September 2011
In This Issue:
2012 Projected Salary Increases
A Practical Guide for Voluntary Benefits in Your Agency
Giving and Getting Concessions in Negotiations
Great Brands – Such as Scouting, Can Rise Above
The Insurance Man
By Neil Lappley
Consulting firms Mercer and the Hay Group, along with WorldatWork, have recently published the results of their initial efforts to survey company plans for 2012 salary budgets. The consensus is that the average increase in base pay will be 3.0% in 2012. That’s up from 2.8% in 2011 and 2.5% in 2010.
The growth in salary increases reflects an increase in the number of organizations resuming pay increases after having frozen salary increases during the recession. Only a couple of years ago, as many as 43% were planning a 0% increase while in 2011 only 7 to 10% of organizations budgeted 0% for salary increases. It is likely that approximately 97% of surveyed organizations will grant increases in 2012.
The 3.0% planned average increase is consistent across employee groups including nonexempt salaried, exempt, executive, sales and nonexempt hourly. Further, the 3.0% increase appears to be consistent for Midwestern states.
Although salary budget increases do reflect some recovery since 2009, their growth has not kept up with inflation over the past year. So why aren’t pay increase budgets growing at a faster rate? The likely answer is high unemployment. Despite rising prices for goods and services, particularly food and petroleum, the supply and demand for labor is still uneven. While the current labor market has been described as a buyer’s market, organizations should be mindful of certain positions that will rise in demand faster than the economy’s growth.
Although the competition for general talent hasn’t fully resumed, organizations continue to focus on programs that tie performance to pay in order to motivate and engage employees. Even with the size of salary increase budgets remaining on the conservative side, there is good evidence that organizations are trying to differentiate awards. As several survey organizations reported for 2010, high performers received merit increases nearly 1.5 times the award size of middle performers.
Neil Lappley is owner of Lappley & Associates in Wilmette, Ill.
By Dick Tillmar
For my insuranc agency friends: Market analysis consistently shows benefit plan designs being diminished, employee contributions increasing and commissions being squeezed.
A 2010 study by the Kaiser Family Foundation illustrates consistent growth in the percentage of employees enrolled in health plans with an individual deductible of $2,000 or more.
Moreover, the trend toward other reductions in benefits or increasing employee contributions is further outlined in the same study.
One would think that with this quantum shift in employer-sponsored benefits, brokers would not be walking into the voluntary benefits arena, but running! What is perplexing, however, is that when we examine voluntary benefits commissions as a percentage of total benefits revenue, there is still a long way to go.
Read more.
By Christine McMahon
In difficult economic times, customers plead for price reductions or extended terms but beware, not all pleas are created equal.
What everyone wants, during good times and bad, is the best value. This requires an exploratory discussion as well as some give and take. How you give and get concessions matters since it reflects the value you place on your offering.
Make these three strategies part of your negotiation strategy book to maintain integrity and eliminate margin erosion:
When negotiating, it’s important to demonstrate flexibility – but explore options that are mutually agreeable and won’t erode your bottom line.
Christine McMahon is president of Christine McMahon & Associates in Milwaukee.
With so much negative press about the economy—the recent largest drop in the stock market since 2008 and the downgrading of the United States' sovereign debt to AA+ by Standard & Poor's, for starters—can the power of a brand overcome negativity? When it comes to the power of a brand to influence human behavior, perhaps the best example, on a global basis, can be found in an incident dating back during World War II. Read more.
Tillmar Connect recommends Productive Knowledge Marketing + Public Relations of Brookfield for branding that rises above and for other effective, distinctive marketing, website and traditional and online public relations work. I've had a great experience with David Niles and Jim Weiss of Productive Knowledge, whose recent work for a diverse clientele includes:
By Robert Fulghum
If you ask my next door neighbor what he does for a living, he will tell you that he is a professional gambler involved in organized crime. In truth, he is an insurance agent. He has a healthy disrespect for his business, and extends that skeptical mode into his philosophy of life.
“We’re all gamblers, says he; “every one of us. And life is a continual crapshoot and poker game and horse race.” Then he adds, “And I love the game.”
He’s a great believer in hedging his bets, however, protecting himself by betting both ways when the odds are close. Philosophically this gets expressed in these sayings mounted on his office wall:
Always trust your fellow man. And always cut the cards.
Always trust God. And always build your house on high ground.
Always love thy neighbor. And always pick a good neighborhood to live in.
The race is not always to the swift, nor the battle to the strong, but you better bet that way.
Place your bet somewhere between turning-the-other-cheek and enough-is-enough already.
Place your bet somewhere between haste-makes-waste and he-who-hesitates-is-lost.
About winning: It isn’t important. What really counts is how you play the game.
About losing: It isn’t important. What really counts is how you play the game.
About playing the game: Play to win!
Does he really believe that: Does he live by it? I don’t know. But I play poker with him. And I bought my insurance from him. I like his kind of odds.
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