Success Criteria for Your Classification and Compensation Study
By Jim Fox and Bruce Lawson, Fox Lawson & Associates, A Division of Gallagher Benefit Services, Inc.
Question: We will be starting a
project to overhaul our classification and
compensation system. As we plan for
the project, we want to establish criteria
by which we can measure success. Do
you have any pearls of wisdom for us
that would help us define success for our
classification and compensation study?
CompDoctorTM: You have
asked a very insightful question. With
capital projects, success can easily be
measured through completion of the
project on or ahead of schedule and at
a cost that is within the established
budget. Whether the project was needed
is not really an issue since the decision
to move forward with the project, be it
construction of a new highway, a new
park, a new building, a flood control
project, or even a major reconstruction
effort, was probably based on the need
for the project. When you take on projects
like a classification and/or compensation
study, things are not quite as
tangible since the physical product is
often a report. And the implementation
of the report will affect every employee
in the organization.
While you can certainly use the basic
criteria of completion on schedule and
within budget, we think these criteria
may be the wrong way to measure
success. Rather, we believe that a key
success measure is: did the study
accomplish what you wanted it to
accomplish? Or, put another way, did it
solve the problems that gave rise to the
study in the first place? From our
perspective, success can, and should,
be measured in a variety of ways, as
follows:
Why did you undertake the project in
the first place? We have addressed
the issue of why an organization
should undertake a review of its classification
and/or compensation
program in prior columns. We suggest
that you review our column on determining
whether your system is out of
whack that was published in 2006 as
a guide to addressing this issue.
Determining success has to start with a definition of your problems
and/or issues. Simply stated, one
cannot determine success if you have
no idea where you are going.
Were stakeholders involved? One of
the biggest problems that we
encounter is that many organizations
attempt to conduct classification
and/or compensation studies as
administrative activities that are
solely the realm of human resources.
The fact that changes in classification
and compensation programs seem to
be of considerable interest to
employees, operating managers, executives,
policy makers, and, dare we
even breathe the word, the general
public, tells us that stakeholders
need to be involved if a project is to
be completed successfully. The
degree of involvement will vary but
our last column addressed this issue
in terms of the composition of a
project steering committee. While
stakeholder involvement through the
steering committee is critical to
overall project success, there clearly
needs to be greater involvement of
the various stakeholders if the project
is to have a successful outcome. This
does not mean that you are negotiating
a solution to your problems or
issues. For those agencies that have
unionized workforces, you will ultimately
need to negotiate or at least
meet and confer with the affected
employee organizations over implementation
of some of the recommendations
coming out of the process. However, the negotiations should be
on implementation issues and not the
study process or the data that is
produced through the study.
Do stakeholders understand why the
changes that have been proposed are
necessary? Organizational change is
always a challenge. Change that
affects people directly is even
tougher, especially when one is
addressing something as personal as
the job classification structure and
individual position allocation into a
new or revised class structure. Add to
that the issue of pay and we are
dealing with two of the most delicate
parts of the human anatomy: egos and wallets. When dealing with organizational
change, we have found that it
is imperative that the stakeholders
understand from the very beginning
the problems you are trying to
address and why they need to be
addressed. In the private sector, there
are currently numerous organizations
that are undergoing major change.
Just look at the travel industry.
Consolidation of airlines resulting in
integration of workforces is a good
example of organizational change that
has been very difficult for many stakeholders.
The auto industry had
different problems to address but
major changes were needed for the
various companies to survive.
Nevertheless, in both instances, one
party may feel that it should be kept
whole and that may or may not be
possible, depending on the situation.
When stakeholders create barriers to
change, the success of the change
initiative is jeopardized, along with the
outright success and/or survival of
the organization. Without involvement
of the stakeholders in the process,
though, the likelihood of failure will be
much more likely than if stakeholders
are involved throughout the process.
The important thing to remember is
that there needs to be a balance. If
you are looking for peace, love and
harmony, as well as full acceptance of
the changes by all stakeholders, then
you should either stop the process
before starting or consider instituting
a substance abuse testing program
for the decision-makers, as this
simply will not happen. Understanding
what and why changes are needed is
one thing. Full acceptance and
support of the changes is another.
To what degree are you able to implement
the changes that are proposed?
Many of the changes that come out of
a classification and/or compensation
study may be implemented by administrative
action.
That is often the case
with agencies that do not have formal
civil service systems that require
approval of any changes to a classification
system or changes in the classification
of individual positions. When independent bodies, such as civil service commissions are
involved, they need to be kept in the
loop from the beginning regarding the
need for the changes that are being addressed. Clearly, if the policymaking
body for the agency, such as a city
council or county board, has adopted
a classification and compensation
philosophy and strategy that spells
out the type of system that is
needed, then this becomes less of
problem. On the compensation side
of the equation, you may need to
negotiate or meet and confer on the
implementation of changes to the
manner in which pay is delivered.
Depending on the number of
bargaining units involved, and the
degree of change that is needed, this
may require a multiyear strategy to
achieve the desired results.
Did the changes that are proposed
address the issues that caused you to
do the study in the first place? The
first issue that we addressed above
is making sure you know what issues
you are trying to address. At the end
of the day, you absolutely need to be able to say that you did address each
issue and that you have addressed it
one way or another. If the problem
was big enough to tackle in the first
place, you certainly need to be able
to show how it was addressed.
Simply throwing up your hands and
saying that there is no solution is
simply not going to be acceptable to
those who agreed up front that you
had a problem.
So, now you know how to determine if
you have led a successful project. The
point we are trying to make is simply
that completion of the project on
schedule and within budget is not a realistic
way to measure success. Rather,
you may have had a successful project
even if the project takes longer than
planned and/or goes over budget
because you elected to take the steps
necessary to involve stakeholders
throughout the process. You will note
that involvement is not the same as
agreement. It also does not mean that
you have to negotiate with the participants.
It also does not mean acceding
to the will of individual employees who may or may not understand all of the
issues involved. What you want to
achieve is participation and understanding
of issues and solutions by the
key stakeholder groups. If you do that,
we believe that you will be well on your
way to being successful. Getting the
study results implemented, so long as
you address the issues that you defined
at the beginning of the process, will
then result in a successful project.
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