“In the world of mathematical tiling, news doesn’t come bigger than this,” observes an article at theguardian.com.
It seems mathematics is upended with the discovery of a new type of pentagon “that can cover the plane leaving no gaps and with no overlaps,” and is only the 15th such pentagon known to do so; the first found in 30 years.
The hunt to identify such anomalies has been a century-long quest; revelation of a new pentagon is cause for celebration.
Another ongoing quest is that of effective compensation strategies. What works at one company may not work at another; discovery of new ways to remunerate employees may provide ways to “cover the plane” in compensation that set new standards.
This week, examine various sides of the compensation puzzle, and learn the shape of things to come.
‘Salary stories are intrusive. Do you ask your neighbor what they earn for their job?’–Nicole Kidman
Conversation about salary may be sensitive; but to make budgets “cover the plane,” such understanding of trends is important.
According to CNN Money, “Here’s the Kind of Pay Raise You Can Expect Next Year.” On average, base pay is expected to increase by an average of three percent, says a Towers Watson survey. This is true for managers, executives, and the “rank-and-file.”
This rate is still ahead of inflation.
“To a large extent, 3% pay raises have become the new norm in corporate America. We really haven’t seen a variation…for many years,” says a Towers Watson employee.
However, as in the past, top performers will do better. They can expect on average 4.6% next year “versus just 2.6% for average players.” Those below par will see increases less than 1%.
Only 1.9% of employers will forgo raises in 2016, down from 3% in 2015.
The Society for Human Resource Management (SHRM) largely concurs. “Forecasters See a 2.7% Increase in U.S. Salary Budgets for 2016,” notes a recent article.
Here, a survey from ERI Economic Research Institute says company budgets for raises will be up 2.7%, down from 2.9% in 2015.
Such budgeted dollars include merit raises, and “increasingly, employers are shifting toward variable pay based on performance and away from cost of living increase,” although salary schedules may be adapted for industry trends.
Considerations for companies setting increase budgets include:
Reasons for smaller salary increases are provided in two additional resources.
“Companies Have Found Something to Give Their Workers Instead of Raises,” notes The Washington Post. More companies choose to provide new benefits in lieu of raises, says the article, including one-time bonuses, time off, health care, gym memberships, coverage of commuting costs, or even pet health insurance.
Millennials drive the trend as they prefer “short-term flexibility over long-term financial security,” and such costs do not constitute permanent budget line items.
Second, “The Surprising Reason Your Salary Isn’t Growing,” in agreement with other sources, is “the continued adoption of one-time bonuses…”
“The raise has gone the way of the gold watch,” says Gary Burnison, CEO of talent management company Korn Ferry.
“Performance-related pay, of which bonuses are an example, will become more and more prevalent,” notes Iwan Barankay, management professor at University of Pennsylvania’s Wharton School.
The advantage for employers is that bonuses are a one-time expense. The disadvantage for employees is that such compensation is not part of base salary, a component in calculation of Social Security, interest payments on loans, and “For young adults, a lower starting salary can potentially put a drag on decades of future earnings.”
Indeed, a related salary consideration for the employee is that “You Could Be Leaving Money on the Table by Not Switching Jobs,” says The Washington Post.
Making sound career choices right off has large ramifications for lifetime earnings. “The biggest takeaway is that there are substantial wage gains to be had from zeroing in on a job early on that fits your skills.”
And, "...you are your whole history of occupations,” notes David Wiczer, economist at the St. Louis Federal Reserve.
Those who choose to change jobs will boost earnings, by as much as 5% in the space of a month. Over 15 years, this can account for earnings 30% below another worker with identical qualifications who chooses better matched jobs.
‘The more they applaud, the bigger your salary will be.’ --Anna Held, singer
Of course, many pieces fit into the overall compensation puzzle.
One of them, as noted, is a necessity to keep pace with industry payment trends. See ERI’s National Compensation Index for a look at broader payment trends by occupation, as well as for an overall market examination.
Compensation appears to have steadily grown in the past three years, along with declines in unemployment.
But, when wage changes are analyzed by job category, “differences between the groups become apparent.” Health care jobs have salary growth at 4.1% in the last year, followed by professional jobs at 3.7%, sales at 3.5%.
“IT occupations tied for the slowest rate of growth, 2.3%”, the only category with decreasing growth. “It is…unclear as to what might be causing this decline.”
Also, benefit costs are critical considerations in compensation packages.
See SHRM’s 2015 Employee Benefits report for “comprehensive information about the types of benefits U.S. employers offer…” like retirement savings, wellness, health care, housing, and business travel.
Some quick takeaways:
Finally, of late more companies are changing parental leave benefits, an impactful compensation trend.
SHRM asks, “Is Extended Paid Parental Leave the Wave of the Future?” "Netflix could become a game changer,” just offering “unlimited, paid parental leave for the first year following the birth or adoption of a child.” Microsoft then quickly announced 20 weeks of paid leave, to include eight weeks of disability for birth moms and 12 weeks for either parent to stay at home.
“Such generous benefits may not become a corporate standard,” due to costs. “But child care accommodations are becoming increasingly important to employees seeking a healthier work/life balance. And employers, eager to recruit and retain good talent, are finding ways to help.”
“Study of pentagonal tilings is interesting because of its potential applications,” say those following the mathematical quest. “…We have found no evidence preventing more from being found and are hopeful that we will see a few more.”
Consider the ways you compensate your employees, and the ways your members earn their wages. How do various pieces cover the plane?