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The Dynamics of Compensation Influencers EconomyFederal Legislation TechnologyMarket Sector Business GrowthLocation Business Consolidation
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Compensation(a discussion)
Lane Transou, CCP, GRP, SPHR, SHRM-SCPLane Transou Consulting, LLC
South Texas SHRM November 5, 2015
Lets Focus Our Conversation
How to use compensation as a business tool to help grow
profitability and efficiency in the organization.
The Dynamics of Compensation
InfluencersEconomy Federal LegislationTechnology Market SectorBusiness Growth LocationBusiness Consolidation
Compensation Impacts Over the Last 10 Years
• 2005 – Up Market• Hunt for talent in energy & technology sector jobs• Salaries escalating; internal equity issues• Merit increase 5%, Bonuses significant
• 2008 – Down Market• RIF’s and Bankruptcies• Cost reduction initiatives across all business areas, consolidations• Hold on merit; bonuses paid only to key positions
• 2012 – Up Market• Turnover• Energy sector salaries increasing in all operational areas• Merit held at a conservative level for non operations roles
• 2014 to date– Down Market
2005 2008
2012
2015
Last 10 Years of Board of Director Focus
• Earnings Per Share • Executive Compensation focus
• Pay for Performance • Say on Pay• Transparency on executive pay
• Succession Planning• Compliance • Safety
• Cybersecurity• Operational Safety
What is the CEO Asking
• How to engage the workforce to:• Grow products and services• Innovate new products and services• Engage customers• Be accountable• Grow with the company
Three Steps to Effective Compensation Planning
• Step 1: Align, Measure and Report• Identify measurements that provide early insight to potential risks
• Step 2: Communicate• Translating your metrics into business strategy
• Step 3: Repeat Steps 1 and 2
Align• Know the following:
• Business• What do you do and how do you make money
• Industry• Who are your competitors
• Strategy• Where are you going
• Jobs• What do all of those jobs really do
• Market• How hard do you compete for candidates
Metrics• The easy ones:
• Usually available through your HRIS or payroll system• Base Pay Cost Year Over Year• Overtime to Total Pay• Turnover Rate• Days to Fill Open Positions
Employee Metrics• Company Demographics
• Average tenure of employees by department/job• Average age• Average base pay of employees by department / job• Male / Female
More Metrics A little bit more challenging:• Compensation as a factor of revenue• Compensation as a factor of output• Compensation as a % of fixed costs• Survey benchmark data year over year analysis
How Often to Report
•Weekly – probably not•Monthly – maybe•Quarterly – yes•Semi Annual – yes•Annual – yes•Bi-annual - no
Communication• Formal – All employees or bonus participants• Interpersonal – One on one with management• Reporting – Boards & Executive report out• Being available
Communications• Speak the language of the business
• How do we make money (base pay)• What do we do with the money (resource investment)• How do we make more money (variable pay)
• Know the jobs in the business• Job analysis
• Formal or intuitive
Resources for Metrics
American Productivity & Quality Center – HoustonAPQC.org
SHRM .orgHow To Measure Human Resource Management Jac Fitz-enzProving the Value of HR: How and Why to Measure ROI SHRMSHRM.org/templates&samples/samples/spreadhsheets&calculators
Tracey Smith – Numerical Insights LLC
