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Compensation- putting the plan in place

November 15, 2017 by Sherrie Suskie

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

November 9, 2017 by Sherrie Suskie

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

October 23, 2017 by Sherrie Suskie

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.

Let leaders lead

August 28, 2017 by Sherrie Suskie

Most who enter the Human Resources disciplines due so out of a desire to help others and to help the organization to align their employee workforce with the goals of the company to further productivity. Often times, however, we forget to let our leaders lead. Especially as an organization grows, HR functions need to adopt a “train the trainer” approach more than a train everyone approach. Although enlightened organizations put their full support and resources into HR functions, the team still has a responsibility to be able to scale the organization without adding significant numbers of HR team members. Efficiency is key.

Train- the- trainer

A train-the-trainer model allows experienced trainers to show a less-experienced individuals how to deliver courses, workshops and seminars. http://work.chron.com/train-trainer-model-5463.html Usually, a new instructor first observes a training event led by the course designer. A train-the-trainer approach can build a pool of competent instructors who can then teach the material to other people. Instead of having just one instructor who teaches a course for a long time, you have multiple instructors teaching the same course at the same time. This ensures that employees get timely training to complete tasks according to company policies and procedures.

Identify SME’s

SME’s or subject matter experts exist in all corners of the organizations and at all levels. It is a fairly good bet that your excel gurus are not sitting in the corner office. Tap those resources! Find out how has a skill set that the rest of the organization could benefit from and engage the SME to deliver the training. This serves two purposes. One, it enhances your pool of trainers and two, it gives well deserved recognition to a group of people who might be overlooked otherwise, further engaging them in the business.

Step out of the way

The inclination is to teach every class to every audience, but the real goal is to get the training out to a broad audience in a timely manner. Like a proud parent, you need to teach your junior trainers your techniques, ensure that they know their material, do a few dry runs with them and then let them launch. Will it be perfect, no. Will it improve with time, yes and will you gain far more by engaging your workforce then trying to do it all yourself, a big YES!

Training is not a one and done. It is a process over an unending period of time that, done correctly, not only teaches a new skill, but also engages and inspires a workforce to do greater things both in their work and personal lives.

Health Insurance 2018

August 14, 2017 by Sherrie Suskie

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.

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.

International HR – Germany

July 17, 2017 by Sherrie Suskie

There are significant differences when it comes to the Human Resources organizations in the US versus companies in Germany, and many other countries in the EU.

Managerial Discretion

Anyone who has worked in the US understands that managers and HR have a lot of discretion over who to hire and who and when to terminate. Sometimes these kinds of decisions can be made in a few days or weeks. In Germany, specifically, these types of decisions are months if not years long, with serious infractions needing to have taken place. Germany has a co-determination practice. Co-determination is a practice whereby the employees have a role in the management of a company. The word is a literal translation from the German word Mitbestimmung.. In some countries, like the USA, the workers have virtually no role in corporate management; and in others, like Germany, their role is more important.

Wage differences

In the US, many studies show that white collar workers can make as much as 20 times that of blue collar workers in the same company. This is drastically different than in Germany. Germany is known for its balanced remuneration system. The average white-collar worker’s wage is only 20% over the average blue collar worker`s wage. In addition, companies are not allowed to hire skilled workers from other companies by offering higher salaries.

Company Loyalty

Here too, the perception differs. In the US, workers are generally always in search of something new or better, and there is very little company loyalty. In Germany, employees feel a much greater sense of loyalty to their companies and, general, will not leave. They will look for opportunities within their current company or subsidiaries and the company will work hard to provide those.

Management decisions

While the US is typically a very individualistic society, making quick decisions and reversing them if necessary, Germany, in stark contrast, tends to work like a democracy in their companies. It is important the whole team has a say and the whole team is bought into the decision. While this can seem appealing, the trade off is time. Decision making will take much longer with a group of employees when everyone needs to be in agreement.

Both cultures have their pros and cons and neither is necessarily best. The US, acting as an impulsive, decisive, all knowing teenager and Germany as the wise parent, moving slowly with certain purpose.

International HR – UK

July 17, 2017 by Sherrie Suskie

Differences between the UK and US

Much like there are slight difference between states in the US, like the timing of final pay for an involuntary or voluntary termination, ranging from day of termination in California to next scheduled pay period in Georgia, there are greater difference amongst countries around the world. Many of these differences relate to working hours and leave.

Overtime

In the UK, for instance, employees cannot be required to work more than 48 hours in a work week, while in the US, there are companies that require, legally, far in excess of this amount, especially during peak seasonal times.

Vacation Pay

While most workers in the US get 10 paid vacation days per year, their lucky UK counterparts are enjoying more than twice that at 28 days. And, if you are in the UK, you are going on “holiday”, not on “vacation.”

Maternity Leave

In the UK you can take a year off for maternity leave without losing your employee rights. No matter how long you’ve worked for a company. Just let the company know 15 weeks before the due date. The official UK maternity leave policy – known as Statutory Maternity Leave (SMP) – means that employees will still earn money for up to 39 weeks. During the first 6 weeks they receive 90% of their average weekly earnings before tax.

Then for the next 33 weeks either £136.78 pounds sterling (about $225 US per week) or 90% of their average weekly earnings before tax depending which is lower. Their employee rights, including holiday entitlements and pay raises, are safeguarded during the time they take off. Compare that to the 6-8 weeks that most US employees take and only receive 66% of their normal wages IF they have SDI.

Time management

June 19, 2017 by Sherrie Suskie

There have been copious articles written about time management and everyone no doubt has their favorite strategies. The below are a few that I have found to be helpful in the workplace and in life in general.

Know yourself

Part of being a good time manager is knowing what behaviors prevent you from managing your time effectively. The link below gives you a quick summary spreadsheet for determining what your behavior is to day and what your behavior should be in the future to maximize your time. It is helpful to know when your energy is at its peak- is that early morning, late night or somewhere in between. This will help you to plan critical activities for when your energy level is the highest.

Multi-task

I know this is contrary to many time management theories out there, but wherever possible, multi-task, especially when something does not require your full attention. When you give up the idea of doing only one thing at a time and look for ways to do two, you can get a whole lot more done. Some quick examples: If you’re on the West coast, schedule East Coast calls on your drive into work. Owe the Far East a call back, pop in your earbuds and make the call while you’re making dinner. 6:00pm pst is around 8:00am there.

Touch each e-mail or piece of paper once

This one is big. We all have a tendency to want to “think about” it for a bit and then answer which is likely the answer you would have given in the first place. Force yourself, unless there is truly research that is needed, to answer right away.

Start the night before

A big time saver is to lay out your next day the night before. This allows you to hit the ground running in the morning and not have to stop and get organized. Know what you need to accomplish that day, in terms of key deliverables and follow up items.

Get your follow up items out early so that it allows people time to work on them during the day.

Take a break

While this may sound counterintuitive, often times taking a quick 10 minute break will help you to re- focus and complete a task in a shorter amount of time than if you had stayed with it past your ability to really focus.

Determine what is urgent and what isn’t

Not every e-mail that comes in must be answered right away. Some of the best time managers only answer their e-mails 1-2 times/day. You would be amazed at how many strings of conversation there are where you are only peripherally involved and if you just let them play out, you can catch the last e-mail and be completely up to speed.

Everyone has strategies that work better for them than others. Don’t be afraid to try 20 or 3- and then pick the top 5 that really do save you time and increase efficiency.

Employee Testing

June 7, 2017 by Sherrie Suskie

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.

Compensation systems

May 25, 2017 by Sherrie Suskie

The last component of an effective HRIS is a Compensation system. A sophisticated compensation system will save you hours of number crunching using excel spreadsheets. Many of these systems are sold as a component of Performance Management systems, but there are a few stand alone ones as well. It is always best to integrate where possible because you save yourself the time and effort involved in paying someone to write the integration software for you and the headaches that come with integrating two systems that were not designed to work together.

The capabilities you want to look for in your Compensation Systems are:

Integration

Ensure that your performance management system and your compensation system are fully integrated so that all the performance scores from the manager’s appraisal, employees’ self-appraisals and any 360 reviews you have, flow over to your compensation system. This will make is significantly easier for your managers to be able to rank employees and doll out the appropriate performance based merit increases.

Pro-ration

You want to ensure that your system has the ability to handle pro-rations, preferably down to the day, so that employees who start on September 1^st are not eligible to receive the same increase as employees who started January 1^st. If you have implemented an annual bonus program, ensure that the pro-ration will apply here as well. Also ask if it will handle lump sum increases if someone is at the range max.

Edit Capability

One of the most frustrating aspects of a poorly designed compensation system is when it does not allow for edit capability all the way up the line. If the spreadsheet gets to your VP’s and they have to send it all the way back to the supervisors to make changes, you will lengthen your process considerably. You should be able to pick and choose who you want to give edit capability to for each spreadsheet.

Co-planners

Invariably someone will pick an inconvenient time to terminate and you will be left with a situation where you need to assign another person to actually complete the merit increases for their group. Your system should allow you to select a co-planner or, even better, to switch managers once the process has already launched.

Custom Reporting

Your system should come equipped with an easy to use and easy to understand reporting functionality. Nothing is as frustrating as having a new system and then having to dump everything in excel in order to actually manipulate the data. Spend some time up front fully understand the reporting capability and figuring out whether it will truly provide you with the info you need to report on.

Multiple types of Compensation

Your system should handle base salary increases, short term incentives and long term incentives like Equity awards or RSU’s. A system that cannot adequately handle long term equity incentives will give you a lopsided view of your employees’ compensation and how that compares to market.

As with the other components of the HRIS that we have talked about, putting twice as much time in up front as you expected will yield the best results in the end.