Grading in context - R Leyssens


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Role and use of grading in Reward - presentation for 5th Annual Global Compensation & Benefits event - London September 19/20

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Grading in context - R Leyssens

  1. 1. Grading in contextA Story on Grapes, Horses and Veils<br />Ralph Leyssens<br />Reward Director<br />Ideal Standard International<br />
  2. 2. INTRO<br />
  3. 3. Grading<br />System to rank roles<br />WHAT<br />“Objective” way of comparing roles across the organisation using criteria based on (internal) values and relativities that are accepted and recognised by all parties involved.<br />AIM<br />As a starting-point and platform for:<br />- Reward Framework - Career Planning<br />- Performance Management - Market data - ... <br />USE<br />Company-specific? Administrative Ease<br />Underpin other HR programs Acceptation / buy-in Time- and Cost Efficiency Fit-for-purpose …<br />NEEDS<br />
  4. 4. A career in pictures<br />
  5. 5. A corporate Smurf role is not a corporate role<br />
  6. 6. 20 years in HR/Reward and I believe:<br />There will always be a need for some sort/type of grading or leveling<br />Selecting / developing the appropriate “method” has never been easy and if anything is getting more difficult<br />The need for perceived and demonstrable objectivity will increase with “maturing” of workforce<br />
  7. 7. “Philosophy”<br />Grapes, Horses & Veils<br />
  8. 8. GRAPES<br />… of Labor<br />
  9. 9. Social Inequality Aversion<br />
  10. 10. INTRINSIC<br />INDIRECT<br />DIRECT<br />Job Content<br />Impact on business<br />Level of responsibility<br />Meaningful work<br />Feedback<br />Personal Needs<br />Development<br />Career opportunities<br />Security<br />Pride<br />Relationships<br />Quality of life<br />Environment<br />Leadership<br />Management style<br />Working conditions <br />Recognition<br />Culture<br />Status<br />Compensation<br />Base salary<br />Incentives<br /> short term long term<br />Equity ownership<br />Benefits<br />Traditional awards<br />Non-traditional awards<br />Support programmes<br />EXTRINSIC<br />Why do people work for an Organisation?<br />
  11. 11.
  12. 12. CONCLUSION<br />Human nature in general and Social Inequality Aversion in particular dictate the need for an objective and “communicatable” method for making decisions on distribution of cucumbers and grapes.<br />
  13. 13. HORSES<br />… for Courses<br />
  14. 14. Jockeys for courses?<br />
  15. 15. Horses for courses<br />
  16. 16. Philosophical/cultural courses<br />
  17. 17. Hierarchicalcourses<br />2008 Walmart Board of Directors<br />
  18. 18. Corporate Lifecycle courses<br />Rejuvenation<br />Maturity<br />Shake out<br />Growth<br />Start-up<br />
  19. 19. Characteristics of Each Stage<br />Start-up<br />Growth<br />Few systems / no policies<br />Entrepreneurial<br />Cash is short / shares<br />Return on Investment - strong focus<br />Creating Vision<br />Highly Optimistic<br />Fire Fighting<br />Communication Issues<br />Sales Emphasis<br />Diversification / International<br />Under-staffed administration<br />Demands on mgmt. / professional mgrs<br />Service delivery issues<br />Focus on staff retention / career opport.<br />Systems and skills<br />Maturity<br />Shake out<br />Focus oncore capabilities<br />Profit Oriented -’cash cow’<br />Cost focus (cut, cut, cut)<br />Innovation<br />Communications<br />Structural Change<br />Out-placement, out-sourcing, alliances<br />innovation is critical<br />performance focus<br />cultural change / transformation<br />Rejuvenation<br />Radical ‘step’ change i.o. incremental<br />Cultural issues<br />Transformation leadership<br />Vision, mission, purpose<br />People practice review<br />
  20. 20. CONCLUSION(S)<br />There is no one-size-fits-all as the most appropriate method depends on the why, where, what, how, when… of the organization.<br />“Organizations” are differentiated and subject to change so methods (and the way they’re applied) should be flexible and capable of serving different needs.<br />
  21. 21. VEIL<br />… of Ignorance<br />
  22. 22. Veil of Ignorance<br />In theoretical economics (e.g. Vickrey 1947; Harsanyi 1955; Cremer and Pestieau 1998), political science (e.g. Frohlich and Oppenheimer 1992) and in moral philosophy.<br />Choosing between societies without knowing where you will be placed or what characteristics you will have in each society, to reflect goodness or fairness of societies. Only then can one truly consider the morality of an issue.<br />Introduced by John Harsanyi, later appropriated by John Rawls in “A Theory of Justice”<br />
  23. 23. Veil in Grading: Objectivity<br />Role not the person<br />Consistent application of the “method”<br />Procedures: agreeing/explaining the process, method and information used, rather than the outcome (grade)<br />Perceived and demonstrable<br />Smoke-filled rooms or discretionary decisions are not always acceptable<br />
  24. 24. CONCLUSION<br />The best way of improving credibility and acceptance of the outcome is ensuring the method and its application is objectively applied and maintained.<br />
  25. 25. And so…<br />
  26. 26. Clarify Roles / Establish<br />Relative Size<br />Establish Market Value<br />for Each Role<br />Recognise Individual<br />Contribution<br />Grading has a place in a Simple Salary Management Model<br />
  27. 27. Courses & Jockeys determine which Horse<br />The Race<br />Purpose<br />The Course<br />Compensation environment<br />US HQ vs Local company<br />Engineering vs M&S<br />Unionized?<br />The Jockey<br />Need for guidance<br />Quality of management<br />
  28. 28. Types of horses<br />Judgement<br />Ranking<br />Levelling<br />Market Pricing<br />Factor Comparison<br />Point Factor<br />Few<br />Bands<br />Broad<br />“Scientific”<br />Many<br />Grades<br />Detailed<br />Generic<br />Company-Specific<br />Off-the-shelf Tailor-made<br />
  29. 29. Similar horses…<br />Although the methodologies differ, most systems use similar criteria for weighing<br />Q&D comparison between Towers Wyatt, Mercer & Hay:<br />
  30. 30. Grapes & Veils<br />Social Inequality Aversion puts emphasis on communication<br />What to communicate<br />Grading Structure<br />Grading Method<br />Grades of Roles<br />Consequences - Reward management philosophy / programs<br />Careful for unintended consequences<br />
  31. 31. The New<br />World<br />
  32. 32. Are jobs dead…?<br />AWAY FROM<br />TOWARDS<br />Hierarchical approach<br />Single career track<br />Constrictive structures<br />Flexibility<br />Self management<br />Alternative career paths<br />Skill development<br />Alignment of people and processes<br />HR<br />15 March 2001<br />Hierarchical approach<br />Single career track<br />One size fits all<br />Emphasis on status and tenure<br />Short term tactical reactions<br />A strategic approach<br />Alignment of corporate and cultural objectives <br />Focus on performance<br />Greater flexibility<br />Self management<br />Alternative career paths<br />Skill development<br />REWARD<br />
  33. 33. Example Career Paths(Benin & Associates)<br />
  34. 34. Generations and The Corporate Lattice<br />From Ladder to Lattice<br />From Linear to Varied paths<br />The Corporate Lattice<br />Cathleen Benko / Molly Anderson<br />
  35. 35. The Corporate Lattice<br />Cathleen Benko / Molly Anderson<br />
  36. 36. Ideal Standard International<br />
  37. 37. An (over-)simplified model…<br />
  38. 38. Is it time for another “consideration”?<br />YES, some employee expectations change (career, work-life…)<br />YES, some company structures and ways-of-working change (globalization, projects…)<br />NO, not everything has changed for everyone <br />Need for recognition, clear accountabilities, responsibilities…<br />Need for a different, yet integrated way of dealing with different “types” of employees, allowing management of and clarity for both “Traditional” and “Individual Growth” type roles<br />
  39. 39. ?<br />