Cash Bonus Programs, How Effective Are They?

Friday, October 25, 2013

 

Cash Bonus Programs are a mainstay of many organization’s Total Rewards, but how effective are they is driving the desired performance behavior and linking that performance to organizational initiatives?  The answer can be found in their design, communication, execution, maintenance, and measurement.

 

Design:  “If I offer a large bonus, won’t my workers will do an outstanding job.”  Not necessarily.  Who is eligible, what performance outcomes are desired, what performance behavior is eligible, how is the calculation done, when are payment made, is the bonus integrated with base pay, is a portion of the bonus “held back” or deferred, are bonus payments included in calculations for benefits, are pay-outs scalable and variable based on performance levels required and organizational needs?

 

Communication:  I once worked for an organization where eligibility for bonus programs was not communicated to the covered employees.  How much, how often, when, and to whom bonus program edibility is communicated is essential to driving the desired performance behaviors and linking those behaviors to organizational initiatives.  Communications drives the “brand” identity of a bonus program, its perceived organization support, as well as its creditability.

 

Execution:  It is never sufficient to design and communicate a rewards program if its execution falls short of delivering on the payouts effectively and efficiently.  The power of a rewards system loses its ability to drive the desired performance behaviors if payouts are incorrect, delayed, lack creditability or presented in an inappropriate manner.  While an organization may not want to publish dollar amounts on their corporate web site, top reward earners should be celebrated nevertheless in some internal/external fashion, e.g., “The Million Dollar Club, Top Sales of the Year, Zero Lost Time Accidents for 10 Years”, … etc.

 

Maintenance:  Organizations live in a dynamic and complex ecosystem of competitors, regulations, and technology.  To be successful, every rewards system must be adaptable to the changing internal and external environment in order to tie performance behavior to the ever changing and new organizational initiatives.  A bonus plan from 2000 is unlikely to drive performance behavior or be linked to the organizational initiatives of today.  Left unattended, any bonus program will become out-of-date and un-harmonized and may even drive the organization to be less competitive, create recruitment and retention issues, and raise sustainability questions with stakeholders.

 

Measurement:  It is a commonly held belief that failing to measure is tantamount to failing to manage.  Ongoing outcome measurement of any bonus program is the foundation for the determination of its effectiveness in changing behavior, i.e., increased profitable sales, reduced costs, … etc.  Without a base-line measurement, it becomes impossible to know if the incentives of a bonus program are too high, too low or just right.  While financial measurement is generally the realm of an organization’s finance function, it is vital that a program’s owners (HR, Marketing, Sales, and Production) be in alignment with its Return on Investment.

 

Workplace Bullying and Top Talent

Friday, September 27, 2013

 

According to The Healthy Workplace Campaign, workplace bullying takes the general forms of:

 

•Verbal abuse.

•Offensive behaviors that are threatening, humiliating or intimidating.

•Work interference or sabotage that prevents work from getting done.

 

Writing for the Society for Human Resource Management (SHRM), Roy Maurer reports that since 2003, two dozen states have established legislation which provide protection for bullied workers and allows them to sue without the need to first demonstrate discrimination.

 

The basis for workplace bulling behavior is complex and employers are generally not equipped to address or correct it.  However, failure to address situations of workplace bullying can have both a direct and an indirect impact on an organization’s efficiency and productivity.  This impact can include increased turnover, lowered levels of service, missed deadlines, and potential litigation against the employer for “allowing” a hostile workplace to persist.

 

An article in the Harvard Business Review for January-February 2013, “The Price of Incivility”, authored jointly by Christine Porath and Christine Pearson paint bulling as an infectious disease.  The authors conclude: “Incivility [bullying] is expensive, and few organizations recognize or take action to curtail it.”

 

Gary Belsky, writing for Time’s Business and Money, reported on a Canadian study in which it was found that “witnesses” to bulling may be as impacted as the intended target of the bullying event.  So visualize this, some of the organization’s top new talent are in a conference when Employee X berates the comments and questions of a co-worker.  What impact is there on the employer’s new top talent?  One, they will adopt that same behavior or two they will start looking for their next job.  Either way, it can be assumed that the unit’s productivity will suffer if such behavior is allowed to continue.

 

An employer’s “brand” is an essential part of the organization’s talent recruitment and retention toolbox.  Street rumors, even if unfounded, concerning an environment which tolerates bullying, can dull the sharpness of the ability of an organization to attract and retain the best talent.  As most organizations have sought to diversify their talent base, they have adopted policies which do not tolerate inappropriate verbal and non-verbal behavior towards women, minorities, and other protected groups.  Jackson Lewis, a US based law firm, dedicated to representing management exclusively in workplace law matters, recommends the adoption of workplace bullying policies.

 

In its efforts to source, recruit, and retain top talent, an anti-bullying policy sends a strong message to current and future employees that the organization will not accept such behavior.  In the same manner that employers have worked to foster a conducive work environment for women, minorities, and others, businesses desiring to attract and retain top talent need to consider the chilling impact that bulling has not only on their top talent, but on their customers and clients.

How to Lose Great Employees in 10 Easy Steps

Friday, September 20, 2013

 ● Ignore them – disregard their advice and suggestions.

Great employees don’t expect to have their advice and suggestions noticed or taken seriously.

● Hide them – bury them somewhere so no one knows they exist.

Visibility to organizational executive management and customers is overrated.

● Don’t challenge them – great employees do not want to be tested.

Great employees don’t want any additional responsibilities; they already have enough on their plate.

● Forget recognition – they are happy being the unsung heroes.

There is no need to recognize great employees, anyway they shun the limelight.

 ● Rewards aren’t required – great employees are rewarded by their jobs.

Just working for the organization and their managers is enough of a reward.

● Don’t promote them – they are too valuable where they are.

The organization cannot afford for great employees to move into other roles.

● Exclude from projects – great employees are not motivated by project work.

Great employees would not enjoy the prospects of a special assignment.

● Isolate them – they work best off-line, excluded from other employees.

Working with others on a team is something from which great employees shy.

● Don’t provide training – great employees do not need training.

Great employees are already fully trained and if they are not, anyway, they are insulted by training.

● Exclude from interviewing – they have no insights into a candidate’s potential.

Great employees are uncomfortable interviewing job candidates.

Great employees start with great hires.  Short changing the sourcing, recruiting, and selection process is akin to including out-of-date ingredients in a cake.  Great employers are absolute in their desire to hire the best employees – and to keep the best of the best.

Interviewing, A Talent Acquisition or A Talent Management Tool?

Friday, September 13, 2013

 

Most organizations would agree that interviewing job applicants is important to the overall success of the business operations of their company.  Likewise, most managers and supervisors would argue interviewing is an essential component of their leadership roles within the organization.  Where disagreement is most likely to occur is in the discussion of the best interviewing method used to select the top job candidate.

 

While not part of the actual interview technique, interviewer preparation, avoiding illegal questions, and the interview environment are important aspects of the overall candidate selection process.  Lack of interviewer preparedness sends a strong negative message to the candidate about both the interviewer and organization.  Even today, there are examples of organizations straying into areas of questioning which should be avoided, and suffering the outcomes.  It is amazing to see some of the locations in which job interviews are held.

 

The purpose of the interview is oblivious; identify the top candidate so the organization can extend an offer, fill a vacancy, and move on to serving its internal and/or external customers.  But how does a hiring manager distill down to that top candidate?  After all, candidates are not homogeneous single dimensional entities.  The highest level of technical skills will not overcome a shortfall of interpersonal communications skills in a role requiring constant interaction, cooperation, and collaboration with others.

 

Candidate interviewing techniques are as varied as the organizations utilizing them, however, they can be classified in two general categories: non-behavioral and behavioral.

 

Non-behavioral interviewing techniques are often lists of yes and no or short answer questions which can be visualized as a check-off list.  Answering “Yes”, to “Do you know how to use Excel?” provides the interviewer with no depth as to knowledge or skill level the candidate has in “using” the tool.  “Yes”, does not tell us anything about the degree of sophistication of the candidate’s experience or the environment in which Excel was used.

 

Behavioral interviewing techniques attempt to dig deep down into the candidate’s past experience.  It gets at the what, when, where, why, and how of how they performed their work and under what conditions.  By restating the Excel question to, “Tell me about the most difficult assignment you ever had using Excel?”, the interviewer can expand into add-on questions.  One possible add-on question might include: “What made this assignment so difficult?”.  From this line of questioning, the interviewer might learn about conflicts with other work assignments, availability of other team resources, time constraints, and whether or not the assignment was successfully completed.

 

No interviewing technique is perfect.  Candidates have been known to “pull one over” on a single interviewer.  When behavioral interviewing is used with multiple interviewers, each focused on a different aspect of the position, it becomes less likely that a bottom rung applicant will be mistake for a top candidate.  Interviewing is both time consuming and expensive.  However, selecting the wrong candidate may prove to be even more time consuming and more expensive.

Business Continuity Planning for Human Resources

Friday, August 23, 2013

If you work in a corporate environment and your function has anything remotely to do with your organization’s data operations, you know that “DR”, aka, “Disaster Recovery” is a hot topic.  A significant interruption of any of the areas within your organization’s data operations can be devastating to internal and external customers.  To combat the impact of such a disruption, most large organizations have detailed plans to recover and resume normal or near-normal business data operations as soon as possible.  But what about the interruption of support functions such as Human Resources?

You may consider that as a support function, the loss of Human Resource operational capabilities would have little to no impact on an organization’s business vitality.  Since much of what HR does is often outside of the limelight, little thought is generally given to exactly what a long-term disruption would do to business operations.  While the source of disruptions can result from spectacular events, even the most mundane action can lead to the loss of business operations.  Example: raw sewer waste contaminates the basement of your office building, the health department closes the building for 30 days, thus no access to phones, faxes, computers, paper files.  Preplanning for such losses is HR management’s role.

1. At any given time, there could be dozens of job candidates in play.  If candidates cannot communicate with the organization and/or the organization cannot respond to them, a good candidate may get lost for the want of a Business Continuity Plan.

2. What happens to those data feeds directed at payroll processors, 401(k) record keepers, insurance carriers, and financial institutions?  Employees are not paid timely or correctly, insurance enrollments may be delayed, direct deposits are not posted or posted to the wrong accounts.

3. If you are in the middle of annual regulatory filings will you be able to proceed?  Even with filing extensions, a disruption may make it impossible to file without penalties.

4. It is one thing to lose data systems or telecommunications capabilities; what is the impact if the loss is key staff members resulting from a pandemic?  The loss of knowledge may have a greater effect than any system disruption.

Failing to plan is akin to planning to fail.  Even a simple plan is better than no plan at all.  A good plan today is better than a great plan tomorrow.  Business Continuity Planning for Human Resources is essential to ensure some level operational capacity following a disruption.  While it may not be “business as usual”, HR’s ability to provide even the most basic support functions will be expected, if not demanded.

At a very basic level, Business Continuity Planning for Human Resources should include:

1. Instructions and Directions – where to go and what to do in the event of a disruption and when and how to contact HR management team leaders.

2. Contact Information – for organizational members, vendors and suppliers, support staff in other organizational units.

3. Data and Data Feeds – location of critical data, format and frequency of inbound/outbound data feeds.

4. Calendar – dates for various business and regulatory filings, mailings, notices, and events.

5. Skill Sets – skills required to perform various functions and the staff who possess such skills.

The Law of Unintended Consequences

Friday, August 23, 2013

 

“The law of unintended consequences is an adage or idiomatic warning that an intervention in a complex system always creates unanticipated and often undesirable outcomes.”

 

Recently, the University of Virginia and UPS announced they would no longer offer health care coverage for employee spouses if those spouses were able to obtain their insurance on their own.  Both organizations cited the Patient Protection and Affordable Care Act (PPACA) as playing a role in their decision to act at this time.

 

In October 20112, Darden Restaurants, which operates the Red Lobster, Olive Garden, LongHorn Steakhouse, and Yard House eateries indicated it would restrict the schedules of hourly workers to 28 hours per week.

 

In November, 2012, John Schnatter, Papa John's founder and CEO caused a significant uproar when it was incorrectly reported that Papa John's Pizza would cut employee hours as a result of PPACA’s mandated coverage rules.

 

A Wendy’s Nebraska franchise reportedly plans to reduce hours for non-management staff in an effort to address PPACA’s mandated coverage rules.

 

Forever21, a fashion retailer, advised workers their hours would be limited to 29.5 a week, PPACA’s mandated coverage rules sets the minimum number hours for health care at 30 hours per week.

 

Are employers beginning to react to the mandated health care requirement built into PPACA that employers with 50 plus employees and employees who average 30 hours per week must be offered health care? 

 

Will fewer employers offer health thus driving more individuals to the health care exchanges? 

 

Will there be fewer individuals with health care since the penalties are far less that the actual cost of health care premiums? 

 

Will the cost of labor rise as employees demand more in cash compensation to offset the lack of employer provided health care benefits? 

 

Will employers end up paying for health care indirectly by offsetting the coverage employees obtain through the exchanges with additional compensation? 

 

Will certain employers or certain industries continue to offer health care in order to maintain their competitive advantage? 

 

Will small employers find it increasingly difficult to keep their top talent as that talent migrates between organizations who cannot afford health care to large organizations which can?

Job Descriptions: Are They Still Important?

Friday, August 16, 2013

 

Putting aside the regulatory and compliance issues for creating and maintaining job descriptions, are they still important to both employers and employees?  To answer that question, it is necessary to look at the anatomy of a typical description.  Job descriptions contain several basic elements, including a title, summary, explanation of duties, knowledge, skills, and abilities, and the environmental and physical demands of the job.

 

Job Title:  While it may seem obvious, the title is often what internal and external prospective job candidates focus on first when considering whether to apply for a job or not.  Think of it as a gateway, its goal is to be informative while funneling qualified applicants into the screening process.

 

Job Summary:  A paragraph of 2 – 3 sentences providing a high level explanation of the duties of the job.  Again, once the candidate has decided that this job has an appeal for them, the Job Summary provides additional detail to entice the applicant to continue to explore the job or conclude it is the wrong job for them.

 

Explanation of Duties:  This is the heart of the description.  The nuts and bolts of the job’s duties are located here. The reporting and supervising relationships are detailed in this section.  The What, When, Why, Where, How, and How Often of the job are spelled out in what is the body of the description.  For the job candidate, this part of the description should allow them to understand the performance expectations of the employer for the job’s incumbent.

 

Knowledge, Skills, and Abilities:  Every job requires some level of Knowledge, Skills, and Abilities.  This section explains to the prospective candidate where and how those attributes were gained and to what level of proficiency the job requires, including alternative means of acquiring such talents.

 

Experience: This section generally describes what kind of experience, how much, where, and when that experience was obtained.  Was the experience progressively more responsible or complex?  In what kind of a business, industry, environment or geographical location was the experience earned?  Over what duration of time was the experience earned and was it at various levels?

 Environmental and Physical Demands:  Although this section was originally derived to address issues with regulatory mandates, it can assist the candidate to understand what demands will be placed on them from a situational standpoint.  Candidates may include or exclude themselves based on their perception of the environmental and physical demands of the job as described.

 

As a recruiting tool, the job description functions to filter candidates in to or out of the selection process.  If unqualified candidates are finding their way into that process, one possibility might be that the job description either under or over states the job’s duties and/or requirements.  Something to consider, is that a poorly written job description may lead to a mis-match between the employer’s and the employee’s performance expectations resulting in higher than desirable rates of both voluntary and involuntary turnover.

 

Jobs are not static and neither are job descriptions, thus they must be written with enough specification to meet the needs of candidates, employers, and employees alike. Jobs can and often vary widely from employer to employer.  While pre-written and canned descriptions may seem to be the expeditious means of creating a placement ad, conducting a  performance evaluation or building a succession plan; they may result in an higher than expected price in the talent war.