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Archive for the ‘strategic hr’ Category

Inject market data to address external compensation inequalities

Posted by Anadi Upadhyaya on May 1, 2013

Ever changing labor market conditions and supply demand fluctuations make sure that organizations don’t design employee compensation strategy in a vacuum. Success of your compensation strategy not only depends on your system’s ability to provide market data analysis during decision-making but also on how well you analyze the external data during your planning phase.

MarketYou start this exercise by deciding on the source of market data as per your industry benchmarks. Relying on multiple survey sources for market salary data will be more beneficial than depending on a single source. In case you opt for multiple sources, you need to decide on mathematical techniques you are going to use to combine multiple sources into an easily comparable source to make comparison with the internal data a smooth exercise.

Getting your current job descriptions updated into your internal system is a must have requirement before you proceed any further. While analyzing the survey data, you need to make sure that you are matching your detailed job description with benchmark job descriptions as matching just a job title or a brief summary can result in wastage of money, time and resources. You also need to have a plan in place for the cases where you don’t find job match in benchmark data.

How you utilize survey results after your internal analysis depends on your current or desired market position. Either you can decide to pay as per market dynamics or you can decide to lead the market. It’s very unlikely that you will decide to pay below market standards after putting so much effort in analysis. You can also opt for total compensation offerings to match or lead the market rather than focusing only on base pay.

It’s easier said than done, you need real experts for a detailed market data analysis internally as software in place will not help if you fail to analyze the data correctly.

Posted in Compensation, strategic hr | Tagged: | Leave a Comment »

Seeking feedback on your compensation process

Posted by Anadi Upadhyaya on April 11, 2013

Organizations put a lot of efforts in choosing the people who can award compensation to their workforce. They may even decide to have a different set of people for different type of compensations awards (i.e. Salary allocation or Stock Grant) as per their business needs. But the question is after giving compensation allocation responsibility and various tools to make informed decisions to these people; do you seek their feedback on compensation allocation process in a planned manner?

It is critical to seek feedback from your compensation decision makers as it will:Seeking feedback on your compensation process

  • Help you to overcome any shortcomings in your existing compensation policy.
  • Help you to understand good and not-so-good things about the tools provided for compensation planning.
  • Help you to discover how determined your decision makers are to voice their opinion for betterment of your compensation policy.

Every compensation round has a theme or a predefined objective that needs to be fulfilled and it varies with the type of compensation you are dealing with. It’s best to collect feedback and keep it associated with specific compensation round. This association will not only help you to closely analyze context specific feedback but also to take the corrective actions. In case you need collective and only one set of feedback you can always combine compensation round specific feedback into one.

You should decide on feedback questionnaire if you are planning to collect specific feedback and can request people to rate things you want to be rated. However, it will be good to provide some free hand where feedback provider can share feedback not related to questionnaire.

Finally, you need to analyze the collected feedback; work on to resolve the highlighted problems (if possible) and follow-up with feedback providers (if required).  Publishing corrective actions or changes incorporated as a result of this exercise will convey that you value feedback and will motivate people to participate in future. You can expect some real value addition to your compensation strategy by this exercise as you will be working with the people important to your business and compensation process.

Posted in Compensation, strategic hr | Tagged: | Leave a Comment »

Strategic HR

Posted by Sri Subramanian (@whosissri) on September 8, 2011

The CHRO and CFO oversee the two main assets of a company. They have enormous opportunity to add value to the CEO. Yet, they sometimes fall short of expectations.

Their strategic  function is not about setting solid guidelines on depreciation of capital assets, or putting together employee handbooks. Those may be required activities, and if not done right, may cause enormous harm. However, they are not leadership activities.

A good CEO can chart the strategic plan for the company. He can even channel the money, but it is much harder to channel the talent and get everyone aboard. This is where the CHRO can help. However, this involves changing the tone of the HR communications from mandates and legalese to influencing and enabling.

The strategic function of recruiting is not to enforce pay boundaries; it is to get the right people to fill the right jobs. The strategic function of performance reviews is not to get 100% participation; it is to foster career growth. The strategic function of succession management is not to make sure all critical jobs have successors; it is to help find the right successors, wherever they are. The strategic function of benefits is not to pass top heavy tests; but to provide benefits that are best provided via group enrollment. The strategic function of time cards is not to keep record of attendance; but to compute gross margin per product, so we know which products to continue to build.

HR’s strategic function is to breathe, speak, and live this, and to be able to see everything from the lens of the business. The rest is to HR what accounting is to finance. It may sometimes be essential, but it is not strategic.

I have been super lucky to work with HR counterparts who get this. They keep me from the legalese and the HR policies.  They share information with me. They suggest ways I can avoid obstacles. And they focus on helping me get the job done. This is business execution.

Posted in finance, hr transformation, leadership, strategic hr, Uncategorized | Tagged: , , , , | 2 Comments »

Yankees Win World Series – What’s the Verdict on Moneyball?

Posted by Mark Bennett on November 13, 2009

2671689242_7fec1f87c6_m

All you need is a stone and a sling. Neither sword, nor armor.

To borrow some phraseology from Kris Dunn, “Wrong question, Sparky.” The takeaway from Moneyball is not about it being right or wrong, but how it asks you to reconsider the way you look at how talent creates value for your organization. The aftermath of its publication in 2003 teaches us that the larger game never ends; that there is no single optimal answer for all time. There’s no trick to winning either, but rather a way to see what others are currently missing or choosing to ignore, use that to your advantage, and also obtain insight into building a better strategy from it. A lot of people are still missing that point.

Public Service Announcement: This post is not all about baseball nor the ins and outs (no pun intended) of winning baseball divisions. Rather, it asks: Why should HR people still care about the Moneyball story, especially since 1) it has almost been played to death the last six years, and 2) it seems there’s all this proof that it didn’t work.

People still debate the “correctness” of Moneyball. They point out that the stars of the book, the Oakland A’s, didn’t win their division and the Yankees, with the largest payroll, won everything. Even many who agreed with the way in which the A’s had utilized measures that other teams ignored are now observing that it is no longer a competitive advantage since the other teams with larger payrolls were adopting those very measures. Many readers took away from the book that it was just a trick and once the trick had been exposed, the advantage was lost, so what was the point?

The point was that it wasn’t about coming up with a trick. That’s the narrow view. Moneyball told a story about how an organization that had a constrained payroll was forced to rethink the strategy for winning the most games. Rethinking your strategy is the point. That this story took particular twists and turns just made it unexpected, concrete, credible (to some), and in some parts, even emotional (i.e. “sticky”). It should come as no surprise that the specific steps, measures and outcomes didn’t maintain an advantage or last. The fact that your steps and measures don’t produce the same results they used to does not necessarily mean you throw them out, especially to revert back to previously discredited measures.

That is itself another takeaway; competition never rests and you must keep searching for the next thing that will help you win. One very good way to keep winning is to focus, as Peter Bregman writes, on playing the game you can win. Malcolm Gladwell recently wrote a piece for the New Yorker about this very kind of thinking. In “How David Beats Goliath,” Gladwell gets into David’s thinking:

In the Biblical story of David and Goliath, David initially put on a coat of mail and a brass helmet and girded himself with a sword: he prepared to wage a conventional battle of swords against Goliath. But then he stopped. “I cannot walk in these, for I am unused to it,” he said (in Robert Alter’s translation), and picked up those five smooth stones.

In other words, David figured he wasn’t going to win playing by the other guy’s rules, so instead he focused on something less conventional. Conventional wisdom at the time was that you fought brute force with brute force: sword against sword, armor against armor. Nobody thought any other route had a chance, so why bother? It’s not about playing a one-time only trick either; it’s about confronting the harsh reality of a situation and choosing the option that gives you the best chance.

There are people still applying the real lessons of Moneyball (and many other books that came before and have followed) and are finding/rediscovering insights into how to win, how to play the game they can win, or even change the game so they win. Kris Dunn and Tom Davenport show how basketball teams are benefiting from focusing on measures that better reflect the overall benefit to the team when a player is on the court vs. individual measures. This would seem to have some application in business as well. But again, this isn’t all about finding a trick that nobody else has discovered yet. Sure, it’s great when the competition is still looking in the wrong places while you trounce them, but you also want to use this information to get better understanding and insight into how your business and the marketplace, and the pieces that comprise them, actually operate and interact. That is what will really help you continue to win going forward.

Photo by hawkexpress

Posted in strategic hr, top talent, Uncategorized | Tagged: | 4 Comments »

HR: Why Improve Your Analytical Intelligence?

Posted by Mark Bennett on October 30, 2009

268139464_64e5934e87_mHey! Come back!

Before you roll your eyes on this one, start having flashbacks to terrible experiences with calculating standard deviations, or trying to wrap your head around multiple regression analysis, and then run screaming from this post, this is not about you trying to become an expert at statistics! Trust me!

It’s about you understanding how analytical tools and methods can help HR have an impact on applying talent to strategic success. Besides, no less than Josh Bersin said at the recent HR Technology Conference® 2009 Talent Management Analyst Panel, “Get used to it.” And that’s a good way to look at it. Too often, HR has been shut out of strategic input because of the perception that it doesn’t speak the language of analytics sufficiently to measure and understand the relationships between various parts of the business (e.g. Human Capital) and profit (or whatever financial result you wish.) Once you have that better understanding, it will enable you to make a stronger case for why HR can provide valuable input and leadership in business strategy and execution.

By now, we’ve had the importance of measuring pretty well pounded in, particularly in the context of Finance. Increasing your financial intelligence is key to participating more in driving strategic decision-making around applying talent to improve business results. Being able to show to senior management the link between what you know about your company’s talent to financial results entails both measuring talent in terms of levels of performance, competency, skills, connectedness, etc. as well as measuring relationships between those measures and the other parts of the business that drive financial performance. What do analytical skills have to do with measuring those parts and their relationships?

Measuring is not Counting

To help answer that question, let’s take an example from “How to Measure Anything: Finding the Value of Intangibles in Business” by Douglas W. Hubbard. Picture the problem of measuring the population of fish in a lake; let’s say in order to know if a restocking effort was successful or not (a good ROI problem). A lot of people will say, “Drain the lake and count the fish.” They could then report there were exactly 22,573 fish and we’ll say that confirms the restocking investment was a success, although all the fish are now dead.

A better approach (certainly for the fish) entails using analytical methods to estimate the population of fish in the lake. If there is sufficient confidence in the estimate of the population before and after the restocking effort, you will be able to tell if the restocking effort was a success or not. Did you have to know every tiny detail of statistics to make a decision based on these estimates and the confidence level? No. How about to show the before and after picture to some “lake executive” who had to give the green light on the restocking effort? No. You just had to know enough about analytical methods to know that the application of them made sense in this case, and either determine you made the right call or get the point across to that executive.

As the authors of “The Differentiated Workforce: Transforming Talent into Strategic Impact” quoted a general manager, “I couldn’t do a regression analysis, but I knew what one was. And the results…made sense to me.” Further, they write, “Improved analytic literacy has a direct impact on the decision making at several levels in a typical HR organization…At the highest level, improved analytical literacy changes the perspective on the financial resources committed to HR…they consider a significant portion [of the HR budget] an investment.”

Principles of Uncertainty

HR labors under the false assumption that everybody else has “precise numbers” and there seems to be a perception that HR can’t come up with the “hard numbers.” The classic story is of the CEO asking the head of HR if they know the company’s headcount and the response is wishy-washy. The thinking is that people are either working for the company or they are not, so what’s the problem? What’s the count? Sure, in a company of a few hundred people, you might actually have a very precise figure. However, we know that depending on the industry, economic conditions, etc. as the number of employees gets larger, it gets a bit trickier to know the headcount with precision. There is a lot going on and even if you are using an HRMS system, the simple fact that humans are involved and entering transactions (or not), makes the number transient and constantly changing. In other words, one minute, you could see 59,268 and a minute later see 59,273.

This is not that different from the folks in Accounting keeping track of Receivables, the folks in Production keeping track of Inventory, or the folks in Development keeping track of Project Completion. In the case of Accounting and Finance, it gets even more interesting when it’s time to report; for instance, general accounting principles require the company to estimate the amount of Receivables that will be uncollectible and there isn’t any hard and fast equation for doing that. Different methods are used to estimate these values, some of them analytical.

The point, as Hubbard writes in his latest book, “The Failure of Risk Management: Why It’s Broken and How to Fix It” is that measurement is better understood as the reduction of uncertainty about the value of something. Once you see it that way and gain enough analytic literacy to feel comfortable with the results from those tools and methods, you’ll be able to move forward more readily with driving and demonstrating positive impact on strategic business results.

Photo by The Michael

The Failure of Risk Management: Why It’s Broken and How to Fix It

Posted in analytics, finance, strategic hr, Uncategorized | Tagged: | 4 Comments »

HR: Why Increase Your Financial Intelligence?

Posted by Mark Bennett on October 21, 2009

141273960_06f6cd3412_mWhen in Rome…

si fueris Romae, Romano vivitomore; si fueris alibi, vivito sicut ibi*

My last post asked: how can the perception of HR’s function as being primarily about governance and compliance oversight be dealt with, in order to allow and encourage its role in maximizing the strategic impact of talent?

A key first step is to learn “the language of business” i.e. Finance. Why? Here’s a list from a book** I recommended a while back, outlining the benefits of financial literacy to HR:

  • Move HR from a Tactical to a Strategic Organization – be trusted with organization and talent development investment decisions.
  • Evaluate Your Company Critically – spot trends or problems and understand more of the stories behind the numbers.
  • Understand the Business – knowing how your company makes money is key to your HR strategy.
  • Understand the Bias in the Numbers – have the power to challenge, when called for, the assumptions made by the finance and accounting departments.
  • Form Relationships with Finance – help to align more the efforts of finance and HR for their mutual benefit.
  • Use Numbers and Financial Tools to Make and Analyze Decisions – improve your ability to make better investment choices regarding projects and programs.

It turns out that Trish McFarlane at HRRingleader is addressing this same step in an “HR 101” series on the Creative Chaos Consultant blog, devoted to what an HR professional really needs to know to be successful. There’s also a great article, “Do HR Managers Have the Skills They Need?” by the same authors of the book, which covers exactly the discussion Beth Carvin and I were having here. Namely, it isn’t all on HR’s head or senior management’s head to enable HR to have a positive impact on strategic use of talent, but a shared responsibility. Here are the factors they listed at the root of the problem:

  • Avoidance – HR folks not “dealing with it” and learning about the numbers (as  Josh Bersin and Naomi Bloom said at last month’s HR Technology 2009 Conference(r) Talent Management analyst panel and Naomi’s closing keynote).
  • Perception – Even when HR professionals do know the numbers, the business side still retains the outdated notion that they don’t.
  • Assumptions – Exhibited when companies don’t encourage their employees to be on the earnings call, for instance, because “it’s too complicated” and “they wouldn’t understand.”
  • Trust – A common theme repeated in this blog. In this case, not sharing financial data with employees because you don’t trust them results in people having nothing real to learn from or apply their learning to. Maybe that was the intended effect.

Note that some of the last two issues are not limited to HR, but can be universally applied to all company managers and employees. In fact, there is another article, “The Dismal Financial IQ of US Managers” that covers this pervasive problem and its consequences in more detail. Even though the authors have a vested interest in pointing out these problems (they have a couple of books and a consultancy that address them), the impact is unmistakable.

*”If you are in Rome, live in the Roman way, if you are elsewhere, live as they do there”

– attributed to St. Ambrose (from Wiktionary)

**Financial Intelligence for HR Professionals: What You Really Need to Know About the Numbers by Karen Berman, Joe Knight, and John Case. Despite the drab title, this book is actually quite fun to read (really!) and does not take very long to read (a few hours.) It’s written in a friendly style that comes right out and tells the HR reader which things matter, how they matter, and which things really aren’t as crucial to know so you don’t get distracted by them. Each section is loaded with examples from recent history (especially scandals) linking HR areas of responsibility to financial problems for companies.

Photo by pdbreen

Posted in finance, hr transformation, strategic hr, Uncategorized | Tagged: | 7 Comments »