Total Rewards - Development PDF

Development engages employees and encourages them to perform more effectively. It comprises learning experiences designed to enhance employees' applied skills and competencies. - Development -- Encompasses the rewards and opportunities that employers offer their workers to advance their skill...

Development engages employees and encourages them to perform more effectively. It comprises learning experiences designed to enhance employees' applied skills and competencies. - Development -- Encompasses the rewards and opportunities that employers offer their workers to advance their skills, competencies, responsibilities and contributions --- in both their short- and long-term careers.. Shared responsibility -- Employers and employees share the responsibility for development. - Employer - The employer must anticipate future workforce needs and provide training and learning opportunities to prepare employees for these roles. - Employers who develop employees and promote from within earn a reputation for career advancement, which serves as both an attractor and retainer of talent. Employee - Employees should proactively take ownership of development of their careers. - They should find out what skills and competencies are needed for advancement and actively seek out opportunities to gain them. Employer Needs Employers need people to carry out the business strategy of the organization. For some organizations, one person runs the entire business. For other organizations, thousands of employees are needed, each with a particular skill set and the ability to perform unique functions. Understanding the organization's business strategy is key to planning for future human capital needs to ensure that the quantity of employees with the right skills, training and experience are available to meet future organizational requirements. This will inevitably involve unanticipated vacancies as well as planned openings and new positions. - Employees to meet organization's strategy -- While many methods exist to adequately keep an organization properly staffed, most will include the following general steps: - Identify the skills, expertise and competencies required to meet future organizational needs - Consider global operations and the skills and abilities needed to manage effectively in a different culture - Establish how many employees with these skills are needed - Establish when these employees are needed - Determine where these employees will be acquired - Develop internally - Create plans to provide training, developmental assignments and experiences to prepare employees to assume higher level positions - Competition for talent can affect the ability to retain employees - Recruit externally - Unanticipated vacancies or a need to quickly acquire talent may necessitate recruiting from the outside. - Particularly in the most sought after jobs, competition for talent may be high and can affect the organization's ability to attract employees. - Consider budgets and cost for training and development -- Budget considerations impact the ability to sustain learning and development programs. However, leveraged technology may support effective development programs at lower costs. - Create a system for managing the process -- Many software programs are available to manage the process. Some organizations use a learning management system (LMS) to provide training, track and manage employees' learning and development. - Ongoing dialogue with leaders is crucial Employee Needs Career advancement -- Career advancement opportunities are a key rewards lever in attracting and retaining employees. - Important in attraction and retention -- Numerous research studies demonstrate that career advancement (or lack thereof) is important to employees in their decisions to either join or leave an organization. - High potential/performing employees are especially sensitive in this regard. A related desire of employees is to develop and improve on their individual skills. In order for the right talent to be attracted and retained, candidates and employees must believe that the organization can offer a career path that provides the opportunities and exposure to assignments and projects necessary in developing their skills. - Skill development - Provides personal satisfaction -- Obtaining and developing skills provides personal satisfaction of accomplishment and a sense of growth and progression. - Increases employee's ability to contribute and be productive - Meets the need to maintain and improve skills -- If employees believe their skills will fall behind their professional peers by remaining with an organization, they will be more likely to leave. - Particularly important for certain professions - Science - Engineering - Information technology Development Opportunities Regardless of the approach to development, the employee must be willing to learn and ready to make a realistic commitment. - Opportunities should be: - Clearly defined -- What will the experience include? How will success be measured? - Able to fit into time and resource commitments -- Should the activity be done during working hours? If done outside of working hours, will the employee be paid to participate in the activity? Will the business pay the costs for development? Will the costs be paid directly or will the employee need to apply for reimbursement? - Interesting -- Is the experience one that the employee finds interesting and will feel is worthwhile? - Compatible with day-to-day responsibilities -- What kind of allowances will be permitted in the employee's day-to-day responsibilities? How will other employees feel if they are asked to take on more responsibility to cover the absent worker? Determining the Development Opportunities Opportunities to enhance present job -- The manager and employee should consider strengths as well as opportunities to build job skills and competency. For skills, knowledge or behaviors that need to be developed, needs should be prioritized and an action plan created. - The employee should identify development activities within the organization as well as outside the organization. - The manager and employee should determine if the choices are appropriate for the business and the job. - Both the manager and employee should decide what the measure of success should be. - The manager approves after checking details such as funding the learning or time conflicts. Opportunities to accomplish career plan -- Employees should: - Consider future needs within their current job. - Consider emerging and future trends in their professional field or area of work. - Consider developing skills, knowledge or behaviors that will prepare them for future jobs. - Obtain feedback from others who know about their abilities, skills and interests -- they maybe helpful in offering suggestions. Types of Development Opportunities - Learning opportunities - Coaching/mentoring opportunities - Advancement/career opportunities Learning Opportunities - Tuition assistance - Corporate universities - New technology training - Attendance at outside seminars, conferences, virtual education, etc. - Self-development tools and techniques - On-the-job learning; rotational assignments - Lead a project - Participate in a major project, presentation or team - Sabbaticals with the express purpose of acquiring specific skills, knowledge or experience Coaching/Mentoring Opportunities - Leadership and management training - Access to experts/information networks -- association memberships, attendance and/or presentation at conferences outside of one's area of expertise - Exposure to resident experts - Formal or informal mentoring programs; within or outside of one's own organization - Training or mentoring others Advancement/Career Opportunities - Increased exposure outside the department - Exposure in the community, professional association - Publish articles - Learn a foreign language - Internships - Apprenticeships with experts - Overseas assignments - Internal job postings - Job advancement/promotion - Career ladders and pathways - Succession planning - Providing defined and respectable "on and off ramps" throughout the career life cycle Measuring Effectiveness To determine if the investment for development has been worthwhile, it is important to measure the effectiveness of the learning, coaching/mentoring, and advancement/career programs. Organizations might look at the measures below and ask these questions to determine the effectiveness of development efforts. - Decreased turnover -- What is the organization's current turnover rate? Are high performers leaving your organization? - Increased productivity -- How do you currently measure productivity? Do you have the right people with the right skills in the right jobs at the right time? Are your employees prepared to meet the challenges for transitions in the organization before they happen? Are development efforts aligned with business goals? - Improved employee engagement levels -- Do you have baseline survey results? Have you tied employee engagement with productivity goals? - Improved ability (reduced time) to fill roles internally -- Are sufficient numbers of employees adequately developed to assume roles as they are vacated? A reduced amount of time to fill roles internally as compared to the time it took to fill positions before development efforts took place can be one indication of the effectiveness of the development programs. Pay for Performance Pay for performance can be looked at as a four-stage process: - Establish goals - Track measures - Types of measurements -- Measures may be financial or non-financial. - Performance measurement systems - Balanced Scorecard -- focuses on financials (shareholders), customers, internal processes, plus innovation and learning - Business Excellence Model -- combines results, which are readily measurable, with enablers, some of which are not - Shareholder Value Added -- incorporates the cost of capital into the equation - Activity Based Costing and Cost of Quality -- focuses on the identification and control of cost drivers (non-value-adding activities and failures, respectively), which are themselves often embedded in the business processes - Competitive Benchmarking -- involves taking a largely external perspective, often comparing performance with that of competitors or other best practitioners of business processes - No one-size-fits-all approach - Multiple, seemingly conflicting, measurement frameworks and methodologies exist because they all add value. They provide unique perspectives on performance and offer managers a different set of perspectives by which to assess the performance of individuals, teams and organizations. - Under some circumstances, one particular perspective will be exactly right for an organization, whereas in another circumstance, it would be counterproductive. The key is to recognize that there is no single best way to view business performance. - Assessment and feedback - Organizations (managers) will assess employees against the measures established. Assessment usually comes in three different forms: - Individual -- How did the individual perform based on the measures determined for the job? - Team -- How did the team perform based on objectives? When assessing team performance, it is important to look at how the team performed and how individuals participating on the team performed. - Organization -- Did the organization achieve desired results (both financial and non-financial)? - How does an organization assess employees? - Formal - Informal - Performance appraisals - 360 Feedback (multi-rater) - Coaching/mentoring - Deliver rewards - Communication is the key to any successful pay for performance program. If communication is inadequate, employees will not understand what they are being measured against and what is important to the organization. - The organization must communicate the links between established measures and performance assessment. Principles of Merit Pay Programs In regard to pay for performance and base pay, merit pay is one of the most frequently used methods. - Objective -- The essential goal of a merit pay program is to link pay to performance in a manner that is consistent with the mission of the organization. There are two required conditions: - Variations in employee performance and contribution must be measurable and measured. - Managers must be provided with the necessary tools and training to determine the appropriate rewards. - Size -- To motivate employees most effectively to meet or exceed performance standards, the absolute size of the merit increase must be significant enough to make a noticeable difference to employees (e.g., the increase must not be so trivial as to be deemed inconsequential). - A successful merit pay program will ensure that increases awarded to the best contributors will be substantially greater than increases awarded to average or less-than-average performers. - Timing -- anniversary date versus common (focal-point) review - Implementation -- Under traditional merit pay programs, merit increases are built into employees' salaries for as long as they remain with the organization. Hence, the increases are permanent and their values are compounded over time as additional increases are granted. - One alternative to base pay increases is the use of lump-sum payments. Lump-sum payments are one-time payments made in lieu of traditional base pay increases and typically are delivered annually via the merit pay program. Factors Affecting the Success of Merit Pay - Managerial factors - Executive support for the increases - Managerial capabilities in planning and appraisal - Supervisor/subordinate trust levels - Managerial fortitude - Organizational factors - Cost of measuring performance - Competitiveness of pay structures - Width of pay ranges - Equitable internal-pay relationship among jobs - Organization's pay-performance linkage - Organizational culture - Effective communication - Individual employee factors - Measurable differences in performance - Performance appraisal - Employee belief in fairness of appraisals and increases The Base Pay Investment One of the decisions that must be made in the development of a merit pay system is whether to link base pay to performance and timing. Most organizations continue to link base pay with performance over time. As a result, it is worthwhile to examine the criteria that may be used to differentiate pay levels under a performance-based pay approach. - Career stages -- Pay levels within the range typically vary depending on an individual's career stage. Organizational expectations at the differing career stages need to be identified. An example of career stages positioned within a pay grade is summarized on the graphic. - New to role (does not fully meet standards) -- learning, not yet performing full scope of job requirements - Emerging (meets standards) -- deep into learning curve; developing competencies; productivity gaining; continuing to require some direction - Established (exceeds standards) -- fully functioning in role; demonstrating desired competencies and behaviors; productive; using sound judgment; mastering functions, serving as a mentor - Expert (consistently outstanding) -- mastering the job function; performing complex responsibilities; credible reputation; unique talent; highly productive; may be serving in a leadership role; consistently exceeds standards over an extended period of time - Evolution of the employee role -- Organizations "invest" in the potential of new employees in the hope that over time they will develop into valuable assets. Position in Range -- Pay Progression within Range Another way to view the base pay investment and advancement through career stages is to add the factor of time to achieve a particular range penetration. Note that in this system (depicted on the slide) range penetration is truncated depending on performance. It is possible to be rated "Meets Standards" for many years and not reach the maximum. There are two key decisions: - How far should a particular performance level take an employee into the range? - How long should it take?