The Journey to World-Class Leveraging Best Practices Compensation Administration Presented to: Lawson Software, Inc. / City of Columbus, Ohio William Bacote Manager The Hackett Group March 27, 2008
Objectives and Expectations § Examine current process efficiency, effectiveness, and structure § Understand current gaps to best practices, and service delivery model considerations through examination of Hackett Best Practices § Begin the development of a best practices scorecard Page 2 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Best Practices Defined: A Hackett-Certified Practice is a proven technique that delivers measurable value § § § Aligns with strategy Reduces costs Improves productivity Promotes timely execution Enables better decision making Leverages existing and exploits emerging technologies § Ensures acceptable levels of control and risk management § Optimizes skills/capabilities of the organization § Promotes collaboration across the extended enterprise Hackett’s Best Practices are certified when there is a correlation with world-class performance metrics Page 3 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Best Practice Scorecard Best Practice A description of each Hackett best practice for this process No Usage Current Practice Usage Now | Future End-State Vision Applicability | Coverage Comments A description of current utilization of this best practice Strong Usage Applicable Yes Adoption of the best practice is in line with current/future business needs No Best practice does not fit the current business needs Coverage High Widespread impact on the enterprise and/or significant value-add Medium Impacts multiple areas, value-add is significant but less relative to processes ranked as High Low Impacts a single area of has limited span of adoption throughout the enterprise Comments Statements pertaining to the technology enablement, policy enactment and other challenges and/or prerequisites associated with improving the utilization of the Best Practice Page 4 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Best Practice Session Page 5 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration – Process Overview Process Definition – The process of administrating and executing all compensation, including hourly, salary, commissions, and executive; in accordance with organizational policies, business practices and government regulations Major Activities § Collection, coordination and maintenance of the required knowledge, skills, and abilities – Job credential establishment and evaluation – Administration of Merit Review Program – Job Analysis / Job Evaluation § Support position and skills pricing – Establishment, tracking and execution of temporary labor pay practices § Communication and implementation of annual pay programs – Administration and training support for new compensation programs – Management reporting specific to Compensation administration § Administration of all compensation including – Administration of all fixed and variable elements (e. g. base pay, commissions, bonuses, stock options, and allowances) – Administration and execution of hourly, salaried, expatriate and executive compensation – Administration of relocation – Administration of stock options § Page 6 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Review – Summary Results Item Count % of Total Best Practices Reviewed 29 N/A Best Practices Deemed “Applicable” 16 55% Best Practices Fully or Mostly In Use at City of Columbus 3 19% or Best Practices Partially in Use at City of Columbus 5 31% or Best Practices Seldom or Not In Use at City of Columbus 8 50% Page 7 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Comments
Compensation Administration – Best Practice Assessment End-State Vision Usage Best Practice Current Practice Now | Future Applicability Yes–No Coverage H–M–L Comments Position descriptions and job evaluations are available online, accessible by managers and employees HRCA 002 No; class specs only (similar to job description) Class specs has general duties for all positions within the spec. , available to anyone. EPC (position description) is available online to dept. HR. Yes M Provide online access to managers & employees. Number of traditional job descriptions greatly reduced or eliminated, standardized by job function and families HRCA 016 Yes, number of job descriptions have been reduced and standardized. 646 class specs for 9 k ees. Yes L Maintain current best practice. Update of job descriptions performed online with the use of automated approval and workflow HRCA 013 EPC updated electronically upon vacancy or when duties change with approval & electronic signature. Yes M Expand to all positions and interface with CHRIS Page 8 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration – Best Practice Assessment End-State Vision Usage Best Practice Current Practice Direct link created between job-description preparation and job evaluation process to maintain consistency in performance expectations HRCA 004 Yes, there is a link between job description preparation and job evaluation process. Workflow N/A due to council approval and BU negotiations. Standardized job evaluation process developed with skills/competencies templates for business and HR managers to create new positions and assign job levels based upon evaluation process results HRCA 003 Now | Future Applicability Yes–No Coverage H–M–L Yes L Request comes to Yes CSC from mgr/director for a new class. Interview (CSC/comp) with dept. reps to define duties/qualifications/K SAs for new class. Present to commission for approval. Comp receives prior to approval. Comp uses spec to determine level and recommend pay/grade assignment to labor relations. Page 9 Negotiated with Document Name – HRCA_Assessment appropriate bargaining © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Comments Requires consistent job evaluation process & policy M Skills & competencies are standard across the business. Develop standardized templates for use. City sees use as being low.
Compensation Administration – Best Practice Assessment End-State Vision Usage Best Practice Current Practice Applicability Yes–No Coverage H–M–L Comments Online, secure, role-based access developed for viewing current and historical compensation data by employee and management chain HRCA 007 Historical compensation data is available to dept HR but not mgrs. Have started definition of reporting structure. Yes H Move toward ESS and MSS for viewing. Will require set up of reporting structure. Proposed promotions, demotions and grade changes input online by line managers into central application repository using Manager Self Service provided through HRMS HRCA 010 This handled by dept. HR. This is a paper process. No H Not envisioned. Variable compensation plan developed based on business and individual performance results and implemented in conjunction with performance evaluations HRCA 001 N/A. No variable compensation plans. Now | Future Page 10 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration – Best Practice Assessment End-State Vision Usage Best Practice Current Practice Applicability Yes–No Coverage H–M–L Comments Online modeling capability utilized to evaluate financial impact of compensation/merit reviews upon area of budget responsibility HRCA 011 No, any evaluation is done manually using spreadsheets. Limited reporting to assist with financial impact. Yes H Desire for modeling. Requires online access for depts. Budget information must be available. Online, secure access to compensation data in place, including budgets, forecasts and past history HRCA 014 Yes for comp data, not for the rest Yes M Access to historical budgeting and forecasts within HR system. Must work with finance for budget and forecast information. Online system established for line managers to implement merit-pay increases and automatically verify against predetermined criteria HRCA 009 No merit is not budgeted. Yes H Budget for merit increases. May want for division level but not line managers. Begin process to identify needs and training for division. Now | Future Page 11 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration – Best Practice End-State Assessment Current Practice Now. Usage Applicability Vision Best Practice Comments | Future Coverage Yes–No Approved merit/market increases are automatically loaded into the HCM system and flow into payroll as base pay HRCA 008 No, approved on paper (multiple steps) and entered manually. Manager self-service provided through the HCM system is available through all levels of the managerial hierarchy to view target bonuses and define goals for reaching different levels of bonus payout HRCA 033 Yes N/A Manager self-service N/A provided through the HCM system is available through all levels of the managerial hierarchy to document performance against bonus goals and recommending a specific bonus payout related to that performance Page 12 HRCA 034 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. H–M–L H Workflow and interface into payroll.
Compensation Administration – Best Practice Assessment End-State Vision Usage Best Practice Current Practice Approved bonus payments are automatically loaded into payroll HRCA 035 No, only longevity pay is automatically loaded. Single point of contact established for all stock option related queries HRCA 028 N/A Stock option agreements are delivered to employees and accepted electronically using workflow and electronic signatures HRCA 037 N/A Internet-accessible selfservice provided to employees for viewing option history, balances and exercising vested options HRCA 040 N/A Now | Future Applicability Yes–No Coverage H–M–L Comments Yes H Automate for all bonus types but maintain audit function prior to pay. Page 13 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration – Best Practice Assessment End-State Vision Usage Best Practice Current Practice Commissions are calculated, verified and reported on through an HCM system module or a separate solution that interfaces with the HCM system, depending on requirements HRCA 041 N/A Employee and manager self-service is available through all levels of the managerial hierarchy to view performance against sales goals and the expected commission payout related to that performance Page 14 HRCA 029 Applicability Yes–No N/A Employee self-service provided to view commissions guidelines and sales goals HRCA 042 Now | Future N/A Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Coverage H–M–L Comments
Compensation Administration – Best Practice Assessment Best Practice Current Practice Usage Now | Future End-State Vision Applicability Coverage Yes–No H–M–L Approved commission payments are automatically loaded into payroll HRCA 043 N/A Relocation administration is centralized or outsourced to a third party vendor HRCA 021 Centralized. Previously had to receive council approval but policy has been proposed. Yes Employee relocation expense claims submitted online HRCA 018 No No Single point of contact established for all international assignment / expatriate queries HRCA 020 N/A Comments Expatriate services are N/A outsourced to 3 rd party Page 15 vendor (e. g. relocation, Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is benefits and taxation) prohibited. L Need to implement policy. Use would be small
Compensation Administration – Best Practice Assessment End-State Vision Usage Best Practice Current Practice Now | Future Applicability Yes–No Coverage H–M–L Comments Integrated service capability established for all international assignment/expatriate activities (e. g. relocation, domestic residence management, compensation, benefits and taxation) HRCA 017 N/A Total target compensation stored by component of pay, including salaries, bonuses, commissions, allowances, etc HRCA 039 No, separate components stored in pay history. Yes M HRMS with standard fields that support components of pay for bonuses and recurring payments. HR generates reports for management to compare and analyze total target compensation versus actual compensation by component of pay HRCA 030 No Yes M Standard & ad-hoc reporting related to components of pay. Page 16 Document Name – HRCA_Assessment © 2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
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