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New ways to help employees save for retirement

11 Aug

Many companies have switched to defined contribution pension programs by now for employee 401(k)s. There are still things that can be done on the payroll management side to make things better for employees without costing too much effort on behalf of the company. For example, many businesses have started programs that automatically increase employee contributions to the 401(k) every year. This can cost money because it requires that HR directors work with payroll management software, but the end result can ultimately boost worker morale, according to Human Resources Executive Online.

A survey by American United Life Insurance Company, a subsidiary of OneAmerica, indicated that 55 percent of the 7,545 retirement plan participants surveyed indicated they would prefer if companies automatically increased their pension contributions.

"With non-stop family, health and life events and changing financial obligations over the course of one's life, saving for retirement can easily fall to the bottom of the priority list," said Marsha Whitehead, vice president of marketing for OneAmerica. "Automatic features can help plan participants easily increase their retirement contributions and not get distracted by other financial matters."

Why it is beneficial for employees to increase their yearly pension contributions at a certain rate
Because of inflation and additional responsibilities like kids and caring for elderly parents, it often helps to put a little extra away as one becomes older and grows with a company. People don't often know exactly how much they will need at the start of their careers, when they are sometimes just out of school and may not know enough about pensions and the time value of money.

According to Whitehead, the companies that do offer gradually increasing contributions to 401(k)s tend to do it either as an opt-in program or an opt-out program. Many of the companies that use the opt-out program find more of their employees stay with the original plan instead of opting out. For example, when people opted in at T. Rowe Price, a finance company with such a program, the number of people who chose the program turned out to be 8.3 percent of employees, according to an internal survey. In comparison, 64.7 percent stayed inside the opt-out version of the pension plan.

Other ways to save for retirement
According to the Wall Street Journal, there are also versions of 401(k) programs that offer the possibility higher returns than ordinary pension plans: These are called managed accounts. Under these programs, a professional investor is managing someone's retirement savings to try to maximize value in a more personalized way. The Journal cited information from the Government Accountability Office that found these programs often charge a fee that can outweigh the benefits of a slightly higher return and lower risk than a traditional 401(k).

Whatever a company chooses to offer its employees for pensions and retirement savings, it should be as transparent as possible. Some companies might consider sending out emails or giving seminars about financial advice if people seem clueless about what a pension plan is or how it works.

How President Obama’s new myRA plan works for Americans

25 Jul

At the beginning of 2014 in the State of the Union Address, President Barack Obama announced that a new way to encourage working Americans to save for retirement would be through the "myRA" (my retirement account) plan, Forbes reported.

President Obama cited the need for greater retirement savings after a study found 28 percent of U.S. citizens are not saving for retirement al all, the source reported.

"Today, most workers don't have a pension," President Obama said in an official statement. "A Social Security check often isn't enough on its own. And while the stock market has doubled over the last five years, that doesn't help folks who don't have 401(k)'s."

The myRA plan will simply work as a initial phase for workers who do not receive an employer-provided retirement income plan, the source reported. The new plan will also not replace Social Security benefits and will increase access to stock market returns.

The plans allow workers to switch jobs and not have to worry about changing their myRA plans, and only cost $25 to start, the source reported. Deductibles can be as low as $5 per paycheck and the U.S. Department of Treasury will support the plan with low-risk investment. People enrolled in the new plan will get an interest rate similar to Federal employees.

Plan aimed at helping lower income workers
According to CNN, the myRA plans are targeted toward low- and middle-income Americans, which account for 75 percent of part-time workers and almost half of all employees. Essentially, the new plan is supposed to work as a supplement to an existing 401(k) plan and can be used by workers with income that is lower than $191,000 per year.

"The good news is you don't have any risk on this account," said David John, a senior strategic policy adviser at the AARP Public Policy Institute, according to CNN. "The bad news is of course you're not going to have a huge amount of earnings on this account either."

The myRA​ plan gives employees the opportunity to use the plan as the safe investment portion of a retirement income portfolio, Forbes reported. According to a recent report from the Center for Responsible Lending, the average U.S. household only had $100 remaining each year after basic expenses and debt payments in 2010.

"This deals with the small saver problem," said John, according to CNN. "Very often the administrative costs of those tiny accounts actually eat into the principal."

Study: More HR Departments Offering Sign-On, Retention Bonuses

27 Jun

Many human resources departments are boosting their payroll management by hooking and keeping workers at the company through sign-on and retention bonuses, according to a new study by nonprofit HR organization WorldatWork.

WorldatWork's "Bonus Programs and Practices" survey found more HR departments are using these two types of programs than in the past. There's also been an increase in the use of referral bonus programs and spot bonus programs. Seventy-four percent of 713 surveyed participants have a sign-on bonus program compared to only 54 percent in 2010. Fifty-one percent use a retention bonus program, which is more than double the amount that did in 2010. Likewise, 63 percent now have a referral bonus program compared to 60 percent in 2010, and 60 percent have a spot bonus program compared to 43 percent in 2010.

According to the survey, these programs are strategic approaches to payroll management and talent acquisition. 

Rose Stanley, total rewards practice leader at WorldatWork, said recruiting and keeping talent has become a greater focus for employers, especially now that the recession is over and there may be additional financial resources available.

"The uptick in sign-on and retention bonus programs may indicate that the war for key talent could be heating up as the economy improves, leading to an increased focus on attracting and retaining employees," Stanley said.

Potential Effects of Salary Disclosure in the Workplace

24 Jun

How much each worker makes has traditionally been between that employee and HR. Many HR departments have had a tight hold on their payroll management and have worked to keep discussions about salary out of the workplace. In fact, numerous employers have it set in their employee handbooks that such talk about what workers make is against the companies' rules.

However, a 2012 article that appeared on TLNT noted that any rules that restrict employees' freedom to discuss their compensation is against the National Labor Relations Act. If this isn't enough, President Barack Obama recently issued an executive order stating that employers are not allowed to retaliate when workers talk about their salaries amongst themselves. According to the order, prohibitions against speaking about compensation can allow salary discrimination in the workplace to go unchecked, because if employees aren't able to talk to one another about how much they made, it is much harder for discrimination to be discovered.

Some HR professionals may not think such discrimination happens in today's workplace, but it does. Consider this example from MoneyWatch: A new supervisor of a travel company accidently sent a spreadsheet to a 11-person department that outlined what each worker made. Even though the employees did the same work, there was a $20,000 annual discrepancy between the highest and lowest paid workers. These employees might not have known there was such a difference in compensation despite everyone doing the same job if it wasn't for this mistake.

Avoid the Fall-Out of Not Allowing Salary Disclosure
Wage transparency is becoming commonplace, and HR professionals need to understand that not allowing workers to discuss their wages can lead to negative consequences. For one, prohibiting salary disclosure has been determined by the federal government to be illegal. Employers could find themselves in violation of employment legislation by not following President Obama's order.

In addition, while an article in TLNT noted fairness can be subjective, workers who do the same work should be paid equally, and employees who aren't can become mad to the point of quitting and can even bring discrimination lawsuits against the employer. For instance, the MoneyWatch article noted the employee who wrote into the publication said the morale of his or her team has dropped considerably since they discovered the pay discrepancies, and the worker in particular was angry that he or she was a top producer but wasn't compensated for that level of performance. 

US Worker Satisfaction Slowly Rising

23 Jun

There are many factors that go into job satisfaction – payroll, benefits and company culture are just a few. Understanding the drivers behind workers' job satisfaction is important for human capital management, as unhappy employees are more likely to leave their positions, which can cause an increased need for recruiting and training new workers.

A survey of 5,000 households by The Nielsen Company in late 2013 for The Conference Board found employees largely remain dissatisfied with their jobs, with only 47.7 percent saying they were content with their employment. However, this is an increase in satisfaction from previous findings. In 2012, 47.3 percent of workers were satisfied with their jobs, and only 42.6 percents said the same in 2011.

The biggest reasons behind workers remaining dissatisfied are a lack of bonuses, training programs and promotions. A blog in The Wall Street Journal noted that other drivers of dissatisfaction are often related to benefits, as employers are starting not to match their workers' retirement contributions and healthcare coverage is starting to disappear. HR professionals need to address these issues to improve worker satisfaction and keep talented employees at their organizations.

Research: Economic Conditions Drive Recruitment and Payroll Management

4 Jun

When it comes to finding talent and keeping it in this economy, having the right HR payroll software in place is a no-brainer. Many employers have started to take the necessary steps to improve their payroll management and their recruitment to continue growing their businesses. According to a new survey by professional website company Dice Holdings, the current economic conditions have driven many employers to increase their hiring and boost their workers' salaries. For HR professionals, this increased optimism means payroll management and effective talent acquisition will be critical for the continued success and growth of their companies in this economy.

Boosting Payroll and Recruitment
Dice Holdings received responses from 806 hiring professionals for its survey, with the majority being from healthcare, technology and financial services. According to the findings, these professionals are seeing the job market tighten and become more competitive, with 89 percent saying their companies weren't planning on laying off any workers within the next six months.

Of those employees who had decided to leave the company on their own, 43 percent of HR professionals admitted it was difficult to see these workers go. Replacing these top performers has become a significant challenge for more than half of the survey's respondents. In fact, 57 percent said their applicant pools are drying up.

Yet the signs remain positive for employers. According to The New York Times, recent reports indicate companies are becoming more confident about the economy and are starting to increase their number of job postings. The newspaper reported some companies have invested in hiring recruiters to boost their full-time employees, which is a big step for many businesses that have made due with trying to find talent without these key hiring professionals. While some of these businesses remain at the mercy of consumer demands and market conditions, The Times reported many are being carefully optimistic about their industries and their ability to increase payrolls and recruitment.

"I'm very curious to see how freight levels are in May and June," James Welch, chief executive at trucking firm YRC Worldwide, told the newspaper. "We're trying to figure out if this is an overhang from the winter, or is it the economy getting better. I don't have the answer yet."

Many employers may need to wait to determine if their industries' needs will support their recruitment and payroll increases, and some – especially those in IT – may end up hiring recent college graduates to fill entry- or mid-level positions that had been previously occupied by more seasoned workers. According to the latest study by the National Association of Colleges and Employers, companies said they are expecting to employ 8.6 percent more workers from the most recent college graduating class. In total, the NACE found 48.4 percent of the 1,015 responding employers said they are hiring recent graduates.

Salaries promise to be higher for these new hires as well. The Dice Holdings survey found 49 percent of employers will provide higher wages of their new hires than last year. In addition, 53 percent said they will increase their existing workers' salaries as well, which is a great strategy for both retention and recruitment. 

To support greater hiring and higher salaries, HR professionals will need to use the best HR software. Having a self-service option is one element at that makes it easy for employees to keep track of their compensation. Talent management software is also a solid investment for HR departments that look to keep their top workers at the company for the long haul.

Survey Finds More Employers Providing PTO to Workers

2 Jun

Many companies offer workers paid time off as part of their benefits administration, and a new survey by the Society for Human Resource Management (SHRM) found more employers are jumping on the PTO bandwagon. Paying employees to take a break from the workplace can be beneficial to employers, because when staff members can get away from work and take time to do things they wouldn't normally be able to do, they can return happier and more focused. This results in workers being more productive and producing higher quality work, which helps the company be more successful.

The Benefits of PTO
SHRM surveyed more than 2,000 employers, most of which are in the private sector and have 500 or fewer workers. The survey found 52 percent of companies provide PTO plans to their full-time staff members. According to SHRM, a PTO plan is one that includes sick, vacation and personal days, but does not include national holidays.

However, many employers decide against providing workers with unlimited PTO days. The survey noted 94 percent of companies give workers a certain number of PTO days annually, with 98 percent providing set vacation days and 88 percent offering set sick leave time. According to Entrepreneur magazine, many companies are wary of giving workers a limitless number of PTO days, as some feel as if workers would take advantage of the extra time off and not do their work properly. 

HR professionals are starting to give workers greater autonomy, however, and are expanding their PTO benefits. According to the survey, 16 percent of companies now offer paternity leave, which is almost as many employers that provide maternity leave (18 percent). In addition, 17 percent give workers paid adoption leave. 

HR professionals need to ensure they are keeping track of workers' PTO use effectively by investing in the best payroll software. Not having modern payroll solutions can make HR departments inefficient and can cause confusion among workers when they try to use their PTO benefits. HR professionals shouldn't try to make it work with a system that is out of date and doesn't provide them with the tools they need to do their jobs to the best of their ability. Human resources departments should make it easy for employees to request PTO when they need time away from the office. Otherwise, the company may not experience the advantages of workers who are well-rested and engaged. 

Is Paying Disengaged Workers to Quit Worth It?

27 May

Paying workers who aren't interested in staying with the company to quit their jobs can sound like the opposite of good payroll management, but in reality it may save employers money down the line. Paying certain employees to leave is a strategy that has gotten some media attention recently after Amazon CEO Jeff Bezos said in a letter to shareholders that the company would implement the practice.

It's an approach that The Washington Post noted is still rare, but isn't entirely new. Zappos has had this HR payroll strategy, which it calls "The Offer," for some years. The notion that giving certain workers money to walk away from the company isn't widespread, but for some businesses it might make sense. For instance, recruiting tends to be expensive for companies, so retention is often a key focus of HR departments. However, retaining workers who aren't productive, strong performers or engaged can end up financially hurting the company. The idea behind offering these employees to leave is that it saves employers in the long run, as the costs of inefficient workers adds up for companies.

The Specifics of Amazon's Unique Strategy
In Bezos' letter, he highlighted that the Pay to Quit program gives fulfillment-center workers the option once every year to leave the company, with the monetary offer increasing by $1,000 annually until it reaches the maximum of $5,000. Bezos' letter noted the first year workers would be offered $2,000 to quit. However, the goal Bezos wrote isn't to encourage employees to actually quit, but to think about how engaged they are in their jobs. Amazon wants its staff members to work for the company only if they want to, as it isn't healthy for the company to retain those workers who aren't happy, engaged or productive at their jobs. Many of the employees who will be given the offer are front-line workers who may not have the most fulfilling jobs. The offer workers will be provided is titled "Please Don't Take This Offer."

According to a Harvard Business Review blog, the notion that it isn't good for companies to keep workers that don't make the business better may be advantageous in certain instances. Giving employees an out of a job that they don't like or can't handle means the business culls those workers from the labor force. It also reaffirms to those employees who stay that they are happy in their jobs.

Rita McGrath, associate professor of management at Columbia Business School, told Human Resources Executive (HRE) Online that more large corporations may follow Zappos and Amazon's leads, but it can end up sending a mixed message to those workers who feel good about their employment at the company.

"On the one hand, [such programs say] 'We want to keep and develop you as part of our talent pool,'" said McGrath. "On the other hand, [the policy says] 'We're happy to pay to see you go.'"

With employee engagement receiving much of the spotlight in HR right now, thinking about this payroll management strategy may help human resources departments focus on the financial benefits of having engaged members of the workforce.

Help Employees Ask for Raises Properly

22 May

Payroll management is a critical aspect of human resources departments, and it's important that HR professionals understand the salary needs of the workforce. Now that the recession has officially been over for some time, many workers may come forward asking for raises if they haven't already received pay increases.

However, asking for salary boosts can be intimidating to many, and it can be hard for even the best performers to request pay raises effectively. Employees can inadvertently harm their own career or end up throwing co-workers under the bus if staff members don't go into salary negotiations prepared, according to

HR professionals don't have to sit back when workers want to approach their managers and the HR department to negotiate a raise. HR professionals can give employees tips about when it is appropriate to come forward to ask for a bump in pay and the best ways to do so. This can help retain the company's top performers because it ensures the best talent knows how to ask for raises, and also ensures workers understand their true value at the business.

Give Workers' Feedback on Their Performance
First, employees should understand their worth at the company and compile evidence of their accomplishments before they ask for a pay increase, according to Phil Blair, a career expert and former co-owner of Manpower San Diego. Workers need to have the evidence in front of them about how well they have done their jobs, including positive emails from clients or managers.

Anita Attridge, an executive coach, told Forbes workers need to show why they deserve a raise – especially if the company isn't handing them out.

"Make the case of why you should be an exception to this policy," Attridge suggested. "This will need to focus on the results you have achieved for the company."

HR professionals are often in a great position to help employees truly assess what they have done at the company and their strengths and weaknesses. The more facts workers have when they enter salary negotiation meetings, the better off the meeting will go for both employees and their employers.

Provide Employees with an Accurate Picture of Reasonable Pay Increases
Some workers may think they deserve a 5 percent raise, but many times the company's payroll management doesn't allow for such an increase. There are websites that compares the salaries of various positions, and workers often use these sites to understand their market worth and determine how much of a raise they should ask for. It can be easy for an employee to go on such a site and see that a person in his or her position at a large company makes more than they do currently. However, the employer may not be able to offer such a high salary to the worker. HR professionals need to make sure workers are being realistic with how much they are asking for. HR departments enter into salary negotiations with new hires all the time and are perfectly outfitted to speak with employees about the salary ranges that are available. 

Practice Workers' Plans and Speeches with Them
It's important for employees to practice what they are going to say during salary negotiations before then enter into the meetings. There are certain phrases that can work against them, however, and HR professionals need to ensure their best talent don't ask for pay boosts in the wrong way. According to Blair, phrases like "I need a raise because my rent is going up" often doesn't encourage managers to give workers a pay boost. HR professionals need to coach the workplace's top performers about these elements of salary negotiations and work with them to ensure their speeches illustrate their true value to the company.

Use HR Payroll Software to Ensure High Worker Satisfaction

13 May

Payroll software programs are going to be even more important for HR professionals, as a new survey found workers' biggest issue with their employers is back pay. While many employers are still recovering from the economic downturn, their staffs are asking for increased compensation to keep up with rising living costs. 

Compensation Remains a Factor in Satisfaction
The Society of Human Resource Management just came out with a new employee satisfaction and engagement study, and it uncovered that frozen wages is the No. 1 workplace issue that is standing in the way of workers being happy. 

The study asked 600 employees about 35 various factors in their job satisfaction and 33 elements of their engagement. Sixty percent of the respondents said that compensation was "very important" to them, compared to 59 percent saying that job security and the ability to utilize their skill sets. Compensation ranked either as the top aspect to job satisfaction or the second most important factor across all generations of the workforce studied, and it was one of the biggest influencers in numerous employee categories.

Only 50 percent of workers in 2012 received a raise that year, but 56 percent of employees involved in the study said they received a pay boost last year. While this shows a positive trend in employee benefits and compensation, HR professionals should keep an eye out on how their workforce is feeling regarding their earnings.

What HR Can Do to Boost Worker Happiness
Not every employer may be in a financial situation to raise payroll across the company, but HR professionals should look to see if they can improve their payroll management strategies to make the best use of the company's resources. What this means for HR professionals is that they need to ensure they are using the latest HR payroll software to understand the true compensation each employee at the company should be provided.