Pay Transparency: Compensation Models for the Future

Once again the federal government has rattled the cages of employers. If you haven’t heard the latest from the U.S. Department of Labor’s Office of Federal Contractor Compliance, you'd better read up, especially if you are a federal contractor or work for one.

The National Law Review reported on Sept. 15 that the OFCC issued a proposed rule that would bar federal contractors from firing or retaliating against people for discussing their pay or the pay of their co-workers. This proposed rule coincides with President Obama’s Executive Order 13665, signed in April, which requires pay transparency among federal contractors.

From a traditional HR perspective, compensation and pay “secrecy” has always been the norm for companies. I am willing to admit that I have been a supporter of policies prohibiting employees from discussing pay with co-workers. I have been in countless employee meetings where this has been discussed, given verbal or written warning notices for violations, but luckily have never had to terminate anyone for violating confidentiality of pay policies.

Why has it been the norm you ask? From a management and HR standpoint, it is not about trying to hide information from employees, but often based on the fact that employees are paid differently based on education, experience, knowledge, skills, abilities and performance. There isn’t a huge conspiracy by most employers to hide this information. They just understand that it is harder to explain differences in pay because employees often perceive themselves as being equal to their peers or even on a higher level than their peers. Think about it -- if employees knew how much their bosses or co-workers made, jealousy and feelings of being undervalued would follow.

That's the traditional argument. But I think it’s safe to say that because this is a fairly new concept for businesses to explore pay transparency shouldn’t be an idea that is automatically discredited.

Regardless of what employees do or do not discuss with their co-workers, each employee has ideas about what they make vs. their peers and superiors. Often this is very different from what the true reality of the pay structures within a company are. In recent studies it has been found that employees believe that their superiors make less than they really do and that their peers make more than they really do.

While this sounds very off base, has been studied repeatedly since the '60s. This harbors and discourages professional development and career growth within the company.

Think about it. If employees think they will only make a little bit more for increased responsibility, wouldn‘t they be more inclined to stay where they are? Or, even worse, seek opportunities somewhere else, where they can make more and grow in their career?

Additionally, employees who feel their peers make more than they do will tend to ask for higher raises or salaries, which can become awkward and problematic on both sides at performance evaluation time.

Let’s look at the opposite approach. Pay transparency and why it is something for companies to consider. I am not suggesting sending out a company email with everyone’s pay information to make sure everyone feels like they are being paid fairly versus their peers. What I am asking for us to at least be open to are policies and transparent company cultures that find a middle ground on this topic.

In a recent study done by Cornell and Tel Aviv University, the study found that pay transparency worked significantly better than pay secrecy in their experiment. While this was a small study conducted with students, the results were concrete. The test subjects who were allowed to discuss their pay and bonuses with peers outperformed the ones who were prohibited from doing so.

What does this mean and how can a company make this work? It’s actually not terribly difficult to accomplish. Creating aggregated pay and salary structures is a practice the most successful companies in the world already have in place. Each position in a company should have a compensation model in which there is a base/entry level wage, an average wage and a top performer wage. Implementing these and updating them based on market and uniformly and in compliance with employment labor law.

Taking this a step further is really where pay transparency comes into play. If an employees find out they are is being paid on the higher end of the structure, or even above the average wage, they may feel a sense of value, fairness and appreciation. For those that are paid under the average, this creates an opportunity to learn why they are under the average and what they can do to earn more. Overall, this engages employees in a way that cannot be measured monetarily and creates more loyalty within the company's ranks.

The cold hard fact is that your employees are talking about their pay. Silencing them hurts your company more than it helps. Just this once I suggest following the federal government’s lead and join the new way wave of transparent compensation models.
Monica Bitrick is CEO of Bitrick Consulting Group, an Idaho Falls human resources consulting company.

Work begins on Freddy's Frozen Custard site

The site on Woodruff Avenue where Freddy's Frozen Custard is to be built.

For the sake of everyone who has asked about dirt being moved on Woodruff Avenue near WinCo Foods, that site is where Freddy's Frozen Custard and Steakburgers is going.

Freddy's announced last December that it was planning a store in Idaho Falls and filed site plans with the city building office in April.

The company was founded in 2002 by two brothers, Bill and Randy Simon, whose father, Freddy Simon, was the inspiration for the restaurant (and obviously its namesake). The first franchise launched in Hutchinson, Kansas, in 2004 and by October 2013 the company had opened its 100th location, in Bowling Green, Ky.

According to the Web site, Freddy's plans to open 400 more stores over the next 10 to 15 years.

Earlier this year, Freddy's rated No. 9 in a Consumer Reports ranking of hamburgers.

Who's afraid of Shaddow Domain?

Julie Oliver, behind the counter at Shaddow Domain

Julie Oliver recognizes some people are never going to visit her store, Shaddow Domain, 175 S. Eastern Avenue.

Anyone who is freaked out by pentagrams, Wiccan accoutrements and books about the occult (and there are a few) are by and large not her target audience.

Nevertheless, she's not a devil worshiper, just a small retailer and good neighbor who's been in business for 12 year. She would like to encourage anyone with an open mind to stop by for a visit.

"We're not scary," she said. "The hardest thing is to get people in the front door. It's just a fun place."

With Halloween approaching, you might expect a surge in business, but it's not that big a bump. "It's a big time for people to come in who don't normally come in," she said.

Before starting the store, Oliver worked for 20 years at Chesbro Music, on the second floor, where all the sheet music is kept. Working at Shaddow Domain has given her more face time with the public, which she likes.

Nobody has ever given her flak, and obviously there's a market for the shirts, incense, candles, dolls and novelties that Shaddow Domain sells. The store's Facebook page has 1,986 likes.

"People are looking for so much different stuff," Oliver said. She has no aspirations to grow the business to get any bigger than it is.

"If it got huge, it would lose something special," she said.

Nearest Hobby Lobby store remains in Logan, Utah

We're still kind of buzzing from the response the Hobby Lobby story got last week (6,114 page views in two days) and are waiting like everyone else with bated breath for the official announcement. In the meantime, the nearest Hobby Lobby store remains in Logan, Utah. If it's a deal to you, it might be a nice weekend for a drive. Tell them BizMojo Idaho sent you.

Guns and Gear eyes early November opening

Work has been going on at Guns and Gear, on Crane Drive, since April.

With a new business, Guns and Gear, due to open in two months, Shane Murphy thinks he knows his niche fairly well.

Sportsman's Warehouse and the soon-to-be open Cabela's can have the hunters. Guns and Gear is aimed at "couch commandos," the firearms aficionados who can't get enough of gadgets.

"A $3,500 heat sensor comes out and they've got to have it," Murphy said. "It's very interesting to see the level of interest in that high tactical stuff."

Located on Crane Drive, south of Pancheri, Murphy said they are eyeing a soft opening the first week of November and a grand opening Nov. 14. The project got underway in April, and has been smooth sailing since then, he said.

When finished, there will be roughly 15,000 square feet, about one-third of it devoted to retail. On the range, there will be 15 lanes, 8 of them high tactical.

Murphy said they anticipate hiring around 14 people, including an in-house gunsmith who will be licensed to do warranty repairs on major brands. "We want to be able to fix it or modify it on the spot, not send it off for a week or ten days," he said.

For information, call 521-4564. To check them out on Facebook, click here.

Olive Garden debates wisdom of unlimited breadsticks

In three years of blogging eastern Idaho business I have never seen a reaction like the one to Wednesday's post about Hobby Lobby. In two days, BizMojo Idaho got more visitors and pageviews than the entire month of August. It was all due to the way the story got passed around on Facebook.

It's only natural to want to prolong the excitement, so here's a story about Olive Garden, another brand that seems to provoke a passion in these parts. I'm not expecting a Yellowstone Caldera eruption of hits, but I can dream, can't I?

http://www.salon.com/2014/09/12/olive_garden_investors_are_not_pleased_with_the_chains_breadstick_situation/

Personality-based interviewing works for both sides

Have you ever watched ESPN's features on athletes? If you haven’t, you are missing out. If you have, you may have a good idea of what a job interview with me would be like. Of course that is without the television cameras, film crews, and an inspirational story or background that I will be asking questions about.

ESPN’s method for encouraging and gathering information from their subjects hands down should be a model for how an employer should do an interview. This isn’t a concept that is really hard to grasp, so I am going to encourage a little bit of thought on this one.

Job seekers, I want you to imagine a job interview in which you can expect to be interviewed as an individual -- meaning getting to know you as a person -- about your professional experience.

Employers, I want you to think about how you can do that by looking beyond the typical “What are your strengths and weaknesses?” questions.

Before we completely demolish the concept of nice, structured, streamlined interview questions that solely focus on nitpicking a resume, sprinkled with a behavioral question or two, it’s important to remember that interview questions should be a custom fit for each company, and really each job.

However, doesn’t a job go beyond why a person is interested and how a candidate responded to a similar job-related situation previously? Of course it does! And that is why the concept of personality-based interview questions and approaches are becoming crucial to the interview process.

Personality-based questions are designed to find out more about the candidate on a personal level. Candidates are posed with a question that in theory should allow the interviewer to introspectively assess personal attributes, characteristics and goals, to name a few. This is important for a number of reasons (not including finding new work buddies) but foundationally allows an employer to determine if the candidate is the right personality fit. In turn, personality fit is crucial to a candidate being successful in his or her job and being able to assimilate into company culture.

Additionally, these questions can at times be a conversation “ice-breaker” – which leads to the candidate feeling more comfortable in responding to future questions by the interviewer. In turn, this allows in the interview to become more or less of a dialogue between interviewer and interviewee, allowing the interviewee to feel more at ease with the process (and to be more open with responses opposed to carefully “scripting” responses geared towards the perceived “right” answer.)

The great news is that these questions aren’t hard to create. One personality based question I ask in interviews is, “If you could have any job in the world, without any boundaries, what would it be?” I have heard everything from health inspector to sitting on the beach with a margarita – after winning the lottery of course. Both responses were exactly what I was looking for and gave me insight into each candidate.

Overall, employers need to get creative in finding the right people for the job, not a person. Personality-based interviews allow companies to go beyond the resume to get a well-rounded view of a candidate.
Monica Bitrick is the CEO of Bitrick Consulting Group, a human resources company in Idaho Falls.