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Ask the HR Expert

Benefits and Compensation


Increasing referral bonuses

I am looking for suggestions, trends, or any recent data on increasing referral bonuses. We are looking to double our existing plan and are wondering how much of an increase we should expect to pay. Also, is there any data that indicates what percentage of new hires are employee referrals?.

Employee referral programs are extremely effective in bringing in new talent to the organization and are a way to engage your existing employees. More companies are using them because they are cost-effective ways of getting a broad selection of candidates. The "six degrees of separation" theory work phenomenally well for referral programs, which is easy to see if you realize your average employee has about 150 people in his/her first circle of contacts – and each of those has about 150 people, and so on. Couple this with online communities like Facebook and LinkedIn, and you will see how the system can work effectively in your favor.

Our experience as consultants and as an employer has been that the amount of the employee referral bonus is not as important to employees as one might think - and it's not terribly important what other companies are paying. Depending on the make up of your workforce and the number and level of people you're recruiting, amounts between $200 and $2,000 are plenty to get attention. If you want to focus attention on certain jobs, you can always add a premium to that job.

Remember also that it's important to keep the buzz alive around your referral program. This can really increase the attention your employees give it. You can add fun giveaways (i.e. T-shirts, event tickets, etc.) or raffles for higher ticket gifts (i.e. iPods, plasma TVs). In addition, always reinforce the program with various types of communications. Continually reminding people – without pestering them – about the jobs you're looking to fill will help them keep their eyes and ears open.

Our own recruiters make it a point to ask people in the halls if they have someone they can refer, and they also make it a point to recognize individuals who have been good at referring candidates in front of others - a little public praise goes a long way.

Of course, the employee referral program is only as good as the follow-up that HR/recruiting do with those candidates who are employed. If your employees feel like their referrals are going to fall into a black hole, they will not refer and word will spread - quickly.


Collecting benefits from commission-only employees

I have a full-time, salaried employee opting to work for commission only. If no commission has been earned for any pay period, how do we collect her portion of benefits due to our healthcare provider? Any advice on how we handle this?

There are a few ways to deal with this situation. You may choose an approach based on how many people you have in this situation. Keep in mind this is partly analogous to employees who take unpaid leave, so you may already have an administrative procedure in place. Here are the typical ways employers take care of health and welfare plan contributions* for employees who do not have a paycheck in a given pay cycle.

1. The employer has the employee write a check to the company each month to cover the employee's contribution amount. The employer is then "whole" when it comes time to pay the providers. Note: the employer needs to maintain good records of these payments for reconciliation and audit purposes.

Strengths: This approach is relatively easy to administer and it's easy for the employee to understand.

Weaknesses: Because the employee's contribution is not a pay deduction, the amount is not tax deductible.

2. The employer effectively "loans" the money by temporarily increasing the employee's paycheck by the amount of the employee's contributions and then withholds the same amount (net pay is therefore $0.00). In subsequent pay periods where commissions are paid, the employer then deducts the previous "loans" so the company is paid back.

Strengths: This approach preserves the employee's deductibility; however, she will now pay extra Social Security taxes on the loaned amount.

Weaknesses: This requires some difficult administration and recordkeeping. Also, one should review this with your auditors because it may be perceived to involve an employee loan.

3. Many employers will allow the employee to elect to pay several months in advance when they do earn commissions. This will cover the periods during which they receive no paycheck. To cover the first few payments, the employer will either get a check from the employee or sometimes the employer sets a longer waiting period (three to six months) for 100 percent commissioned employees to become eligible for the plan.

Strengths: This approach is easy for the employee to understand and the tax treatment is the same as all other employees.

Weaknesses: This can be a little difficult to administer because the payments will vary in timing and amount.

*Note: 401k contributions must be payroll deductions; they cannot be paid with a check from the employee.


Handling attendance problems

Is there a standard attendance policy or philosophy I can refer to? We have a few employees that are having a hard time managing their work/life balance issues and recently have been absent from work more than usual. I am hoping to find some industry standards I can use as a benchmark. In addition, if you have any advice on how I can best address some employees taking advantage of personal or sick day use I would appreciate it.

There is no one standard attendance policy that can apply to all employees across all work sectors. My recommendation for an overarching policy would be to determine if your employees are meeting their performance metrics, and if they are not, figure out what can be done so they can succeed. If an employee is having difficulty with work-life balance issues, perhaps a referral to your organization's Employee Assistance Program (EAP) is warranted if this resource is available. If an employee is struggling with work/life issues because he or a family member is sick or disabled, he may be eligible for Family and Medical Leave Act (FMLA), disability or paid leave, among other employee benefits. Then, the company must adhere to statutory mandates and afford the employee the time off allowed by law, regardless of the specific attendance policy for a particular job.

Two recent research studies found that flexibility was the best way to manage absences, while another found flexible work arrangements reduced unscheduled time off. Perhaps these employees might benefit from flexible schedules or alternative work arrangements. For example, if your employee is late 15 minutes every day since he has to wait for his kids to get on the school bus, perhaps he could start his work day later and work from 9:30 a.m. to 5:30 p.m.. Or perhaps he could telework one day a week to ease work/family issues. Whether an employee needs to be in the office to complete his/her job is dependent on the type of job at hand. A receptionist, for instance, must be present to perform some duties, like greeting visitors to the office. However, an editor may be able to perform some work from home and not need be present at the office every day.

Lastly, another idea to consider is the use of "paid time off (PTO) banks" instead of separately tracking both sick and vacation time. PTO banks provide a specific number of days that employees can take for any reason – sick, personal, vacation, and sometimes holidays. Advantages of PTO banks are employees take charge of their time, and can use it in ways that best meet their needs. Also, employers are not in the position of monitoring who is taking what kind of a day off for whatever reason. However for business coverage, it is helpful to require that employees give some advance notice about when they will be taking off, unless they are unexpectedly sick.


Easing employees' financial stresses

With the tightening of the economy I am looking for ways to help our employees better manage the financial stresses they may be feeling. Are there any new trends in work/life balance benefits I should look into that may make a difference to our employees? We are offering standard raises, but have cut back on bonuses; therefore, if there are other ways we can help I would like to try.

Some organizations provide financial educational seminars on a range of topics for their employees. In fact, a MetLife 2008 Study of Employee Benefits Trends reports that "US workers are increasingly concerned about their financial security and are turning to their employers to help them build a financial safety net for their future." Seminars could include a "Lunch and Learn" or a presentation held after work. The curriculum may cover areas such as meeting financial goals, purchasing appropriate types of insurance, making sound investments, minimizing tax liability, and saving for college tuition or retirement. Other organizations offer their employees a short, complimentary (30 minute) telephone consultation with a certified public accountant or certified financial professional on topics such as debt and credit card issues, retirement planning, or college funding.

Also, although you may not be able to give employees monetary compensation, perhaps you might consider giving them the gift of time? For example, some organizations allow their employees to leave a few hours early in the summer. Or have employees work an extra hour Monday through Thursday, and then close at 1 p.m. on Friday for the summer. You probably know best what time adjustments your employees would value, or you could ask them in an employee survey. Another idea would be to encourage flexible work schedules that allow employees to adjust their work hours to better meet their home demands while meeting business needs. Employees report high satisfaction with these arrangements, which have also demonstrated higher loyalty and commitment.


Dealing with short-term disability and bereavement leave

We have an employee that was on medical leave and was paid short-term disability – the employee does not contribute to this. During this time, her mother passed away. The company normally pays for a death in the family - three days for an immediate family member. We paid her 80 percent of her salary during her short-term disability, but now she is asking to be paid for the death in her family as well. How do I handle this?

There are no federal laws governing this sort of situation, so the key would be to look at your policy. If you do not have a written policy as to how to handle this, you will need to look at past practice to insure that you are treating all employees equally. In the absence of either, my recommendation would be to not pay the bereavement leave. When an employee is on short-term disability, they are not working and therefore generally not eligible for pay they would receive had they been working. Frequently, they are being paid by the disability insurance, and so their pay is outside the regular pay-cycle and paying the bereavement pay would create an administrative burden and blur the lines between working and being on disability leave. Either way, the best course is to state that employees on leave are on leave and are paid strictly through the leave policy.

-- PEGGY SHEEDY and BILL GERKE, senior human resource manager at Aon Consulting

Requiring employees to use vacation and sick time for medical leave

One of our employees is scheduled to be out of work for surgery in June. She has some vacation time earned that she could use towards this time out of the office. Can I require her to use her saved vacation time and her accrued sick days prior to receiving short-term disability benefits?

According to the Department of Labor FAQ on the Family and Medical Leave Act (FMLA): "...the law permits an employee to elect, or the employer to require the employee, to use accrued paid leave, such as vacation or sick leave, for some or all of the FMLA leave period. When paid leave is substituted for unpaid FMLA leave, it may be counted against the 12-week FMLA leave entitlement if the employee is properly notified of the designation when the leave begins." How paid time off interacts with your short-term disability pay is a matter of company policy and the terms of your disability insurance coverage; many short-term disability plans have an unpaid waiting period, and many organizations require employees to use paid time off during that period. Again, it is best to have a written policy in place that spells out what is required. In the absence of a written policy, be sure to check past practice. If you have previously not required employees to use paid time off, you shouldn't start again now without implementing a written policy.

-- PEGGY SHEEDY and BILL GERKE, senior human resource manager at Aon Consulting

Enhancing employee benefits without breaking the bank

I have many openings in several locations that do not pay very well. Are there any voluntary benefits I can add to our benefits plan that would enhance our offerings but not cost us a lot of money?

There are several voluntary benefits that can be offered for little or no cost to the organization. We have found that the benefit programs employees value are different from company to company - and often between locations at the same company. Therefore, before implementing new programs, we advise that you first gain a good understanding of what employees value about your existing benefits offering and where you are lacking. This can be accomplished informally by asking for input from business leadership, HR staff and employees. You can also gather this feedback more formally through employee surveys or focus groups. Armed with this information, you will be able to make sound decisions on what benefits should be offered - or trimmed.

Organizations like the Society for Human Resource Management (SHRM) and Watson Wyatt have conducted research that identifies the benefit programs most valued by employees. Watson Wyatt's 2006/2007 Strategic Rewards survey identified that about 30 percent of top performing employees leave their company because of work/life balance issues. In addition, SHRM's 2007 Job Satisfaction survey found that 56 percent of respondents indicated that flexibility to balance work and life issues was ranked as "very important" to their satisfaction. If appropriate for your company, you may want to consider the following low cost programs that address work/life balance:

  • Flexible hours/compressed work week – Allow employees work an extra 1/2 - 1 hour per day Monday through Thursday and let them leave early on Friday.
  • Telecommuting – Have your "knowledge workers" telecommute from home one or two days per week (using less gas is also good for the environment).
  • Job sharing – Provide the opportunity to have two employees share on job.
  • Concierge services – Work with local service providers (dry cleaners, caterers, etc.) to offer pickup/delivery services for employees.
  • On-site flu shots – In addition to saving employees a trip to the doctor, the return on investment on flu shots is very high – avoiding employee absence and increasing productivity.

It is important to note that clear communication of all benefit programs is important to employee satisfaction. Often employees either don't understand or are not aware of the benefits you already offer. We suggest you take a "marketing" approach to communicating your benefits so employees understand the value of the programs. Communication is another low-cost way to increase employees' appreciation of the programs you offer.


Paying unused sick days from a separate vacation bank

I understand we must pay unused accrued vacation time in Massachusetts, but do we need to pay unused sick days if they are separate from the vacation bank?

In the private sector, unless stipulated by an employment agreement or union contract, it is not typical to pay-out unused sick days. Massachusetts General Laws define what is payable to employees upon termination under Chapter 149, Section 148. The law stipulates that only unused accrued holiday and vacation time must be paid out. Visit the General Laws of Massachusetts on the state website at mass.gov for the specific section of the law.

As always, we recommend that you check with your legal counsel on matters like this.


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Expert Bios

Benefits and Compensation

Jeff Arnold
Watson Wyatt

Judi Casey
Sloan Work and Family Research Network

Bill Coleman


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Ibis Consulting

Colette Phillips
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Sobel & Raciti

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Tracy Burns-Martin
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Mary Ann Masarech

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