HR Analytics: Human Resource Professionals Need to Catch Up

Posted on July 7, 2014 by Chris Kelley Posted in Compensation Consulting, HR Analytics, KnowledgePay

HR analytics still seem to be a mystery to some human resources professionals. Although more data is available than ever before due to technology, the HR field lags behind in predicting workforce trends, reducing risks, and increasing returns, according to a Cornell University study.

Is Common HR Analytics Useful? 

The Cornell study reports that HR professionals commonly use metrics such as performance, retention, engagement, and compensation. However, this data merely presents current or past trends. The goal, according to the executive participants, should be to predict and analyze the future.

Yet, a 2014 post entitled, ‘Grab hold’ of analytics or get left behind, HR warned, suggests that the finance, supply chain, and operations functions are leaving human resources in the dust. In fact, Deloitte’s Global Human Capital Trends 2014 report notes that 86 percent of companies have no human resources analytics capabilities, while 67 percent say their skills using the data to make predictions are weak.
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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:

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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.

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Gainsharing – The Phoenix Rising through the Ashes

Posted on March 19, 2014 by Chris Kelley Posted in Compensation Consulting, KnowledgePay

Gainsharing plans have been enjoying somewhat of a renaissance in popularity the past couple of years as the economy starts to recover from the near economic collapse in 2008 – 2010.  While these plans originally date back to the 1930’s, they seemed to have peaked in popularity in the early 2000’s .  During the darkest times of the recent recession, there seemed to be no new activity in terms of creating new plans and other plans that had been in place were scrapped.  As the markets have started to improve though, the prevalence of gainsharing plans is starting to regain its popularity.

So what is a gainsharing plan anyway?  The definition of a gainsharing plan is actually part of the identity crisis that caused them to fall out of favor during past decade.  A quick search for gainsharing terminology will give you various definitions, but the most common is that they are a compensation incentive plan where a portion of the company’s profits are share with employees.  Employees have ‘skin in the game’ and so they are incentivized to improve performance and productivity.  Therein lies the major problem according to Brad Hill of Tandehill Human Capital.  “First and foremost, gainsharing plans are a commitment to employee involvement where sustained improvements in productivity can lead to a financial reward.  The key difference in that definition is that we focus first on gainsharing being a commitment to employee involvement, not compensation.”

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Pay Transparency: Culture is Key

Posted on March 14, 2014 by Chris Kelley Posted in Compensation Consulting, KnowledgePay

There’s still a lot of talk lately about the idea of pay transparency, but many organizations still not willing to take the plunge. Why the hesitancy? One argument I hear is that pay information is personal and it’s a private matter between the organization and employee.  Others respond with view that employees just don’t have a need to know what coworkers earn. Or, my favorite, employees can’t be trusted with this kind of information. Therefore, when social media management company Buffer recently announced it was posting salaries online, you can imagine the uproar.

However, as Buffer CEO Joel Gascoigne emphasized in a December blog post, “Transparency breeds trust, and trust is the foundation for great teamwork.”

Buffer isn’t the only company choosing to share ‘confidential’ information. Thirty-employee SumAll chose to make performance reviews as well as salaries public. They say the program is a success. This may be due to how well they implemented the program. Specifically, they built the right culture as well as developed complementary policies and programs that are transparent as well as defensible.

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