Employee Compensation

Is the Unlimited Vacation Trend Right for Your Company?

by NPEO Media NPEO Media No Comments

The approaching summer vacation season should prompt you to review your paid time-off policy. Have you considered switching from traditional to unlimited downtime so personnel can unwind
unlimitedvacation
and recharge? Successful examples show why and when this modern system works.

Case Study

Netflix employees began relishing as many extra vacation days as they wanted in 2004. The company granted them freedom to choose when to work, how long their responsibilities take to accomplish, and when to enjoy time away from their jobs. Since instituting that policy, the operation’s market cap has grown to exceed $51 billion.

While encouraging flexibility, Netflix also emphasizes accountability. Workers must communicate their schedules to their supervisors, who expect high performance. That principle is so central to Netflix’s culture that management rewards work that is just adequate with terminations that include generous severance packages.

Employees can take infinite vacation days because no superiors track their time. Rather than micromanaging how personnel fulfill their duties, leaders seek results — the only metric that matters. They discovered that increasing staffers’ autonomy makes them more responsible. Without the distractions of domineering rules, team members’ focus and production grew.

Upgrading Reasons

Back when Netflix offered a conventional vacation policy, staffers asked a key question: Since we do not keep track of our after-hours time like answering business emails from home, why maintain records of our days off from work? Management understood and addressed that question’s simple logic.

Basing pay on hours made sense for industrial-age employers when workers stood on assembly lines for fixed shifts. Thanks to convenient technological advances, many present-day employees perform job duties from anywhere they might be whenever needs arise. Such scenarios make off time an obsolete concept for modern talent.

Today’s participation economy measures and pays staffers according to their production. Yet we still cling to industrial-era practices of compensating personnel for how much time they spend at workplaces. Recognizing that as a massive de-motivator, Netflix changed its leave policy to match how crewmembers accomplish their work.

Brazilian Origins

Unlimited vacations did not begin at Netflix, even though it was among the first significant American organizations to embrace them. Semco, a Brazilian firm, has offered them quietly for over 30 years. Following serious health issues at age 21, the founder’s son realized that his grueling work schedule was killing him slowly. That meant other employees also were in danger.

unlimitedvacation1In a radical move, the firm eliminated traditional work shifts, vacation time, and sick days. Despite typical fears of output plummeting, talent became fiercely loyal and more productive. The company thrived as the staff did. Revamping its scheduling policy in 1981 helped Semco’s worth grow from $4 million to today’s $1 plus billion.

Global Comparison

In America’s workaholic society, employees receive fewer days off than those in all other countries besides South Korea. Five, 10, or 15 per year are common. Laws do not require U.S. organizations to provide annual paid vacations, but many other nations must follow such mandates. Brazilian personnel amass 30 days plus 11 holidays. United Kingdom workers can take 28 including holidays. Austrian, Danish, Finlander, French, Luxembourger, and Swedish staffers get 25 days.

Policy Incentives

Various firms defend their inflexible vacation plans by asserting that employees would exploit lenient methods. However, the 1 to 2 percent of U.S. companies trying limitless programs finds the reverse. Freedom strengthens workers’ ownership and answerability to the point that some workers do not take any time off at all. Therefore, some corporations switching to unrestricted time off also establish leisure incentive policies. Talent submitting travel expense receipts receive partial to full reimbursements. Evernote repays staffers $1,000. FullContact ups that stipend to $7,500.

Workaholic recruits may seem ideal, but exhausting schedules do not benefit your business or overworked personnel. Shrewd companies realize that recharging during downtime — particularly when empowered staffers can take leaves as needed — increases creativity and productivity upon returning. Your firm will save money by not paying departing employees for earned but unused vacation days, conserving funds to subsidize leisure getaways.

Modern Update

Sadly, most companies still reward their teams by an outdated assembly-line approach. When personnel work from wherever and whenever necessary to achieve results, updating your compensation and benefit programs to reflect that business concept makes sense. You may choose to count time off until you confirm this system is effective. If you worry that will create a recordkeeping nightmare, National PEO’s payroll administration services will track the vacation and sick days each employee uses.

Top Millennial Perk: Education Debt Relief Plans

by NPEO Media NPEO Media No Comments

perkeducationMillennials born between the early 1980s and mid ’90s have amassed higher student loan obligations than all other generations. They also are becoming the chief workforce demographic. This means gym memberships, free snacks, and holiday parties aren’t enough to entice this talent group to accept jobs. These needy young adults are being very selective by looking for employers that offer education debt-relief plans, a growing benefit trend.

Financial Burdens Sway Priorities

Outstanding U.S. student loans have reached a staggering $1.3 trillion. Almost seven of every 10 alumni owe considerably high sums for earning recent college or trade school degrees. The 2015 graduating class alone racked up an average of $35,051 in education debts per person. Huge financial drains are causing current scholars to reconsider if academic credentials will help them land high-paying positions. Economic issues are influencing which majors they pursue.

Such overwhelming responsibilities force workers to choose between reimbursing scholastic loans and achieving other impending yet costly life milestones like marriage, home ownership, and families. Many millennial employees elect to pay down debts instead of saving for retirement that is roughly four decades off in the distant future. Due to high lender balances, younger personnel who participate in their employers’ 401(k) plans contribute low percentages that are too insufficient to provide for late-life workforce exits.

Saving in early adulthood is the best way to boost investment compounding and growth over time, improving staffers’ chances of accumulating enough money to retire. However, trying to compensate for not building wealth soon enough during their later years is challenging. Then, workers must contribute much larger percentages of their incomes while possibly also funding their own children’s expenses and/or elderly parents’ care.

Current Monetary Assistance

A study found that almost 80 percent of people who received educational advances prefer working for firms offering repayment assistance programs with matching opportunities. Of those, 49 percent favor school-loan contributions over company-sponsored 401(k) plans. Other research shows that half of recent graduates wish their employers would subsidize their college balances instead of health insurance or retirement.

Sadly, only 3 percent of enterprises offer scholastic loan repayment plans currently. Typical industries include technology, law, and medicine — all specialized fields that require lengthy and expensive schooling. Some benefits may help government workers and teachers. Luckily, forward-thinking companies are enacting creative programs to help struggling millennials and inspire future generations of business leaders to choose higher education.

perkeducation1Emerging Benefit Trend

When considering appropriate options to compensate their teams, perceptive firms offer help where young workers need it most: paying down student loans. Companies are devising various incentives. Some put $100 per month toward staffers’ college bills for as long as six years. Other outfits lure new hires with sizable contributions over preset intervals, following low monthly expenditures with balloon payments several years later. Both strategies ensure loyalty.

Group-sponsored programs that combine debt relief and retirement savings offer balanced approaches that can set workers up for more secure futures. Such win/win situations enable reducing loans while building up funds for their post-work periods. When staffers make school payments, their employers deposit pretax subsidies into their retirement plans — even for non-participating team members who are not eligible to receive matching contributions.

Company assistance possibilities include fixed dollar amounts, proportions of workers’ college loans, and percentages of staffers’ total compensations by payroll periods or at bi-weekly, monthly, or annual intervals. One industry expert doesn’t foresee student debt pay-down programs becoming as popular as 401(k) retirement plans, but he anticipates as many as 100,000 businesses offering options between 2021 and 2026.

Mutual Advantages

Today’s young job seekers want unique employment benefits that address their top financial issue. Firms hoping to interest, hire, and retain those millennials are embracing their education debt concerns. Company loan contributions are cost-effective recruitment tools that reinforce workforce knowledge, skills, innovation, productivity, loyalty, and satisfaction.

Your support could lessen millennials’ financial burdens so they can plan for futures goals. Benefits that shave off $10,000 of workers’ loans can shorten payoffs by as much as three years. The chances of saving enough money to buy homes or start families climb when carrying less student debts. Options that also pad their retirement accounts fulfill needs at both ends of the career spectrum. National PEO can simplify that additional benefit when administering your company’s Employee Assistance Programs. Complete our online form to request a group benefit quote.

Update Your Compensation Policies to Equalize Wages

by NPEO Media NPEO Media No Comments

compensationpoliciesPayment differences between the genders exemplify long-standing inequalities. Women receive just 79 cents per dollar in men’s paychecks, reports the Census Bureau. Per the Equal Pay Act (EPA), employers must give all women and men employed in the same workplaces equal wages for equivalent work. Job natures instead of titles determine if positions meet substantially equal criteria. More than 50 years after the EPA went into effect, firms still are striving to close the pay differential and end compensation discrimination.

Expert Recommendations

Audit your workforce wage practices to determine if women receive the same earnings and benefits as men holding corresponding jobs. To equalize salaries, laws forbid decreasing remunerations for either gender. That ruling applies to all compensation forms including income, overtime, holiday and vacation pay, bonus plans, benefits, life insurance, stock options, profit sharing, gasoline and/or cleaning allowances, hotel accommodations, and reimbursed travel expenses.

Modernize more than your compensation criteria by upgrading to National PEO’s convenient and accurate online payroll services. Our versatile web-based tools simplify and speed up onboarding new hires, attendance, payroll ledger reconciliations, and separations. Manage those records online, via email, or by phone from any location. Consider enacting the following suggestions from social scientists, policymakers, and impartial companies to overcome your organization’s gender pay gap.

Traditional Gender Roles

Women outpace men in academic degrees today. However, since society still views certain industries and professions as male or female domains, many jobs abide by historical pay structures. Discriminatory practices have segregated well-trained women into typically lower-paying health, education, administration, and literacy (HEAL) occupations. To break prejudicial barriers, others chose unconventional vocations. That narrowed the wage gap initially, but men shunning essential but traditional female jobs to pursue male-dominated science, technology, engineering, and mathematics (STEM) fields hindered further progress. Reevaluating stereotypical gender roles could prompt future advances.

Negotiation Strategies

Men receive better pay partially because they are more apt to request it. Before accepting job offers, a study found that only about 12 percent of women negotiated more money, compared to around 51 percent of men. Other research showed that females seek greater amounts that are still 30 percent lower than their male counterparts. Since starting salaries influence raises and lifetime earnings, women in middle-paying positions who do not bargain upfront may forfeit up to $750,000 during their careers. That figure jumps up to $2 million for those in high-compensating jobs. Other investigations indicate that employers penalize females who barter while rewarding males.

compensationpolicies1Consider these varied solutions. Coach your female employees on negotiating skills. Inform personnel who set worker compensations about your firm’s disparity, and authorize them to advocate for women throughout pay talks. Alternatively, ban all wage bargaining and base nonnegotiable salaries on jobs and experience. That strategy tasks your company with paying impartially so candidates will not need to haggle to get fair earnings.

Previous Salary Irrelevance

Stopping the pattern of women losing millions during their careers due to low-balled job offers could involve ignoring former remuneration levels. Instigate this approach by basing earnings on what positions are worth. Direct hiring managers to discontinue relying on candidates and staffers’ prior incomes when setting their new ones. That practice deprives mothers who return to the workforce after breaks to raise families. Women’s earlier situations also have greater chances of inferior wages. To prevent previous discrimination from continuing, do not ask contenders for their salary histories.

Mothers’ Helpers

Research indicates that compensation for both genders’ first post-education jobs is similar. The pay gap becomes obvious after several years when women begin having children. Their earnings may lag due to shorter shifts, breaks to rear young kids, and/or extra time off when child care or health issues arise. Some employers assume incorrectly and thus unfairly that those events will occur. Policies that support working mothers including paid sick days, parental leaves, and affordable child care can help women have ongoing careers. Economists report that paid parental leaves raise probabilities of moms resuming jobs, increasing work hours, and receiving higher wages.

Workplace Flexibility

The largest pay gaps exist in the least accommodating occupations regarding work times and locations. Disparities shrink when staffers can choose their schedules or shifts and substitute for each other easily. Those practices do not penalize women who work fewer hours as much. Offering greater flexibility in traditional male roles could encourage fathers to balance parenting responsibilities better with their employed wives.