California and Washington have both enacted pay transparency laws this year

BY ERIN BENDIG | PUBLISHED 30 JANUARY 2023

Earlier this month, pay transparency laws went into effect in Washington and California, requiring employers to list pay ranges on job listings. Later this year, New York state will also follow suit. These laws, already in place in Colorado, are one way that states are combatting wage gaps —including racial and gender pay gaps. In fact, the gender pay gap was cut by 45% in organizations that disclosed pay compared to those that didn’t. As more states, including South Carolina and Massachusetts, begin developing pay transparency laws, this could soon become the new norm. 

Here’s what you need to know about the new pay transparency laws effective this year.

California: At the beginning of this year, California’s labor code(opens in new tab) began requiring employers with more than 15 employees to list salary ranges on job postings, even for postings on third-party websites. 

Employers are also required to share pay ranges for an employee's current position, upon request — which is likely to put the cat among the pigeons... Home to many powerful companies — like Apple and Wells Fargo — and to millions of employees, California's pay transparency laws could soon become the new normal across states. 

Washington: Similar to California, Washington now requires employers with more than 15 workers to share salary information on job postings — both internally and on third-party sites like Glassdoor and LinkedIn — thanks to the Equal Pay and Opportunities Act(opens in new tab). Furthermore, company benefits, like health care, retirement benefits and sick leave, are also required on job listings. These requirements are effective whether the applicant will fill a position in person or remotely.  

Rhode Island: Rhode Island has also required further pay transparency from employers. According to Rhode Island’s Pay Equity Act(opens in new tab), if requested, employers are required to provide pay ranges for job listings if "inquired about". However, they don't have to list these ranges outright on job listings. Employers will also be required to disclose salary ranges before an employee is hired or before they change positions. 

New York State: New York state’s transparency laws will go into effect in September of this year. Starting in September, New York employers are required to share pay ranges for job listings. This applies to employers with four or more workers. Pay transparency laws have been in effect in New York City since November 1, 2022, which made it the largest municipality in the U.S. to codify pay transparency.

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Source: Kiplinger

https://www.kiplinger.com/personal-finance/more-states-roll-out-pay-transparency-laws

January 27, 2023

On November 28, 2022, the Securities and Exchange Commission (the SEC) published final clawback rules (the Final Rules) in response to the long-standing requirement under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to increase transparency and disclosure in financial reporting; the Final Rules were adopted by the SEC on October 26, 2022, and become effective 60 days following publication, i.e., January 27, 2023.

Ultimately, the Final Rules will require companies that are listed on the NYSE or NASDAQ to establish, comply with, and disclose a written policy that provides for the recovery, or clawback, by the company of any incentive-based executive compensation that is received by current and former executive officers during the three-year period preceding any requirement to prepare an accounting restatement based on a misstated financial performance measure. Smaller reporting companies, emerging growth companies, foreign private issuers, and controlled companies will not be exempt from compliance with the Final Rules.

In the near term, new Rule 10D-1 of the Securities Exchange Act of 1934, as amended (the Exchange Act), instructs the NYSE and NASDAQ to revise their listing standards to require listed public companies to establish, adopt, and abide by a written clawback policy mandating the recovery of any excess incentive-based compensation (i.e., compensation that is based upon attaining a specific financial reporting measure) that is received by current or former executive officers in the event that the company needs to prepare an accounting restatement due to material noncompliance with a financial reporting requirement under applicable securities law. Affected companies will be required to file their clawback policies with, and provide certain disclosures in, their annual reports and certain other public filings.

The Final Rules require each exchange to file its proposed revised listing standards within 90 days of the publication date of the rules, i.e., February 26, 2023, and the proposed revised listing standards must be effective by the first anniversary of the publication date, i.e., November 28, 2023. This means that, on the date that the listing standards become effective (which may be before November 28, 2023), all incentive-based compensation received by executive officers on or after such date must be subject to a compliant clawback policy, and all disclosures required by the Final Rules must be included in all applicable SEC filings required on or after that date. The latest date for companies to adopt a compliant clawback policy is 60 days after the revised listing standards become effective, which, at the latest, could be January 27, 2024, assuming that the applicable exchange’s revised listing standards do not have an earlier effective date. Companies should monitor developments regarding the revision of existing listing standards, as the dates noted are the latest possible dates.

The Final Rules are significantly more expansive than the prior rules adopted under the Sarbanes-Oxley Act of 2002, which require the recoupment of erroneously paid compensation to the CEO and CFO for material restatements resulting from misconduct. Under the Final Rules, clawbacks will be required for more types of restatements, including restatements that are not material (what the SEC calls “little r” restatements), in addition to those restatements that correct errors that are material to previously issued financial statements, i.e., “big R” restatements. Little r restatements correct errors that are not material to previously issued financial statements but would result in a material misstatement if (i) the errors were left uncorrected in the current report or (ii) the error correction was recognized in the current period. A finding of fault will not be necessary in order to trigger the obligation to recover compensation, and companies will be prohibited from indemnifying affected executive officers against the loss of erroneously awarded compensation. Further, the new rules will apply to more executives, i.e., all Section 16 officers, than are covered under most existing policies.

For purposes of the Final Rules, the definition of “executive officer” is the same as that found in Rule 16a-1(f) of the Exchange Act and includes a company’s president; principal financial officer; principal accounting officer (or, if none, the controller); any vice president of the company in charge of a principal business unit, division or function; and any officer who performs a policy-making function.

The company’s recovery shall be limited to any excess amount “received” during the three completed fiscal years prior to the date when the company became required to prepare the accounting restatement. Under the Final Rules, the term “received” is intended to mean that the applicable financial reporting measure connected to the incentive compensation has been satisfied and the incentive compensation has been earned, even if not yet paid, such that a bonus award would be deemed received in the fiscal year it was earned on the achievement of the performance measure, even if it was not actually paid until the following year. The clawback amount (on a pre-tax basis) is the difference between the incentive-based compensation received by the executives and the amount that would have been received based on the required restatement.

There are limited exceptions to the recovery requirement due to impracticability where the company has already made a reasonable attempt to recover the excess compensation and (i) direct third-party expenses incurred to assist in enforcing the policy would exceed the amount to be recovered, (ii) the company receives an opinion of home country counsel advising that the recovery would violate home country laws that predated the new rule, or (iii) the recovery would likely cause a tax-qualified retirement plan to fail to meet IRS requirements.

New disclosure requirements related to the Final Rules were also adopted in amendments to Item 601(b), Item 402, and Item 404(a) of Regulation S-K as well as to the cover pages of Forms 10-K, 40-F, 20-F, and, for listed funds, Form N-CSR, which require reporting the adoption and compliance with the clawback policy in annual reports, proxy statements, and information statements. These disclosures will need to be tagged using Inline XBRL. Under new Item 601(b)(97) of Regulation S-K, affected companies will need to file a copy of their clawback policy as an exhibit to their Annual Report on Form 10-K. Under new Item 402(w) of Regulation S-K, to the extent that an accounting restatement becomes necessary, a company will need to disclose the date when it became required to issue an accounting restatement, the amount of excess compensation that was awarded, an explanation of how the excess amount was calculated, how much of the excess amount had not been recovered as of the end of the last completed fiscal year, and an explanation as to any impracticality that precludes its recovery.

A company will be subject to delisting if it does not establish and comply with a clawback policy that meets the requirements of its exchange’s listing standards. As such, companies listed on the NYSE or the NASDAQ are strongly encouraged to begin the process of preparing and implementing a clawback policy for incentive-based executive compensation, determine whether they need to amend any of their current policies in order to comply with the Final Rule’s requirements, confirm which executive officers will be subject to the policy (including both current and former officers), and consider how the Final Rules may affect their existing compensation plans or accounting practices and what measures could reasonably be taken to recover any such compensation. While companies will not be required to adopt a clawback policy, or amend an existing one, to comply with the new rules until after the exchanges publish final revised listing standards implementing Rule 10D-1 and such standards become effective, companies can and should begin the process of evaluating their current circumstances and planning accordingly.

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Source: JD Supra

https://www.jdsupra.com/legalnews/sec-adopts-new-executive-compensation-5450402/

January 17, 2023 — Scottsdale, Arizona— WorldatWork’s Pay Equity Study finds an increase in organizations acting on pay equity.

The survey revealed 70% of organizations are taking action on pay equity in 2022, a 10% increase since 2019 and a 4% increase over 2021. Only 2% of organizations reported not having pay equity on their radar. Three-quarters of organizations reported that they have been doing pay equity analysis for three years or more compared to two-thirds in 2021.

Organizations taking action on pay equity cite “it’s the right thing to do, to build/maintain a culture of trust and to remove bias against protected classes” as the main reason for doing so. The potential cost to fix pay inequities is cited as one of the largest barriers for companies that have pay equity on their radar and have not yet acted.

“Increasingly employees want more transparency on how they are being paid and why,” said Sue Holloway, CCP, CECP, compensation content director at WorldatWork. “With more pay transparency legislation being implemented, pay equity has garnered more attention from organizations.”

Organizations are increasingly concerned about the legal risk of pay inequity; since 2020 the proportion citing “mitigating legal risk” as very or extremely influential to their organization’s choice to pursue pay equity has increased by 20% to 71%.

While organizations have begun to include more types of compensation in their pay equity analyses, most organizations could improve their pay equity analysis by being more inclusive of all types of pay.

Among organizations that have a pay equity process in place:

• Nearly all include base pay in their analysis or are thinking of including it in 2023.
• More than half include or hope to soon include short-term incentive plan payments (e.g., annual bonuses, profit sharing), and sales commissions/incentive payment.
• Nearly half include or anticipate including long-term incentive plan equity/stock-based grants.
• Even the least-frequently included types of compensation, such as special one-time equity/stock-based grants are (or likely will soon be) included in pay equity analysis by more than a quarter of respondents.

“If companies conduct an analysis only on base pay, they could be leaving out important elements of total compensation. Including bonus payouts, equity grants, and other kinds of compensation results in a more holistic analysis.” – Emily Cervino, Head of Fidelity Stock Plan Services Industry Relationships and Thought Leadership

When it comes to communicating about pay equity:

• Just over one in ten share the high-level results of pay equity analysis publicly.
• Only a quarter share the high-level results with their employees.
• And only a third even share the fact that they are doing a pay equity analysis with their employees.

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Source: HRO Today

https://www.hrotoday.com/ticker/worldatwork-survey-finds-70-of-organizations-are-taking-action-on-pay-equity/

Payroll errors can cost businesses up to $705 per error

OKLAHOMA CITY--(BUSINESS WIRE)--One in five payrolls in the United States contains errors, each costing an average of $291, according to a new Ernst & Young survey. The study also shows the negative impact of traditional payroll methods where perfect payrolls often do not occur.

The average organization makes 15 corrections per payroll period, according to EY. The effects are costly: lost revenue, hours correcting errors, and potential lawsuits and fines.

“Payroll errors have consequences for employees, businesses and the broader economy,” said Chad Richison, founder, chairman and CEO of Paycom. “Organizations need to ensure their payrolls are 100% accurate and not hindering their businesses or people. With Beti, Paycom’s self-service payroll solution, employees are empowered to identify and correct errors ahead of time so everybody wins. Beti is the future of payroll.”

More than 40% of surveyed organizations facing litigation as a result of payroll errors resort to cutting jobs. More than half of those facing regulatory and compliance issues as a result of payroll errors also resort to cutting jobs. Others facing regulatory and compliance issues reported declines in employee morale (41%), fines (15%) and reputational decline (36%).

EY targeted companies with 250 to 10,000 employees and collected responses from 508 individuals who work at companies headquartered in the U.S. and work with payroll.

Survey results indicate an average 1,000-employee organization spends an aggregate of 29 workweeks fixing the most common payroll errors.

Time/attendance and expense errors were the most common payroll errors, occurring on average more than once per employee per year. Those errors cost about $250,000 per 1,000 employees, according to EY. Errors recorded include:

Payroll error category	Errors per 1,000 employees, per year	Cost per 1,000 employees, per year
Time/attendance and expense	1,139	$250,000
Vacation/PTO/sick time requests	721	$220,000
Benefits	503	$140,000
Schedule earnings and deductions	410	$135,000
W4 and tax allocation changes	229	$135,000
Direct deposit	159	$45,000

The top five most time-consuming errors to fix — time punches, expenses, uniforms charge errors, sick time not being entered and errors setting up health savings plans — take nearly 29 40-hour weeks to fix per 1,000 employees. That’s more than half a work year spent on manual processes instead of strategy to advance a business. Fixing missing and incorrect time punches was the most time consuming; companies spent 26 minutes per employee fixing these errors in the last fiscal year.

The EY report comes on the heels of a Morning Consult survey commissioned by Paycom showing payroll errors cause nearly 1 in 5 American adults to take drastic actions and nearly 60% would have difficulty paying bills and making purchases if just $100 were missing from their check. The good news: Outdated payroll and related problems are easily fixable. For example, Paycom’s Beti guides employees to find and fix payroll errors before submission.

More information on the EY report can be found here.

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Source: Business Wire

https://www.businesswire.com/news/home/20221222005093/en/EY-survey-Payroll-errors-average-291-each-impacting-the-economy

Published Jan. 10, 2023 | Lindsey Wilkinson 

Dive Brief:

• Roger Lee and Teddy Sherrill have launched a new website, Comprehensive.io, that tracks and publishes tech salary ranges daily to advance pay transparency and eliminate pay inequity. Lee will serve as CEO and Sherrill as CTO.
• “For companies: you can look up the salary ranges that similar companies are posting for similar roles,” a Friday LinkedIn post from Comprehensive.io said. “If you’re not complying with the pay transparency law yet, we hope this data can help you figure out what salary range to use.”
• In order to provide accurate information to users, Comprehensive.io aggregates job posts from over 700 tech companies, totaling more than 53,000 job postings, and extracts the salary ranges daily, according to the website.

Dive Insight:

Starting Jan. 1, California required employers to include salary ranges on job postings. A similar law went into effect in New York City last year. As transparency laws become more common, business leaders and employees alike can use the increased visibility to their advantage. 

In addition to tracking salary ranges, Comprehensive.io provides users with pay transparency compliance rates for California and New York City. 

Compliance rates are calculated by dividing the number of companies that include salary ranges in job posts by the total number of companies required to be compliant per relevant location, according to Comprehensive.io. 

The California compliance rate sits below half at nearly 42%, while New York City’s is nearly two-thirds, according to Comprehensive.io.

A company is considered compliant if the majority of jobs posted on its career page in the relevant location contain a salary range.

The website also highlights how employers seem to test the limits of the transparency laws’ “in good faith” requirement. 

Tesla sits atop the list of companies with the highest salary range for senior software engineers, with a salary range of $83,000 to $418,000, according to the website. Snowflake is second with a salary range of $214,000 to $328,000 for senior software engineers, according to Comprehensive.io. 

Before working on Comprehensive.io, Sherrill was CTO at Restaurant Brands International, where he created a TypeScript codebase for restaurant apps including Burger King, Popeyes and Tim Hortons, according to his LinkedIn. Co-founder Roger Lee created Layoffs.fyi during COVID-19 to track tech layoffs and co-founded Human Interest, a digital 401(k) provider for businesses, in 2015, according to his LinkedIn.

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Source: HR Dive

https://www.hrdive.com/news/pay-transparency-tracker-California-NYC/640103/

Juliana Kaplan | Jan 5, 2023, 7:00 AM

The Federal Trade Commission wants to make sure your boss can't force you to sign away your rights to work at a similar company — or even start your own business.

Under a new proposed rule, the FTC would ban employers from saddling workers with noncompete agreements that prohibit them from working at competitors, or starting similar businesses. The Commission argues that noncompetes are an unfair method of competition, violating the Federal Trade Commission Act — and their ban would broaden opportunities for American workers, putting almost $300 billion more in their pockets annually.

"Why are we doing this? Basically, in short, there's a whole raft of economic evidence that now documents the ways in which these noncompete clauses undermine competition and competitive conditions," FTC chair Lina Khan said. 

Theoretically, noncompetes are meant to stop primarily high-level employees from jumping ship to other companies, bringing proprietary information and other knowledge with them.

But, in practice, noncompetes are more sweeping. Over 30 million workers are made to sign noncompetes, according to the National Employment Law Project, and over a third of those workers are asked to sign the agreements after they've already accepted a job. In some cases, workers can't start their own businesses similar to the ones they're working in.

"If you're a phlebotomist or a journalist and you think that you can't practice your trade in the area in which you work for a long period of time, that's still significantly chilling. It could still mean that you don't match with the optimal job that you want," Elizabeth Wilkins, director of the office of policy planning at the FTC, said. "You can't get a raise, and you can't ask for the kinds of things that you might be able to ask for if you could get a better job."

Agreements are sometimes foisted upon low-wage workers, preventing them from jumping ship to a different restaurant or retail store offering higher pay. Among workplaces paying an average of less than $13 an hour, 29% have noncompetes for all workers, according to a report from the left-leaning Economic Policy Institute.

One famous example of noncompetes: Stopping sandwich sales. In Illinois, sandwich chain Jimmy John's settled a lawsuit from the state's attorney general in 2016, and said it would not enforce noncompetes on its workers. Workers had been banned from working at any business within two or three miles of a Jimmy John's that made over 10% of its revenue from selling "submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches" for two years. 

The White House has already taken aim at noncompetes as a barrier to competition. President Joe Biden signed an executive order last summer encouraging the FTC to ban or limit the agreements. Now, the FTC is doing just that, with its proposed rule outlawing employers from entering into, maintaining, or making it seem as though a worker is subject to a noncompete. Independent contractors and unpaid workers would be subject to the rule. Under it, employers would have to rescind current noncompetes and let workers know they're doing so. 

The public will have 60 days to submit comments on the proposed rule, which the FTC will then review and potentially incorporate into a final rule.

Anecdotally, some businesses have recently been more dogged in enforcing noncompetes amidst labor shortages in attempt to keep workers. The rule is likely to attract ire from businesses which deploy noncompetes.

Crucially, noncompetes are one mechanism for maintaining what's called monopsony power — which means that, due to a lack of competition, employers have more power over the labor market, and the ability to do things like set wages at lower levels than a more competitive market would create. 

The Treasury Department previously found that wages are 15% to 20% lower currently than they would be in a perfectly competitive labor market, showcasing the monopsony power employers still hold. One reason for those suppressed wages, according to Treasury: Noncompetes. 

"If this rule were to be finalized and go into effect, workers that are currently stuck in place, effectively, would now be able to freely move to another job," Khan said, adding: "I would think that would basically force employers to compete more vigorously over workers in ways that should lead to higher wages. That should lead to improved working conditions."

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Source: Business Insider

https://www.businessinsider.com/ftc-wants-ban-noncompete-agreements-workers-make-300-billion-more-2023-1

By Rebecca (Becky) Burton and Peter Kim | December 1, 2022

Equity-focused increases drive overall non-employee director compensation growth

Companies remain vigilant in their pursuit of balanced yet attractive pay programs amid a turbulent global economy. WTW’s Global Executive Compensation Analysis Team (GECAT) has completed its annual S&P 500 year-over-year director pay program analysis comparing results between 2022 and 2021 proxy data. Total pay for non-employee directors continues to grow at a modest but fixed rate led by a particular focus on equity.

More than half of companies (55%) disclosed pay program changes in 2022, compared with 39% of companies reporting changes in the prior year, reflecting a return to pre-pandemic prevalence. Approximately one-third of companies (34%) increased the value of their annual equity grant, while just under one-fourth (23%) of companies increased their annual cash retainer. Only 16% of companies adjusted their non-core pay elements.

The combination of cash and equity changes has pushed pay levels to a new milestone in the history of GECAT’s annual study, and median total direct compensation (TDC) now rests at $300,000 (a rise from $290,035). Additionally, in what appears to be an acknowledgement of increased public interest in diversity and representation, the gender landscape has shifted from 76% male/24% female in 2018 to 70% male/30% female in 2022.

The median annual cash retainer remained steady at $100,000.

68% of companies deliver all or a portion of annual equity value through restricted stock or restricted stock units, up from 67%

55% of companies made changes to their pay programs

58% of S&P 500 companies separate the roles of COB and chief executive officer (CEO)

Specific key findings include:

• Similar to the prior year, the median value of most individual cash components remained the same. Meanwhile annual stock compensation and TDC median values each increased 3%. Consequently, the pay mix for non-employee board members shifted to 61% in equity and 39% in cash (previously 60% in equity and 40% in cash).
• Shifts in cash compensation include the prevalence of board meeting fees declining by two percentage points to 4% and the prevalence of committee per-meeting fees declining by three percentage points to 5%. The median value of board meeting fees remained at $2,000, while committee per-meeting fees decreased from $2,000 to $1,500 (–25%). In contrast, additional committee chair retainer median values rose 17% (from $15,000 to $17,500).
• Median annual equity values continued upward across all vehicles, pushing overall pay mix more in favor of equity compensation. The median value increased 12% for stock options (from $89,167 to $99,955), 3% for deferred and phantom stock (from $165,047 to $170,000), 3% for restricted stock (from $170,043 to $175,055), and 4% for common stock (from $160,018 to $166,258). The number of companies granting deferred/phantom stock decreased one percentage point (to 17%), while the number of companies granting restricted stock increased one percentage point (to 68%). One-time initial stock grant prevalence remained at 9%, while the value at the median increased 18% from $170,000 to $200,000.
• Pay for board leadership roles outpaced TDC increases during the past fiscal year. Additional non-executive chair of the board (COB) pay rose 6% at the median (from $155,000 to $165,000), while additional lead independent director pay leapt 14% at the median (from $35,000 to $40,000). When compared with 2019, these values reflect an overall median increase of just 3% (from $159,959 to $165,000) for COBs and 33% (from $30,000 to $40,000) for lead directors.

• Will the utilization of equity continue be favored in lieu of cash, or will companies return their attention to include cash going forward?

Download the report

Title	File Type	File Size
S&P 500 director pay trends - Dec 2022 (EPM 1 Dec 2022)	PDF	.8 MB

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Source: WTW

https://www.wtwco.com/en-US/Insights/2022/12/2022-director-compensation-trends-at-S-P-500-companies

Workers left an estimated 28% of PTO unused in 2019, according to Sorbet. This year, that share jumped to 55%.

Published Dec. 22, 2022 Ryan Golden

The pandemic disrupted employers’ paid time off policies, but two years later, a recently published study shows the problem may have only grown worse.

Results from a July survey of U.S. adults by PTO solutions provider Sorbet found that 55% of PTO went unused by employees, compared to 28% in 2019. In all, the company said 57% of workers left PTO on the table this year, compared to 37% in 2019.

That unused PTO translated into a real monetary cost for workers, too. Sorbet estimated that the average employee held $3,000 in unused accrued PTO.

“We tend to think of PTO in terms of time, [but] people often don’t realize is that there’s a dollar and cents implication in your compensation when you accrue PTO,” Veetahl Eilat-Raichel, Sorbet’s CEO, said in an interview. “And when you don’t take it, you essentially end up with a hard-earned portion of your compensation locked up and unavailable to you.”

The vendor’s findings seem to mesh with those of other organizations. In August, Eagle Hill Consulting announced survey results that showed 42% of U.S. workers had not taken a vacation in the past year, though not all workers in the cohort reported having access to PTO.

The impact of flexible work

More than two years after COVID-19 created shutdowns and wreaked havoc on employers’ accrual systems, Eilat-Raichel said employers still have difficult questions to consider with respect to how their organizations handle time off, such as whether to adopt policies that group all PTO into one bucket and allow workers agency to choose how to use their time, or create separate buckets.

But as far as employees’ lack of willingness to take time off, the pandemic may have only highlighted a pre-existing problem. “Partially, this trend of not taking time off is deeply rooted in culture,” Eilat-Raichel said. “It has to do with the fear of the optics of it [and] being seen as unprofessional or less committed.”

Employees felt even less legitimacy to take time off with the advent of remote work, she added, because of the ways in which life activities and events bled into the work day.

Few trends are perhaps as reflective of this sentiment as the “workcation,” described in a March BBC article as a trend in which employees who are able to work from anywhere combine elements of a vacation with a workday in an exotic locale.

As excited as employees may be at the thought of cliff diving in between days spent working on a laptop, a recent Visier survey found that employees who worked while on vacation were more likely to quit their jobs than those who disconnected. The firm also found in a separate 2021 survey that one-third of employees felt pressured to check in with their jobs during vacation — while many respondents described vacation as a mere temporary relief from burnout.

What can HR do?

HR cannot solve the unused PTO problem by itself, Eilat-Raichel said. Instead, departments will need to work with leadership and management to address the cultural component involved. That could start with a baseline of ensuring employees have the time they need to take care of themselves, and then ensuring that leaders model the behavior they want to see from workers.

“If the general sentiment is that you need to always be on in order to perform, that’s not going to work,” Eilat-Raichel said.

Having access to the right data also may help. Eilat-Raichel said she is seeing employers track PTO use and include it as part of employees’ performance reviews so that managers can follow up on the subject.

Employers also may need to be aware of the inequities inherent in PTO availability and use. Sorbet, for instance, found that male employees received 10% more PTO days on average than women, and that men took 33% more days off than women.

Since the start of the pandemic, employers have experimented with enhanced PTO policies on a small scale. Google announced in February that it would implement a minimum of 20 vacation days for employees alongside expanded caregiving leaves. Others, like Hootsuite, have taken companywide weeks off with the aim of addressing burnout and mental health issues.

PTO can be an expensive and difficult benefit to administer, but the fact that workers let their time off go underutilized and unused “almost does the exact opposite of what PTO was originally intended to do,” Eilat-Raichal said. “There’s so much to be unlocked by this incredible benefit that you already have.”

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Source: HR Dive

https://www.hrdive.com/news/employers-unused-pto-problem-may-be-getting-even-worse/639436/

One advocate says reduced-hour weeks could become the norm in the next decade.

Published Dec. 21, 2022 By Ginger Christ 

It’s often said that one of the silver linings of the COVID-19 pandemic is the reshuffling of priorities. As people reflect on what matters most, they’ve put more value on a work-life balance and on personal time to spend with loved ones or on hobbies. 

“There is more to life than just slogging for hours and hours on end. I think the 21st century, the ‘quiet quitting,’ the Great Resignation, they represent that the working class, the workers, have decided they want to have quality, meaningful work they value, but they also have things they want to do outside of work,” said 4 Day Week Global Managing Director and Co-founder Charlotte Lockhart. 

Lockhart’s not-for-profit launched in 2019 after news spread about a successful trial the previous year at New-Zealand-based estate planning company Perpetual Guardian, a company co-founded by Lockhart’s 4 Day Week Global colleague Andrew Barnes.

Since then, 4 Day Week Global has led more than 250 companies through pilot programs on shortened weeks. The latest cohort of companies included 33 businesses, most of which were in the U.S. or Ireland or were fully remote. Of those, none said they planned to return to a five-day week after the six-month pilot ended, a report released Nov. 30 found. Companies reported average revenue gains of 38% compared to the previous year and rated productivity at a 7.7 out of 10 during the trial. 

On the employee side, about 97% said they wanted to continue with shortened weeks, and 70% said they would need to receive 10% to 50% more pay to work at a job with a five-day workweek, the report found. 

“The four-day week has been transformative for our business and our people. Staff are more focused, more engaged and more dedicated, helping us hit our goals better than before. Greater employee retention and faster hiring has been surprisingly powerful in driving improved business outcomes, too,” Jon Leland, chief strategy officer at Kickstarter, said in a news release about the pilot program. “We’re achieving more as an organization, while giving people time to start new creative projects, rest and be with their families. It’s a true win-win.”

Lockhart said there’s been a “real shift since the pandemic” on companies’ interest in shortening the workweek. 

“Prior to the pandemic, we really did have to explain to people all of the benefits that are there. Now, it’s about the how. We shifted from why to how,” Lockhart told HR Dive. 

Software company Buffer did two different consecutive trials on four-day workweeks starting in May 2020 as a way to give employees more flexibility. The company’s former Director of People Nicole Miller said, “The four-day workweek resulted in sustained productivity levels and a better sense of work-life balance.” 

Buffer has Fridays as the default day off, which employees may use as overflow days when needed to catch up on work. Employees still get paid the same as when they were working five days per week. 

Umber Bhatti, a content strategist at Buffer, said the schedule change initially took some adjustment. 

“It was strange when Thursday rolled around, and people would say ‘have a great weekend’ in Slack. I kept forgetting that meetings couldn’t be scheduled on Fridays and end-of-week deadlines needed to be met by Thursday. There was even a bit of anxiety on my part as I wondered if the work was really doable in just four days,” Bhatti said. “But gradually, I became confident that this schedule was actually realistic.” 

As more companies normalize reducing the time on the clock, Lockhart sees the four-day workweek movement making big strides in the coming years. 

“There are some real conversations being had not just by companies but also by governments in some shape or form, whether they be national or local. I think we’ve got to the point now where some form of reduced-hours working will be the norm in the next decade,” Lockhart told HR Dive.

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Source: HR Dive 

https://www.hrdive.com/news/companies-clocking-in-on-four-day-workweeks/639364/

ARLINGTON, VA, December 13, 2022 — Employers in North America need to reshape their performance management efforts and pay-for-performance programs to give them a much-needed boost, according to a survey of over 800 global organizations by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company. The survey revealed similar conclusions worldwide.

The survey found just one in four North America employers (26%) reported being effective at both managing and paying for performance. Additionally, the gap between the priorities for performance management and delivering on those objectives is wide. For example, more than nine in 10 North America respondents (93%) cited driving organization performance as a key objective for performance management, yet less than half (44%) said their performance management program is meeting that objective. Similarly, nearly three in four (72%) said supporting the career development of their employees is a primary objective, but only 31% said their performance management program was meeting that objective.

North America respondents also had mixed views on the effectiveness of managers in evaluating performance and differentiating pay. Less than half (49%) agree that managers at their organizations are effective at assessing the performance of their direct reports. A similar number — 46% — consider their managers effective at differentiating their direct reports’ performance. Further, only one in three organizations indicates its employees feel their performance is evaluated fairly. Interestingly, despite the rapid increase in remote and hybrid working models, only one in six employers (16%) reports having altered its performance management approach to align with such models.

“Employers have their work cut out to raise the bar on their performance management programs. Many recognize that their programs have not kept up with the changes due to the pandemic and tight labor market, yet they have not taken action. Ideally, employers will reshape their programs to correspond with new work styles and employee career aspirations and provide a better employee experience,” said Amy Sung, Work & Rewards global growth leader, WTW.

While most employers recognize their programs are falling short of expectations, the survey found that North America employers already have several initiatives in place or are planning or considering enhancing their performance management and pay-for-performance programs:

• Three in 10 respondents (34%) have strengthened the link between performance management and career development; another 60% are planning or considering doing so.
• Over half of employers (54%) currently ensure ongoing and meaningful performance dialogue between managers and employees in a remote/hybrid working environment; another 39% are planning or considering taking actions to ensure meaningful dialogue.
• Only 17% of employers have improved employees’ understanding of how their performance is evaluated, but 70% are planning to improve employee understanding.
• Nearly one in four respondents (23%) has improved the employee and manager experience, but 64% are planning or considering ways to improve the experience.

Employers that make the effort to improve their programs are likely to reap financial benefits. The study found that companies using performance management programs effectively are one and a half times as likely to report financially outperforming their industry peers and one and a quarter times as likely to report having higher employee productivity than their peers. Companies that are effectively using pay programs to drive individual and team performance are also more likely to outperform their peers (1.2 times) and report higher employee productivity (1.4 times) than their peers.

“Our results show that performance management can be a key competitive differentiator as can pay-for-performance programs. While most organizations are currently planning for larger increases in 2023, the need to demonstrate to employees how their pay is tied to performance has never been greater,” said Alex Weisgerber, senior director, Work & Rewards, WTW.

About the survey

A total of 837 organizations worldwide, including 150 North America employers, participated in the 2022 Performance Reset Survey. The survey was conducted during September and October 2022. North America respondents employ more than 2.7 million workers.

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Source: WTW (NASDAQ: WTW)

https://www.wtwco.com/en-US/News/2022/12/employers-are-reshaping-performance-management-and-pay-programs