Grading in contextA Story on Grapes, Horses and VeilsRalph LeyssensReward DirectorIdeal Standard International

INTRO

Grading

AIM

“Objective” way of comparing roles across the organisation using criteria based on (internal) values and relativities that are accepted

and recognised by all parties involved.

NEEDS

Company-specific? Administrative EaseUnderpin other HR programs Acceptation / buy-in

Time- and Cost Efficiency Fit-for-purpose …

WHATSystem to rank roles

USE

As a starting-point and platform for:- Reward Framework - Career Planning

- Performance Management - Market data - ...

A career in pictures

A corporate Smurf role is nota corporate role

20 years in HR/Reward and I believe: There will always be a need for some sort/type of

grading or leveling

Selecting / developing the appropriate “method” has never been easy and if anything is getting more difficult

The need for perceived and demonstrable objectivity will increase with “maturing” of workforce

“Philosophy”Grapes, Horses & Veils

GRAPES

… of Labor

Social Inequality Aversion

Why do people work for an Organisation?

Job ContentImpact on businessLevel of responsibilityMeaningful workFeedback

Personal NeedsDevelopment

Career opportunitiesSecurity

PrideRelationshipsQuality of life

CompensationBase salaryIncentives short term long termEquity ownership

BenefitsTraditional awards

Non-traditional awardsSupport programmes

EnvironmentLeadership

Management styleWorking conditions

RecognitionCultureStatus

INTRINSIC

EXTRINSIC

IND

IREC

T

DIR

EC

T

CONCLUSION

Human nature in general and Social Inequality Aversion in particular dictate the need for an objective and “communicatable” method for making decisions on distribution of cucumbers and grapes.

HORSES

… for Courses

Jockeys for courses?

Horses for courses

Philosophical/cultural courses

Hierarchicalcourses

2008 Walmart Board of Directors

Corporate Lifecycle courses

Start-upGrowth

MaturityShake out

Rejuvenation

Characteristics of Each StageStart-up Growth

Few systems / no policiesEntrepreneurial

Cash is short / sharesReturn on Investment - strong focus

Creating VisionHighly Optimistic

Fire Fighting

Maturity Shake out

Focus on core capabilitiesProfit Oriented -’cash cow’Cost focus (cut, cut, cut)

InnovationCommunications

Structural Change

Out-placement, out-sourcing, alliancesinnovation is criticalperformance focus

cultural change / transformation

Rejuvenation

Radical ‘step’ change i.o. incrementalCultural issues

Transformation leadershipVision, mission, purposePeople practice review

Communication IssuesSales Emphasis

Diversification / InternationalUnder-staffed administration

Demands on mgmt. / professional mgrsService delivery issues

Focus on staff retention / career opport.Systems and skills

CONCLUSION(S)

There is no one-size-fits-all as the most appropriate method depends on the why, where, what, how, when… of the organization.

“Organizations” are differentiated and subject to change so methods (and the way they’re applied) should be flexible and capable of serving different needs.

VEIL

… of Ignorance

Veil of Ignorance

In theoretical economics (e.g. Vickrey 1947; Harsanyi 1955; Cremer and Pestieau 1998), political science (e.g. Frohlich and Oppenheimer 1992) and in moral philosophy.

Choosing between societies without knowing where you will be placed or what characteristics you will have in each society, to reflect goodness or fairness of societies. Only then can one truly consider the morality of an issue.

Introduced by John Harsanyi, later appropriated by John Rawls in “A Theory of Justice”

Veil in Grading: Objectivity

Role not the person

Consistent application of the “method”Procedures: agreeing/explaining the process, method and information used, rather than the outcome (grade)

Perceived and demonstrableSmoke-filled rooms or discretionary decisions are not always acceptable

CONCLUSION

The best way of improving credibility and acceptance of the outcome is ensuring the method and its application is objectively applied and maintained.

And so…

Grading has a place in a Simple Salary Management Model

Clarify Roles / EstablishRelative Size

Establish Market Valuefor Each Role

Recognise IndividualContribution

Courses & Jockeys determine which Horse

The Race Purpose

The Course Compensation environment US HQ vs Local company Engineering vs M&S Unionized?

The Jockey Need for guidance Quality of management

Judgement

“Scientific”

Generic Company-Specific

Ranking

Levelling

Market Pricing

Factor

Comparison

Point Factor

Off-the-shelf Tailor-made

Types of horses

Man

yG

rade

s

Few

Bands

Detai

led

Broad

Similar horses… Although the methodologies differ, most systems use

similar criteria for weighing

Q&D comparison between Towers Wyatt, Mercer & Hay:

Grapes & Veils

Social Inequality Aversion puts emphasis on communication

What to communicate Grading Structure Grading Method Grades of Roles Consequences - Reward management philosophy /

programs

Careful for unintended consequences

The NewWorld

Are jobs dead…?

Hierarchical approachSingle career trackConstrictive structures

FlexibilitySelf managementAlternative career pathsSkill developmentAlignment of people and processes

Hierarchical approachSingle career trackOne size fits allEmphasis on status and tenureShort term tactical reactions

A strategic approachAlignment of corporate and cultural objectives Focus on performanceGreater flexibilitySelf managementAlternative career pathsSkill development

HR

REW

AR

DAWAY FROM TOWARDS

15 March 2001

Example Career Paths(Benin & Associates)

Generations and The Corporate Lattice

From Ladder to Lattice

From Linear to Varied paths

The Corporate LatticeCathleen Benko / Molly Anderson

The Corporate LatticeCathleen Benko / Molly Anderson

Ideal Standard International

An (over-)simplified model…

(Major part of)

Company

Region /

Function

STRATEGIC

TACTICAL(Way of working)

OPERATIONAL(people & resources)

Sub-function /Country with

Indirect/ Minor DirectOrganisation Function

Impact Impact

Sub-function /Country with

Direct / MajorOrganisation

Impact

Board

Finance - LegalLogistics - Procurement …

Cluster

Market Intelligence…

Small Country

Quality - TreasuryL&D – …

Major Country

Is it time for another “consideration”?

YES, some employee expectations change (career, work-life…)

YES, some company structures and ways-of-working change (globalization, projects…)

NO, not everything has changed for everyone Need for recognition, clear accountabilities, responsibilities…

Need for a different, yet integrated way of dealing with different “types” of employees, allowing management of and clarity for both “Traditional” and “Individual Growth” type roles

?