LEADING THOUGHTS

In the UK, for example, there’s a proposal to tie top public sector pay to a 20-times multiple of low pay, and to publish the salaries of the highest earners.

Amid all the huffing and puffing, the huge UK-based HR association, CIPD, is providing a gutsy contrarian view. In a recent report, CIPD argues in favour of variable pay and bonuses, a tough argument to make in these days of retrenchment.

“Politicians and, perhaps more importantly, more strident parts of the media need to stop seeing pay in the public sector as only a cost to be driven down,” the report says. “Instead, used well, it can be a tool to drive up standards and increase value to the taxpayer.”

So how should compensation be designed to deliver what public sector bosses and their political masters intend? CIPD suggests that, for the most part, what works for the private sector should work for the public. To wit:

Ensure reward practices match the purpose.
The key question is: “Are the ways that the benefit package is structured likely to make any day-to-day difference to the ability of the organisation to deliver its objectives, or the effort delivered by individuals to help it do so?”

Make compensation transparent.
Employees need to know what is expected of them and what they need to do to earn a pay raise or bonus, and what is expected of others. Transparency also builds credibility with taxpayers. In fact, CIPD likes the idea of publishing the names of high earners, not merely their job titles. U.S. states such as Utah, Washington, Nebraska, and California already have publicly accessible online databases containing the salaries of state employees.

Reward performance.
This won’t please the “slash the pay packet” crowd but CIPD suggests public sector managers make greater use of variable pay to reward individual or team behaviour. This is a good way to recognize high performance without continually ratcheting up comp levels and pension commitments. “Bonuses can help focus minds by communicating what’s important to the organisation and can be more cost-effective than consolidated pay awards.”

Adopt flexible compensation schemes.
CIPD recommends moving from national pay agreements, “pay spines/increments”, and service-related pay progression to flexible pay structures. More flexible pay grades and progression mechanisms should be adopted to allow individuals to progress through their grades faster.

Download Transforming Public Sector Pay and Pensions

You’re flush with excitement because you’ve just hired an industry high flier. How can you make sure that your new star employee isn’t a flash in the pan?

Top-notch talents do not automatically perform at high levels, say Groysberg (Harvard Business School), Lee (RiskMetrics Group), and Abrahams (Harvard Business School). Writing in the MIT Sloan Management Review, they offer advice on how to get the best out of the best.

Their main point is that “star” hires perform at their peak when surrounded by colleagues of similar talent. As proof, they point to a study they performed among equity analysts who benefited (as did their customers) by working with sharp portfolio strategists and salespeople.

Why is this so? It turns out that high-quality colleagues act as sources of information, provide insightful feedback, serve as valuable interfaces between knowledge workers and clients, and enhance the reputation of their star colleagues.

This management strategy also leads to higher retention of the top performers, the authors state. “The goal here is the so-called Matthew effect: The more stars a company has, the easier it is to develop and retain such high-caliber individuals.”

Three other pieces of advice:

:: Avoid lavishing high salaries on your new star hire; doing so risks demoralizing co-workers. In fact, the authors write, high achievers may be willing to accept a pay cut for the opportunity to work with similarly talented employees.

:: Stars may not have the instinct to play well with others, especially when managerial time and resources are scarce and the urge to compete is greatest. Managers should therefore create a culture of collaboration by encouraging face-to-face contact and building a compensation package that rewards appropriate behaviour.

:: Don’t neglect home-grown talent. By developing high potentials from within and building bench strength, you will be rewarded with greater loyalty and less disruption when a key person leaves.

“What it Takes to Make ‘Star’ Hires Pay Off”, by Boris Groysberg, Linda-Eling Lee, and Robin Abrahams; MIT Sloan Management Review (Vol. 51, No. 2, Winter 2010, pp. 57-61)

photo credit: Noel Feans

Four of every 10 employers in the U.S. profess to be concerned that the aging of the workforce will have a negative impact on their business over the next three years. But it might be all hand wringing and no action: the same survey found that two-thirds have not analyzed the demographics of their workforce and 77 percent have not analyzed the projected retirement dates of their employees.

So what do you make of that seemingly mixed message? According to the Sloan Center on Aging and Work, the unit that gathered the data as part of its Strategic Talent Management Study, part of the answer lies in the tight financial circumstances in which many organizations find themselves.

Researchers at Sloan dug deep into their survey of 696 U.S. organizations and identified four different employer groups:

• “Lower pressured employers” anticipate a positive or neutral impact from the aging of the workforce and are not suffering from the economy (24 percent of the sample).
• “Economically pressured employers” aren’t concerned about an aging workforce but are struggling to keep up in the economy (36 percent).
• “Age-pressured employers” are really worried about the aging workforce but are in decent financial shape (12 percent).
• “Age/economically pressured employers” are stuck in the worst of both worlds (28 percent).

The Sloan report builds the case for organizations to conduct a rigorous assessment of their workforce demographics, projected retirement dates, and future skills needs. The report includes a handy chart outlining workforce planning considerations for employers, depending on where they sit on the “pressure” scale.

Download a copy of the report here or email me at Alan [at] AlanMorantz.com.

photo credit: AMANITO

As head of the world’s largest confectioner, Cadbury CEO Todd Stitzer has plenty of challenges, not least of which is leading a multinational corporation that retains some of its Quaker culture. In this interview with INSEAD, Stitzer discusses his own leadership journey, managing through a “de-merger” and downsizing, waging a war for talent, and maintaining your sanity.

Go straight to the 4:20 mark, where Stitzer talks about the split between Cadbury and Schweppes.

At 6:38 he explains his messaging to employees going through a major downsizing.

At 8:50 he discusses the still prevalent Quaker culture, and the tension between high performance and social responsibility.

At 10:12 Stitzer reveals the Cadbury approach to talent management. Factoid: over the past five years, about 30 percent of the top 150 employees changed positions.

At the 12:00 mark he discusses the qualities he looks for in a leader: selflessness and high engagement (a willingness to “invest in accomplishment”).

And at 14:15 Stitizer gives his recipe for work-life balance: not playing golf with the boys on Saturday mornings.

Today’s organizational principles are based on the idea that the workforce is shaped like a pyramid, with many young people at the base, a medium number of mid-career workers in the middle, and fewer older workers at the top. In reality, the workforce is beginning to look more like a rectangle with nearly the same number of workers at each life stage, writes Tamara J. Erickson, president of nGenera Innovation Network in the journal People & Strategy.

Given this reality, Erickson asks a number of provocative questions regarding organizational design:

Is it time to redesign career paths for lateral moves, with less dependence on promotion? Tie variety, recognition, learning, and compensation to the development of capabilities that are not necessarily related to hierarchy.

Do we need titles and, if so, for what purpose? Titles that clarify the function a person performs are essential; titles that recognize movement up the org chart are less so.

Does a career need to be continuous and linear? Provide employees with the opportunity to leave and re-enter the workforce.

How long should we expect people to stay in one job or even in one company? Redesign jobs to accommodate frequent movement and short tenures per role.

Should we redefine work in terms of tasks rather than time? Have employees put in only as much time as it actually takes to get the work done, and remove the need to keep regular hours or show up at the office each day.

How can you ensure employees are choosing you? Find ways to let prospective employees understand for themselves what it is like to work in your organization, and then encourage the prospective employee to evaluate the fit.

Redesigning Your Organization for the Future of Work, by Tamara J. Erickson; People & Strategy (Human Resource Planning Society, Vol. 31, Issue 4)

Email me for a copy of this paper: Alan [at] AlanMorantz.com

photo credit: Engin Erdogan