Archive for November, 2010

Overcoming Fundamental Problems When Recruiting

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Expert Perspective by Grahall’s OmniMedia Editorial Board

We couldn’t help but chuckle when we read in Joe Light’s November 15th article for the Wall Street Journal (Keeping ‘Overqualifieds’ on Board) that Sayed Sadjady, who leads PriceWaterhouseCooper’s talent management practice, hired  “…some candidates, who would have secured high positions in a better economy, at lower levels instead.  Now…the company is revisiting the compensation, positions and development opportunities of [these] employees to bring them in line with the improved market.”

Shame on you Sayed for hiring people at the “wrong“  compensation level. And no wonder his “…clients [have] become concerned about overqualified hires looking to move to higher-paid positions…”).

Too often companies make four fundamental errors when recruiting:

1) They waste scare resources.
2) They fail to hire workers who are as committed to the company as the company is to them.
3) They forget that not all employees need to be long-term employees.
4) They disregard the fact that “the workforce” has changed.

Smart companies know that compensation is neither the right magnet nor the right glue to attract and retain workers.  Certainly it plays a part, but too often companies waste too much of their scarce resources – time and money – on workers who don’t boost competitive advantage.  Those positions that move the organization toward its goals are considered mission critical or “competitive advantage” positions. With competitive advantage positions, it is important to look for the best candidates and, more often than not, spend more than the market’s average in compensation dollars.

As is perfectly illustrated in the challenges faced by companies who hired workers at too low a salary, companies fail to search for candidates who are both right for the company and vice versa.  Based on our experience, a mutually rewarding outcome demands that the company hire candidates who are the best fit for the job.  Those candidates likewise  feel the company is the best fit for them.

Employees will continue with a company for as long as it feels “right” to them, and often not a moment longer.   Employers will retain workers for as long as they provide value, and not a moment longer.
Because of this, it is more appropriate to consider whether job candidates can and will make a meaningful contribution during their tenure, rather than worry about what that tenure might be.

For the majority of companies, there is no longer a single “workforce”.  There may be 10 or even 100 different workforces that are aligned like layers of an onion.  A uniform planning, management, rewards system or communications program will not work in this complex environment. 

In summary, organizations are made up of all types of “tissue,” and workers are akin to the specialized cells of these tissues. It is important for companies to think differently about how to recruit, motivate and retain these unique workers.  It’s not easy and will likely require continual review and improvement to HR tools. But it is not only the way of the future, but the way of today.

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

Filed under: Expert Perspective - Organization Development



Pay for Performance is More than Pay for Shareholder Return

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Expert Perspective by Grahall’s OmniMedia Editorial Board

Several articles were published in the Wall Street Journal drawing from the Journal’s Survey of CEO Compensation conducted by the Hay group.

The articles all tout the fact that CEO pay is up (according to the survey) but so too is shareholder return.  As Joann Lublin writes in her article Paychecks for CEOs Climb, “The chief executives of the largest U.S. public companies enjoyed bigger paydays in their latest fiscal year, as share prices recovered and profits soared amid the country’s slow emergence from recession.”  Is this really “pay for performance” as the articles seem to suggest or is a “rising tide lifting all boats”?

Our experience suggests that “pay for performance” requires looking at executive compensation in three ways: 
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Great Corporate Governance Starts with Capable Directors

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Expert Perspective from Grahall’s OmniMedia Editorial Board

Joanne Lublin’s article in the Wall Street Journal, Using a Board Seat as a Stepping Stone, quotes Susan Stautberg, co-founder of OnBoard Bootcamp as saying potential director candidates should “…downplay their usual aggressiveness during board interviews because a director must be a good listener…Boards value teamwork, diplomacy and collaboration as well.”

In our experience, the best directors are more like supreme court judges – good questioners first; good listeners second.  Unfortunately, some Boards seem to be the embodiment of the proverbial “Three Wise Monkeys,” unwilling to recognize anything damaging or detrimental in the decisions and actions of management. 
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Putting a Price on Corporate Governance: Does Your Board Add To Your Value Chain?

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Expert Perspective from Grahall’s OmniMedia Editorial Board

We noticed that the Forum for Corporate Directors recently hosted the “7th Annual Directors’ Institute to Prepare Directors for Change in the Boardroom by Addressing the Consequences of New Governance Policies”.  According to the press release, the 2 day conference was to focus on “the most timely and critical issues facing today’s boards of directors.”   Quite frankly we were pleased to see that one of the panel topics was “Do You Really Have the Right Board?”  We think that if boards truly asked themselves this question, the answer for many companies going through change would be a resounding “NO”. 
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To Get the Right Person for the Job, Recruit the Right Way

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With American workers changing jobs and companies many times over in the course of their working lives, recruiting is a mission critical job for every company.   It may seem that in these days of widespread unemployment recruiting is as simple as hanging out the help wanted sign.  But the truth is that with many people out of work the job of identifying and hiring the best and the right person for a job can be more, not less challenging.   Many ccompanies find that posting open positions can bring hundreds of resumes and wading through these can be both time consuming and fraught with challenges.  Additionally, there is no guarantee that the perfect candidate can be found in that mountain of paper.

So with recruiting becoming more and more important and with significant associated cost of employee turnover and replacement, what can a company do to effectively manage this process?
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In His Own Image: How Competency Models Compel Uniformity

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Expert Perspective by Grahall’s OmniMedia Editorial Board

Creating, promoting and nurturing diversity in the workplace has long been a focus of human resources efforts.  Whether its religion, race, gender, cultural or lifestyle differences, we agree that all enhance the work environment.   Why then do performance review, talent management review and leadership competency models inevitably reflect only the qualities, traits and characteristic of the current leaders? 
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Get Going Whether Times are Tough or Not: Manage Headcount Regardless of the Economy

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Expert Perspective from Grahall’s OmniMedia Editorial Board

The Great Recession, Economic Recession, Economic Crisis, or whatever you want to call it has (as Robert Samuelson said in an article for the Washington Post: The Great Recession’s Stranglehold)  “…changed American psychology, politically, economically and socially.”  Not only have individual psyches been impacted, but also the “functioning psyche” of companies changed as a result of the dramatic and persistent downturn.     These changes will certainly be long term and very possibly permanent. 

Many companies have weathered the challenges of the economic downturn by focusing on the bottom line: carefully evaluating expenditures to ensure the greatest ROI, outsourcing and off shoring non-essential services, reducing headcount and utilizing contingent and temporary workers.  These adjustments have helped many companies stabilize and even increase profits in these difficult times.    The question remains why did it take the most significant financial crisis of the past 70 years to get companies to take these logical steps? 
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Making Lemonade out of Lemons: Occidental Changes its Exec Compensation Plan

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Expert Perspective by Grahall’s OmniMedia Editorial Board

The Editorial Board read with interest the October 29, 2010 Edgar-Online article Occidental Petroleum tweaks executive compensation policy that indicated that “The company plans to use more long-term incentives to compensate its top executives. Specifically, it will rely on so-called Total Shareholder Return (TSR) Incentives, which grant bonuses to executives based on how Occidental’s stock performs relative to those of 12 peer companies.”

A little background – Occidental’s top executives (in particular Messrs. Irani and Chazen) have long been among the highest paid executives in their industry, if not in the world.  Critics have argued its rewards programs have dramatically overcompensated Mr. Irani in particular.
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On the Brink: Boards’ Responsibilities and Roles

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Expert Perspective by Grahall’s OmniMedia Editorial Board

For companies facing bankruptcy, there is usually plenty of blame to go around and plenty of individuals on whom it should be smeared.  The Tribune Company, however, seems to have more than its share of reprehensible characters in its executive ranks, coupled with a Board of Directors that seems unwilling or unable to make swift decisions that would benefit the company. 
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Don’t Get In a Twist About Human Capital Turnover

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Expert Perspective Form Grahall’s OmniMedia Editorial Board

Jon Picoult made some sensible points in his recent article published in the New York Times (Here Comes a Turnover Storm) but in a few important ways he missed the boat.  No doubt there will be turnover when the job market picks up and perhaps most of that is due to employee discontent. But more importantly, before people  begin leaving (because they always do), a company should design its reward and retention programs to hold onto those, frankly, very few, who are the most important to the company. These few, in most cases not more than 15% of the workforce, are those individuals who contribute to the competitive advantage the company offers. 
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Filed under: Expert Perspective - Rewards