Maintaining a Competitive Edge: Effective Strategies for Competitive Market Pay Analysis

Maintaining a Competitive Edge: Effective Strategies for Competitive Market Pay Analysis

Presentation Team Gregory A. Gast, SPHR, Principal, PROXUS Jeffrey Green, Principal, PROXUSMaya Johnson, HR Manager, Air Products Healthcare

2 Maintaining a Competitive Edge

Our presenters today come from both Air Products Healthcare and PROXUS

Presenters– Maya Johnson, HR Manager, Air Products

Healthcare

– Jeff Green, Principal, PROXUS

– Greg Gast, SPHR, Principal, PROXUS


Today we will cover the following topics

The situation and the players– Air Products Healthcare– PROXUS

The Challenge– AHS acquisition by Air Products– Growth through Acquisition strategy

The Solution– Project scope– Project implementation

Outcomes and Lessons


Let’s start with a history of Air Products Healthcare

American Homecare Supply formed in 1999

Air Products acquisition of AHS in 2002

15+ acquisitions in 5 years


Air Products Healthcare grew by acquisitionThe strategy was to leverage existing strengths

• Local Identity

• Patient Care

• Customer Experience

• Grandfathered Structures


It soon became clear that a major problem existed

PROBLEM

Grandfathered compensation plans created

difficulty establishing and administering a

competitive pay program across multiple

geographic regions


Not having a consistent approach to base pay created challenges

• Difficulties around recruiting/hiring/onboarding of new hires post-acquisition

• Pay for Performance relationship could not be implemented

• Increased exposure to perceived unequal/unfair pay practices

• Impossible to benchmark competitiveness in overall industry

• Inconsistency in pay rates and job title structure


We looked at the business issue and identified a goal

Goal

To develop a consistent, yet geographically

adjusted pay program structure across the

organization


PROXUS was identified as the best partner to help us achieve these goals

Who is PROXUS: HR Management and Consulting firm Joint venture of Granatt HR and Professional

Payroll Solutions Provide Payroll, HR and Benefits services


Initial goals for Air Products – PROXUS Partnership

PROXUS was engaged to develop a simple, easy to administer base pay program that was: Consistent with the pay philosophy of APH

Competitive within each geographic location

Equitable within APH

Inclusive of reasonable pay ranges for each position

Easily accommodating of future acquisitions


Further Analysis resulted in goals being broken into manageable, sequential components

Short Term•Everyone paid within their range (no one over or under)•Standardized titles recognized by entire organization

Long Term•Established procedure for adjusting pay ranges/geographical differentials•Enhanced automation of compensation program


The Air Products – PROXUS Partnership

The Project Plan - A 4 Step Process:

1. Position review and analysis of all job titles

2. Identification of market data sources

3. Market analysis

4. Salary structure re-design


Prioritization of project phases

1. Exempt / Non Exempt

2. Job Titles

3. Job Descriptions

4. Benchmark Companies

5. Geographic Differences


Secure Leadership Commitment

Execute The Plan

Identify . market data sources

Job matching techniques and

criteria

Geographically adjusted pay program


Identify market data sources

Geographic Adjustments

Job matching techniques and criteria

Leadershipcommitment

We will walk you through our plan


The 1st thing we did was to determine Market Data Requirements

Define the competitive marketplace– Who are key competitors?– What industries do we operate within?– Within what geographic regions are we located?

Research available survey sources– Industry – Position – Trade and professional organizations

Obtain input from internal managers

Market Data

Sources

Market

Data

Sources


Next we had to select the right Market Data for this project

Market data used for the Air Products project: Economic Research Institute

Comp Data Surveys

Watson Wyatt Hospital/Healthcare Survey

Market

Data

Sources


Effective techniques for job matching build credibility

Collect, organize and analyze available job related information– Job title report– Job descriptions– Table of organization charts

Compare job titles across facilities and geographic regions – Establish job families– Reduce overall # of job titles– Identify each unique job classification

Conduct interviews as necessary – Improve understanding of scope and role– Involves managers in the process

Job

Matching


Establishing Job Families and Job Documentation builds consistency

Human resources, with location representatives, established the following job families:

Job

Matching

Accounts Receivable Pharmacy

Administrative Rehabilitation

Customer Service Respiratory

Delivery Sales

IV Warehouse

Resulted in reduction from 155 to 60 job titles


Critical Considerations in Pay Program Development

How do we create a consistent program across locations in multiple states?

Obtained geographic differentials – By location or nearest metropolitan area– Economic Research Institute data utilized

Analyzed the results– Determine # of structures required– High/low market values dictated # of salary grades

Geographic

Adjustment


6 geographic regional structures basedon a % of the U.S. national average

% of U.S. National Average

Structure ID Range

90 A 88% – 92%

95 B 93% - 97%

100 C 98% - 102%

105 D 103% - 107%

110 E 108% - 112%

115 F 113% - 118%

Geographic

Adjustment


Fine tuning the results

Each location slotted into the appropriate structure (A - F)

Individual jobs slotted in the appropriate grade/range for their structure

All jobs were slotted into the same grade across all locations

“Majority rule” used to standardize grading across locations– Pay higher in range if local market conditions dictate– Maintain same salary grade for all positions

Geographic

Adjustment


Implementation Challenges

Developing a philosophy to address employees:– Under range minimum– Over range maximum

Educating the management team

Maintaining confidentiality

Technology restrictions


Discussion Activity

1. Break into pairs or trios

2. Discuss your experience with these issues and how you have addressed them

3. At the end of the discussion we will ask 2-3 groups to share a key learning from their discussion


Challenges presented in implementing the process Discussion topics

• Philosophy around under minimum/over maximum pay

• Management team education needs

• Maintaining Confidentiality

• Technology restrictions


The President must lead the charge and empower HR to proceed Align the HR project with the business strategy

– Growth through acquisition strategy– Broad geographic locations

Communicate early and often with leadership– Educate on compensation fundamentals– Establish multiple check-in points

Engage the management team throughout process– Establishment of job families– Job description content– Solicit input on salary information sources– Review of job titles for accuracy

Leadership

Commitment


Lessons learned from 2003 - 2008

Communicate the difficult information (employee impact)

Compensation does not function in a vacuum– Benefits and employee relations implications– Alignment with corporate strategy– Communications to multiple stakeholders

Service provider relationship must be a true partnership– Role of PROXUS has evolved from 2003 – present– Extension of HR as opposed to outsider

Avoid organizational paralysis…move ahead (“we do not have to get it all right out of the gate”, Gretchen Pendleton – VPHR, Air Products Healthcare)


This change does not happen overnight, it is a journey that can make a difference to a company


Questions?

Documents

Maintaining a Competitive Edge: Effective Strategies for Competitive Market Pay Analysis