Leveraging Best Practices Compensation Administration

The Journey to World-ClassLeveraging Best Practices

Compensation Administration

Presented to:Lawson Software, Inc. / City of Columbus, Ohio

William Bacote

Manager

The Hackett Group

March 27, 2008

Page 2

Document Name – HRCA_Assessment© 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Objectives and Expectations

Examine current process efficiency, effectiveness, and structure Understand current gaps to best practices, and service delivery model considerations

through examination of Hackett Best Practices Begin the development of a best practices scorecard

Page 3


Best Practices Defined:A Hackett-Certified Practice is a proven technique that delivers measurable value

Aligns with strategy Reduces costs Improves productivity Promotes timely execution Enables better decision making Leverages existing and exploits emerging

technologies Ensures acceptable levels of control and

risk management Optimizes skills/capabilities of the

organization Promotes collaboration across the extended

enterprise

Hackett’s Best Practices are certified when there is a correlation with world-Hackett’s Best Practices are certified when there is a correlation with world-class performance metricsclass performance metrics

Page 4


Best Practice Scorecard

Best Practice Current PracticeUsage

Now | Future

End-State Vision

Applicability | Coverage Comments

A description of each Hackett best practice for this process

A description of current utilization of this best practice

CoverageHigh Widespread impact on the enterprise and/or significant value-addMedium Impacts multiple areas, value-add is significant but less relative to processes

ranked as HighLow Impacts a single area of has limited span of adoption throughout the enterprise

CoverageHigh Widespread impact on the enterprise and/or significant value-addMedium Impacts multiple areas, value-add is significant but less relative to processes

ranked as HighLow Impacts a single area of has limited span of adoption throughout the enterprise

ApplicableYes Adoption of the best practice is in line with current/future business needsNo Best practice does not fit the current business needs

ApplicableYes Adoption of the best practice is in line with current/future business needsNo Best practice does not fit the current business needs

CommentsStatements pertaining to the technology enablement, policy enactment and other challenges and/or prerequisites associated with improving the utilization of the Best Practice

CommentsStatements pertaining to the technology enablement, policy enactment and other challenges and/or prerequisites associated with improving the utilization of the Best Practice

No Usage Strong Usage

Page 5


Best Practice Session

Page 6


Compensation Administration – Process OverviewProcess Definition – The process of administrating and executing all compensation, including hourly, salary, commissions, and

executive; in accordance with organizational policies, business practices and government regulationsMajor Activities Collection, coordination and maintenance of the required knowledge, skills, and abilities

– Job credential establishment and evaluation – Administration of Merit Review Program – Job Analysis / Job Evaluation

Support position and skills pricing– Establishment, tracking and execution of temporary labor pay practices

Communication and implementation of annual pay programs– Administration and training support for new compensation programs – Management reporting specific to Compensation administration

Administration of all compensation including

– Administration of all fixed and variable elements (e.g. base pay, commissions, bonuses, stock options, and allowances) – Administration and execution of hourly, salaried, expatriate and executive compensation– Administration of relocation– Administration of stock options

Page 7


Compensation AdministrationBest Practice Review – Summary Results

Item Count % of Total Comments

Best Practices Reviewed 29 N/A

Best Practices Deemed “Applicable”

16 55%

Best Practices Fully or Mostly In Use at City of Columbus

3 19% or

Best Practices Partially in Use at City of Columbus

5 31% or

Best Practices Seldom or Not In Use at City of Columbus

8 50%

Page 8


Compensation Administration – Best Practice Assessment


Now | Future

End-State Vision

Applicability Coverage Yes–No H – M – L

Comments

Position descriptions and job evaluations are available online, accessible by managers and employees

HRCA002

No; class specs only (similar to job description) Class specs has general duties for all positions within the spec., available to anyone. EPC (position description) is available online to dept. HR.

Yes M Provide online access to managers & employees.

Number of traditional job descriptions greatly reduced or eliminated, standardized by job function and families

HRCA016

Yes, number of job descriptions have been reduced and standardized. 646 class specs for 9k ees.

Yes L Maintain current best practice.

Update of job descriptions performed online with the use of automated approval and workflow

HRCA013

EPC updated electronically upon vacancy or when duties change with approval & electronic signature.

Yes M Expand to all positions and interface with CHRIS

No Usage Strong UsageNo Usage Strong Usage

Page 9




Now | Future

End-State Vision


Comments

Direct link created between job-description preparation and job evaluation process to maintain consistency in performance expectations

HRCA004

Yes, there is a link between job description preparation and job evaluation process. Workflow N/A due to council approval and BU negotiations.

Yes L

Requires consistent job evaluation process & policy

Standardized job evaluation process developed with skills/competencies templates for business and HR managers to create new positions and assign job levels based upon evaluation process results

HRCA003

Request comes to CSC from mgr/director for a new class. Interview (CSC/comp) with dept. reps to define duties/qualifications/KSAs for new class. Present to commission for approval. Comp receives prior to approval. Comp uses spec to determine level and recommend pay/grade assignment to labor relations. Negotiated with appropriate bargaining unit. Labor does legislation to council for approval.

Yes M Skills & competencies are standard across the business.

Develop standardized templates for use. City sees use as being low.


Page 10




Now | Future

End-State Vision


Comments

Online, secure, role-based access developed for viewing current and historical compensation data by employee and management chain

HRCA007

Historical compensation data is available to dept HR but not mgrs. Have started definition of reporting structure.

Yes H Move toward ESS and MSS for viewing.Will require set up of reporting structure.

Proposed promotions, demotions and grade changes input online by line managers into central application repository using Manager Self Service provided through HRMS

HRCA010

This handled by dept. HR. This is a paper process.

No H Not envisioned.

Variable compensation plan developed based on business and individual performance results and implemented in conjunction with performance evaluations

HRCA001

N/A. No variable compensation plans.


Page 11




Now | Future

End-State Vision


Comments

Online modeling capability utilized to evaluate financial impact of compensation/merit reviews upon area of budget responsibility HRCA011

No, any evaluation is done manually using spreadsheets. Limited reporting to assist with financial impact.

Yes H Desire for modeling. Requires online access for depts.Budget information must be available.

Online, secure access to compensation data in place, including budgets, forecasts and past history

HRCA014

Yes for comp data, not for the rest

Yes M Access to historical budgeting and forecasts within HR system.Must work with finance for budget and forecast information.

Online system established for line managers to implement merit-pay increases and automatically verify against predetermined criteria

HRCA009

No merit is not budgeted. Yes H Budget for merit increases.May want for division level but not line managers.Begin process to identify needs and training for division.


Page 12



Best Practice Current Practice

Usage

Now | Future

End-State Vision


Comments

Approved merit/market increases are automatically loaded into the HCM system and flow into payroll as base pay

HRCA008

No, approved on paper (multiple steps) and entered manually.

Yes H Workflow and interface into payroll.

Manager self-service provided through the HCM system is available through all levels of the managerial hierarchy to view target bonuses and define goals for reaching different levels of bonus payout

HRCA033

N/A

Manager self-service provided through the HCM system is available through all levels of the managerial hierarchy to document performance against bonus goals and recommending a specific bonus payout related to that performance

HRCA034

N/A


Page 13




Now | Future

End-State Vision


Comments

Approved bonus payments are automatically loaded into payroll

HRCA035

No, only longevity pay is automatically loaded.

Yes H Automate for all bonus types but maintain audit function prior to pay.

Single point of contact established for all stock option related queries HRCA028

N/A

Stock option agreements are delivered to employees and accepted electronically using workflow and electronic signatures

HRCA037

N/A

Internet-accessible self-service provided to employees for viewing option history, balances and exercising vested options

HRCA040

N/A


Page 14




Now | Future

End-State Vision


Comments

Commissions are calculated, verified and reported on through an HCM system module or a separate solution that interfaces with the HCM system, depending on requirements

HRCA041

N/A

Employee self-service provided to view commissions guidelines and sales goals

HRCA042

N/A

Employee and manager self-service is available through all levels of the managerial hierarchy to view performance against sales goals and the expected commission payout related to that performance

HRCA029

N/A


Page 15




Now | Future

End-State Vision


Comments

Approved commission payments are automatically loaded into payroll

HRCA043

N/A

Relocation administration is centralized or outsourced to a third party vendor

HRCA021

Centralized. Previously had to receive council approval but policy has been proposed.

Yes L Need to implement policy.

Employee relocation expense claims submitted online

HRCA018

No No Use would be small

Single point of contact established for all international assignment / expatriate queries

HRCA020

N/A

Expatriate services are outsourced to 3rd party vendor (e.g. relocation, benefits and taxation)

HRCA022

N/A


Page 16




Now | Future

End-State Vision


Comments

Integrated service capability established for all international assignment/expatriate activities (e.g. relocation, domestic residence management, compensation, benefits and taxation)

HRCA017

N/A

Total target compensation stored by component of pay, including salaries, bonuses, commissions, allowances, etc HRCA039

No, separate components stored in pay history.

Yes M HRMS with standard fields that support components of pay for bonuses and recurring payments.

HR generates reports for management to compare and analyze total target compensation versus actual compensation by component of pay

HRCA030

No Yes M Standard & ad-hoc reporting related to components of pay.


Documents

Leveraging Best Practices Compensation Administration