April 2014 – Knowledge Pay Website

Does Organizational Planning and Job Design Matter?

Posted on April 30, 2014 by Chris Kelley Posted in Compensation Consulting, Job Descriptions, Job Titling, KnowledgePay

The Business Case for a Disciplined Approach to Designing Jobs and Organizational Structures

Jane had been the accounting department’s top performer for 10 years, but three months ago, to her manager’s surprise, she resigned. Her reasoning? She was no longer satisfied with the work after a recent reorganization.

So what happened?

The company had gone through some restructuring and layoffs about six months prior because of a slowdown in the market. Their overall financial position was still very strong, but they wanted to get lean and took the opportunity to downsize. Unfortunately, while the financial objectives were clear about how many heads to take out of the organization, there was far less clarity around how to most effectively design the new organization and the necessary jobs.

In Jane’s case, what ended up happening as a result of the restructuring was a collection of poor decisions made by her senior management team. The work environment, that at one time was fulfilling and engaging, now became a chaotic fire drill where the entire team’s performance suffered. Jane tried to raise her concerns to her manager, but after a few frustrating months of inaction, Jane decided to jump ship. Good for Jane, but with the brain-drain that slipped out the door with her resignation, the already struggling accounting department now has an even deeper hole to dig themselves out of.

So how did things fall off the rails? We had a chance to catch-up with Jane and get her observations about what went wrong. Here’s how she summed it up:

Market Pricing – Compensation Group Hits 1500 Members

Posted on April 22, 2014 by Chris Kelley Posted in Market Pricing, Salary Surveys

Several years ago, I started a Group out on LinkedIn called “Market Pricing – Compensation”. This community has now reached a milestone of having over 1,500 members….it’s now at 1,575 and growing every day!

The group is made up of compensation and HR professionals from around the world who all share a common interest of trying to make sure they have the best salary survey sources to fit their relevant labor market. I personally review the profile of everyone that requests membership to make sure the group stays on focus.

Can Paying Higher Wages be Smart Business?

Posted on April 9, 2014 by Chris Kelley Posted in Compensation Consulting, KnowledgePay, Market Pricing

Many employers follow the formula of reducing overhead and employee wages as their way to increase profit. Given that pay related expenses for any business can be the single largest operating expense, it’s easy to see how minimizing wage expense can lead to higher profits. However, some organizations are realizing that this might not be the best way to optimize profits. The pay check your employees take home is one of the most powerful communications vehicles you have at your disposal and the key message it shows is how much (or how little) you value them. Some business gurus believe that sense of value translates directly into how much effort your employees give on the job and can lead to dissatisfaction and attrition of employees, which leads to higher costs in other areas. This also has a negative impact on customers and top-line revenue. The jury is out though. Would paying higher wages positively impact your business?

Many big name companies see the writing on the wall and are changing philosophies. For instance, Gap, Inc. recently raised the minimum hourly wage for their employees to $9 with plans to increase to $10 an hour in 2015. According to Glenn K. Murphy, Gap’s Chief Executive, increasing wages is an investment in Gap’s employees which will bring many returns to the company. He said, “. . .To attract and retain the best talent we have to make sure we invest in them.”

QuikTrip convenience stores has proven paying higher wages can increase profits. QuikTrip values their employees. They offer employees a “regular wage, a customer service bonus, a profit bonus and even an attendance bonus” according to one manager. QuikTrip’s philosophy is that if they treat their employees well, the employees will treat customers well. The customers will then be more loyal to the company.