Friday, December 15, 2006
Now, most of us behave ourselves well during the work day. Every now and then, however, we get a little too casual with use of the system. So, imagine the oh-so-clever remark you made about how your boss parted his hair, or the fight you had with your wife, or the sweet talk to that single co-worker, or the flame-out over something or someone who frustrated you...living forever somewhere. So, email with caution and consider picking up the phone more often.
Tuesday, December 05, 2006
Heading on the office I thought of how often we hear that the world is going straight to hell. Values are lost, younger generations are no good, we're in a post-Christian culture, yadda, yadda, yadda.... To all that I offer a diverse group of young Good Samaritans; some white, one black, one Latino, men and women, some wearing cross pendants, who ran out into traffic and let their egg biscuits get cold, working together to help complete strangers. Way to go next gen.
Monday, November 20, 2006
Since the One Company announcement much has been said about our publishing filter, which is just another way of saying our publishing standards. As is typical with 650 people, some of you think its too restrictive, some think its just about right, and a lot of you don't care one way or the other. Over the weekend I had very little down time or TV time, but in the scant minutes I was around a television I heard about the new O.J. Simpson book every time the set was on. For those of you out of the house or in a cave over the weekend, this book is about how he would have murdered his wife if he had committed the murders. His publisher was quoted in the Tennesseean last week as saying, "I regard this has his confession". NBC news reported that his advance for the book was in the neighborhood of $2.5 million.
There has been an overwhelmingly negative response to the book, and to its publisher Judith Regan at Reganbooks. I mentioned this to my wife, who knew the name and said, "Oh yeah, that's not the first trash she's published". So, being curious, I looked up the Reganbooks web site. There you'll find banner or feature ads for such prestigious and uplifting titles as "How to Make Love Like a Porn Star" by porn star Jenna Jameson, "How to Make Money Like a Porn Star" by Rolling Stones writing Neil Strauss, and "The Confession", former New Jersey Governor James McGreevey's apologetics about leaving both his office and his wife after a gay affair with a subordinate became public. Reganbooks is an example of what a publisher becomes when they don't have adequate publishing standards.
So why do I care about this as subject matter for an HR blog? Well, how would you feel about Thomas Nelson if we published any of the books mentioned above? The content coming out of our company is synonymous with our corporate identity. Who we are, and how you feel about it as a staff member of the company, goes a long way towards your satisfaction in the job. Without a filter for content decency we potentially fall prey to a great sales pitch for a bad drop-in title, especially if we're behind budget at the time. If you think it can't happen, stop and think of some of the books we've published that you've found offensive and you'll know that it already has happened in the past.
During my first week on the job a staff member, who is now in our leadership team, stopped me outside my office and said, "When you've had some time and learn this place a little better, I want you to come back to me and answer this question: are we a Christian company or just a corporation that traffics in Christian products?" That question, in one form or another, has been asked of me for most of the almost six years I've been with this company. One Company and the publishing filter have settled that question and as its implemented we will as a corporate culture be better off for it.
As always, I welcome comments both in agreement and in dissent.
Tuesday, November 07, 2006
There's an old saying in building spreadsheets that says, "first, turn off your PC"; in other words, design first and enter numbers afterward. In base pay, the process is similar. First, companies have to put the data aside and look at their organization and make several decisions about culture, industry, strategy, desired market position, and what jobs you employ. While this is usually done the first time you price jobs, it has to be done periodically as new companies are acquired or as business units change significantly in the number and nature of their positions.
Culture is our first consideration; is the company more conservative than entrepreneurial, or the opposite? Is it focused on keeping cash for a rainy day, or more concerned about taking advantage of every opportunity. Does it value high-fliers; those employees who can make it rain money, or does it value steady performance? All these considerations play into how a company sets its target compensation for its jobs.
Next is Strategy. How does the company go to market, and where is it in its life cycle? If the company is young and needs to grow with very little capital, it is more likely to take more risk in its investments in people and fixed assets. If later in life, it may value preservation of its assets and approach investments, including those in people, cautiously.
Market Position impacts salaries as it matters greatly if a company is a weak player in its industry, is a moderate competitor, or dominates the industry. Do potential employees see the company as an employer of choice, and thus it can have its choice of people, or does it have to scramble to find talent?
Once you understand the company, the next critical issue is understanding the jobs. What types of jobs are you going to utilize in order for the company to do what it does. Are you employing nuclear physicists that will have to be imported from India, or are we employing school teachers with a ready supply of people who will do the job for low pay? Once you know the jobs, what is the scope of responsibility for each job? In terms of scope, things to consider are the number of people supervised, the equipment utilized, the cost of mistakes, the nature of contact with customers and vendors (anywhere from "none" to "final decisionmaking authority"), the level of supervision needed, and the spending authority we're willing to give the position. This gives a company some measure of how it ranks its jobs internally.
Once you know your culture, you're ready to price the jobs. Here you take the resources listed in the last post and match the company's jobs to similar jobs in the labor market. Once the company knows what outside jobs compare to its own, you take the data from those and begin your analysis. The data provided from published surveys usually gives a targeted base pay, targeted bonus or commission, and a total cash compensation (base + bonus or commission) at the 25th, 50th, and 75th percentiles. Remember, a percentile is not a percentage; it is the percentage of all companies surveyed that pay the same or less for this job. Thus, the 50th percentile means that, for every 100 companies surveyed, 50 will pay more and 50 will pay less. The 50th percentile is the most common target that companies use as targeted compensation for its positions.
In rare cases a company may have to conduct its own survey. When we've had to do that, we plot the data using linear regression analysis and calculate the statistical median of all data points. Then, plotting a bell curve, throw out the high and low outliers to establish the data set that we'll use to re-calculate the median and average. Thankfully, this is rare but sometimes it has to be done when no outside data is available.
So what does this mean? While this may be way more information than the average person wants, the takeaway is that there is process and statistical analysis behind the pricing of jobs. Its not a gut feeling, a guess, or a conspiracy.
Next time: placing priced jobs into a compensation structure.
Tuesday, September 26, 2006
As promised, we'll now turn our attention to how we calculate the fair market value of a position's base pay. To revisit our earlier post on terminology, base pay is the wage you receive every two weeks and does not include commissions, spiffs, or bonus. These are variable compensation pieces, and the value at targeted performance is usually calculated or expressed as some percentage of base pay. The base pay calculation, therefore, is very important in accurate and fair compensation as it impacts variable pay calculations.
The first important consideration in knowing how job prices are calculated is to know what we use to calculate them. This is the subject of today's post.
Job Descriptions - Specifically, we focus on the section in the JD template that addresses skills, duties and resopnsibilities, and specifically not the sections on education, reports to, or title. Job value is all about the duties of the position and the scope of responsibility (people supervised, level of direct customer or author contact, cost of mistakes, etc...). It is not about the qualifications of the individual who holds the job past consideration of the minimum qualifications to hold the job. In other words, you must meet the minimum standards to hold the job; past that what those qualifications happen to be do not directly influence pay. For instance, some jobs may not be available to high school graduates (such as the job of Accountant), but in jobs where there are no special education requirements high school graduates and MBAs doing the same exact job have the same pay range.
Salary Surveys - You may or may not know that there's an entire industry out there built around providing market information for various jobs. While the government tries to provide this information free for anyone who wants it through the Department of Labor, their surveys are done about every three years and take about a year to calculate and publish. As such, its out of date before it hits the public's eye. The most reliable and current data therefore comes from salary surveys published through for-profit compensation consultants, industry associations, chambers of commerce, etc... For Nashville operations we use the following outside resources:
Nashville Area Compensation Survey
Evangelical Christian Publishers Association Salary Survey
Comp Data Tennessee/Kentucky
Robert Half Accounting and Finance Survey
State of Tennessee Survey
Watson Wyatt Survey of Middle Management Compensation
Business and Legal Reports Survey of Exempt and Non-Exempt Compensation
Salary.com (we have a subscription to their data for employers that the public can't access)
That's all for now; next time we'll look at the calculation process of how we turn salary survey data into a job price. Until then your comments, as always, are welcome.
Thursday, September 07, 2006
The wages that you bring home every two weeks, whether earned by the hour or by the pay period, comprise your base pay. If you punch a time card, this is your hourly rate multiplied by the number of hours you work. If you work over 40 hours in a pay week, that rate is (1.5 x hourly rate) x hours worked over 40. If you want to annualize your hourly rate, multiply it by 2080, which is 40 hours per week x 52 weeks per year.
If you are a salaried employee, your base pay is your annualized salary ÷ 26 (the number of bi-weekly pay periods in a year). Salaried employees are not paid by the hour; neither do they receive overtime.
Bonuses, commissions, or spot awards (sometimes called "spiffs") make up your variable pay. The amount of variable compensation that a position is paid (notice I didn't say a person, but a position as jobs are priced based upon duties and not who performs them) is usually expressed as a percentage of base pay, with simpler jobs typically earning 5% or less in some form of group incentive like a bonus pool or profit sharing plan, and more difficult staff and low-to-mid-level managerial positions earning up to 30% of base in potential bonus. Typically 5% -20% of base pay is indicative of almost all bonus plans in most companies.
The sum of your base pay + variable pay = your Total Cash Compensation or TCC for short. This is the number we use when pricing jobs on the market and comparing individual employees' compensation to the market. TCC does not include any of the forms of compensation listed below.
Your group benefits are an important part of your total package. Typically, our company pays 70% of the cost of your benefits, and that cost is approximately 28% of our total payroll. So, if you're considering leaving the company for, say, life as an independent contractor or consultant, take your total W-2 wages from last year x 140% (your TCC plus the total cost of your benefits) and that's what you'll need to earn to be able to support yourself with the same standard of living after buying your own benefits.
Another fairly common form of compensation is equity in the company. This is an ownership stake in your employer and is most commonly granted to employees in a group plan such as an ESOP. Management employees may also receive stock options or stock grants as their decisions guide the health of the business and the theory is that you want them to treat the business as if it were their own.
When you total all forms of compensation together, TCC + benefits + equity (if applicable) = Total Rewards. This, other than job satisfaction or the occasional headache, is everything you get in return for working for someone else.
I hope you find this helpful, and as always please feel free to post questions for everyone's benefit. Remember, we want this to be a community conversation and disagreement is okay, although lavish praise is always appreciated. :-) Our next topic will be in the next week or so on the subject of Determining Base Pay. In that, we'll discuss how jobs are priced and what elements of a job make it more or less valuable on the market.
Tuesday, July 25, 2006
Besides the light crowds, and the natural beauty, there are deals. I saw about a half dozen motel signs in Pigeon Forge advertising rates from $25 - $28 per night. Now, this is Family Inn accommodations and it might not be your cup of tea. We were in a Bed and Breakfast (Eight Gables Inn and we recommend it highly) with 16 rooms and no more than 4 were filled any night we were there. Old Guard restaurants like The Peddler where 1 hour waits are common had immediate seating. The outlet malls had more clearance merchandise that usual due to light sales from the light crowds.
According to the locals, three things are hurting the crowds. (1) Gas prices are limiting the drive-in tourism, (2) last year's hurricanes closed so many beaches that the crowds were unusually large, and (3) last year's large crowds led to traffic and congestion that caused people to stay away this year.
So, if you have some PTO time available and need to squeeze in one last vacation, you could offset the higher fuel costs to get there by the savings at motels and retails stores. The Eddie Bauer Store at Five Oaks Outlet Mall has a particularly impressive 60% off section.
Friday, May 26, 2006
Job vs. Personal Worth
The pay issue is deeply personal when people define themselves by what they do ("I am Vice President of Human Resources") instead of by their relationships ("I am Vonnie's husband and Rachel's dad") and who they are (Kentuckian, Catholic, miserably poor guitar player, etc...). The first step in being able to discuss pay issues is to remember one fact: jobs have calculable finite dollar values, but people do not. Your compensation is a reflection of all those things that go into job pricing that we'll discuss in future posts (market value, internal equity, scope of responsibility, potential cost of mistakes, customer exposure, etc...), it is not a reflection of what you are worth as an individual. Getting this one point will help you look at pay more clearly.
Another touchy issue is the question of whether you're going forward or backward in your pay and standard of living. I've only met a couple of people who ever made more, and now make less, that didn't let it eat at them the rest of their careers. The unfairness of these situations is that their former employer closed up shop, fired them, pushed them out, or they left for their own reasons; but its' their subsequent employers who take the beating for not paying enough. Understanding that what happened to you happened somewhere else will help you see pay issues more clearly.
Idealism vs. Reality
This is a huge issue among younger, college-educated staffers. Professors recruit you to take a major in their department and give you stories of those who got their degrees there and won big. Those are great stories, but are the exception rather than the rule. Remember, professors tend to not get off campus much and what they either didn't know or didn't tell you is that almost everyone graduates college, starts at the bottom, and works for a few years in unappealing work developing their skills and readying themselves for key positions. Your college degree typically starts paying off 3-7 years into your career when you start to compete with equally-skilled but less educated co-workers for key positions. Until then, your degree indicates potential but doesn't usually return much value to your present job or make you worth more money.
Ambitions vs. Outcomes
No matter how much you play with titles, the truth of all organizations is that they are pyramids; the farther you go towards the top the fewer jobs are available and the more competitive the situation. Also, over the years you tend to specialize in something specific that the company needs or that pays well in the current market. If that something isn't in the core business competency of your employer then your expertise makes you a niche player not eligible for promotion to positions that run the business as a whole. For example, VP of HR in an HR consulting firm like Watson Wyatt or Mercer might track you to be CEO; VP of HR in a manufacturing or publishing company makes that highly unlikely. At some point in our careers we face the ceiling, and our earliest indication is usually that first pay increase that's less than the company budget. At that point we can use the disappointment as motivation to change jobs, change industries, or enhance our skills. Another choice is to accept the limitations that the situation places on us and stay in the comfort zone that expertise often gives us or where we feel we're called to be. The worst choice, and the one that too many make, is to get angry and the blame their boss or company. Chances are that the same thing would happen under a different boss or different employer in the same industry.
One of the hardest situations for managers is the situation of employees in need. There are some cases where a person's situation outside of work (caring for a sick family member, personal illness, etc...) places them in dire financial need. I work with a group of executives with big hearts who want to help people in these situations. The problem is that some financial need is self-inflicted, and when managers start deciding between the needy and truly needy we get into issues of favoritism and why you help one and not the other, as almost no company can afford to control the financial outcomes of each of its employees and still stay in business. I don't have an answer to this issue and welcome anyone's suggestions. Needless to say, employees in need are more likely to take pay issues seriously and personally.
This basic human emotion will always plague conversations about pay. I heard someone say the other day that the world's worst and most common problem is "somebody got something I didn't and I want it". I tell anyone wanting a career in HR, payroll, or especially compensation management that they can't be successful if they pay attention to what everyone else gets or if they're money motivated. The best way to understand if you're paid fairly or not is to focus on your job in your industry and market, not on what anybody else gets or does.
Remember, in this post we're not discussing what is or isn't fair pay. Here we're discussing what you should and shouldn't focus on in order for us to have a much-needed and candid conversation about pay. I welcome your professional and constructive feedback, even if you disagree with me, and invite you to participate in this discussion by posting a comment. If you want to privately comment or ask a question , you can email me at email@example.com or IM me on AIM at jthom140.
Monday, May 01, 2006
The Center for Immigration Studies, and independent, non-partisan think tank that studies immigration issues published findings in 2005 that estimated the number of immigrants in America to be 35.2 million. An estimated 7.9 million of these arrived between 2000 and 2005 and about 3.7 million of them were illegal/undocumented. So, talk radio jocks might say, this is the smoking-gun-proof that we must build our own Berlin Wall in Texas to keep the Latinos out before we all lose our jobs, right?
Well, not exactly. The Bureau of Labor Statistics of the U.S. Department of Labor tracks unemployment by month, quarter, year, age, race, occupation, and just about any other data cut you can imagine. Total unemployment by year since 2000 looks like this:
2002 5.8% (the beginning economic impact of 911 terrorist attacks)
2006 4.7% (annualized data for the quarter ending March '06)
So combining these two data sets we see that the growth in the U.S. economy has absorbed the "911" job losses and 7.9 million immigrants, including the 3.7 million illegals, with no appreciable impact on unemployment. It looks like your job might be safe after all.
Now what about this spontaneous civil rights movement? Don't buy it! Check out http://www.latimes.com/news/local/la-me-organizers3may03,1,7009105.story to see the role that organized labor played in the May 1st demonstrations. Organized labor has for years shot itself in the foot by not targeting immigrants as potential members, treating them instead as cheap labor and a threat to "good union jobs". This was a major factor behind the recent breakaway of former AFL-CIO member unions like the Service Employees International Union which views immigrants, even illegal immigrants, as a rich source of new members. They are the most disenfranchised and vulnerable segment of the workforce and thus a natural to need organized labor's protection. Now that labor has awakened to this fact it hopes that becoming the advocate for guest worker amnesty and other immigrant rights initiatives ingratiates this demographic group to labor much the way that 1960's Democrats' embracing of the civil rights movement brought African Americans into their party for a generation. The May 1st demonstrations would not have happend without Big Labor organizing expertise and money.
So what's the takeaway here for the average working person? Not much, really and that's the point of this post. You're not going to lose your job to a cheaper foreign worker anytime in the forseeable future if at all. The only thing of significance that happened this week on this issue was how much TV news and talk radio ad time was sold telling you that something important was happening.
Tuesday, April 18, 2006
Believe me, you can use this anywhere. The rule works well at all positions, so don't rule out taking candidates for entry-level or lower-level positions to lunch, even if its just to Wendy's. Candidates who are rude to the lady working the counter but nice to you will kiss up and kick down once hired, and we don't need any of that.
Monday, March 20, 2006
During my last eight years before coming to Nelson I worked in and around El Paso, Juarez, Chihuahua City, and Torreon setting up manufacturing plants. Here I'll admit my bias that I'm a fan of the Mexican people and feel that Hispanics in general are getting a raw deal in today's political climate.
During my Mexican tour of duty (which includes El Paso if you've ever been there) I saw true poverty. Our manufacturing workers had some of the best jobs in the cities where we were located; they made the equivalent of $32 - $64 per week depending upon the pay grade of their job. They typically hauled water and rigged hand-made wiring from the nearest utility pole to steal electricity. On cold mornings you could rarely see Juarez from the mountains of El Paso because people burned anything they could find in hand-made brick fireplaces to keep warm: this included pallets, tires, trash, etc... It amazes me that so many Americans who pride themselves in our American ingenuity and grit fail to see the parallel between the modern Hispanic experience and our own ancestors. I submit to you that faced with similar living conditions and lack of opportunity, most of us would swim the Rio Grande to America and would not care if American considered us there legally or not. Hungry is hungry, especially if its your children.
Many of you know that I recently moved from the Logan County, KY area about an hour north of Nashville. This is tobacco country and low-cost, manual agricultural labor is important to the local economy. I have seen grown men (there both legally and illegally) living 12 to a single-wide trailer and saving as much money as possible to send home to their families. And, typically, those are strong Christian families who stay together either in Mexico or eventually in the U.S. With values of faith, family, hard work, and determination to succeed in our world (their new world) they should be held up by all of us as modern-day examples of what our families endured for our sake in generations past.
And, success is in no way guaranteed. Aureliano Ceja was 72 and worked all his life to make his family successful Americans. His final reward, in this world, was ultimately to be killed by someone who coveted his wealth. Fermin Estrada was celebrating the purchase of 14 acres to call his own and was surrounded by a loving extended family that had come from as far away as Georgia when he was killed by at best misunderstanding and at worst prejudice.
In this context, the Hispanic experience in Tennessee is heroic and not parasitic as some politicians and radio shock jocks would have you believe. In our company we have many fine, long-serving Hispanic employees. As this next political cycle heats up let's not let the politics of the day convince us that any of our people are simply "those people".
Sunday, March 12, 2006
Around 2000 the Health Insurance Portability and Privacy Act (HIPPA) passed through Congress. Within weeks every HR department, hospital, doctor's office, or any facility that handled private medical information had to put in safeguards to make sure personal information did not become publicly known. This is why you can go to a hospital and ask for "Joe Blow's room number" and get it, but you can't go to a hospital and ask if Joe Blow is a patient (they won't tell you). I can ask United Healthcare how much money we've spent in cancer treatments this year, but I can't ask them (and wouldn't, by the way) who among our workforce has or has had cancer. As an employer, we can require employees who are seeking a leave of absence to provide medical certification from their doctor as to why they are being treated. However, if the employee is not asking for a leave and is only requesting PTO then we can't (and wouldn't) ask the employee why they are taking off work or what medical condition they have.
This brings us to the employee expectation issue. Employees are more aware as a group than ever before that they don't have to answer such questions. Often times an employee will take PTO rather than FMLA leave for short medical-related absences rather than disclose a medical condition. Others will exhaust their PTO completely before disclosing a medical condition and then request FMLA after the fact. In such cases, the company does not always get complete information.
I myself did this in 2001. I was working for someone for whom, I had been warned, surgeries and illnesses were a sign of weakness. I had been with the company four months and discovered that I had to have arthroscopic knee surgery. I scheduled two vacation days (as we called them in '01) on a Thursday and Friday. I had the surgery 8:00 a.m. on Thursday and was home by 3:00 that afternoon. I was on my back that evening and all day Friday; walked on crutches Saturday and Sunday, and Sunday evening took a triple dose of pain medication and put my crutches in the closet. I reported to work on Monday with a slight limp that I attributed to weekend gardening and never told anyone (until now). I hadn't mentioned it because, frankly, is really isn't anyone's business. Keep this in mind when I tell you, then, that an employee undergoing chemotherapy may covet our prayers but does not want the phone calls, letters, cards, and workplace conversation about them that goes with it.
In our church one variation of the liturgy asks us to pray for "all who are sick, all who suffer, and all who will die today". Maybe we should do the same for members of our Nelson family whose struggles are known only to themselves, God and a handful of close friends and family. If that's the way they want it, then we should afford them that respect.
Wednesday, February 08, 2006
Blamers have one thing in common; they are afraid. They may be the staff member with a fragile ego who is afraid to be wrong. They may be your cubicle neighbor who is afriad for their job and who feels that they can't afford to "look bad". Or, and this is unfortunately too often the case, they are that individual who is underpowered intellectually or too fragile emotionally to get the job done and who can only hang on to their position by blaming others for their performance deficiencies. In any of these cases, the high road is the only road for reasons I hope will be obvious below.
A wise executive (who thankfully happens to be one of our senior leaders) said it best recently in an email to me: bad fish eventually smell. As such, the best tactic with blamers is to keep your emotions in check, avoid defending yourself unless absolutely necessary, and only if necessary defend yourself in private to your supervisor (and no others). If you fire back at your accuser you've lowered yourself to the lowest common corporate denominator of the feuding co-workers. If you vent your frustrations to your co-workers you're engaging in the next lowest form of corporate behavior, that of the water cooler gossip. Blamers aren't by nature brave people, so they usually won't come looking for you and for trouble. Avoiding conflict and confrontation, setting the record straight in private to your supervisor, and then letting the bad fish smell on its own is your best strategy. The outcome of blamers is almost always the same: either they give up blaming (absent any career gratification) and/or they fail without your help.
Our corporate values include taking responsibility when we're wrong. For people to feel comfortable doing that requires that we all give each other grace when mistakes are made. If you want a workplace free of blame and blamers then be kind and forgiving whenever possible when others make mistakes. Never roll in the proverbial mud with those who would throw blame, and keep your focus on excellence in your job. By our works, good and bad, will we all eventually be known.
Finally, as hard as it may be, pray for the blame throwers, for theirs is often a miserable work experience.
Tuesday, January 31, 2006
Now, this is not a testimonial about Thomas Nelson (well, it's not just a testimonial) or a first-person account of our decision. The point I want to make to you, if you watch this blog for tips on the working life, is that I haven't felt this good in a long time. Too many of us ride the fence afraid to commit in today's corporate world. So many companies let you go for no good reason and/or place little value on long-term employment. But if you think the fence is any place to be, go literally sit on a fence and see how uncomfortable it becomes after a time. The figurative job or career fence is no more comfortable.
My advice to you is drink the Kool Aid here and go all in, or go find yourself an organization where you can. If you want to commit, or think you might but have questions or issues then come see me. Life is too short to ride the fence.