Most "Cost of Living Increases" are woefully mismanaged.
I get questions frequently on annual payroll increases. This year, 2008, the national average is hovering around 3.9%. You can see my article, same subject, for more detail.
A company, however, simply cannot continue to increase payroll in a vacuum.
All businesses can increase prices. And frankly, all businesses must do so on a regular basis. "Readily" and "successfully?" Depends on how they've been managed to that point.
Prices must rise, or companies go out of business. No organization can -- successfully -- continue to give pay raises each year, and absorb other inflationary costs, without raising prices, or finding a corresponding (or greater) reduction in operating costs.
Those businesses without a larger strategy lay off and "cut back" first; they eventually, however, increase their prices.
Margins must be maintained over time -- no other way about it. Even in commodity and/or intensely competitive environments.
So, given a 3.9% increase in total payroll costs, what should you do with that?
My payout recipe...
** Identify my top 10%. They'll see 7-10% increases in pay.
** Average to "below top 10%" will see around 3-4%.
** Below average will get coal in their stocking. Those improving will be comforted, those declining can pound sand.
Frankly, and this is something of a different way of thinking, I know, but... I can argue that average performers don't really deserve more money, unless market ranges have truly shifted -- and you should know that "market" ranges do not move lock-step with inflation, CPI, or any other such economic driver.
If we had the courage to consistently pay "at," or even better, "slightly above" market, then average performers are already correctly paid, and should only be adjusted when we adjust market-based ranges in total.
Of course, like all performance and reward issues, this can't be done in a vacuum, but needs a process in the organization to support it, including performance management, development, and front-end expectation-setting.
But that's just me...
KB
Kevin Berchelmann
www.triangleperformance.com
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 D. Kevin Berchelmann View my profile here |
Thursday, February 28, 2008
Saturday, February 23, 2008
Smart Coffee
So, Starbucks, the "evil empire," is having a training day.
Actually, it's more like a training half-day, but its the principle that's so interesting.
Starbucks Coffee is shutting down all 7,100 (yes, that's seven thousand) of its stores, keeping all 135,000 "baristas" on the clock, to do some necessary, in-house employee training.
I can't begin to calculate the real costs; it must certainly approach or exceed $10,000,000. Easily.
And you're agonizing over a few thousand dollars to provide some sorely-needed development to some key managers???
The company said these educational sessions will "provide a renewed focus on espresso standards" and will "transform" the customer experience.
In other words, they'll do some technical training as well as some learning on customer service, customer satisfaction, and in all likelihood, some mix of communications skills.
Many call these "soft" skills. I think not -- especially since it's these very skills that define a customer's experience.
So, it's not the millions of dollars in costs I mentioned above; the return on that investment is so much larger. Consider that their employees are now better trained (read: "more productive"); trained, likely, by a consistent message across the company; and no one can possibly doubt Starbuck's focus on employee development and customer satisfaction.
To paraphrase Mark Twain:
"The news of training's death has been greatly exaggerated."
Even if a triple-venti, non-fat, no-whip mocha does cost $4.35.
KB
Kevin Berchelmann
www.triangleperformance.com
Actually, it's more like a training half-day, but its the principle that's so interesting.
Starbucks Coffee is shutting down all 7,100 (yes, that's seven thousand) of its stores, keeping all 135,000 "baristas" on the clock, to do some necessary, in-house employee training.
I can't begin to calculate the real costs; it must certainly approach or exceed $10,000,000. Easily.
And you're agonizing over a few thousand dollars to provide some sorely-needed development to some key managers???
The company said these educational sessions will "provide a renewed focus on espresso standards" and will "transform" the customer experience.
In other words, they'll do some technical training as well as some learning on customer service, customer satisfaction, and in all likelihood, some mix of communications skills.
Many call these "soft" skills. I think not -- especially since it's these very skills that define a customer's experience.
So, it's not the millions of dollars in costs I mentioned above; the return on that investment is so much larger. Consider that their employees are now better trained (read: "more productive"); trained, likely, by a consistent message across the company; and no one can possibly doubt Starbuck's focus on employee development and customer satisfaction.
To paraphrase Mark Twain:
"The news of training's death has been greatly exaggerated."
Even if a triple-venti, non-fat, no-whip mocha does cost $4.35.
KB
Kevin Berchelmann
www.triangleperformance.com
Tuesday, February 12, 2008
Just wanna have FUN!
I was recently asked by a junior colleague about how to make some required (read: “sleep-inducing”) training “more fun.” As someone who facilitates leadership development, I get this sort of thing frequently.
Unfortunately, the answer is NOT clown noses, gag gifts, and kooshie balls (is that how you spell that??).
Fun CAN be part of training, but it takes a highly skilled trainer to have both sufficient subject knowledge and adequate facilitation skills to pull it off effectively. "Being funny" in front of a room doesn't equate to making a training event meaningful.
”Funny” or “entertaining” is never a goal, merely a method of reaching a learning objective -- which should always be priority one.
Interactive exercises – in small groups – are a valuable method for learning, as long as the exercise is truly relevant and the debrief brings it together well. Don't know about "fun," per se, but these can be lively, interactive, and engaging.
The better your personal knowledge and facilitation skills (including awareness of why/how we learn), the easier it becomes to add, modify, and create on your own.
Might not be a laugh-a-minute, but you’ll leave them learning, and hopefully reasonably awake…
KB
Kevin Berchelmann
www.triangleperformance.com
Unfortunately, the answer is NOT clown noses, gag gifts, and kooshie balls (is that how you spell that??).
Fun CAN be part of training, but it takes a highly skilled trainer to have both sufficient subject knowledge and adequate facilitation skills to pull it off effectively. "Being funny" in front of a room doesn't equate to making a training event meaningful.
”Funny” or “entertaining” is never a goal, merely a method of reaching a learning objective -- which should always be priority one.
Interactive exercises – in small groups – are a valuable method for learning, as long as the exercise is truly relevant and the debrief brings it together well. Don't know about "fun," per se, but these can be lively, interactive, and engaging.
The better your personal knowledge and facilitation skills (including awareness of why/how we learn), the easier it becomes to add, modify, and create on your own.
Might not be a laugh-a-minute, but you’ll leave them learning, and hopefully reasonably awake…
KB
Kevin Berchelmann
www.triangleperformance.com
Friday, February 8, 2008
Do what we do...
Nestling warm and sleepy in your company, like the asp in Cleopatra's bosom, is a department whose employees spend 80% of their time on routine administrative tasks.
Nearly every function of this department can be performed more expertly for less by others.
Chances are its leaders are unable to describe their contribution to value-added except in trendy, unquantifiable and wanna-be terms - yet, like a serpent unaffected by its own venom, the department frequently dispenses to others advice on how to eliminate work that does not add value.
It is also an organization where the average advertised salary for professional staffers increased almost 14% last year...
I am describing your human resources department, and have a modest proposal:
Why not blow it up?
- - Thomas A. Stewart, Fortune, 1/96
Above is just an excerpt of one of my favorite articles on Human Resources value (and sometimes lack thereof.
"Let's blow the sucker up."
So, if the true value in organizations today is really people -- and all that entails -- doesn't it make sense to drastically change HR?
For example...
1. Send payroll and benefits administration to finance. Maybe even including benefits plan design, though likely outsourced. Hell, outsource the whole enchilada.
2. Give Safety to Facilities or Maintenance or someone like that. It's a mundane, compliance-focused commodity.
3. Teach managers to manage, and abolish any HR functional "employee relations." This is one of the most insidious functions within human resources, and functionally torpedoes a line manager's accountability.
4. Give legal issues and strict compliance to legal (or "law" department). Or, create an administration department, many larger organizations have them, and let this sort of administrivia reside there.
Keep talent management and compensation as core HR functions. Talent management includes key hiring, sourcing, recruitment, development, succession, etc. Then, HR folks, get good at those things necessary to create real value within your organization.
Or, we could always go back to blowin' the sucker up...
KB
Kevin Berchelmann
www.triangleperformance.com
Thursday, February 7, 2008
How much do we have to pay??
This is a common question, when considering compensation. The key here is not so much "how much," but remaining consistent with your approach.
In compensation parlance, this is called your "compensation philosophy," and includes a consideration for wanting to lead, lag, or match the market in general. In other words, do you want to -- generally -- pay more than the market median, less than that median, or pretty close to exactly that market median.
Seems simple, right? Well, the real answer, of course, is typical for human capital questions... It depends.
If you need cutting edge, high-in-the-food-chain talent, you simply must consider paying more than typical market rates. It doesn't need to be much more, but it does need to be reasonably apparent.
If you don't really need rocket scientists, and the learning and acclimation curve for new hires is minimal, and/or you can offer something else of significant value to employees & candidates, then consider paying something less than market rates. Your recruitment efforts will need to be more rigorous, and your selection criteria must be sound, but many organizations do this with some degree of success.
If you are like most organizations, then simply attempt to match general market compensation rates. The issue here, of course, is that compensation -- and likely total rewards -- will not be a competitive advantage for you; you'll need to realize that lots of people are competing for the exact talent that you'll attract.
The key isn't really which philosophy you choose, it's making sure you understand the impact and benefits of that choice, and have processes that allow you to succeed within those parameters.
Just keep your eyes open, and expectations reasonable. That's all I'm sayin'...
Cheers,
KB
Kevin Berchelmann
www.triangleperformance.com
In compensation parlance, this is called your "compensation philosophy," and includes a consideration for wanting to lead, lag, or match the market in general. In other words, do you want to -- generally -- pay more than the market median, less than that median, or pretty close to exactly that market median.
Seems simple, right? Well, the real answer, of course, is typical for human capital questions... It depends.
If you need cutting edge, high-in-the-food-chain talent, you simply must consider paying more than typical market rates. It doesn't need to be much more, but it does need to be reasonably apparent.
If you don't really need rocket scientists, and the learning and acclimation curve for new hires is minimal, and/or you can offer something else of significant value to employees & candidates, then consider paying something less than market rates. Your recruitment efforts will need to be more rigorous, and your selection criteria must be sound, but many organizations do this with some degree of success.
If you are like most organizations, then simply attempt to match general market compensation rates. The issue here, of course, is that compensation -- and likely total rewards -- will not be a competitive advantage for you; you'll need to realize that lots of people are competing for the exact talent that you'll attract.
The key isn't really which philosophy you choose, it's making sure you understand the impact and benefits of that choice, and have processes that allow you to succeed within those parameters.
Just keep your eyes open, and expectations reasonable. That's all I'm sayin'...
Cheers,
KB
Kevin Berchelmann
www.triangleperformance.com
Customers DO Matter...!
So, last night, I took my wife and daughter to Gratzi's italian restaurant in Spring, Texas.
Now, some of you may know... I decided late last year to finally get my physical fitness under control. What that means to me (30lbs. since November 15, thanks), is just be realistic. I exercise, reduce my portion size, don't do anything colossally stupid, and I never withhold something I really crave.
Well, this night, I wasn't particularly 'craving' anything, and didn't want to do anything 'colossally stupid,' but I just couldn't find a good way to do that. I mentioned that to our server, who promptly brought out the chef to discuss.
Richard White is both the owner and chef at Gratzi's (yes, yes, I know that's not the italian spelling, but it IS the restaurant's name); he arrived at our table, discussed my concerns, and offered several options -- none of which were even close to "on the menu."
He "gets it."
It's not that I had "special needs," or something. Frankly, it wouldn't have been the end of the world had I just ordered some available dish off the menu, and avoided those things I didn't want on the plate.
Instead, I left their delighted, versus simply satisfied. He saw a customer need, knew he had a solution he could pull off, and did so. Almost matter-of-factly.
Richard White "gets it." We'll be back, that's for certain.
Does your management staff "get it?" If so, great! Tell 'em they do, pat 'em on the back, and continue... If not, teach them to "get it," or whack 'em, reload, and start over. Good clients and customers are hard to find, and easy to lose.
KB
Kevin Berchelmann
www.triangleperformance.com
Now, some of you may know... I decided late last year to finally get my physical fitness under control. What that means to me (30lbs. since November 15, thanks), is just be realistic. I exercise, reduce my portion size, don't do anything colossally stupid, and I never withhold something I really crave.
Well, this night, I wasn't particularly 'craving' anything, and didn't want to do anything 'colossally stupid,' but I just couldn't find a good way to do that. I mentioned that to our server, who promptly brought out the chef to discuss.
Richard White is both the owner and chef at Gratzi's (yes, yes, I know that's not the italian spelling, but it IS the restaurant's name); he arrived at our table, discussed my concerns, and offered several options -- none of which were even close to "on the menu."
He "gets it."
It's not that I had "special needs," or something. Frankly, it wouldn't have been the end of the world had I just ordered some available dish off the menu, and avoided those things I didn't want on the plate.
Instead, I left their delighted, versus simply satisfied. He saw a customer need, knew he had a solution he could pull off, and did so. Almost matter-of-factly.
Richard White "gets it." We'll be back, that's for certain.
Does your management staff "get it?" If so, great! Tell 'em they do, pat 'em on the back, and continue... If not, teach them to "get it," or whack 'em, reload, and start over. Good clients and customers are hard to find, and easy to lose.
KB
Kevin Berchelmann
www.triangleperformance.com
Wednesday, February 6, 2008
SHERM's got bucks...
A recent article in Workforce magazine revealed that the Society for Human Resources Management, or SHRM (pronounced "SHERM"), is a $95M enterprise with -- better sit down -- almost $170,000,000 in financial reserves! $170M buckos.
That ain't chump change.
Yet here we are, 2008... and the vast majority of the profession still spends time and emotional energy on why managers can't do this, why they 'must' do that, and telling the shop guys to take down their girlie calendars.
Not that these things don't have some value. They do. It's just that, if we're hanging our hat on compliance, don't be surprised when we start looking like buggy whips to senior managers.
It may be necessary, but that doesn't mean it adds value.
Now, with all those benjamins, SHRM could help with the profession's reputation... why don't they? I visited SHRM's message board the other day (infrequently), and someone asked, "Isn't it senior HR folks' job to coach and train newbies?"
To that, I responded:
"...isn't it our job to help coach the newbies...?"
Nope, it's not.
I may do exactly that a lot of the time, but I do it because I want to -- it's not my responsibility to coach or train them.
Further, if SHRM has expectations that we'll do that, all the more reasons to have significant, separate resources available for those in a senior capacity...
SHRM obviously has incredible resources. Would like to see those really used to advance and truly *promote* the profession (not the association, necessarily), and for Pete's sake, either shore up the sometimes-dubious image of our certifications or quit promoting the need.
It seems that the association is more in a revenue-generation mode -- ALL the time -- and never really in the "support and give-back to the membership" mode.
Maybe just me... but I expect that of a professional association.
And membership growth and financial reserves doth not a successful association make. Seems there should be additional criteria for a not-for-profit, mission-driven organization...
So, SHRM... how about sharing the wealth with the people who made it for you? Do something big and bold for the profession. We need profession leadership, not association growth for growth's sake...
At least, to my way of thinkin'.
Cheers,
KB
Kevin Berchelmann
www.triangleperformance.com
That ain't chump change.
Yet here we are, 2008... and the vast majority of the profession still spends time and emotional energy on why managers can't do this, why they 'must' do that, and telling the shop guys to take down their girlie calendars.
Not that these things don't have some value. They do. It's just that, if we're hanging our hat on compliance, don't be surprised when we start looking like buggy whips to senior managers.
It may be necessary, but that doesn't mean it adds value.
Now, with all those benjamins, SHRM could help with the profession's reputation... why don't they? I visited SHRM's message board the other day (infrequently), and someone asked, "Isn't it senior HR folks' job to coach and train newbies?"
To that, I responded:
"...isn't it our job to help coach the newbies...?"
Nope, it's not.
I may do exactly that a lot of the time, but I do it because I want to -- it's not my responsibility to coach or train them.
Further, if SHRM has expectations that we'll do that, all the more reasons to have significant, separate resources available for those in a senior capacity...
SHRM obviously has incredible resources. Would like to see those really used to advance and truly *promote* the profession (not the association, necessarily), and for Pete's sake, either shore up the sometimes-dubious image of our certifications or quit promoting the need.
It seems that the association is more in a revenue-generation mode -- ALL the time -- and never really in the "support and give-back to the membership" mode.
Maybe just me... but I expect that of a professional association.
And membership growth and financial reserves doth not a successful association make. Seems there should be additional criteria for a not-for-profit, mission-driven organization...
So, SHRM... how about sharing the wealth with the people who made it for you? Do something big and bold for the profession. We need profession leadership, not association growth for growth's sake...
At least, to my way of thinkin'.
Cheers,
KB
Kevin Berchelmann
www.triangleperformance.com
Tuesday, February 5, 2008
What's this "empowerment" stuff?
There are two fundamental styles of leadership: Controllers and empowerers. Now, I always hesitate to say that "Controllers" are bad, and "Empowerers" are good.
It's just not that simple.
Sometimes, even the best leaders find themselves in a controlling 'mode.' Perhaps a deadline snuck up on them; perhaps there's been previous errors in decision-making or judgment. Maybe it's a safety issue or a true urgent need.
Whatever. Anyone who lives in a production, quantity and time environment, will eventually find themselves in a Controlling mode sometimes. The key isn't to bemoan the fact; it's to realize what we're doing and get out of that mode as quickly as possible.
Always remember: when in a Controlling mode, you may be accomplishing an immediate task, but that's all you're doing -- satisfying the moment. You are not developing your folks, so the problem that caused this urgency will be back.
And you'll have to decide again...
Pay attention to these things. They matter.
KB
Kevin Berchelmann
www.triangleperformance.com
It's just not that simple.
Sometimes, even the best leaders find themselves in a controlling 'mode.' Perhaps a deadline snuck up on them; perhaps there's been previous errors in decision-making or judgment. Maybe it's a safety issue or a true urgent need.
Whatever. Anyone who lives in a production, quantity and time environment, will eventually find themselves in a Controlling mode sometimes. The key isn't to bemoan the fact; it's to realize what we're doing and get out of that mode as quickly as possible.
Always remember: when in a Controlling mode, you may be accomplishing an immediate task, but that's all you're doing -- satisfying the moment. You are not developing your folks, so the problem that caused this urgency will be back.
And you'll have to decide again...
Pay attention to these things. They matter.
KB
Kevin Berchelmann
www.triangleperformance.com
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