Thankful!

We at DB Squared are thankful for our clients that have continued to use and provide suggestions for our current software programs DBCompensation and DBDescriptions. DBCompensation has been around since 2005 and the last update in January 2017 was the 10th and DBDescriptions has been updated several times based on client input. We maintain above a 90% retention rate and our clients tell us that they are very appreciative of the quick technical service and software education/how-to support.

For 2018, we would like to move DBCompensation from a Microsoft Access-based platform to SQL or some other program that would allow the software to accommodate larger employee populations and other data with increased speed. We continue to have requests to pull out the copyrighted Johanson Group job valuing/job rating portion of the program as an independent function and to develop a performance appraisal program tied to the job descriptions and essential duties for each job title within our client organizations.

As for DBDescriptions, we are considering adding another 400 to 900 pre-loaded job descriptions to the web-based program. This would increase the ‘ready-made’ job descriptions in DBDescriptions to 1500 or 2000. These ready-made descriptions can be modified or our clients can still start from scratch to build their job descriptions. We are also thinking about offering a Spanish conversion feature for an additional fee.

We wish all of our current clients a Happy and Festive Holiday Season and may 2018 be one of your best years.

Compensation Strategies for Millennials

We have partnered with Equias Alliance, a nonqualified benefits plans and BOLI company, on a few compensation projects and one of its principals, Ken Derks, wrote a recent excellent article titled, “Compensation Strategies to Attract, Retain and Motivate Millennials.”

One of his statements summarizes well where the millennials are financially.  “While millennials have essentially the same financial needs as the generations preceding them, their time horizon to retirement can be 30-plus years or more, which is too far into the future for them to focus on when faced with immediate financial planning decisions, like retiring student debt, purchasing a home and providing for their children’s education.” Ken offers a recommendation to meet the financial needs of the millennials by stating, “For the next generation of leaders, managements and boards should consider nonqualified benefit plans that allow for in-service distributions timed to coincide with events such as a child entering college or to pay off college debt.  Plan payments made to the participant while still employed can be made at some future point such as three, five or ten years.”

As companies are transitioning their work forces from the baby-boomers to the millennials, the importance of providing a competitive base salary coupled with performance-based incentive and retirement plans will help to attract, retain, and motivate the millennials and other generations to follow.

Johanson Group has worked with all types of companies and organizations for the past 44 years in the areas of compensation management, strategic planning, training and development, and management consulting.  We have taken our copyrighted job design and compensation methodologies and created software that is licensed through another company we own, DB Squared.   DBCompensation and DBDescriptions provide the front-end of the total rewards equation.  Please contact us to learn more about our consulting services and software products.  If you would like to contact one of our partner companies, Equias Alliance, their website is www.equiasalliance.com

Mind The Gap: A Guide To Talent Retention

We recently referenced a study from Manpower Group about job talent. The study was based on data from 1,300 respondents and the following key findings were identified.

  1.  Employers stated that applicants in general lacked the skills and experience required to successfully complete job duties and responsibilities for open positions.
  2.  Employees expected higher pay than the salaries offered by employers.
  3.  The top five consistently hardest  jobs to fill are:
  • Skilled Trades
  • Sales Representatives
  • Engineers
  • Drivers
  • Accounting and Finance Staff

There is a gap between employers and potential employees regarding the expected applicant skills and experience and expected compensation based on the Manpower Group Study.   Most likely, this is a resulting gap of talent depletion from employees leaving one employer for another that offers a better compensation package and career opportunities.

We conduct annual and/or bi-annual market studies and annual internal job and pay comparative analysis for our clients to reduce or eliminate employer and employee gaps with employee capabilities expectation, pay for performance and compensation expectations.

Back-filling position gaps resulting from higher levels of voluntary terminations through continuous recruitment and placement efforts is a very expensive tangible and intangible employment disposition.

Address your potential talent shortage and talent retention  gaps by implementing our proactive compensation management processes with DBSquared’s proven and very productive software called DBCompensation.  Our clients have gaps they can hurdle while employers utilizing reactive compensation management strategies have canyons to cross either by mule which is slow, or by helicopter which is efficiently expensive.

 

Why The Engineer&squo;s Approval is the Most Important

Our firm completed a few job classification and compensation study projects in Kentucky last year and one of the side entertainment venues was the Keeneland Race Track in Lexington. What a nice horse racing track and facility for guests traveling to the Lexington area from within U.S. and around the world to see these amazing animals and jockeys racing full speed to the finish line. While spending the day at Keeneland, it became pretty apparent the amount of precision and forethought that goes into all the systems and processes for a smooth operating race track facility. The display board computer and graphics, the betting system software and hardware requirements, the photo finish computer and systems, the beverage and food POS software and hardware configuration, the publishing systems to produce a daily race track program, and the HRIS system to manage human capital compensation and benefit programs. While the Keeneland Race Track was being developed, constructed and configured for its ultimate opening day and during its on-going operation, a team of engineers and information technology professionals used and continue to use their skills, training, knowledge and keen eyes to ensure no stone is left uncovered. This leads to consistent and efficient daily race track operations.

When we completed one of the job classification and compensation study projects for a public utility, the final step required approval by the utility board of commissioners. One of the commissioners is a mechanical engineer and his review of the proposed job classification and compensation study project was through the lens of a skilled and knowledgeable technical professional. His questions about the study internal job valuing and external market pay study processes were comprehensive and precise. It was his desire as a member of the commissioners’ team to test the processes and systems to determine its validity and value for the public utility organization. After answering several questions and having a good discussion about the job classification and compensation study project, the commissioner was satisfied and understood the Utility’s new job classification and compensation management system. It passed the engineer’s filter for comprehensiveness and precision.   We gained the Engineer’s approval and he was going to support passage of the new job classification and compensation study.

What are the components of a “state of the art” job classification and compensation management study project?

Comprehensive, consistent and compliant job descriptions developed in an automated electronic position analysis questionnaire database system with a collaboration feature.

Job descriptions and job rating systems that are integrated and aligned for efficient internal job valuing and placement within the organization structure.

Automated employee information uploading systems to minimize or eliminate data entry. Employee information that includes at minimum, ID #, Last Name, First Name, Job Title, Pay, Gender, Race/Ethnicity, Date of Birth, Date of Hire, EEO or Merit Rank, Department and Supervisor’s Title.

The ability to include external market pay data comparisons to evaluate internal pay competitiveness and validate the job valuing process for greater compensation management precision and defensibility.

Integrated and interactive system output tables, graphs, worksheets and reports for effective base compensation management structures and decisions that foster organization and employee behaviors and efforts that are aligned to meet objectives and goals.

 

Performance Management Appraisals “Pass or Fail”

Based on several recent articles in various management journals, human resources, and total reward publications, there are a growing number of organizations that have decided to eliminate performance management appraisal processes or revamp the process by placing greater weight on top performing skills and achievement toward team goals. As business, human resource and compensation consultants, and SAAS human resources technology developers and advocates, we are keeping a close eye on the Pay for Performance “Pass or Fail” saga and the potential evolution toward more effective performance management systems and processes that will drive higher levels of organization and individual results.

Dan Pontefract, a Forbes / Leadership contributor who focuses on collaboration, leadership, engagement and purpose at work wrote a short article on Performance Management Appraisals’ effectiveness from 2000 to 2015. Dan references three research reports on performance management: one in 2000 conducted by the Society for Human Resource Management (SHRM), the second in 2012 commissioned by Towers-Watson, and the third in 2014 with SHRM checking to see if any progress had been made in performance management effectiveness since its 2000 survey study.

Mr. Pontefract shared an insightful statement from the SHRM 2000 report Executive Summary. “Stronger executive support for performance management and increased employee participation in development activities is needed in order for performance management systems to truly become a tool to help attract and retain talent.” Dan mentions in his article that leaders did not support performance management appraisal systems as an effective management tool.

The article continues with Mr. Pontefract’s furthering his case by sharing insight from a Towers-Watson 2012 Global Workforce Study entitled “Engagement at Risk: Driving Strong Performance in a Volatile Global Environment”.   Dan stated in his article that based on the study results, only 44 percent of organizations do an effective job of using technology to deliver the performance management process itself. He laments that a decade of technology improvements and additional management feedback systems should have allowed enough time and change for more effective performance management processes.

Dan provides insight on SHRM’s 2014 research report – HR Professionals’ Perceptions About Performance Management Effectiveness. He quotes a disturbing report outcome statement, “More than one-half (53 percent) gave their organizations a grade between C+ to B and one-fifth (21 percent) chose a C, and only 2 percent gave an A in performance management to their organizations.”

At the end of Dan’s article, he states, “After 15 years of survey after survey, and research report after research report, we’re no further ahead with respect to improving the performance management process, program or behavioral model in our organizations. “ He concludes his article by offering some key parting thoughts that should be considered when designing and implementing a performance management appraisal system that is enhanced by technology for greater efficiency and productivity.

  • “Performance management isn’t a score. It’s a frequent, ongoing coaching conversation.”
  • “Performance management isn’t an annual meeting. It’s a development opportunity that occurs as necessary.”
  • “Performance management isn’t bound by technology. It’s a behavioral attribute that puts the employee at the center of his or her growth.”
  • “Performance management isn’t a hammer. It’s an opportunity to use all the tools in the toolbox.”
  • “Performance management isn’t managing performance. It’s the leader’s responsibility to help build up and then release the enhanced performance of an employee.”

Performance management is becoming more than the annual sit-down session between the employee and their supervisor. The following content represents some policy language from the University of New Hampshire’s Performance Management handbook.

“ONGOING FEEDBACK AND PERFORMANCE MANAGEMENT”

Benefits of Providing Ongoing Feedback & Coaching

“During the year, you are responsible for coaching and mentoring your employees to assist them in reaching their goals and achieving optimal performance. Ongoing feedback and coaching are used to communicate about and correct performance deficiencies, to reinforce appropriate behavior, to teach the employee new skills, to motivate high performance, and to mentor employees so they understand their role in the Department and University.”

  • “Regular feedback and coaching will make your job as a supervisor/manager easier when employees build their skills and independence.”
  • “Feedback and coaching also increases productivity, the quality of work and the effectiveness of the work group.”
  • “Employees’ motivation and initiative is increased with effective feedback and coaching.”
  • “Creativity and innovation in problem solving increases with effective feedback and coaching.”
  • “Feedback and coaching can prevent problems from occurring.”

WorldatWork released an article in their weekly newsline titled, “North American Employers Give Pay-for-Performance Programs Low Marks.” This statement supports findings from a recent Willis Towers Watson survey. The WorldatWork article included the following quote, “Employers continue to make significant investments of time and money in their traditional pay-for-performance programs, primarily annual merit pay increases and annual incentives,” said WorldatWork member Laura Sejen, global practice leader for rewards at Willis Towers Watson, in a press statement. “Unfortunately, these reward programs are falling short in the eyes of many employers.”

Based on the survey report, only 20% of the North American companies reported merit pay as “effective” at driving higher levels of individual performance, and 32% believe that their merit pay programs are effective with differentiating pay based on individual performance.

The performance management processes are not making passing grades and the survey report indicates that organizations are making changes to improve the effectiveness of their performance management programs by

1) adopting more forward-looking performance goals,

2) placing greater emphasis on demonstrated knowledge and skills required for employee’s roles,

3) applying greater weighting to the critical roles,

4) aligning company goals with top performing employees , and

5) rewarding achievement of team goals.

The emphasis on performance management improvement has become a noticeable initiative with WorldatWork and its total rewards members. WorldatWork is hosting a performance management practices forum to raise the visibility and bar of performance management.

What Is DBConsulting?

At DBSquared we like to remind clients that our solutions are designed specifically for you, by HR professionals for HR professionals.  At this time of the year when every tax consultant I run into can only lament the loss of their personal time between now and April 15th, I am reminded that we also can say that our flagship solution, DBCompensation™ was designed by consultants for consultants.

A little bit of history is probably worthwhile.  The original methodology was developed by our founder in the mid 80s to help him be a better compensation consultant to public and private clients.  His sons enhanced and improved the methodology to help them address new developments in job classifications and compliance.  The computer application was originally designed to enable their consultancy to be more efficient.  We only decided to commercialize it when our clients began clamoring for it.

We are reminded of why we became consultants.  We were attracted by:

  • The opportunity to bring a continually improving, process-driven approach to your craft
  • The desire to bring best practices from one client to another, while leveraging your industry depth or functional expertise
  • The freedom to “do the right thing by the client”, secure in the knowledge that “the rest will follow”, when you make solving the client’s problem your priority?

Look at almost any consultancy discipline and you will find an explosion of tools, some commercial and some home grown.  At DBSquared we have been fortunate to have our clients see the value in our tools.  As consultants we still have the opportunity to improve our expertise and ability to help clients.  We didn’t cede that advantage or opportunity.  In fact we would argue that the increase in accuracy, reliability and risk mitigation is alone worth our investment of time and expertise.  Our consulting business has increased even as we sell our solution to clients.

We would encourage any compensation consultant to explore making our solution part of their own tool chest.  It won’t mean you will have less opportunity.  But it could mean the difference between offering your clients the most effective service in the most efficient manner, and having a little time left over for yourself.

 

 

DBConsultation is available to assist you in the development of your Total Rewards Philosophy and the various base, bonus, short-term and long-term incentive plans and benefit programs. The total package should motivate employees to perform at levels that provide your organization with a competitive advantage over other organizations as you seek to fulfill the strategic plan. Contact us today for your successful tomorrow.

 

Getting Pay Right

Over the past several years, the Obama Administration has pushed for equal pay between men and women. On January 29, 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009, an equal pay law. Last Friday on the anniversary of Lilly Ledbetter, the President promoted a new EEOC (Equal Employment Opportunity Commission) proposed regulation that would require businesses with more than 100 employees to provide W-2 earnings pay data that can be sorted by gender, ethnicity, age, job category, pay ranges, and hours worked. The EEOC will use this data to determine if employers are engaging in pay discrimination and this proposal would affect at least 63 million U.S. employees.

Since 1986, the Johanson Group has worked with clients in most business sectors to implement an internally equitable and externally competitive base compensation program titled Job Evaluation and Salary Administration Program (JESAP). This program integrated job descriptions, job valuing, employee pay data and market data to produce pay ranges and the ability to show where each employee was located in their respective pay range. Starting in 2001, we converted the JESAP program into a SaaS product and released it to our clients in 2005 with a new name DBCompensation as part of a new HR software company we established, DBSquared.   The DBCompensation process improved our efficiencies by 500% over the past technology of Microsoft Word and Excel.

As far as we know, none of our clients have had to deal with pay discrimination issues after the implementation of the JESAP/DBCompensation system. Our program color-codes and graphs employee base pay data by gender, ethnic background, and age. This important data provides our clients with a visual review as well as hardcopy statistical data so they can correct, or at least start to correct, any pay equity issues that are identified.

With over 75 clients using the DBCompensation system and a retention rate well over 90% since 2005, we are passionate about our clients “GETTING PAY RIGHT” and being a resource to them as they seek to be “internally equitable and externally competitive.” Our approach is proactive and should meet or exceed any regulation requirement that has been passed since the Equal Pay Act of 1963.

We would love to increase our footprint across America and hope you will become our next software client. We also offer compensation and total rewards consulting.

COMPENSATION MANAGEMENT – Internal Job Valuing and External Market Salary Comparisons

An informative article written by Fred Hilling, President of Sander Consulting Services was published in the 2nd Quarter 2015 WorldatWork Journal. The article was titled, “Salary Pay Options for Control and Accuracy”. Mr. Hilling makes a case in this article based on two primary statements:

1) “The only relevant goal for a salary administrator is to define and administer a competitive salary level for each position.”

2) “The level of support for managers making pay decisions varies by the level of control embedded in the salary policy and accuracy of the prediction of a competitive pay level for an individual position.”

Mr. Hilling continues his position in this article by listing compensation management policies that provide control and accuracy. They include:

  • The definition of job content
  • The method of establishing internal equity
  • The definition of salary grades and ranges
  • The procedure for progression in the salary range

Mr. Hilling makes a case for accuracy based on the methods that support internal job valuing that are aligned or validated by external salary market comparisons.   He describes various methods for internal job valuing which include Classification, Point-Factor Equity Plans, Point-Factor Competitive Plans, Regression Models, and Salary Market Comparisons.

We support Mr. Hilling’s position for greater compensation management accuracy by utilizing an internal job valuing process and an external market pay comparative analysis to validate the internal job placement in the salary structure and to ensure pay competitiveness with the defined salary market.

Mr. Hilling concludes the article with several statements that summarize his position on compensation management with pay options for control and accuracy. One of the statements that resonate with our compensation management philosophy follows: “Salary administrators have a fiduciary responsibility to shareholders/taxpayers. They have to balance this obligation with the continuing advice and opinions from management and employees. The best way to achieve this balance is to implement accurate measurement of competitive pay levels.”

The compensation management team at DBSquared has developed an automated and integrated internal job valuing (internal) and market salary analysis (external) system. We focus on simplifying Human Resources and Compensation Management processes through proven systems and technology.

Please contact us for help with automating your job descriptions, job valuing, market salary analysis and compensation management processes and structures.

Show Me The Money!

At this time of year, we have several clients working hard to determine what adjustments they are budgeting as far as pay increases for their employees. Between 2008 and recent years, many organizations were not in a position to provide increases due to the weak economy. With a couple years of growth and improved bottom-lines, employees are saying, “Show me the Money!” They want to see increases in the areas of merit, cost of living, market pay for those employees under market midpoint, longevity, bonus, certifications, 401(k), etc. Employee pay has been frozen for the most part, benefits such as 401(k) contributions had been suspended, and the increased cost of health insurance has been passed on to the employee. The most valuable asset lost its status during the recession years. Employees are telling employers that enough is enough and want to see the increases in their pay like they enjoyed in the pre-recession years.

Our clients have come to us over the past 42 years (Johanson Group, HR/Management Consulting established in 1973) and the past 10 years (DBSquared, HR software) to assist them in determining how best to pay their employees with the resources that they have to work with. Whether an organization was large or small, the employees agreed during the recession that their pay increase would be small or none, but that period of time has come and gone.

We are currently working with a municipality that didn’t provide any increases over the past several years, and when we recently completed their market analysis and set their pay ranges using our DBCompensation software program (job descriptions, job point ratings, employee data and market data), they were 20% behind market. We worked with the leadership team and City Council to formulate a pay plan over the next few years that will help them to make up that deficiency as well as keep their pay range structure current with market. With this plan in place, the employees will spend less time thinking “Show me the Money!” and will start spending more time being engaged and committed to make a difference for their organizations.

Job Valuing is Regaining Velocity

A recent W@W Workspan published article (September, 2015) titled, “JOB EVALUATION – Relevant, Robust and Reimagined” was written by Hay Group executives Phil Johnson, Tom McMullen and Mark Royal. The article began with an historical perspective of job valuing being a popular job measurement tool from the 1960’s to the 1980’s. The authors noted that since the recent economic downturn and slow recovery period, job valuing has regained momentum as a valuable management process in determining relative internal job worth as it relates to its contribution and impact on company goals and outcomes. Johnson, McMullen and Royal made the following insightful statement in their job valuing article, “Many organizations woke up to the fact that a process that analyzes the work that needs to be done can provide much more than the way to link to market and determine appropriate pay levels.”

DBSquared’s DBCompensation software has a proven proprietary job valuing system with a 1985 origin. With this efficient and easy to use HR technology, job descriptions and job valuing are simultaneously developed and displayed in a job evaluation chart. The job valuing chart offers a high-level job fine-tuning and valuing feature and a link to automatically align final job descriptions with final job values. DBSquared’s compensation professionals support the philosophy of validating internal job valuing and proposed pay structures with external market pay comparisons. The combination of internal job valuing and external market pay analysis produces a more precise and comprehensive pay structure where all jobs have a value on the company’s internal pay line and pay structure.

Recently, we had a VP of HR and Administrative Services of an electric utility company make a comment about the professional integration of internal and external job valuing processes in the DBCompensation software. He was pleased with the recent job classification and compensation study and how the software simplified the process without losing creditability, validity and transparency.