The Wall Street Journal has an article today on "the latest office perk": paying employees for volunteer assignments. Volunteer programs are seen as a particularly strong point in attracting and retaining Millenials. But corporate volunteerism has much to offer beyond being an attraction and retention tool.
Today's HR professionals are facing increasing pressure to create the development opportunities necessary to prepare the next generation of leaders (a particularly urgent need with the boomers approaching retirement age), along with training budgets that have been flattened by a slowing economy. New research from Deloitte suggests that the solution to this challenge may lie in an unexpected place: corporate volunteer programs.
According to Deloitte's Volunteer IMPACT survey, 91% of respondents agree that skills-based volunteering would add value to training and development programs, but only 16% of companies intentionally offer skills-based volunteer opportunities for employee development on a regular basis. And out of those who do offer volunteer opportunities for the purpose of leadership and skill development, the vast majority limit the opportunities to management and above.
Interesting possibilities here, it seems to me.
In the process of designing incentive plans, discussion will eventually turn to the question of how often; that is, how often to measure and reward performance. Should it be annually? Quarterly? Monthly? Weekly?
As a general rule, the more closely a reward follows the event or behavior it is meant to reinforce, the better. Immediacy can be a very powerful force when it comes to rewards. So, all other things being equal, the more frequently we measure and reward, the better.
Problem is, of course, all other things rarely are equal. And one of the factors you need to consider when determining reward frequency is something called cycling.
In his book The Reward Plan Advantage, author Jerry McAdams explains cycling as follows:
Cycling is the net effect of performance as it varies from group to group, period to period, measure to measure, or any combination of these elements. Cycling reduces the organization's net gain in performance if that performance falls below baseline in any one group, measure, or payout period. For example, ... February's performance can be offset by March's downturn.
The problem, of course, using the last example in the explanation above, is that if you have a monthly measurement and payout cycle, you will have paid out on February's good performance before things tank in March. And unless you have some kind of hold-out provision in your plan, you can end up - over the course of several months, paying out far more in incentive awards than your net performance truly justifies.
The degree to which cycling presents a challenge will vary from organization to organization, depending on the nature - and specifically the cyclicality - of the business itself. My point is simply this: Make it a priority to know the cycling issues in your business and factor them into any decisions on reward timing. It isn't the sole consideration in determining the appropriate award frequency, but it sure is an important one.
Words like "poor" that imply a value judgment on the person, rather than an objective assessment of their work, present enormous obstacles to helpful conversations about performance. "Poor" is an obvious example, but there are others as well, including "fair" and "good".
Better are words or phrases that focus on work accomplishment. "Consistently meets (or does not meet) stated performance expectations" for example.
Recent research (WorldatWork) suggests that the biggest obstacle to effective performance management is managers' ability and willingness to have difficult conversations with employees about their performance. As we all know, these conversations are hard enough under the best conditions. Why would we make them even more difficult (and way less effective) by forcing managers to use words that imply a judgment on the worth or quality of the person?
Update: Please make sure and read through the comments for this post, where Dick Grote shares the results of some interesting research he has conducted on best and worst appraisal ratings. Thanks, Dick, for making this available to us!
Total reward practices are undergoing change in the Middle East, according to a recent survey of benefits and HR practices conducted by Mercer. The survey covers seven countries (Bahrain, Egypt, Israel, Kuwait, Qatar, Saudi Arabia and the UAE), over 500 benefit plans and 61,000 employees.
Survey results indicate that the region's traditional focus on high base salaries and cash allowances is shifting towards long-term incentives and "protection" benefits like pensions and medical, life and disability insurance.
According to Mercer, the changes in benefit practices are being driven by the continuing influx of multinational companies to the region, an expansion of the expatriate workforce (some 85% of Dubai's population is now expatriate), and the greater mobility of expatriates between jobs. In the United Arab Emirates, legislative changes have also fueled the trend.
Some outtakes from the survey:
Retirement benefits - The change in pension practices, in particular, is driven by workforce mobility as many expatriates are now choosing to stay long-term or permanently relocate. Expatriates in most of the Gulf States have no statutory entitlement to local state pensions, and local job moves generally result in the loss of membership of their home country pension plan. This has prompted an increase in employer-provided supplementary benefits.
While only 8 percent of multinational companies surveyed currently provide a supplementary pension plan in the UAE, 65 percent said they are looking to change their benefit provision - including setting up supplementary plans. These plans are generally established on a defined contribution basis through offshore investment funds that are often associated with international pension plans.
Medical benefits - The UAE’s national health service used to be free to all UAE nationals but this is no longer the case. In addition, private sector companies in certain locations such as Abu Dhabi and the free trade zones must provide all their employees and families with a private medical plan. Consequently, the majority of multinationals in the UAE (85 percent) provide a supplementary medical insurance policy, usually through an insured arrangement.
There are also mandatory requirements for private healthcare in Saudi Arabia and Egypt but the majority of multinational companies in the Middle East (80 percent) provide private medical benefits irrespective of these requirements.
Other benefits - Almost all companies in the Middle East provide additional perks and allowances to their expatriates. These vary between countries and employers, but the majority provide allowances for housing, schooling and flights home.
A company car benefit is also commonly provided (60 percent of survey participants across the Middle East). Throughout the region, the most popular fringe benefits are long-service awards, mobile phones, social allowances and subsidised health club memberships.
Tags: Bahrain benefit practices, Egypt benefit practices, Israel benefit practices, Kuwait benefit practices, Middle East benefit practices, Middle East reward practices, Qatar benefit practices, Saudi Arabia benefit practices, UAE benefit practices
Accenture – Future Leave
After extensive research on retaining a multigenerational workforce, Accenture realized that the "work experience" needed to look past daily or weekly flexibility and address career flexibility. “Future Leave” offers an innovative alternative to the traditional leave of absence. Under Future Leave, Accenture employees are assured of a job when they return, can continue their benefit coverage at the same premium, and have the option of budgeting for the time away by having a percentage of earnings placed in a separate account. The pilot program, which was introduced to more than 30,000 U.S. employees in March 2007, was adopted as an ongoing program in Accenture’s U.S. offices this past January.
Ernst & Young – The Parents Network
The Parents Network supports the needs of Ernst & Young (EY) parents of children with special needs. The increase in disabling conditions among children in the United States has major workplace implications. The Parents Network supports partners, staff and family members by offering a safe forum in which to share experiences, needs and concerns and receive support. The network offers insurance advocacy; educational program awareness; referral to Web site resources, providers, and local community groups; and sharing face-to-face, telephonically and electronically. They discuss career issues and personal and family adjustments related to parenting children with special needs. The experiences of these parents help maximize EY’s investment in benefits and services for all its people.
USAA – Personal Balance Tool
The Personal Balance Tool (PBT) was developed in 2006 as a one-stop, Web-based resource to help USAA employees and their family members achieve greater work-life balance. Users access the tool anonymously and can easily identify all available benefits that can help them achieve their personal and professional goals and successfully meet responsibilities at work and at home. Employees may choose whatever subject they seek to self-educate, including: Benefits information, USAA product information and other services Helpful articles and tip sheets Suggestions to manage personal and work priorities Guidance to address issues with a manager/supervisor Suggestions for seeking professional assistance, including the Employee Assistance Program provided through Value Options and Work/Life Referral Program provided through Harris Rothenberg, International
In composing my previous post about the new research on recognition published by WorldatWork, I was reminded of something that a former colleague used to say when discussing recognition programs.
Never give a plaque to an employee who has no wall!
The point? Make sure that you recognize employees in a manner which they value and appreciate. For example, not everyone likes to be called out in public; employees on the shy or reserved side might find this to be an uncomfortable experience. In fact, lack of care for how employees prefer to be recognized can torpedo an otherwise positive and well-directed recognition effort.
Case in point: An organization I once worked for had an "employee of the quarter" award, based on peer nomination. Every quarter, right before the quarter-end all-staff meeting, an email would be circulated asking for votes for the employee who most deserved recognition that quarter. The employee who received the most peer votes would be called to the podium during the all-staff and presented with a nominal award (gift certificate, if I recall correctly) and made to stand there while the office head gave a
silly memorable speech about their accomplishments over the past quarter.
Now I'm certain that this whole effort started out just fine, but by the time I had joined the firm, the peer nomination process had been tainted with practical jokes and even minor acts of revenge. And if you had a hint that you might be among the top runners for employee of the quarter, well you made it your priority to be out-of-town at an unavoidable client meeting that day. Just to avoid the embarrassment.
And yes, folks, this was at an HR consulting firm. Big shame on us.
The lesson? Recognition can be a powerful and effective tool, particularly given its ability to accomplish a lot on a relatively small budget. But recognition plans can have extraordinarily limited shelf lives. You have to keep 'em fresh and keep 'em real, and you have to watch carefully for signs that they are fraying around the edges.
Forewarned is forearmed!
The WorldatWork glossary defines recognition programs (clearly and helpfully, I think) in this way:
A policy of acknowledging employee contributions after the fact, possibly without predetermined goals or performance levels that the employee is expected to achieve. Examples include giving employees clocks or other gifts on milestone anniversaries, granting an extra personal day for perfect attendance or paying a one-time cash bonus for making a cost-saving suggestion.
Note that recognition programs, when defined this way, differ from incentive plans in that they tend to be reactive, rather than proactive, in nature. Rather than laying out pre-determined performance measures and goals, and then communicating specific awards that will be paid if those goals are reached, recognition plans are more about catching someone in the act of doing something great. As such, they can make a unique and powerful contribution to your overall reward toolkit, addressing organizational objectives that are hard to reach and/or reinforce through other types of pay programs.
Some key findings from the WorldatWork research, which features the responses of 554 participating members:
For more information on the research, contact WorldatWork (note that copies of the research report are available to members).
In the midst of all the attention (mostly, if not entirely, negative) that executive compensation is getting these days, there is particular scrutiny of the role of compensation consultants. A recent report from the Congressional Committee on Oversight & Government Reform focused on the presence of a financial conflict of interest for compensation consultants when they provide both executive compensation advice and other services to the same company - an opinion bolstered by the Committee's finding of a correlation between the level of CEO pay and the presence of just such a purported conflict on the consultant's part.
Into the fray jumps a group of Wharton accounting professors (and others) whose research presents us with a different picture of the situation. Their study, The Role & Effect of Compensation Consultants on CEO Pay, featured in a recent Knowledge@Wharton article, found that while executives do get paid more when compensation consultants are involved, the CEOs are still held to acceptable pay-for-performance standards. "We are unable to find widespread evidence of more lucrative CEO pay packages for clients of conflicted consultants despite anecdotal evidence to the contrary," concluded the researchers.
From the article:
To examine the question of whether consultants' conflicts of interest influenced CEO pay, the researchers divided the consulting firms into two broad groups. Those that may provide no services except for compensation consultation were categorized as having no conflict of interest. The consulting firms that may provide other services were characterized as having potential conflicts of interest. The authors use three different ways of dividing the firms into these two categories -- whether the hired consultant's market strategy is not to provide other services, whether firms disclose that the consultant does other work, and whether the firm's auditor provides non-audit services.
"We find no evidence of rent extraction -- [i.e., giving unjustified or unwarranted pay to the CEO] -- in the form of lower pay-performance sensitivity among the clients of these consultants," the researchers write. "Overall, we do not find compelling evidence that the controversy and accusations regarding the use of potentially conflicted compensation consultants are warranted."
Their conclusions differ from those of Waxman's committee, which based its findings not only on information disclosed in proxy statements of Fortune 250 companies, but also on information specifically requested from six top consulting firms. The firms were asked to provide information on what other services they provided to companies they consulted with.
"In 2006, the median CEO salary of the Fortune 250 companies that hired compensation consultants with the largest conflicts of interests was 67% higher than the median CEO salary of the companies that did not use conflicted consultants," the Waxman report concluded. "Over the period between 2002 and 2006, the Fortune 250 companies that hired consultants with the largest conflicts increased CEO pay over twice as fast as the companies that did not use conflicted consultants."
Carter offers two explanations for the differences between the two studies. She says the Congressional committee did not take into consideration a number of variables that her study did. "The study failed to control for economic determinants of pay and therefore its conclusions should be interpreted with caution," she and her colleagues write. For example, bigger and well-performing firms tend to pay their CEOs more. If these types of firms are also the kind of firms that hire consultants to provide other services, the Committee could have been led to their conclusion, not because the conflicts led to higher pay, but because the characteristics of these firms warranted greater pay, Carter states.
Still, she acknowledges that it's possible the House committee is right and her team is wrong. The Congressional committee had the benefit of subpoena power, Carter says, so it had a clean measure of conflicts of interest because consulting firms provided proprietary information on revenues from executive compensation consultant and other services.
While Carter said she has requested, with no success, the data used by the committee, she, Cadman and Hillegeist concede that the imprecise measures they used might have led to their conclusion. According to Cadman, "without [the Committee's] data, we have no way of knowing the true cause of the difference in conclusions."
For the record, I am not currently involved in providing executive compensation consulting to Fortune 500 size companies, nor do I provide any services beyond compensation/performance management - so I don't see myself as having a particular axe to grind here (other than, perhaps, the wish not to see my profession unnecessarily pilloried). I do, however, think that the reporting on this issue has been pretty one-sided, and so I welcome the chance to share a different perspective from as reputable a place as Wharton.
I try to do the occasional post on benefits when notable topics or studies (or even just quirky trends) cross my path. I thought the findings from the 2007 EBRI/Commonwealth Fund Consumerism in Health Care Survey published by the Employee Benefits Research Institute, particularly their SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of these newer health plan types, was worth summarizing and sharing here. There is a lot interest in and attention being paid to these so-called consumer-driven plan approaches. Some see these plans as the future of health insurance and a possible avenue for addressing runaway healthcare expenses; others believe them to target a very limited niche in the overall marketplace.
In the survey, two types of plans - consumer directed health plans (CDHPs) and high deductible health plans (HDHPs) are examined and compared with the more traditional health plan. Strengths, weaknesses, opportunities and threats for the new plan types are summarized below:
The study offers the following concluding statement:
There is somewhat of a chicken and egg problem with consumer-driven health plans. The relatively low enrollment in CDHPs and HDHPs affects the levels of familiarity and confidence. Some degree of skepticism is to be expected and will be hard to overcome unless prospective participants see more of their counterparts satisfied with the change. Enrollment will grow only if workers buy into the idea of the informed and engaged consumer and accept the financial structure. CDHPs and HDHPs are perhaps at a tipping point. The level of enrollment in these plans has grown significantly relative to previous years, but is still modest in absolute terms. That suggests that both workers and employers remain skeptical of them. These attitudes will change only if both the substance and perception are positive. If employers and workers change their mindsets, CDHPs and HDHPs can become a significant part of the U.S. health care financing system. But if there are no changes in employers’ and workers’ attitudes and behaviors, they will remain as a niche type of plan or decline in the future.
This continues to be an interesting trend to watch evolve.