Workplace Practices

December 2005 » Business

FACTS

Raises as part of an overall compensation program

by SHANON FAUERBACH, P.E.

Fair compensation is an important part of a healthy workplace environment, and raise practices are a major factor considered by staff in how they rate their firm's standing.

Based on research of participants in the 2005 Best Civil Engineering Firm To Work For Contest, the median percentage increase for staff payroll in 2004 was 4.19 percent, and the range was from 2.4 percent to 12.47 percent.

Additionally, our data assessed how employees feel about such practices with the Employee Satisfaction Survey component of the contest, which in total included responses from more than 14,000 respondents. When we asked employees how satisfied they are with their current company's practices regarding frequency and amount of raises, the response was mixed.

Thirty-six percent of respondents were satisfied and only 26 percent were very satisfied. Compared with satisfaction levels indicated for retirement plans - 39 percent were satisfied and 42 percent were very satisfied - we can conclude that staff aren't as enthused with practices regarding raises as with various other benefits.

Check out some other interesting findings in the chart below.

Since compensation - including salary, bonus, and retirement plan contribution - was indicated to be of major importance in employees' decision to remain with their current employer (86 percent of respondents said it was important or very important to them), it may be worthwhile taking a look at your firm's raise policy as part of your overall compensation program.

 

FIRMS

Raises issued for licensing milestones

Spalding DeDecker Associates, Inc. (SDA), a civil engineering and surveying firm headquartered in Detroit, is an employee-owned firm with 111 employees and three branch offices.

Because SDA relies heavily on the expertise and credentials of its staff - as do all professional service firms - it goes above-and-beyond the norm to compensate staff when they achieve licensing milestones. For example, when an employee earns an E.I.T. designation, their annual salary is raised $500. Staff who earn their professional engineer or surveying license receive a $1,000-per-year raise. Others who obtain applicable licenses or certifications receive a $500- to $1,000-per-year raise, depending upon the certification.

According to Dawn E. Webb, SDA's human resources manager, this benefit motivates staff more than the more common method of compensation for achieving licensing milestones, which is a one-time bonus, typically ranging from $500 to $1,500. She said, “We feel that by offering a longer-term benefit, it will continue to motivate others to obtain their license and take us to a higher level of excellence in the engineering community.” Additionally, Webb said, the benefit “demonstrates to our employees and to our clients that we value excellence. By putting a premium on licensure and self-improvement, we are setting the bar for quality.” Of course, she added, “While the monetary increase is certainly a motivator, the desire for self-improvement and to advance in one's field is the major motivation.”

 

FEEDBACK

by SAMAN CHAUDRY

Total compensation comparisons

Gone are the days when salary was the only consideration for people making a career move. While salary remains a vital part of the job change equation, recently it's been folded into an evaluation of total compensation. Now candidates conduct a line-by-line comparison of what is being offered versus their current package. To maximize your chances of having someone accept an offer, it's critical that you understand the individual's entire current compensation and benefits package. In particular, you need to ask the following questions:

• What was your bonus last year, and what do you expect this year? Describe the methodology used to determine the bonus amounts.
• What type of healthcare plan do you have now? What is your deductible, and what is your out-of-pocket expense per year (pre-tax or post tax)?
• What is your firm's 401(k) match and vesting period?
• How many days of paid vacation do you receive annually? What is the actual dollar value of this benefit based on your salary?
• Do you expect a salary increase in the next few months,and if so, what will it be?
• What other income-related perks or benefits do you receive, such as a company vehicle or client “entertainment” budget?
• Do you have special work circumstances that facilitate work/life balance, such as flex-time or working from home? Once you understand an individual's current compensation and benefits package, you can lay out a competitive, educated offer. Using a line-by-line analysis, you and the candidate can identify and address any areas of discrepancy. Note that you should go over the total package while extending the offer, instead of letting the candidate figure it out on his or her own.

Saman Chaudry is a principal with ZweigWhite in San Francisco. She can be contacted at schaudry@zweigwhite.com.


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