
“I also am on board with the idea that by saving your $35 overdraft and saving your payday loan rate, you’ll be better off,” Klein said.
But he’s not willing to say these tools solve the problems of low-income people.
“If the core problem is I used to make $35,000 a year, now I make $30,000, and because of that shock I’m going to end up accruing $600 of payday loan and overdraft fees, eliminating that $600 makes you a lot better off,” Klein said. “But it doesn’t negate the overall income shock.”
Thompson at CFSI says it’s too soon to tell whether earned wage access brings about financial well-being.
“We’re just beginning to explore the potential for these tools,” he said. “Right now they feel very promising. They could give people the ability to act quickly in an emergency and have access to and use funds in lieu of a payday loan or some other high-cost credit or consequence they would rather avoid, like an overdraft fee.”
What could go wrong
Thompson also sees a potential downside to giving employees payday advances.
“The every-other-week paycheck is one of the few normal structures we have for people around planning, budgeting and managing their money,” he said.
Without that structure, which is a form of savings, “we’re going to have to work hard to make sure we don’t just turn people loose on their own with even less structure or guidance or advice on their financial life.”
Another common concern about payday advance tools is that if you give people access to their money ahead of time, they’ll just spend it, and then when their paycheck arrives, they will come up short.
But Klein, for one, doesn’t see this as an issue.
“I trust people more to manage their money,” he said. “The people who work paycheck to paycheck spend more time budgeting and planning than the wealthy, because it’s a necessity.”
A related fear is that people could become addicted to payday advance tools, and dig themselves into a deeper hole.
Jon Schlossberg, CEO of Even.com, somewhat surprisingly acknowledges this could happen.
“Getting access to your pay on demand is a tool you can use the right way or the wrong way,” he said. “If you offer only on-demand pay, that could cause the problem to get worse, because getting access to that money all the time triggers dopamine; it makes you want to do it more and more. If you are struggling with a very low margin and you’re constantly up against it, getting more money all the time accelerates that problem."
Quantitative and qualitative analyses have borne this out, he said.
Even has granted users $700 million worth of Instapays; they typically use Instapay 1.4 times a month. Schlossberg doesn't see high use of the feature as success.
“You shouldn’t need to be using Instapay,” he said. “You should be becoming financially stable so you don’t have to.”
Baker said addiction to payday advances isn't a danger because they don't roll over the way payday loans do. With a salary advance, “It’s conceivable you could get $200 behind permanently, but it’s not a growing obligation and it’s not damaging,” he said.
Shah at PayActiv said users tend to withdraw less than they're allowed to — about 75%.
“When it comes to usage of their own salary, instead of asking for more, people behaviorally ask for less,” he said.
They see PayActiv more as a headache reliever like Tylenol, rather than an addictive candy or drug, Shah said.
Pay advances are just one of many tools that can help the working poor. They also need help understanding their finances and saving for goals like an emergency fund and retirement.
“This conversation about on-demand pay is a double-edged sword because people are paying attention to it now, which is good, but they’re viewing it as this magic tool to solve all problems,” Schlossberg said. “It isn’t that. It is a piece of the puzzle that solves a liquidity problem. But it is by no means going to help people turn their financial lives around.”
SOURCE: Crosman, P. (14 March 2019) "Do paycheck advance apps improve financial health?" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/do-paycheck-advance-apps-improve-financial-health?brief=00000152-146e-d1cc-a5fa-7cff8fee0000
Editor at Large Penny Crosman welcomes feedback at penny.crosman@sourcemedia.com.
Goodbye, suits and ties. Hello, sneakers
As the workplace evolves, one thing many managers have in common is that they are throwing out their traditional business dress code. Continue reading this blog post from Employee Benefit News to learn more.
Casual Friday? Try casual Monday through Friday.
As the modern U.S. workplace evolves, one thing many office managers have in common is that they are throwing the traditional business dress code out the window.
About 88% of employers today offer some type of casual dress benefit, up from 81% five years ago, according to the 2018 employee benefits survey from the Society for Human Resource Management.
The most recent company to join the ranks of the suit-and-tie-less workplace is banking giant Goldman Sachs. The decision — once believed unthinkable for such a straight-laced organization — comes as the company looks to keep up with “changing nature of workplaces,” according to a Goldman memo last week.
“Casual dress attire at work is just one of the many ways employers are trying to retain and attract top talent in this competitive job market,” says Amelia Green-Vamos, an employer trends analyst with Glassdoor. “The unemployment rate is at a historic low, and casual dress attire is an inexpensive perk creating a more approachable and comfortable culture for new and existing employees.”
All employers want to attract the best possible talent and in today’s job market that talent is younger. Indeed, more than 75% of Goldman Sachs’ employees are members of the millennial or Gen Z generations. When it comes to hiring younger talent the more traditional companies — such as big banks — are competing against tech giants and hedge funds that are offering a different kind of workplace.
Facebook, for example, has had a relaxed dress code since the beginning. “We don’t want our people to have a work self and a personal self,” says Facebook spokesman Kyle Gerstenschlager. “That aspect of our culture extends to our lack of a formal dress code.”
Google is another company with a simple dress policy. “You must wear clothes,” was the response Susan Wojcicki — current CEO of YouTube — gave in a 2007 interview with Bay area media outlet The Mercury News. She was VP of ad services at Google at the time.
But, it’s not just the Silicon Valley tech companies that have embraced a more laid back attire policy. When Mary Barra — current CEO of General Motors — was vice president of global human resources at the automaker, she set out to replace the company’s 10-page dress code exposition with two words: “Dress appropriately.”
It’s a simple idea, but Barra was perplexed when she received pushback from HR and one of her senior-level directors, she explained at the 2018 Wharton People Analytics Conference. But this actually led to what Barra called an “ah-ha” moment, giving her better insight into the company and teaching her a lesson about making sure managers feel empowered.
Office culture has been evolving for decades, with offices with sleep pods and ping-pong tables now commonplace. But it’s practicality rather than entitlement that is leading offices to adapt their dress codes.
“I have a hard time imagining a position where wearing a tie could be considered an essential part of the job’s responsibilities,” says SHRM member Mark Marsen, director of human resources at Allies for Health + Wellbeing. “Even using arguments that it contributes to or enhances corporate image, client perceptions, or establishing a form of respect. What matters at the end of all, for everyone concerned, is that a successful service was rendered.”
SOURCE: Shiavo, A. (12 March 2019) "Goodbye, suits and ties. Hello, sneakers" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/goldman-sachs-embraces-casual-dress
Pay transparency: A new tool to boost employee engagement
Some companies require new hires to sign an agreement promising not to disclose their pay to co-workers. Continue reading this blog post to learn more about pay transparency.
For many companies, discussing salaries has always been taboo. Some firms even required new hires to sign an agreement swearing they wouldn’t disclose their pay to co-workers.
This “loose lips sink ships” approach is largely illegal, of course: Employees are generally free to talk about pay rates as part of their rights under the National Labor Relations Act.
Nonetheless, for years, companies held salary information very close to the vest.
But times are changing. Many firms have now gone to a policy of transparency in matters of compensation.
2 separate approaches
Stephanie Thomas, program director of the Institute for Compensation Studies at Cornell University, writes that pay transparency comes in two flavors: salary disclosure and pay process transparency.
1. Salary disclosure: In this approach, the company distributes a spreadsheet listing employees, their titles and their salaries.
This approach can be tricky. There are always going to be cases where an employee asks, “Why is Stephanie paid more than me? We have the same title and the same duties.”
Whole Foods explains the rationale for adopting its policy in a statement on its website:
“Salary information for all –including the company’s leadership – is available to all inquiring team members. Wage transparency helps promote inclusiveness and ensures our compensation system is fair.”
2. Pay process transparency: The second approach explores how compensation decisions are made, and explains to individuals why they’re making what they are and what they need to do to earn more.
This involves having detailed discussions with employees, either individually or in a group, about the overall compensation plan – salary ranges and midpoints, goals and objectives that need to be met, performance metrics, etc. Most companies prefer this approach because it focuses the conversation away from rankings of employees toward individual performance.
Both approaches signal a new trend in employee engagement – helping workers understand the inner workings of their organizations.
SOURCE: Mucha, R. (15 February 2019) "Pay transparency: A new tool to boost employee engagement" (Web Blog Post). Retrieved from https://www.hrmorning.com/pay-transparency-a-new-tool-to-boost-employee-engagement/
Dispelling the stigma around mental health disorders in the workplace
Forty million adults in the U.S. are affected by anxiety disorders each year, according to the Anxiety and Depression Association of America. Continue reading to learn more about the stigma associated with mental health disorders in the workplace.
It’s no secret that poor mental health impacts employee performance. Anxiety disorders, for example, affect 40 million adults in the U.S. each year, and nearly six in 10 American workers report that anxiety impacts their workplace performance, according to the Anxiety and Depression Association of America.
But because of the stigma often associated with mental health disorders, employees might not be using the benefits and programs clients have in place to help address the problem. That’s why just having programs in place isn’t enough, experts say. Instead, employers need to help remove the stigma of mental health conditions by creating a culture of inclusiveness in the workplace and forming employee resource groups.
Employers including Johnson & Johnson, Trulia and Verizon Media are doing just that, company executives said during a webinar last week hosted by the National Alliance of Healthcare Purchaser Coalitions.
When Margaux Joffe, associate director of accessibility and inclusion at Verizon Media, started working on a proposal to form a mental health-focused employee resource group (ERG), dispelling stigma and empowering workers was one of her first priorities.
“We wanted to create a paradigm shift,” she said, speaking as part of the webinar. “Growing up, you’re taught to think you’re ‘normal or not normal;’ you’re mentally ill or you’re not. We started with the idea there is no such thing as a ‘normal brain’ as we’re increasingly understanding neurodiversity in the human race.”
A lot of people with mental health issues don’t necessarily identify with the word disability, added Meredith Arthur, content marketing manager at Trulia.
“We struggled around removing the word disability because there was a desire to face the stigma and take it on,” she said of Trulia’s ERG. “Ultimately, we wanted to reach as many people as we could. We wanted to be sharper in our focus on mental health.”
Trulia expanded its ERG statement of purpose from just focusing on mental health education and awareness to advocating for the needs of different abilities.
Joffe said putting in place an ERG for mental health at Verizon was done with the support of senior leadership. “We’ve been lucky to get a lot of support from the company for ERG,” she said. “A common challenge that exists across the board is lack of organization readiness.”
Readiness is a huge component of success in mental health programs, added Kelly Greenwood, founder and CEO of Mind Share, a nonprofit organization addressing the culture of workplace mental health.
“It is so important to achieve true culture change,” she said. “Oftentimes we work with leadership first and do workshops for executive teams before rolling them out to the company to really get that buy-in and understanding from the top down to build a transparent culture.”
At Johnson & Johnson, it took the company about nine months to get its ERG program up and running. “There was a lot of conversation internally if it should be its own ERG for mental health or integrated into another employee resource group,” said Geralyn Giorgio, talent acquisition change management communications and training lead at the pharmaceutical and consumer packaged goods manufacturing company.
At that time, she said, the company had an ERG called the alliance for disability leadership. The decision was made to put mental health under that ERG umbrella. “Since than happened, there were a lot of [employees] not seeing themselves in this ERG. We felt strongly we had to rebrand the ERG, and we went live last year, using the name alliance for diverse abilities to make it more inclusive,” she said.
This year, Giorgio said, the company will work to empower managers to handle mental health conversations.
“If you have a manager open to the conversation, [employees] have a different experience than someone whose manager is ill-informed,” she said. “That’s something we need to focus on this year — helping our managers feel more comfortable with having the conversation.”
SOURCE: Otto, N. (12 March 2019) "Dispelling the stigma around mental health disorders in the workplace" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/dispelling-workplace-mental-health-stigma?brief=00000152-146e-d1cc-a5fa-7cff8fee0000
Nine Ways To Motivate Employees That Don't Always Involve Cash
Employers are reporting that recruiting and retaining talent is the single greatest challenge they've experienced since the U.S. unemployment rate hit historic lows. Continue reading this blog post from Forbes for nine ways employers can motivate their employees.
With unemployment at near historic lows in the United States, employers report that their single greatest challenge is recruiting and retaining talent. The answer for many companies is to throw money at the problem: Bonuses, incentive pay, and out-of-cycle salary increases are often seen as motivators that will entice greater effort and loyalty out of workers.
Turns out, using cash as a carrot isn’t always the best answer, according to new research by Harvard Business School Assistant Professor Ashley V. Whillans. More than 80 percent of American employees say they do not feel recognized or rewarded, despite the fact that US companies are spending more than a fifth of their budgets on wages.
What employees crave even more is to feel that their managers appreciate them and aren’t afraid to show it, not only in paycheck terms, but in other ways such as flexible work-at-home schedules, gift cards for pulling off impressive projects, or even just by saying “thank you” for a job well done.
“Cash matters in people’s lives, but it’s not all that matters,” says Whillans, who researches what makes people happy. “What really matters in the workplace is helping employees feel appreciated.”
Whillans co-wrote a recent article in Compensation & Benefits Review, “Winning the War for Talent: Modern Motivational Methods for Attracting and Retaining Employees,” with Anais Thibault-Landry of the Université du Québec à Montréal and Allan Schweyer of the Incentive Research Foundation.
Rewards that signal to employees that they did a good job and that their manager cares about them will encourage employees to want to work even harder, the research shows. Whillans provides nine tips for business leaders on how best to reward their workers in ways that will bring them greater job satisfaction and motivate them to work harder.
When recruiting, emphasize benefits. Talking up a job’s perks, such as flexible work schedules and skill training, can give companies a recruiting edge. A 2018 study that Whillans and her team conducted of more than 92,000 job ads found that the more benefits an employer described, the higher the application rates.
Cash can motivate workers—in some types of work. Cash rewards are best suited as a motivator for work that is measured quantitatively, Whillans says. But money is less meaningful as a motivator in the complex creative jobs that make up most work in our modern knowledge-based society.
If you give cash, include a meaningful note. It’s best to avoid merely adding a cash bonus to a worker’s paycheck; a separate bonus check stands out more as a recognition of their work. And managers should also include a sincere handwritten note explaining why the employee deserved the bonus.
Reconsider performance incentives. Decades of research confirms that financial incentives can boost effort and performance. But when an employee’s pay is contingent on performance, they can become obsessed with earning more. What often works better is to turn around the timing of the reward, handing it out immediately after an employee excels at a particular task, rather than dangling it beforehand.
Consider thoughtful gifts instead of cash. A 2017 study of 600 salespeople found that when a mixed cash and prize reward program was replaced with an equivalent value all-cash package, employee effort dropped dramatically, leading to a 4.36 percent decrease in sales that cost the company millions in lost revenue, Whillans’s article says. The firm may have inadvertently demotivated salespeople who preferred prizes or discouraged workers who liked having a choice.
Give the gift of time—and other intangible perks. A Glassdoor survey Whillans and her team conducted with 115,000 employees found that providing intangible non-cash benefits, like flexible work options or the ability to choose assignments, led to much stronger job satisfaction than straightforward cash rewards.
Encourage employees to reward one another. Companies can build recognition into their business practices by creating peer-to-peer recognition programs in which employees are provided monthly reward points that they can give away to colleagues for work-related wins. Employees who earn a certain number of points can redeem them for various perks, such as a restaurant gift card or an extra personal day.
Make the recognition public. If employees are receiving a $500 bonus, hold a workplace event to hand out checks, and invite the employees’ peers. Perhaps add a certificate of appreciation along with the check.
Sometimes a simple thank you is enough. Among the happiest employees, 95 percent say that their managers are good at providing positive feedback, Whillans says. A simple, heartfelt “thank you” from a manager is often enough for employees to feel like their contributions are valued and will motivate them to try harder.
Why rewarding employees works
Whillans says these types of rewards work because they tap into three strong psychological needs: Employees long for autonomy, with the freedom to choose how to do their work; they want to appear competent, armed with the skills needed to perform; and they want to feel a sense of belonging by socially connecting with colleagues in a meaningful way.
When these needs are satisfied, employees feel more motivated, engaged, and committed to their workplace—and they report fewer intentions of leaving their jobs, Whillans says.
SOURCE:
7 ways to reduce stress this tax season
Does tax season leave you stressed out? Tax season is here, leaving many employers face-to-face with a number of demands. Continue reading this post from Employee Benefit News for seven ways employers can reduce stress during tax season.
Tax filing season is here, which means many employers will come face-to-face with a number of demands. Whether they do their own taxes, use online tax software or meet with a trusted tax adviser, there are many useful resources out there that will help employers work smarter, not harder.
Here are seven ways employers can reduce stress during tax season.
2019 U.S. Master Tax Guide
The U.S. Master Tax Guide contains timely and precise explanations of federal income taxes for individuals, partnerships and businesses. This guide contains information including tax tables, tax rates, checklists, special tax tables and explanatory text.
Legislative resources
Find a trusted, reputable resource for the latest news, opinions and laws regarding healthcare. Many companies in the industry have a designated section on their website that is dedicated to providing employers with updates and trends in the health insurance industry and how it will affect taxes.
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Payroll calculators
Employers can use payroll calculators to determine gross pay, withholdings, deductions, net pay after Social Security and Medicare and more. Calculator types include salary payroll calculators, hourly paycheck calculators, gross pay calculators, W-4 assistants, percentage bonus calculators and aggregate bonus calculators.
Keep, shred, toss
Now is the perfect time to organize tax records so that they’re easy to find in case they’re needed to apply for a loan, answer IRS questions or file an amended return.
The IRS has some helpful guidance you can share with your clients on what records to keep and for how long. They should remember to:
- Keep copies of tax returns and supporting documents for at least three years.
- Keep some documents for up to seven years.
- Keep healthcare information statements for at least three years. These include records of employer-provided coverage, premiums paid, advance payments of the premium tax credit received and type of coverage.
Make sure records are kept safe — but when it’s time, shred or destroy
Whether they consist of paper stacked in a shoebox, electronic files stored on a device or in the cloud, it’s important to safeguard all personal records, especially anything that lists Social Security numbers. Consumer Affairs recommends scanning paper and keeping records stored securely on a flash drive, CD or DVD.
It’s more important than ever for employers to keep personal information out of the hands of identity thieves. That means not tossing records in the trash or recycling bin. Home paper shredders are often inadequate for large piles of paper, but many communities have professional, secure document shredding services.
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Start as early as possible
A deadline looming always makes the situation more stressful. It’s very important for employers to not wait until the last minute to start their tax return. If they choose to use a tax professional, be sure that they get in early. Tax professionals take on many clients, and only have a short timeframe to get all the work done.
Be honest
It may be tempting for employers to tell a white lie on their taxes to maximize their tax breaks or return, but that comes at a great risk. If they are audited by the IRS, they will liable for whatever was reported.
SOURCE: Waletzki, T. (12 March 2019) "7 ways to reduce stress this tax season" (Web Blog Post). Retrieved from https://www.benefitnews.com/list/how-to-reduce-stress-this-tax-season?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
New tech helps HR pros practice hiring and firing — in virtual reality
A new platform from Talespin allows employees to practice challenging social situations, like the act of hiring and firing an employee, beforehand. Continue reading this blog post to learn more.
What if HR professionals could practice hiring and firing someone before they even set foot in the office? Virtual reality and artificial intelligence may be closer to making that a reality for some employers.
Talespin, a developer of virtual reality technology has released a new platform that allows employees to practice challenging social situations. The platform, called its Virtual Human Technology, is meant to mimic typical conversations that an employee might have at work. The software can simulate anything from performance reviews, to leadership training, sales conversations or even firing.
“We’re thinking holistically about the employee life cycle and how spatial computing is going to affect that,” says Kyle Jackson, CEO of Talespin.
Talespin aims to evoke real human emotions and give employees a sense of the best way to handle a difficult situation, Jackson says. The platform demo, for example, puts users in the shoes of an HR manager and asks them to fire an employee named Barry. Barry is an AI-powered virtual character that displays realistic human responses, like anger, when a user tells him that he has been terminated.
Users can be successful or unsuccessful at terminating Barry and the platform provides feedback on how they can improve these skills over time. The system can be tailored to provide responses based on the specific needs of the employer, Jackson says.
“The system can record all sorts of things: from your sentiment, to what you say, what branches did you activate, what different paths of process did you go down. With all that data it’s a question of what’s the learning objective and what’s the learning outcome that you’re looking for?” he says.
While the platform is best used in virtual reality, users can access it via desktop, mobile or audio only. Jackson says the company is deploying the platform with five employers in the telecommunications, automotive, insurance and consumer packaged goods industries. Farmers Insurance is already using Talespin technology to train new hires. Employers using the software pay per monthly active user plus the cost of the module, Jackson says.
Some employers are investing in AI and virtual reality as a way to attract and retain new talent. Pharmaceutical company Takeda, for instance, combined 360-degree photographs and an interactive map of its Cambridge, Massachusetts campus to create a virtual reality office tour for current and potential employees.
Jackson says they’ve heard from employers that poor treatment from a manager has in some cases, led to employee turnover. A VR platform like Virtual Human Technology can help managers develop their soft skills for interacting with employees and potentially improve retention.
“It’s not a technology problem, it’s not an efficiency problem. It’s really a people problem,” he says. “It’s the one area that’s really hard to fix.”
SOURCE: Hroncich, C. (8 March 2019) "New tech helps HR pros practice hiring and firing — in virtual reality" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/hr-tech-helps-practice-hiring-and-firing-in-virtual-reality?brief=00000152-14a7-d1cc-a5fa-7cffccf00000
3 ways anxiety can hold back your employees’ careers
According to the Anxiety and Depression Association of America, nearly six in 10 American workers report anxiety impacts their workplace performance. Continue reading this blog post to learn more about workplace anxiety.
Employers want their employees to grow and succeed at their jobs. Unfortunately, there are a variety of external and psychological obstacles that can stand in the way of employees reaching their full potential. While most workers would like nothing better than to perform well on the job, anxiety can prevent them from doing so.
Anxiety disorders are extremely common: They affect 40 million adults in the U.S. each year, and nearly six in 10 American workers report anxiety impacts their workplace performance, according to the Anxiety and Depression Association of America. A study in the academic journal Anxiety found the economic effects of this mental health condition are huge — costing employers almost $35 billion from lost or reduced productivity in the workplace, the study says. The good news is 80% of employees treated for mental health problems report improvements in their job satisfaction and productivity.
For employers to mitigate the impact anxiety has on their employees, it’s important to understand the form it takes in the workplace. Anxiety often takes shape in various thinking traps that can sabotage an employee’s growth. Three of the most common traps are social comparisons, personalization and overmagnification.
To explore how these thinking traps manifest in the workplace, let’s consider a scenario in which an employee sees a co-worker gets a promotion instead of them.
The social comparison trap. The research is clear that comparing yourself to others is bad for your mental health. However, that doesn’t stop people — especially those with anxiety — from doing just that. A co-worker’s promotion can lead an employee to leap to the conclusion they must be inferior to their colleague. In reality, there’s no way employees can fairly compare themselves to a co-worker. Their experiences, personalities and skills are different. Employees able to avoid that comparison trap might, instead, keep the focus on themselves, evaluating the growth they’ve achieved over the past year and determining how they can continue to improve in the year ahead.
The personalization trap. It’s hard for some employees to recognize not everything is about them. The co-worker who earned the promotion may have gotten the job because they were simply a better fit; that doesn’t diminish the talents and abilities of those who weren’t chosen for the position. Rather than assume the worst of themselves, employees could look at the situation more objectively and recognize that their co-worker may not be better than them, just different.
The overmagnification trap. Blowing things out of proportion is another thinking pattern with a destructive effect. Being passed over for a promotion can expand to a sense of being permanently, hopelessly, bad at one’s job. Instead of being able to parse out the specific reasons why the promotion didn’t go their way, employees who overmagnify convince themselves that they are not only unqualified for the promotion, but they’ll never get a promotion and their career is doomed — so why even try? To keep those overblown feelings at bay, a better approach is to stay focused on the specific and transient nature of what has just happened. Being passed over hurts now, but it won’t hurt forever. Not getting this particular job says nothing about the person’s ability to get other jobs. It may mean that they are missing certain skills or experience, but it doesn’t mean they will always lack them.
Workplace culture and practices can either exacerbate or diminish the self-sabotaging thinking traps that go hand in hand with anxiety. Some effective strategies that can help foster a positive work environment for all employees, but especially those who tend toward anxiety, include:
Create a collaborative workplace. Workplace collaboration helps employees feel valued for their contributions and allows them to see how their skills are important to achieving success for their team or company. It also provides the opportunity to learn from other employees and appreciate what they bring to the table, rather than viewing them as their competition.
Promote transparency. Employees who are kept in the loop, who understand their role, the criteria for what promotions are based on, and understand what they can do to get to the next level are more trusting of their leaders. Be particularly sensitive to what employees may be experiencing during annual performance reviews and make sure to overcommunicate during those times.
Offer tools and services. Providing programs and services to help reduce stress and anxiety can be beneficial for all employees. These can include subsidizing gym memberships, offering yoga classes, encouraging “mind vacation” breaks throughout the day, providing online programs that guide employees through mindful meditations or other well-being exercises.
Model self-care. Employees are more likely to engage in self-care at work if they see their supervisors practicing it, not just encouraging it. If a meditation class is offered in the workplace, employees are more likely to take part if their managers are taking time out of their day to participate as well. Similarly, organization-wide activities, such as a mid-day walk, allow employees to see management promote the message that self-care is a workplace priority.
Given the high number of working Americans with anxiety conditions, easing their anxieties and helping them avoid those thinking traps is good for business. It will improve employees’ overall well-being, workplace satisfaction and professional growth.
SOURCE: Parks, A. (5 March 2019) "3 ways anxiety can hold back your employees’ careers" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/3-ways-anxiety-can-hold-back-your-employees-careers