Compensation- putting the plan in place

sherrie-suski-compensation-plan

Last week we talked about establishing your Compensation Strategy and how to determine the competition and your rationale for certain recommendations.  Once you have a thorough well thought out strategy, though, you need to execute.  Careful, well thought out execution is every bit as important as developing your strategy.  Remember, it is likely that you understand compensation better than anyone else in your organization so start at the top.

 

Get your Executive Team Bought in

Keep in mind that executive teams have a lot on their mind and are likely not up to speed with why a compensation strategy is important, so start simple.  https://www.shrm.org/ResourcesAndTools/hr-topics/compensation/Pages/AlignPay.aspx The payroll in a company is by far the largest expenditure and compensation touches all areas like candidate attraction, retention, turnover and satisfaction to some degree.  Pay ranks in the number three spot as to reasons why employees leave positions and the cost to replace that employee is anywhere between 100-200% of their base salary. https://www.appleone.com/Employers/SCALE/2017/EngagementTools/cost-of-turnover-calculator.aspx  Plenty of reason to make sure that compensation is NOT the driving force behind your resignations.

 

Train your Managers to have Compensation Conversations

Once your executive team is bought into your strategy, it’s time to train your managers to talk about compensation. https://hbr.org/2014/04/how-to-discuss-pay-with-your-employees  We have all heard or experienced firsthand the horror stories of employees finding out what their raise is when their paycheck comes out, never having had a conversation with their manager, or the manager walking into a group of employees, handing each a piece of paper with their raise on it and walking out, thus missing a critical opportunity to further enhance the employee’s satisfaction and level of engagement. https://compensation.blr.com/Compensation-news/Compensation/Compensation-Administration/Preparing-for-Compensation-Conversations-with-Empl/  The first step is to listen.  Listen to what the employee has to say, repeat back what you think you have heard.  Share critical information, such as the merit budget pool for the year and the compensation philosophy.  

 

Communicate the Process

Letting the team know up front and reminding them often of who will do what we go a long ways towards preparing for success. http://www.simplehrguide.com/compensation-strategy-key-content.html  Communicate the roles that HR will play-to establish salary grades and structures, to provide compa-ratios, to set the merit pool amount and to weigh in on any recommended market adjustments.  The first line managers will be responsible for recommending salary increase, justifying recommendations for promotions or market adjustments and communicating the approved increases to the individual employees. Your executive team has the responsibility to communicate and support the compensation strategy and philosophy they have approved. Employees, too, play a role.  They have the responsibility to ask questions and ensure that they get a satisfactory answer.  Make sure that they know their manager is their first stop, but if questions remain unanswered that HR’s door is always open.

Do you best to create an environment where compensation is not practiced in a black box, but is implemented in a thoughtful, straight forward way, where everyone understands what it is meant to achieve and feels comfortable offering suggestions to enhance the process.  A compensation strategy, created and implemented well, can enhance many aspects of the organization and the employee experience.

Compensation- Getting it Right

sherrie-suski-compensation

This time of year brings all the excitement of the holidays, Halloween, Thanksgiving, Christmas and Hanukkah, among others.  Amid all the festivities, for many organizations, it brings Compensation planning activities including revisions of salary structures, decisions on merit increases, promotions, adjustments and bonuses.  Before you say “Bah Humbug” let’s take a closer look at how to structure a compensation plan and why it’s so important to your organization. 

For all of the articles out there espousing compensation as a short term motivator, compensation speaks to our employees.  It tells a story of how we perceive their value in the workplace.  There is little that is more important than the value one sees in oneself and that is partly determined by the value others place on us and our contributions.

Ask Questions

You have to start out by asking the right questions in order to determine what your company’s compensation strategy should be.  It’s OK not to have all the answers, they will provide topics for discussion with your internal teams.

What are your goals?   

It’s important to know what problem you are trying to solve before you launch into a strategy to solve it.  Do you have excessive turnover?  Are you having a hard time attracting candidates?  Are you losing your high potential employees at an alarming rate?  Do you need to focus certain groups on different goals

How would you define your market?

Is it defined solely based on a geography you are in?  Do you need to include competitors outside of your geographical regions?  Is it domestic or do you have international competitors as well?  Sometimes, you can get a good clue to identifying this by asking where do your employees come from, and where do they go when they leave?

How competitive do you need to be?   

Some disciplines like Big Data are highly competitive and there may only be a handful of candidates that everyone is competing for.  On the other hand, if your positions are relatively common and there are many candidates available, you may be able to set you target closer to the 50th percentile and be just fine

What and how should you reward?  

What behavior do you want to reinforce and what types of rewards will you give?  The most effective plans focus on a Purpose Statement and/or Guiding Principles.  Your rewards should ultimately drive the culture you are trying to create.  Even monetary rewards come in many different forms.  They could be merit increases, promotions, short term or long term cash incentives.

All of the above questions will help to guide you toward the most effective compensation strategy for your organization and drive employee productivity forward. 

 

Holocracy- Implementation Challenges

sherrie-suski-holacracy-challenges

Last week we talked about Holocracy, what it is and what its advocates say the potential benefits are.  But in reality, does Holocracy work ?  Can a type of self-management that gives decision making power to fluid teams, or “circles,” and roles rather than individuals yield results and better decisions than a traditional structure?  How well do people deal with the uncertainty that a holocratic approach creates

Sourcing and Hiring

Holocracy models complicate sourcing and hiring decisions.  How do you advertise for a job that is comprised of ever changing micro roles and how do you assess whether the person sitting in front of you actually is competent at those micro roles and any other talents they might have?  People are used to looking for traditional job titles, but in holocracy, there are no traditional job titles.  Do management level employees worry that deviating from their career path might stall out their careers.  What if they are at a Director level now and you are trying to recruit for a team member with a skill set normally held by an Accounting Dir.  How many would take a “team or circle member” title?

Micro Roles

Another issue that holocracy creates is the formation of micro roles.  No longer is one individual responsible for a specific set of set roles, but a swirling set of micro roles that are ever changing.  It can complicate the work actually getting done as employees may be responsible for up to 25 different responsibilities and struggle with prioritizing them and deciding where to focus first.  They may be members of a number of different circles and have weighty responsibilities to each, but not be able to satisfy all of them or be forced to prioritize in conflict with others. 

Compensation

Compensation becomes difficult as well.  Not only are there struggles with determining internal equity as this now requires each of 100’s of micro roles to be assessed and the value of these roles change as new circles are created and as the organization matures and different skills become more or less valuable, but external equity is an issue.  How do you go to the market to assess the worth of a position when there is no longer a match for the position?  There is nothing to compare the person’s position to.

Unlearning old behavior

For holocrcay to be successful it necessitates that both bosses and subordinates unlearn old behavior.  If everyone is truly to be tapped for their full potential then there cannot be those who are hesitant to express opposing views in front of what used to be superiors.  This is a hard habit to break for both bosses and subordinates.  It is hard for leaders to learn to step back and not lead all the time.

Holocary has yet to be proven as a model that offers significant benefits over a traditional structure. The best of both worlds may be to incorporate some of the circle mentality into the traditional structure allowing everyone a voice to be heard and encouraging growth horizontally as well as vertically.

Hierarchy versus holacracy

sherrie-suski-holacracy-main

Before we delve into whether or not holacracy is right for your organization, how many of us know what holacracy is?  Holacracy is a social technology or system of organizational governance in which authority and decision-making are distributed throughout a holarchy of self-organizing teams rather than being vested in a management hierarchy.  In theory, holacracy empowers people to make meaningful decisions and drive change.

Instead of a traditional management structure where questions must go from the bottom to the top and decisions go in reverse, organizations that adopt holacracy empower agile teams of people to make and implement decisions.

sherrie-suski-holacracy

Self-organization models typically share three characteristics:

Teams are the structure

In holacracy, there are “circles” or many companies simply call them “teams.” Whatever they’re called, these basic components are not, individuals, and not units, departments, or divisions but they are the essential organizational building blocks.  Individual roles are defined and assigned in order to accomplish the work. As in more traditional hierarchical organizations, there may be different teams for different projects or functions like finance, tech, sales. But self-managing enterprises have a lot more of them. After Zappos implemented holacracy, 150 departmental units evolved into over 500 circles.

Teams design and govern themselves

Although self-organizing companies try to avoid the traditional hierarchy, the teams are a part of a larger structure, which they are actually able to shape and refine. Holacratic organizations have everyone sign a constitution—a document outlining the rules by which circles are created, changed, and removed. So the circles not only manage themselves; within those guidelines, they also design and govern themselves. The constitution doesn’t dictate exactly how people should do their tasks. It explains in a broad way how circles should be created and operate: how they should assign roles, what boundaries the roles should have, and how the circles should interact with one another. 

Leadership is constantly changing

In self-managed organizations, leadership is distributed among roles, not individual people.  People usually hold multiple roles, on multiple teams. Leadership responsibilities continually change as the work changes and as teams create and define new roles. Technology is essential for keeping all these changes straight. The information is accessible to anyone in the organization and each individual’s commitments are visible to everybody at the company. Supposedly, transparency enables cross-team integration.

Although it is becoming a buzz word, holacracy is not being adopted at a rapid pace. The organizations who have tried to adopt it run into a myriad of issues, including increased turnover and decreased productivity given the endless meetings.  While some look at it with interest, others simply say it does not work.  Next week we will delve into some of the issues that have arisen when organizations have tried to implement holacracy.

 

Health Insurance 2018

sherrie-suski-health-insurance-2018

PwC’s Health Research Institute (HRI) annually projects the growth of health insurance and more specifically, medical costs, in the employer insurance market for the coming year.  They also identify the major factors expected to impact the trend.  Moving into 2018, the healthcare industry seems to be settling into a “new trend” which is marked by more moderate fluctuations and single-digit medical cost trends

HRI projects 2018’s medical cost trend to be 6.5%—the first uptick in growth in three years.

Screen Shot 2017-08-21 at 9.53.09 AM

What does this mean for employers still seeking to get the most for their insurance dollars and provide the best benefits for their employee population?  In a labor market that is heating up and becoming more competitive, employers are looking for new cost containment strategies beyond shifting more costs to their employees.

Target Health and Wellness

Many employers are creating wellness programs and enlisting the employees in a partnership arrangement regrading practicing better health habits.  Although hard numbers are difficult to come by, many employers believe they are creating a focus on wellness that will pay off at the bottom line.  Employers are offering smoking cessation programs, health fairs populated by as many as 100 different vendors, offering everything from multi vitamins to massage, and healthy snacks, like fruit and nuts instead of candy, cupcakes and empty snacks.

Investigate provider arrangements

More employers are taking a harder look the health services they are providing and how those health services are being offered.  Some are considering more restrictive arrangements like EPO’s (Exclusive Provider Organizations)  where they can get better discounts by decreasing the size of the provider network.  Other options include offering 2 tier plans where the employer pays a sizable percentage of the lower plan, but gives the employees an opportunity to “buy up” if they want to choose the more expensive plan.

Evaluate the value of drug spending

Employers are banding together to put pressure on drug companies to moderate price increases. Similar pressures were enacted in the early 1990s and significant decreases in the drug price growth rate.

We are already seeing some pharmaceutical companies take action, limiting price increases, offering cheaper generic alternatives and proactively addressing questions of value in the marketplace.

Even though health insurance price increases have slowed over the past three years, they still outpace inflation and employers need to continue to pursue alternatives that will lead to a healthier workforce and, ultimately, to lower health insurance costs for everyone.

 

Employee Testing

sherrie suski, employee testing

Almost all organizations engage in employee testing of one type or another.  What many organizations don’t understand is almost all of them open you up to some type of potential liability should you be challenged.  Selected and administered well they can be valuable tools in your candidate assessment process, but handled poorly they can cause you a whole host of problems.

Pre-Employment Physicals

Few can argue that Pre-employment physicals or drug screens are a bad idea.  Even with many states, including California, legalizing marijuana, you may still preclude its use while at work, the same way you can insist that your employees not come to work drunk or impaired by the use of prescription drugs.  Just because a substance is legal, does not mean it is OK be under the influence while at work.  Give prospective candidates notice that you will require them to take a pre-employment physical.  Many will simply choose not to apply.

Background Screening

Background screening is another “test” that few will argue with other than those who feel they have some antiquated right to privacy.  Background checks will check driving records, misdemeanor and felony convictions.  How you use this information gets a little trickier.  While you can turn down a candidate who will be driving a company vehicle if they have DUI convictions because you can show a direct correlation between the offense and the job requirement, what about the person who is a 2 time convicted child offender and you have offered him/her a position within an development department?  Can you show a relationship between the offense and the job requirement?

Skills testing

Skills testing can fall into multiple categories.  There are on the job skills tests that are easy to validate.  If the job requires someone to install HVAC systems and you ask them to install an HVAC system, the relationship and applicability are clear.  This type of testing can also include basic grammar and math skills.  The reasoning is that those that can construct a basic sentence with proper grammar and understand basic math are going to be better at their jobs whether they are being hired as an AP Specialist or a Customer Service rep.  These relationships to job proficiency are fairly easy to understand, but be prepared to defend your decision, even with validated tests.

Aptitude Tests

Aptitude tests are a gray area and only a handful of companies are using them.  Their theory is that if they hire only those that score exceptionally well on the aptitude tests that they will be able to train them faster, they will catch on more quickly, they will be more creative in terms of finding efficiencies within their jobs.  If you use Aptitude testing, be sure it is only one aspect of your hiring decisions.  It would be easy to come under fire for adverse impact if you established a cut off whereby you would not accept applicants.

Personality Tests

Quite a few companies use personality tests and there are many different versions, Myers-Briggs, DISC, Predictive Index. Personality tests can be helpful especially when you choose one like Predictive Index where you can create the profile for the job and then compare the profiles of the candidates to the job profile.  These can be especially helpful when you have a team of people to hire.   You want variety on your team, but complimentary personalities.  There is no right or waring, pass of fail with a personality test.  Each personality has its own pros and cons.

Define your testing strategy up front and ensure that you understand what you are hoping to accomplish with each one and how you will use the results.

Creating an Environment of Engagement

Sherrie Suski, Environment of Engagement

With the first quarter of 2017 only visible in the rear-view mirror, as unbelievable as that seems, it’s the perfect time to re-evaluate what we want to accomplish in our organizations by the end of this year.

Employee engagement continues to be the buzz word of the decade. Constituents quote the statistics that engaged employees are more than 3 times as productive than the unengaged or 10x as productive as the actively disengaged.

Creating an environment of engagement and learning

To understand this concept, we need to understand the true meaning of the word empathy.  Empathy, as defined by the dictionary, is the ability to understand and share the feelings of another.   Borrowing a term from Big Data, it means focusing on the user experience or UX.  It will require designing work for the employee through the lens of user experience (UX) with the goal being able to help the employees feel good about the work they are doing and have a solid understanding of the connection to the greater organizational goals.

It has little to do with nerf guns, skateboards and other “tools” used to sell an environment of engagement and much more to do with spending the time to understand what is important to the individual actually performing the job.  Maybe it’s ergonomic, like a chair with better back support, maybe it’s auditory, like a pair of headphones to tune out the chatter around them, maybe it’s offering a rotation of job duties to stave of boredom and the repetitive nature of the job.

Adopting a Management Style that supports engagement

Equally important to creating the right environment is fostering the right management style to support a team environment. A team is a group of talented people who work together to accomplish something beyond their individual best. In order to work together they need to be supported by managers who allows them to thrive. This style is built by leaders who understand how to communicate the vision of the company in a way that engages and encourages everyone to work towards that goal.

Leaders who are effective communicators, develop a sense of community, and show authentic transparency and concern for others will be able to build high performing and engaged teams of talented people.”

Creating jobs that support engagement

Go beyond traditional training classes that support skills based on-the-job training and look for peer-to-peer opportunities.  investigate ways to allow employees to “try out” another position for a day or even a few hours.   This has multiple advantages.  Not only does it build a more well-rounded and cross trained workforce, but it circles back to our definition of empathy, to understand and share the feelings of another.  A workforce who has had the opportunity to “stand in another’s shoes” is a workforce that is better equipped to understand the full business cycle.

Body Language in the Office

arms crossed

Your body language has more of an impact on your career than you’d believe.  According to Albert Mehrabian, Professor Emeritus of Psychology at UCLA,

The three elements account differently for our liking for the person who puts forward a message concerning their feelings: words account for 7%, tone of voice accounts for 38%, and body language accounts for 55% of the liking.

Body language is our non-verbal communication of our feelings and thoughts; we judge other people on their body language, and we are constantly being judged by our body language. Due to the fact that so much is communicated outside of the words that we speak, it’s important to be aware of our bodies, and to work to give off the correct impression. These are a few things you should keep in mind about body language in the office.

 

Don’t Cross Your Arms

This isn’t a new one; we’ve been told that crossed arms are a poor signal since we were young. But, it bears repeating. When you cross your arms, you are literally creating a physical barrier between you and the person/people you are addressing; that’s an immediate signal to them that you don’t want to be a part of whatever conversation that you’re having. Crossing arms may be an unconscious defense mechanism for some people when they are nervous or uncomfortable, so try to be aware of your body in situations where you are not feeling 100% at ease.

Stay Still

One of the tell-tale signs of nervousness is fidgeting. Nervousness is definitely not a characteristic that you want to be known for in the office. Nervousness dictates discomfort, and your colleagues will begin to scrutinize the reasons for your apparent discomfort. If you’re a natural fidgeter, try to keep your movements to a minimum when interacting with your coworkers.

Maintain Eye Contact (But Don’t Stare)

It’s important to maintain eye contact with anyone that you’re speaking to; it builds a feeling of connectedness between you and your audience. An avoidance of eye contact signals untrustworthiness to others, and that’s the last thing that you want to be known for within the office.

But, it’s important not to let your eye contact cross the line into staring. Very intense, unbroken eye contact will make others uncomfortable, and it can be interpreted as aggressive or even creepy. It’s a delicate balance. Work to read the body language of your company in order to gauge the proper amount of eye contact necessary.

 

Remember Your Posture

Always stand up straight. Good posture is a universal signal to others that you are sure of yourself. Elongate your spine, push your shoulders back, and keep your head held high. Take pride in how your carry yourself, and others will respond positively to your aura of power and self assuredness.

For more tips on body language, see these resources: Inc , AMA, Lifehack