Friday, May 17, 2013
Friday, May 17, 2013
The most modest organization has large amounts of information, i.e., “Big Data”, on its operations, suppliers, customers, and especially on its employees. Even knowing as little as length of service, hours worked, job function, performance data, and location can be telling as to which employees are likely to succeed or not. The basis for Big Data decision making is founded in that class that most students ignored or only took the one mandatory course. That course usually covered the statistical foundation concepts of data collection & presentation, variability, central tendency, sampling theory, inference & hypotheses testing, regression & correlation, indexes & time series, and seasonal & cyclical analysis. While an employer with a few dozen employees can manage them with no more of a sophisticated tool than a good memory or paper notebook, even a middle sized organization of a workforce of few hundred needs to look deeper.
To illustrate the role of Big Data and Talent Management, the Polytechnic Institute of New York University recently hosted a day-long workshop titled: “Talent Management 2.0: HR Innovation In The Big Data Era”. Speakers at the workshop included NYU-Poly instructors from the computer science, engineering, and technology departments. Additional speakers included individuals representing PepsiCo, Aon Hewitt, Google, SAS, Morgan Stanley, JetBlue Airways, and Accenture.
Aasonn, a global systems and technology services consulting firm, recently reported on a study by the MIT Sloan Management Review: “From Value to Vision: Re imagining the Possible with Data Analytics”. The MIT study found that while “17% of product development, 19% of marketing, and 20% of operations respondents reported using analytics to drive innovation”, however only 8% of HR organizations used analytics to drive talent acquisition and retention.
In what he refers to as “Talent Analytics”, Josh Bersin, a contributor for Forbes, writes, “While most of the talk is about applying BigData to marketing and consumer businesses, there is an even bigger opportunity to apply BigData to Human Resources.”
In the same way a marketer might look at customer consumption behavior patterns, the recruiter would look at employee performance and correlate it with various data points. By asking questions as to who is performing and what they have in common, the recruiter may be able to isolate discrete factors which identify employees as top performers.
Is it significant that 90% of employees in department A quit after 18 to 36 months? Is it significant that 70% of employees who were managed by manager B are now in middle and upper management roles? Is it significant that all of your best engineers came from small non-top 10 colleges, worked 12-36 months at the Tacoma facility, are currently enrolled in a graduate or MBA program, and have 2 to 4 years of military service?
Friday, May 10, 2013
Friday, May 10, 2013
Interns are an excellent way to “preview” a potential future employee for many organizations. Many interns return as full time, highly talented employees after spending a summer with a prospective employer. The problem is that some organizations use this talent pool without proper regard for the Fair Labor Standards Act (FLSA) minimum wage and overtime guidelines. Xuedan Wang, a former unpaid intern for Harper’s Bazaar (Hearst Corporation) filed a lawsuit in February 2012 alleging that Harper (Hearst Corporation) failed to recognize her as a regular employee, eligible for protection under the FLSA minimum wage and overtime rules and New York labor law.
Previously, the US Department of Labor issued (April 2010) new guidelines for unpaid interns in the form of a DOL “factsheet”. The fact sheet outlines six (6) criteria for an unpaid intern to be exempt from “an employment relationship … under the FLSA”:
“1.The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.”
Apparently, where Harper (Hearst Corporation) may have run into a problem was that the internship program did not meet one or more of these six (6) conditions. The fact sheet expands on the six (6) guidelines in three (3) illustrative manners:
● “In general, the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience.”
● “If an employer uses interns as substitutes for regular workers or to augment its existing workforce during specific time periods, these interns should be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.”
● “The internship should be of a fixed duration, established prior to the outset of the internship.”
Wang alleged “that Hearst used interns … to complete tasks necessary to its operations such as to answer phones, make deliveries, and organize clothing and accessories.” Furthermore, Wang alleged “that Hearst violated … [both] the FLSA and the New York Labor Law.”
Both paid and unpaid interns have potential advantages for employers and employees. However, clearly professional level assistance should be sought in addressing and dealing with federal, state, and local wage and labor laws.
Friday, May 3, 2013
Friday, May 03, 2013
Beginning January 1, 2014, the Patient Protection and Affordable Care Act (PPACA) will require virtually all Americans to obtain and maintain health care coverage. Coverage may be provided through their employer, a publicly funded health care program, private insurance via a state or federal government run exchange or a private carrier. Employers have already begun reporting company provided health care on employees’ 2012 W-2’s issued in January 2013. Individual taxpayers will begin reporting health care coverage or the lack of coverage when they file their 2014 1IRS 040 in 2015.
The concept behind an individual health insurance mandate is straight forward; if everyone has insurance, the risk and therefore the costs are spread across ALL taxpayers and just not those who have employer, private or public coverage. The US Census Bureau estimated in 2011 that some 49 million persons do not have employer, private or public health insurance coverage and that approximately 260 million Americans had coverage. The individual health insurance mandate is directed at those without coverage.
Since a number of the 49 million persons who do not currently have health insurance will fail to pay for some or all of the cost of their health care needs, the resulting cost is shifted to those who do pay or is written off as a business loss, thus absorbed by taxpayers in general. In theory, eventually ALL health care consumers, including their employers end up paying higher direct costs or higher insurance premiums, co-insurance payments, co-pays, and deductibles to offset some or all of these unrecoverable unpaid medical expenses.
To encourage taxpayers who do not have health insurance coverage, the PPACA assesses a penalty on those who fail to obtain coverage beginning in 2014. The initial penalty is $95 but increases over time and is indexed to the cost of living after 2016:
● 2014, $95 per adult/$47.50 per child, family max of $285 or 1% of income, whichever is greater.
● 2015, $325 per adult/$162.50 per child, max of $975 or 2% of income, whichever is greater.
● 2016, $695 per adult/$347.50 per child, max of $2,085 or 2.5% of family income, whichever is greater.
The penalty is capped so that it will not exceed the cost of an individual ($4k -$4.5k) or family ($12k -$12.5k) Bronze plan through the exchanges in 2016.
At issue, will the initial and subsequent PPACA penalties actually motivate individuals to obtain coverage? Loss aversion tells us that consumers fear losing more than they treasury gaining something of value. So will a health care consumer fear losing the $4,000 to $5,000 for expected annual cost of individual health insurance coverage more than gaining the value of having health care coverage?
Friday, April 26, 2013
Friday, April 26, 2013
According to a recent report by Sage Advisory Services, a leading Texas-based investment management firm, Cash Balance Pension Plans have the potential to overtake 401(k) Retirement Plans in the foreseeable future. While many organizations have terminated or frozen their traditional defined benefit pension plans, others have explored cash balance plans. The US Department of Labor, Employee Benefits Security Administration describes a cash balance plan this way.
“In a typical cash balance plan, a participant's account is credited each year with a "pay credit" (such as 5 percent of compensation from his or her employer) and an "interest credit" (either a fixed rate or a variable rate that is linked to an index such as the one-year treasury bill rate). Increases and decreases in the value of the plan's investments do not directly affect the benefit amounts promised to participants. Thus, the investment risks are borne solely by the employer.”
So in many ways, a cash balance pension plan, although still a defined benefit style plan, appears to employees as having many of the same attributes as a 401(k) plan. Employees in a cash balance pension plan do not have actual segregated, delimited, and individual accounts, instead their accounts are “notional”. Nevertheless, the employee perceives value changes, gains, and losses in their “account” with contributions deposited, interest earned, and investment gains and losses posted.
If cash balance plans as so similar to 401(k), why even bother with a 401(k)? Cash balance plans are still a defined benefit pension and suggest to the reporting, minimum funding, and actuarial rules as traditional defined benefit pension plans. Cash balance plans generally do not permit employee contributions, thus the responsibility for funding falls squarely on the employer. Nevertheless, cash balance plans are a tool in an organization’s effort to attract and retain top talent along with cash compensation, non-cash rewards, health and welfare benefits, and paid time off.
Such an arrangement as a cash balance plan is often highly attractive to younger, investment savvy, and more mobile employees. These employees are also often the very employees that an employer wants to source and recruit. Compared to more traditional defined benefit pension plans which can have complex benefit formulas, cash balance plans can be simple and straight forward. Many offer portability of accrued account balances in the event an employee separates from their employer before retirement age. A traditional plan, on the other hand, might require a separated employee to wait until age 55, 62 or 65 before their benefit could be distributed.
Friday, April 19, 2013
Friday, April 19, 2013
Job Design, as the term implies, is the organizational process of assembling individual work components into a coordinated and cohesive set of tasks we call a “job”. Why “coordinated and cohesive”? It would be fairly unsafe and implacable to have an aircraft pilot fly the plane and function as an in-flight attendant. In addition, a set of job tasks which are not “cohesive” would lead to a fragmented and inefficient approach to the organization’s efforts to deliver its product or services. Therefore, care must be taken when creating a job to organize the tasks in a way which adds value to both the organization and the individual. Once again, in an effort to attract and retain an organization’s top talent, it is important to know why and how the work product is delivered to the end customer, internally or externally.
Many jobs are designed with a progression from less to more difficult tasks, which are performed at successive higher organizational levels. This segmentation of work allows for the most appropriate level of knowledge, skill, and ability to be applied to a given function. From an organizational development standpoint, individuals are afforded an opportunity to grow their skill level in step-like fashion over time and thus optimizing the possibility of success. Bench depth and strength are built under more or less controlled conditions ensuring that the desired talent is developed to the benefit of the whole organization. Therefore, it is critical to allow for the design of jobs in a manner which allows managers to add or subtract tasks in a way that brings out the optimal performance in a given employee, i.e., the employee's "comparative advantage".
An organization which wants to build the scope and depth of a potential top performer can use value added job design to add specific tasks focused on one or more growth areas. As the employee gains greater skill levels in the desired area, more demanding tasks can be added to continue the skill growth. As an example, consider an entry level electrical engineer with a utility company. Initially the scope o such a job is limited with heavy supervision. However, providing the entry level engineer with progressively more challenging tasks within a coached environment will speed up development. Combine this sped-up development with selective financial and non-financial rewards and the organization is likely to retain this top performer.
Of course to make all of this happen:
● The organization must communicate what opportunities are available,
● The employee has to be identified as a top performer,
● They have to be teamed with an appropriate coach,
● Reward and recognition has to be obtainable,
● The organization has to deliver with the challenging tasks.
One thing we forget is that even a top performer may, on occasion, fail. Thomas Edison is quoted as saying, “I have not failed. I've just found 10,000 ways that won't work.” The function of value added job design is to create an environment where the organization’s key talent can experiment without the threat of serious physical, organizational, or financial harm.
Friday, April 12, 2013
Friday, April 12, 2013
In my prior roles dealing with employee compensation and salary administration, I frequently developed structures for entire families of jobs. Most individuals are aware of such families, an example is accounting where an entry level position might be an accounting clerk progressing to the CFO. If job levels are associated with salary grades and ranges, each successive job level moves up one or two grade levels. This movement corresponds to an increase in job responsibility, scope, knowledge, skills, and abilities. Depending on the organization, there may be similar job families which parallel each other, examples might be roles in accounting, budgeting or financial management. Potentially, an employee might be able to move vertically within a family or laterally across family structures. These “ladders” or “lattices” of progression from one role to the next, ultimately allowing an employee to attain some desired goal, is generally recognized as a “career path”. However, career paths are more like a road map and often lack the details of how an employee accomplices a move from one position to another; this is the function of a “career framework”.
As the term implies, a career framework is both the structure for advancement as well as the means required for an employee to achieve that advancement. A career path is merely one component of a career framework. Career frameworks are well suited to high performers who generally take ownership for their own growth and shy away from some prescribed formula to advancement. Given our example of an accounting family, a career framework might indicate that knowledge of the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) would be required for posting to the organization’s European offices in Brussels, Belgium. The framework might also indicate fluency in at least one foreign language, including French, German or Spanish. For posting to the organization’s European accounting and financial management offices may also require certification as the European equivalent of a CPA. Lastly, the framework spells out that a desirable candidate must have operational proficiency in the organizations, manufacturing, supply, and logistics functions in both domestic and international subsidiaries.
Career frameworks provide the focus for organizational units to develop a high performer’s talents and direct those talents to key business initiatives when and where they are required. They are applicable to all private and public enterprises regardless of their business cycle, capitalization, customer base, accounting charter or level of maturation. Essential to successful career framework implementation is management buy-in, clear concise employee communications, organizational alignment, adaptability, and flexibility. Career frameworks can focus on narrow set of roles or span the entire scope of the organization. They are not in and of themselves a guarantee for organizational success or achievement. Career frameworks are one tool in the organization’s kit to attract, retain, and motivate top performers and must be integrated along with candidate sourcing and onboarding, training and development, and total rewards.
Friday, April 5, 2013
Friday, April 05, 2013
According to a March 21, 2013 press release by the American Management Association (AMA), AMA’s Enterprise division conducted a survey of approximately 1,000 organizations between December 18 and January 6 in an effort to understand employers’ views on employee turnover potential. In short, most employers seem unconcerned with the potential for the possibility of impending employee turnover. 69% of the respondents did not perceive the likelihood of increased turnover as the economy improved as “something unusual”. When asked to rank the urgency of increased turnover, 61% reported the matter was either “Not so urgent” (39%) or “Not at all urgent” (22%).
Sandi Edwards, Senior Vice President of AMA Enterprise was quoted as saying, “Intent to leave is a key indicator of engagement and commitment to the organization. If management wants the best out of its people, they need to be aware of their stress and contribution levels. Management needs to work with them individually to understand what will meet their career goals along with what has to be done to drive the organization forward.” Edwards went on to comment that it is less about turnover in general and more about specifically turnover of the organization’s “high value employees”.
Retention of “high value employees” requires a focus on their individual talents as well as areas of growth potential and clear communications of an individual career plan coupled with reward and recognition. According to Accenture, a global management consulting, technology services, and outsourcing company, high performers are often associated with seven high-performance learning traits:
● Autonomous performance
● Active soliciting of input and feedback
● Future orientation
● Self-directed development
● Agile alignment
● Linking learning and practical experience
● Active collaboration
While many organizational leaders appear to be unconcerned with the possibility of increased turnover, employee turnover should be viewed as a risk. Is it not the role of business leaders to manage risk? Risk must be managed, least the organization will its find top talent, market share, customers, and product ideals bearing the logo of their competitors.
Performers, especially high performers expect a broad range of rewards and recognition. Yes, financial and non-financial make up a significant portion of the high performer’s reward package. However, tantamount to reward is recognition. Give them leadership of a high visibility project, a high risk high reward assignment or a task no one else wanted or could not accomplish. It is said that General H. Norman Schwarzkopf, a.k.a. Stormin' Norman, a.k.a. The Bear, moved up through the ranks to general by taking on jobs no one was willing or able to do. True high performers relish a challenge.