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  | | February, 2007 - Vol 2, Issue 1 | | | | In This Issue | | | | | Links | | | | | | | Dear Cherryll, | | Welcome to our latest edition of View from the Ridge.
Our intention is to offer you, our friends, colleagues and clients, insights and practical, timely information to help you think about issues and to make better “people-related” business decisions. We hope you enjoy this periodic collection of ideas and tools and find it stimulating and informative. We always welcome feedback, questions, possible future topics, and what you like or don’t like.
Check us out at www.CypressRidgeSolutions.com.
| | | | | | Each year about this time, I’m asked to speak at several Human Resources leadership groups on what is happening in the area of compensation. This month’s article presents a few highlights of my findings. At a recent seminar, when asked how many in the audience had lost 3 or more key employees in their organization, all hands went up. No new trend here! According to a recent Watson Wyatt survey, the top 3 reasons ranked by employees for leaving are as follows: 71% leave for more pay; 68% leave for a promotional opportunity; and 66% leave for career development. Compensation still ranks the highest, but the other reasons are not far behind. There are several trends to support this.
Economic Trends to Consider
It is important to look first at large macro-economic trends and their impact on the labor market. We saw more technology IPO’s in 2006 than in recent years. Most of these start-ups still offer stock options to all or most of their employees, while at the same time public companies are reducing both the amount and the depth of stock option grants. Another trend to note is that while the news highlights our immigration concerns, California lost nearly 20,000 families monthly last year. These often are our best and brightest employees moving out of the area, and out of our labor force. Another important fact is that in the bay area, unemployment is at a near all-time low of 4.1%. The trends put increasing pressure on pay practices of local employers.
Trend #1
Merit increases were about 3.6%-3.8% in 2006 and that is expected to rise slightly to 4.0% in 2007. Unless a company has consistently kept up with annual merit increase trends the past several years, made market rate adjustments for key positions and managed equity and promotional increases, this current merit increase data can be misused. An employer could still be paying considerably less than market and as employees explore opportunities, you may be at risk of losing your top talent.
Suggestion: Consider budgeting 1.5% of total payroll for market adjustments and promotions to ensure you are staying at or above market for those high performers.
| | | | | | | “Having adequate long-term insurance is the single most influential determinant of whether an individual will have a financially secure retirement.”
---Employee Benefit Research Institute study, Employee Benefit News
Why are employees more interested in LTC?
To attract and retain your key Baby Boomer employees, this is an excellent benefit to consider. For employees now in their 50’s, the likelihood of needing in-facility or at-home care at some point in their life is about 50:50 that care will be needed in their later years. While the average nursing home stay is just under 3 years, the average home-care experience is well over 4 years. That means, if you should need care by 2025, just 7 years of combined home and in-facility care translates to over $1,800,000! The question has not become so much whether one should purchase long term care insurance; rather how much one should buy.
Long-term care costs are increasing faster than inflation.
According to the Office of the Actuary, Centers for Medicare and Medicaid Services, nursing home care is increasing at 5.8% per year. In 2005, the average nursing home care was $74,095. By 2035, at the current annual increase, that translates to $1,100 per day, or $401,500 per year.
| | | | | | If the following sales compensation planning checklist does not assist you in closing out the 2007 sales compensation design planning process, then it can be used to complete a mid-year evaluation of your plan effectiveness or to kick-start planning for the next fiscal year.
The first nine items of the checklist (from Business Strategy Articulation to Commission Crediting) were covered in previous newsletter articles and can be found on our web site in Sales Compensation Planning Checklist - Part I and Part II.The final five items complete the checklist and include the following:
- Quota Setting Process Defined and in Place
Many companies think that the sales compensation planning process is complete with the design of plans that include critical business-driving plan components. However, time and money spent on designing the best sales plans is pointless without basing these plans on achievable yet challenging quotas. Despite the doubts of sales management and sale finance regarding an organization’s ability to set top-line goals and then distribute them down to individual contributors, there needs to be a significant level of confidence that each goal is at least attainable, if not over-achievable.
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