Compensating employees who have many different job responsibilities can often be a problem. Members trying to respond to our wage and salary surveys may question their ability to find a job match. A William M. Mercer book called "The Use and Abuse of Salary Surveys - A Primer on Pricing Your Jobs" suggests the following two approaches in analyzing "hybrid" jobs:

1. The Majority Rules Approach. Match the job that consumes the majority of the employee's time. Then increase the competitive salary by a 10% to 15% premium for the additional responsibilities.
2. The Combination Approach. Calculate a weighted average market composite between the respective jobs (for example, Compensation Analyst/Recruiter = 60%/40%). These two approaches will help you to compensate a "non-traditional" job using available salary surveys.

AE

PAY FOR FIRST LINE SUPERVISORS

Paying first line supervisory employees for their contributions to a company requires careful consideration, and while compensation may not be the single most important thing a supervisor gets from his job, the paycheck must bear a favorable relationship with those the employee is supervising.

There should also be an awareness of a problem which can develop called "pay compression," which occurs when the pay differences become narrowed between supervisors and their higher level non-supervisory subordinates. Higher paid non-supervisory employees may become reluctant to accept supervisory positions if there is only a marginal increase in pay (or, perhaps, even a decrease).

A commonly used rule of thumb is to average the hourly rates of the highest paid five employees and convert it to a monthly figure by multiplying the result by 173.3 for salaried, exempt supervisors. Studies reveal that the middle fifty percent of employers pay first line supervisors within a range of 105% to 120% of those they supervise.

The supervisory pay practice should be reviewed at least as often as is pay for hourly or other non-supervisory employees. Such reviews are best conducted at some other time during the year than when hourly rates are adjusted. Salary decisions affecting supervisors should focus on achievement and individual recognition to the greatest extent possible.

NAE Labor Relations Reporter

RELOCATING EMPLOYEES & THEIR COST OF LIVING

The changes in living costs experienced by relocating employees have prompted an increasing number of employers to offer cost-of-living differential payments, according to a survey of 386 relocation managers by Runzheimer International, a Rochester, Wis.-based consulting firm.

The share of employers with formal cost-of-living policies rose from 36 percent in 1995 to 41 percent in 1997, the biennial survey found. The cost-of-living payments that employers made to their transferred employees averaged $6,106 per year, the survey revealed.

"Widening differences in North American housing costs, along with employees' concerns for family and lifestyle issues, have caused companies to look for ways to keep transferees whole," according to Rod Reimann, a Runzheimer consultant. "This means allowing the transferee to maintain an equivalent standard of living in the new location," he said.

As for actual moving costs, the survey found that many employers have begun offering lump sum allowances instead of reimbursing employees for the specific expenses they incur. Employers using lump-sum allowances reported median savings of $15,000 per move. ("Survey and Analysis of Employee Relocation Policies and Costs" can be obtained for $345 by calling Runzheimer International at 1-800-558-1702, ext. 2256).

Bulletin to Management

SURVEY REVEALS CHANGES IN BENEFIT SPENDING

While employers continue to spend more money annually on employee benefits, the percentage of this increase per year has decreased compared to a few years ago, according to a recent study released by the Employee Benefit Research Institute (EBRI) in Washington D.C. The report includes a number of significant findings concerning employer spending on benefits in calendar year 1996. Among the most interesting points:

In 1996, employers spent $4,425.7 billion on total compensation. Wages and salaries accounted for the lion's share, $3,633.6 billion, while benefits made up the remainder, $786.6 billion.

In the 1980s, the average annual growth rate in employer spending on all benefits was 8.0 percent. In the 1990s, this growth rate fell substantially to 4.9 percent.

The slower growth rate in employer spending on group health insurance accounted for a large part of the slower growth rate in overall spending on employee benefits. In the 1980s, employer spending on group health insurance grew at an average annual rate of 11.9 percent, growing to $186.6 billion in 1990 from $61.0 billion in 1980. In the 1990s, the average annual growth rate in employer spending on group health insurance slowed to 5.7 percent, growing to $262.7 billion in 1996 from $188.6 billion in 1990.

Employer spending on retirement income benefits, less Social Security, increased at a slightly faster rate in the 1990s than in the 1980s. In the 1980s, employer spending on retirement income benefits, less Social Security, increased at an average annual rate of 4.0 percent, growing to $154.2 billion in 1990 from $104.5 billion in 1980. In the 1990s, employer spending on retirement income benefits, less Social Security grew at an average annual rate of 5 percent, growing to $206.9 billion in 1996 from $154.2 billion in 1990.

Private sector employers spent $55.3 billion on retirement income benefits, less Social Security, in 1980. This amount increased to $63.2 billion in 1990, and to $94.8 billion in 1996.

State and local governments spent $19.1 billion on retirement income benefits, less Social Security in 1980. This amount increased to $33 billion in 1990, and to $48 billion in 1996.

The federal government spent $28.4 billion on retirement income benefits, less Social Security and railroad retirement, in 1980. This amount increased to $55.4 billion in 1990, and to $61.5 billion in 1996.

Employer spending on other benefits, i.e. unemployment insurance, life insurance, and workers' compensation, increased to $86.2 billion in 1996 from $75 billion in 1990, growing at an average annual rate of 2.3 percent.

Employer spending on Social Security, Old Age, Survivors, Disability, and Hospital Insurance (OASDHI), grew at an average annual rate of 9.8 percent in the 1980s, slowing to 5.1 percent in the 1990s. In 1980, employers spent $67.2 billion on the OASDHI program. This amount increased to $170.7 billion in 1990, and to $229.6 billion in 1996.

"The interesting thing about this latest survey is how the annual rate of spending for health care costs has dropped," says Ken McDonnell, a research analyst for EBRI. "However, this could be a temporary situation, since many HMOs intend to raise their rates considerably in 1998. And Medicare rates are another big variable that could change in the next two or three years."

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