Archive for May 10th, 2010

Expert Perspective - Organization Development

The Only Constant Thing is Change

by Joe Davidson 

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May 10th, 2010

Expert Perspective by Grahall’s OmniMedia Editorial Board

In his April 23, 2010 article Organizational Development & Change  Matt Pytosh says he finds “…Change Management to be over used and the new buzz phrase… Organization development (OD) isn’t as catchy. OD is broader and more comprehensive though, and places more value on the humanistic approach versus the economic approach of change management.”

Although we found Pytosh’s article to be a bit of an exercise in taxonomy – simply an attempt to classify various terms in hierarchical structure – we did think it was a good platform for a discussion of how companies approach change and change management.

Clearly a key organizational competency required in today’s world required of companies in every industry and geography is the ability to adroitly address change.  However, one size does not fit all – the approach a company takes to change management should be based upon the company’s business strategy and organizational structure.

We see there being at least 4 different distinct approaches a company can take to deal with change:

1) understand and react to change
2) proactively manage change
3) predict and utilize change
4) create and exploit change

Whatever the approach to change, the outcome must include an assessment of the impact of change on the company’s business strategy, followed by a review of organizational capabilities in light of change, and a realignment of talent management strategies to ensure a better long-term result.

Continually measuring the impact of change on the company’s business strategy helps companies to create an appropriate organizational reaction that might demand a change to the business strategy itself, or require fine-tuning to knowledge management, decision making, communication, talent management,  or a host of other organizational processes and protocols. 

With today’s environment changing more rapidly than ever before, it is important to have a resource of experienced consultants who can work cooperatively with an organization’s management team to identify, understand, interpret, and constructively and positively evolve the organization to not only survive change but take advantage of it.

Contact Grahall, we can help you.

Contact Grahall’s OmniMedia Editorial Board at edie.kignston@grahall.com

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Expert Perspective - Organization Development

Let the Truth be Told

by Joe Davidson 

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May 10th, 2010

Expert Perspective by Grahall’s OmniMedia Editorial Board

We read with great interest the May 3, 2010 press release from Kenexa announcing the finding of their global employee confidence study (Employee Confidence Decreased 8.8% in the First Quarter 2010) saying: “Global employee confidence dropped in March 2010 compared to fourth quarter 2009, according to a recent employee confidence study. The Kenexa Research Institute study found that its employee confidence index score in March was 93.8, a decrease from the score of 98 in Q4 2009.”

These are interesting statistics for countries but we think it is more important to understand if this trend toward globally declining confidence on the part of employees might influence a company’s success and how companies might address issues of employee confidence.
Continue reading “Let the Truth be Told” »

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Expert Perspective - Organization Development

A Teachable Moment

by Joe Davidson 

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May 10th, 2010

Expert Perspective by Grahall’s OmniMedia Editorial Board

In his April 24, 2010 article for the Wall Street Journal (Goldman Puts Spotlight on Self-Evaluations) author Joe Light writes of the recent congressional hearing around the fraud case brought by the SEC against Goldman Sachs:  “Self-evaluations are nearly ubiquitous at corporations and often are used as part of a “360-degree” review process, in which the employee is assessed by superiors, peers, and subordinates… After the publicity of the Goldman case, companies may think twice about keeping them around for so long, say employment experts.”

Rather than wade into the political cesspool that surrounds the Goldman Sachs investigation and hearings; or comment on the ethics, morals or reasonability surrounding Goldman’s approach to hedging bets, we will contain our comments to self evaluations and their place in the HR toolkit.

Self assessments are an important tool in performance evaluations.  First, they have been used with great success to reward individuals whose contributions might go unnoticed by managers and supervisors.  Second, they can assist managers with sometimes difficult performance discussions where the employee’s perception of his performance is not consistent with (and, in fact, greatly exceeds) the reality of his contribution.  

The chance that a self evaluation is made public in a setting like these congressional hearing is what?  One in a million? Or maybe one in 100-million?  With low odds like that, why would companies consider jettisoning a useful and effective tool?  Simply stated, these Congressional hearings around Goldman’s actions should not be the impetus for companies (even for Goldman for that matter) to change their policies around performance reviews or records retention. 

The “teachable moment” here is not to stop self evaluations, but to raise awareness about when these “private” documents can become public, and how the language in these documents might be understood should it be read by an outsider. 

Contact Grahall’s OmniMedia Editorial Board at edie.kingston@grahall.com

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Expert Perspective - Rewards

It is not how big you are, it’s how big you play (John Wooden)

by William Byrnes 

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May 10th, 2010

Expert Perspective by Grahall’s OmniMedia Editorial Board

In his April 2, 2010 article in the New York Times, When a First Pick Isn’t the Best Pick  Richard Thaler writes regarding the NFL draft: “… the teams choosing early in the draft generally don’t, in fact, get the players that provide the most value per dollar.”  He goes on to say that “…the first pick in the draft is, on average, the least valuable in the entire first round.”

He concludes his article with the following: “So, if teams’ ability to select players is only slightly better than flipping coins, should we expect that corporations can do any better in picking their chief executives? “

We found his article interesting and we agree with his premise, but also disagree with his comments and conclusions. 

There is an interesting book by Michael Lewis titled Moneyball: The Art Of Winning An Unfair Game published in 2003 that follows the unique and successful approach used by the Oakland A’s GM Billy Bean to draft players for the Oakland A’s.  Dan Ackman reviewed this book in May 28, 2003 for Forbes  and says: “It has long been an article of faith among fans and team owners–especially small-market owners–that the poorer teams could not compete with the richer teams, at least not for long. The A’s have defied this logic and embarrassed the economic determinists, including Bud Selig, baseball’s commissioner…”

So it seems that ‘paying top dollar for major league baseball or foot ball players can’t guarantee success, but talent management, whether athletic talent or executive talent, is all about the selection process.  And the selection process requires that the GM or Board of Directors know what characteristics are important in the talent they are looking for.  We disagree with Mr. Thaler’s comment that “chief executives hired from outside a particular company have been performing mostly in private.”  In fact, for all CEO’s at publicly traded companies, their performance is essentially reported all day every day with a 15 minute delay on the stock tickers.  That is hardly working in “private”.

Further, most CEO’s or individuals being considered for a position of a CEO are highly seasoned executives.  They have operated in their respective arenas for years and there is little comparison with rookie athletes, whose experience has been on high school and college fields.       

With any selection process, the human factor that influences the ultimate success of a new hire or even of a person newly promoted from within can never be predicted with certainty.  

So with all the unknowns what should Boards consider when looking for a new CEO?  Even though, as Thaler says, CEOs aren’t given IQ tests like NFL draftees, CEOs are certainly hired for their intellect.  But it is much more about the CEO’s ability to apply intellect and skills in the context of that job.  For the CEO it is more an issue of EQ (“Emotional IQ”) than IQ that would help to predict success in that job.    From our experience, great CEOs have certain characteristics: they have a great capacity for vision, they are outstanding communicators, they have experience in high visibility roles, they possess a business acumen and sharpness that permits them to make sound decisions with imperfect information, and they show political savvy and can successfully deal both up and down the chain of command. Perhaps the most important characteristic for CEOs is that they demonstrate outstanding judgment.

All that being said, it really isn’t how much a company pays a CEO that is important, it is how that pay is structured and what behaviors that structure drives.  As we shared in our blog Creating Quality Compensation, when designing CEO pay a company must understand its business strategy: including general, value chain and specific business strategies and align its executive rewards programs with these strategies.

Read more about how to design effective executive compensation on our blogs and in the book Effective Executive Compensation by Grahall’s Michael Graham.

Contact Grahall’s OmniMedia Editorial Board at edie.kingston@grahall.com

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Ask the Expert

Heath Care Reform: What You Need to Know NOW

by Edie Kingston 

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May 10th, 2010

Ask the Experts: Pate Steele, Robert Cirkiel and Todd McDonald discuss ealth Care Reform and what it means for your business

On May 4, 2010 Grahall hosted a webinar on the new heath care reform bills signed into law in March 2010.   Presenters Pate Steele  of Grahall, Robert Cirkiel of UHY Advisors  and Todd McDonald of Aisling Partners  reviewed the main provisions of the reform, discussed the timeline of events and actions required, and shared information and tool needed to respond to health care reform.

Complete recording of the conference call, all presentation materials and other information are available on the Grahall website.  Listen to the conference call (the conference content begins about 6 ½ minutes into the recording) and access the presentation materials.

On March 23, 2010 President Obama signed into Law the Patient Protection and Affordable Care Act, the following week Obama signed The Health Care and Education Reconciliation Act signed into law.  These 2 laws complete the current efforts to enact comprehensive health care reform in the United States.  The scope and impact of the changes are significant making it imperative for  employers to understand the changes in order to meet new requirements, take advantage of new opportunities and optimize plan designs.

The health care reform bills are essentially just frameworks and the requirements will be defined by as yet to be written regulations.  There are important things to know even before the regulations are released. 

1) Determine if you qualify for the small employer health premium subsidy, this tax credit is “free money” to those who qualify.
2) On June 23, 2010 a reinsurance program will be introduced for employers with retiree medical plans that cover early retirees.  The reinsurance program, funded with $5 billion, is intended to cover 80% of “large claims”.  Employers will need to apply. No doubt there will be an enormous rush to apply for these funds. 
3) Determine if you have “grandfathered” plans not subject to some of the otherwise required changes, and if it makes sense to maintain these plans, and what you do and do not need to be concerned with regarding the new requirements.
4) Begin preparing the communications for 2011 enrollment period.  Employers will need to conform with yet to be written regulations and 2011 mandates. AND any material plan changes must be communicated to employees at least 60 days before the effective date (or 10/31/2010 for plan years beginning 1/1/2011) 

There is more insight, material and tools available on our website.  Complete recording of the conference call, all presentation materials and other information are available on the Grahall website.  To listen to the conference call go http://www.grahall.com/knowledge/event-transcripts/.  The conference content begins about 6 ½ minutes into the recording.  To access the presentation materials go to http://www.grahall.com/knowledge/event-transcripts/

Or contact our presenters:

Pate Steele at pate.steele@grahall.com
Robert Cirkiel at rcirkiel@uhy-us.com
Todd McDonald at tmcdonald@aisling-partners.com

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