Compensation Practices

Over the last five years there has been significant advancement in the strategic development and administration of compensation programmes in companies across Barbados. Many of the large progressive companies have sought to incorporate sound compensation design principles in the development of their compensation programmes. Notwithstanding the above, the components of a typical compensation package have not changed significantly in the last decade; however, the mix of the components has changed. Typical Components:

1. Base Salary
2. Variable Pay – bonus and incentive payments
3. Cash Allowances – travel, entertainment and car
4. Benefits – contributory medical insurance plan and pension plan
5. Perquisites – vehicle benefit and utilities

Base Salary

A standard base pay programme offers fixed salary ranges for each level of employee performing the standard duties of their jobs. Minimum and maximum levels are set within those pay ranges to account for variations in experience and skill levels. In Barbados, larger, well established companies have set base pay ranges for each job level/grade. Many small companies, unless they are subsidiaries of an international company, typically do not have set base pay ranges. Typically, organisations increase salaries in line with collective bargaining agreements and these agreements are developed for two to three year periods. Pay increases are typically provided across-the-board. Many progressive companies use a merit pay plan to progress the employee through their salary range at a performance-driven speed. Non–unionised employees typically receive increases which are equal to or above those received by the bargaining unit and are administered using quasi-merit systems. The average annual salary increase in the last two years ranged from 4% to 6%. Prior to 2006 the average increase ranged from 3% to 3.5%.

Variable Pay

While it is traditional for companies in Barbados to offer a bonus, there has been a shift from a bonus variable pay (traditionally a Christmas bonus) to a true incentive pay. Incentive-based compensation is becoming much more common because of the increased emphasis on performance and increased productivity. Most companies in Barbados appear to have adopted performance sharing plans for their variable pay design. The awarding of bonus/incentive payments are based on individual performance, company (corporate, divisional) performance/results and are also varied by level or position in the company. The formula/calculation of bonus/incentive payment varies by company. Generally, incentive plan payouts vary by level as follows:

• Junior: 5% of base pay
• Middle Management: 10% of base pay
• Executives/Top Management: 20% of base pay

A small percentage of companies in Barbados offer long-term incentives. These programmes typically include incentives such as stock options and the purchase of company shares.

Benefits

1. Annual Leave

   By law all employees regardless of their job level receive three (3) weeks paid holiday after completion of one year service with the same employer and four (4) weeks paid holiday after five (5) years of service. Highly competitive companies offer paid vacation over and above what is required by law. It is common for these companies to start their employees with four (4) weeks’ vacation and their top Executives receive between five (5) to six (6) weeks’ vacation. For further details regarding holiday leave refer to the labour relations sections.

2. Insurance Benefits

   The general market practice is to offer full health/medical insurance to all permanent full-time employees. These plans include vision and dental coverage and have a group life insurance component. Only a small number of companies offer disability insurance and dependent life insurance.

3. Pension Plan

   The larger companies generally offer pension to their employees. Current market trends indicate that companies are moving away from the defined benefit type pension plans to the defined contribution pension plans. Employees contribute on average between 2% to 5%. The common practice is for the employer to match employee contributions up to a maximum of 5%.

4. Housing Benefit

   Most companies offer this benefit to expatriate employees and rarely provide this benefit to local employees. Companies administer this benefit by paying the rent directly to the landlord or by providing the employee with a housing allowance to cover part or the full cost of the rent. The amount offered is dependent on the company policy, family size and job level. On average a housing allowance for a three person family is Bds.$5,000. This benefit is taxable.

Perquisites

1. Vehicle Benefit

   Most companies provide a car allowance instead of company vehicles due to the high costs incurred in terms of fleet management. The amount of car allowance varies depending on the company size and job level of the employee. Smaller to medium sized local companies that provide fully maintained company cars only offer this benefit to top executives. In larger organisations this benefit is offered to top management, executives and some middle management staff. It is important to note that some positions require the use of a vehicle to allow the employee to function in that role. Therefore, in these instances, the company provides these employees with fully maintained vehicles. The value, type and/or brand of vehicles varies based on job level, for example; top management/executive employees are offered company vehicles valued in excess of Bds.$100,000. This car benefit is taxable.

2. Professional Subscriptions

   Professional subscriptions are generally provided to employees based on their job and level within the organisation. For example, accounting staff have to be members of professional accounting bodies such as ACCA, CGA, and most companies would cover the costs of the membership. Most companies do not have a set maximum cost and will therefore cover the full costs of the subscription/membership.

3. Club Memberships

   Mostly medium to large companies offer club memberships which relate to social activities. These include gyms, golfing facilities, yacht clubs, as well as business and service clubs. This perquisite tends to be offered to management level employees and the company generally covers the full cost. However, a few organisations may stipulate a maximum number of clubs or provide a specified dollar set amount for specific positions.

4. Educational Allowance

Most companies encourage their employees to continuously develop themselves and are willing to provide educational assistance to cover the cost of work related courses of study. On average most companies cover between 50-75% of the cost of the course.

Snapshot of Compensation & Benefits in the Local Market Barbados 2009

Information Systems Administrator

Assists with the management of the Company’s internal Microsoft Windows NT network and server. Co-ordinates the information systems/information technology needs of the organisation, making recommendations for the improved efficiency of the end users. Trouble-shoots network problems, ensuring minimum downtime and ensures that all equipment is functioning in an efficient manner. Provides training for staff in the use of various computer tools and software packages. Assists in the design, implementation and production of management reports and designs and implements all software interfaces needed by the company. Coordinates the IT infrastructure and activities with internal and external IT Manager/Consultant.

Receptionist

Manages and operates the PBX System efficiently and courteously, which involves directing calls to the appropriate persons. Greets all visitors and customers in a friendly and efficient manner and directs them to the appropriate staff members. Ensures the timely distribution of all incoming and outgoing mail. Records all incoming cheques, issues receipts and submits to the Accounts Department.

Office Manager

Analyses and organises office operations and proceedures such as typing, filing and requisition of supplies. Coordinates the company’s purchasing, maintenance and services by directing the acquisition and maintenance of office equipment and machinery and by directing the purchase, storage and requisitioning of office supplies; is responsible for records maintenance, mail and messenger services. Evaluates office processes, revises proceedures or devises new forms to improve efficiency of workflow. Formulates procedures for systematic retention, protection, retrieval, transfer and disposal of records. May be required to hire, train and supervise clerical staff. Coordinates other business activities associated with the efficient running of an office.

Accountant

Responsible for the establishment and maintenance of a system of financial controls aimed at ensuring adherence to approved policies and procedures, safeguarding of assets and the timeliness, accuracy and completeness of the Company’s accounting records. Presentation of monthly, quarterly and annual financial statements and provides financial management support to the Financial Controller.

Human Resources Officer

Assists the HR Manager with the HR function. Assists with the recruitment and selection of staff and organises the orientation of new recruited staff. Assists with the preparation of job descriptions and other HR documentation. Maintains employee records ensuring that they are up-to-date and conducts research on HR topics and issues.