Your top performer has resigned. Now what?

It’s Thursday afternoon. Your employee asked you for a personal meeting. You’re thinking it will be a quick update meeting. Not quite. Your star performer is handing in their notice.

This is not how most of us want to end their week. Receiving the resignation from your top performer can leave you feeling frustrated. So many thoughts are running through your mind. Just what are you going to do now?

Accept and learn

Take a deep breath. It may feel like the end of the world. It isn’t.

You may experience the feeling of hurt and disappointment. After working closely with your top performer, you’ve trained and developed them and don’t understand why they didn’t open up earlier about their plans. The employee may have had their reasons for not sharing them with you. Or perhaps they did all along and you just didn’t listen?

For now, simply accept their decision and take some time to reflect on it.

(No) counter offers

You may not be that ready to accept their resignation. You may consider offering them a counter offer, generally involving a higher salary and/or exposure to specific work and responsibilities.

Some companies categorically rule out counter offers. Such organisations see counter-offers only as temporary band aids. After all, you shouldn’t stop a rolling stone.

Unfortunately, history has shown that most employees who accepted a counter offer will still leave for the same reasons that made them look externally in the first place. Next time around, the company will not offer another counter offer and the employee will leave for good.

In contrast, some organisations may provide a counter offer for top performers in critical roles or working on time-sensitive projects. For these companies, a counter offer closes the immediate need and buys them more time to find an alternative, knowing the employee may still resign in a few weeks or months.

Before committing to any counter offer with your star performer, check with your company’s process and DOA. How long will it take to reach a decision, including answering these questions:

  • Do you know what would make your employee stay (higher salary, flexible schedule, a different project)?
  • Will you be able to match the external offer? Do you want to match the external offer?
  • If not, what non-financial offerings (e.g. new customer, new responsibilities) can you provide? How will you sell these?

Learn from exit interviews

“Employee leave for more money” used to the be explanation. Study over study shows that compensation is not one of the top reasons. For many top performers, a number of events is leading to their resignation.

Organise an exit interview and understand the employee’s motivation for leaving. Exit interviews are ideally held on the employee’s last working day or after they’ve left the company. This way, they don’t have to fear any repercussion for providing direct and honest feedback.

For any exit interviews held by HR in person, careful attention has to be paid to non-verbal cues. Assumptions and interpreting what the employee may wish to say can be misleading. More and more companies therefore use online exit interviews which protect the employee’s privacy and allow them to speak freely.

Implications for the team

While an exit, whether voluntary or involuntary, can impact the team, the disruption can be limited. This is an opportunity to review the team’s roles, responsibilities, processes and workflows.

Most teams generally anticipate some additional work while a replacement is being identified. During this time, support for the remaining team is crucial or a domino effect may be expected.

Managers can spend more time with each team member and modify work goals. At the same time, take a genuine interest in each employee and also help them achieve their personal goals. It’s the latter that also increases employee engagement, something in high demand especially during these times of change.

Just as current work arrangements are being reviewed, focus on making knowledge sharing and succession planning integral parts of running your business. Being pro-active now can reduce the impact of future resignations.

Create a succession plan where you identify those employees who could immediately step in, even if it’s only for a specific period, and who needs to be prepared within the next 6 or 12 months or longer. Do you have any employees who could be cross trained to reduce your dependencies on one individual leaving? Decide what specific training and exposure they’ll require and then start getting them ready. Depending on the transparency levels within your organisation, you may wish to inform these employees about your succession plans while also carefully managing their expectations.

The replacement

As you’re considering the current team structure, you may decide that a replacement is no longer needed. Perhaps you place this role on hold, profiting from manpower savings and only revisit the potential recruitment activities in a few weeks or months.

Should you have determined that freezing the vacancy is not an option, start thinking about the requirements on the role and the ideal candidate. It can be a challenge finding the perfect successor for your star performer. By understanding your team’s needs, you can narrow down on the must have skills, knowledge and experience. You’ll be able to recognise desirable abilities and traits as a differentiator between two (or more) equally suitable candidates.

You may choose not to recruit for the replacement externally and select an internal candidate, although their profile may not be a 100% match. Such a decision may be linked to your overall EVP and HR strategy, focusing on growing talent internally and reinforcing your company’s stand on internal career progression. You’ll provide the internal candidate with an individualised learning plan, acknowledging the support and training they require from you to become successful in the new role.

Make for a smooth exit

While notice periods vary from role and level within the organisation, motivation generally declines quickly after giving notice. It’s best to start the hand over as soon as your top employee handed in their resignation. Agree which activities need to be completed or to whom they need to be handed by what date. Obtain log in details and passwords. Decide who will notify customers about the individual’s departure. When will that communication go out and how?

If your star performer is in a sensitive role, you may wish to put them on garden leave. If you decide that, how will you extract their knowledge and manage the hand over?

Some individuals may ask to shorten their notice period. As tempting as it is to hold them to the entire notice period, be honest with yourself: How much will they actively contribute 9, 10 or 11 weeks into their notice?

To keep the experience with your organisation a positive one, consider agreeing on an earlier end date, especially if brought up by the employee.

You can ask them to take any accrued but untaken leave days. This will reduce your financial responsibility to pay out any such days. Although it may be hard for you to appreciate it, you are, however, giving the employee some time to relax, finish working for your organisation on a high note and start their new job fresh. It all adds up to a positive image of your company and the employee being an ambassador for your organisation even when they’ve moved on.

Finally, wish them well. You may not want to throw a big farewell party. Yet, you may wish to give them a card and say good-bye with dignity and respect. Cherish the good memories you, the team and your top performer shared.

Don’t be caught off guard when your top performer leaves. Contact us today and learn how we can reduce your organisation’s dependency on a single employee. Don’t be stuck in a crisis mode. Be prepared.

25 ways to recognise your employees without breaking the bank

Employee appreciation goes back to the basic human needs in the workplace and yet, too many companies are wasting time and money on ineffective recognition programmes.

Earning a steady pay check only contributes to the first level of Maslow’s hierarchy of needs, being able to look after one’s basic needs. While working in a safe environment follows, recognition is linked to Maslow’s levels affiliation/belonging and esteem, which fill an individual’s life with meaning. Especially for millennials, purpose-driven work is a must.

When a manager appreciates their employee’s efforts and achievements, it increases the feel good hormone, oxytocin, within the employee. It’s a simple action by the manager with big implications for the organisation. For one, the manager strengthens the organisation’s culture for recognition. At the same time, the employee’s satisfaction, motivation and productivity increases, as Deloitte discovered.

Now, isn’t this something we all want?

“Take time to appreciate employees, and they will reciprocate in a thousand ways.” Bob Nelson

Yet, we still see companies not offering recognition schemes, whether of an ad-hoc or structured nature. Some businesses may quote current market conditions as preventing them from implementing a new appreciation initiative which, as they perceive it, comes with a heavy financial investment. The benefits of more productive and engaged employees, however, should outweigh any concerns.

25 ways to recognise an employee or team

An effective recognition scheme doesn’t have to cost the world as these 25 ideas to acknowledge an employee or team show:

  1. Put a simple sticky note with a personal message on their screen
  2. Thank an employee via email by using one of these 8 templates
  3. Recognise the individual’s or the team’s efforts in meetings
  4. Issue a certificate of appreciation
  5. Pay for a course in the field of one of their personal interests
  6. Announce the “Employee of the Month” and “Team of the Month” during the staff meeting
  7. Provide a travelling team trophy to recognise entire teams
  8. Send a thank you letter to the employee’s family, their family time may have been cut short due to the employee’s time travelling or working extra hours on a project
  9. Publish an article about the employee in the company newsletter
  10. Hand out a wellness voucher which employees can use for a massage, mani-pedi, yoga or spinning class
  11. Shout it from the roof top and post about the employee’s achievements on the company’s social media
  12. Give them a bowl of fruits or cookies
  13. Provide a parking spot close to the entrance, especially during the heat of the summer
  14. Let the employee present to senior leaders and gain exposure to them
  15. Give them cinema tickets for the employee and their family
  16. Name an office, lounge, conference room or any room in your office building after the employee
  17. Create a wall of fame where employees can recognise their peers
  18. Bring in a recognition cake for the team
  19. Offer flexible working hours or extended lunch breaks for a week
  20. Bring the employee their favourite drink for a week
  21. Invite family members to recognition events
  22. Send them to an unexpected training course or conference
  23. Prepare a food hamper to share with their family
  24. Have a senior leader take them out for lunch
  25. Give them time off to volunteer with a charity of their choice, works also well for team bonding

These 25 options can be given on an impromptu basis while recognising the team of the month can become part of the regular staff meetings.

Offering timely recognition, a leader is underlining their genuine belief in the employee’s efforts and achievements, regardless if the employee has carried out an outstanding task or is steadily enhancing their own performance, attitude and behaviour.

When an employee expects to be rewarded, this entitlement neutralises the positive effects of recognition programmes seen above. If no award has been provided, the employee’s attitude may become even sour. They may become disengaged and feel resentful towards their management. By keeping it unexpected, the entitlement mentality can be limited.

Benefit from motivated and engaged employees. Call us on +971-52-2516322 and find out how we can set up an effective recognition programme for your company.

Succession planning – What’s the next role?

If your Finance Director has to be hospitalised, do you know who could take over now? Your top sales person just resigned, who in your organisation could to fill this role?

The departure of a key employee can leave an organisation in a state of uncertainty. Succession planning is the answer to reduce such interruptions and provides stability.

What is succession planning?

Succession planning more than a mere replacement planning. It takes a comprehensive and integrated approach to identifying and growing the talent pipeline to “fill business-critical positions in the future”. It identifies the next generation of leaders and has also become a common tool to tackle skills shortages.

As both small and large businesses need to ensure business continuity, succession planning can be seen as a form of risk mitigation. Preparing and developing existing employees for their next internal move can reduce potential disruptions to the daily operations and reduce the financial loss caused by an employee’s departure or unavailability of talent.

Lay the foundation

It’s all about the role. Dave Ulrich reminds us that succession planning doesn’t start with people. “It starts with the requirements of the position.” While some companies focus solely on the top of their house, others go down deeper in their organisation and cover every role. A third approach is to address only business-critical positions. Any organisation will therefore need to decide its very own approach to success planning.

High potential employees vs. all employees. Focusing on high potential employees for succession purposes allows companies to provide very targeted development opportunities. In times where budgets may be limited, this may appear as the appropriate way of making the most of such constraints.

To not be restricted to a small group of employees, most companies consider all employees for their succession planning. This sets the basis for a fair review of previous performance.

Companies need to keep in mind that not all high performing employees also have the potential and/or aspiration for a higher level role. They may, however, be a potential candidate for a lateral move.

Internal vs. external candidates. For some companies, succession planning is closely linked to talent management and only internal candidates will be considered for senior roles. Existing employees are already living the organisation’s culture and values and technical expertise can be taught.

While an external candidate may bring a fresh perspective and new skills, they may not fit into the team, potentially taking the company back to square one.

The individual’s readiness. Organisations need to differentiate the employee’s readiness to take on a new role. This review illustrates the organisation’s internal talent pool and simultaneously the training and preparation requirements for each role.

The immediate readiness would be for emergency covers on a temporary basis or for a start in the new role today. Medium-term readiness could be around 12-18 months while a long-term successor, e.g. for a senior role, may require 3-5 years. It’s been reported that the former CEO of McDonald’s, Jim Skinner, coached and prepared his successor Don Thompson for almost 7 years. The preparation for GE’s current CEO, John L. Flannery, who took over in August 2017, was started in 2012.

Top management support. In a crisis, decision making often concentrates on immediate needs rather than strategic and sustainable solutions. To benefit the most from succession planning, top management needs to own this process and align it to the long-term objectives of the company. Their expertise will also need to be shared as part of the internal coaching and mentoring.

Not having the right talent in house can substantially influence the organisation’s competitiveness, potentially to the point of not being able to stay in business at all. Which company can afford this?

Integrate succession planning with core HR programmes

Insights from the performance discussions. Moving away from the dreaded performance reviews, line managers are urged to give more timely feedback. The continuous conversions provide an opportunity to review an employee’s behaviour, attitude, skills, knowledge, experience and talent (BASKET).

They can further learn about the individual’s career aspirations, although not every employee may have the trust in their line manager to honestly share their ambition.

The more an organisation understands their employees’ BASKET and career goals, the more can this be reflected in the succession planning. Under the traditional approach, an employee may not have been considered for a position while the additional insights also highlighted transferable skills of the individual, making them a suitable candidate.

Identify gaps. Reviewing the requirements for the identified future roles, an employee may have certain BASKET gaps. The regular feedback and the structured performance discussions can be used to reveal these while constructive 360-degree-sessions can be utilised for a more holistic assessment. After all, an employee will not only work with their line manager but a variety of individuals. Based on these gaps, HR can prepare a customised development plan for the employee.

Provide development opportunities. Whether this is by coaching, mentoring, training and special assignments, companies should utilise all development channels and can apply the 70-20-10 model. Here, 70% is linked to experience, for example gained from stretch goals or working on certain assignments or taking the lead for a particular project. 20% of the individual’s development comes from coaching, mentoring and knowledge sharing with others and the remaining 10% from formal training programmes or webinars.

The training and development initiatives for the future role should be integrated into the regular learning activities as arranged by HR and the current department.

If no central training system is used, the company needs to ensure the effective usage of resources. Communication between HR and the current department needs to be smooth to avoid booking the same training course twice.

Regular succession reviews. For smaller organisations, succession planning and performance management may be done on post-it notes stuck on a white board. This works for some.

However, for an organisation that wants to be more efficient, agile and/or grows, a home grown succession and skills database, tied together with performance and training elements, may be more appropriate.

For larger organisations, specific and integrated succession planning modules from vendors like SuccessFactors, Workday or Saba may be more suitable.

Depending on the organisation’s industry, an annual succession planning meeting will not suffice. Review meetings on every 3-6 months may be more appropriate.

Start your succession planning today

Succession planning reinforces an organisation’s commitment to their employees. It shows the company’s investment in employee development and creates career paths upwards and sideways.

Hiring from within the organisation can be a cost-effective recruitment tool. Internal candidates have already proven their cultural fit and can be acquire the missing skills and knowledge through a personalised development plan.

Overall, succession planning prepares an organisation for the unexpected and gives the company stability and sustainability required during disruptive times.

Can your company afford not to implement succession planning? We prepare organisations for the unforeseen by creating customised HR solutions fit for their business now and in the future. Contact us and find out how we can support your company.

What’s happening in compensation and benefits this year?

As every year, Informa hosted the 2-day-long Compensation and Benefits Forum in Dubai last week. For us, it was an opportunity to reconnect with former colleagues, meet new friends and share the latest compensation and benefits trends with you!

The employer trends report

Prior to the actual event, we supported Informa in creating their 2018 employer trends report. Participants reported being challenged by the fluctuating economic conditions across the region. As such, 20.36% of participating companies are planning to implement modest pay increases of up to 3.5%. In contrast, 6.04% of participants are proposing increases of 6.0% or higher in 2018.

The labour market is currently in favour of employers, yet, there’s always an opportunity for high performers. More than half of participating companies are experiencing an attrition rate of 5.0% or less while almost 1/5 of participants report over 10.0%. It was surprising to find out that over 11% of companies are unaware of their attrition rates.

The implementation of VAT (value added tax) has also kept rewards professional busy. For most companies, no special adjustments will be made for salaries or benefits. Employers are taking the view that VAT is part of life and the burden cannot be taken off employees’ shoulder. This comes as a mindset change. Historically, this region has provided various allowance like housing, transportation and schooling to help (expat) employees with the cost of living.

2018 challenges

2018 offers to be an exciting year. Conservative and innovative approaches need to balance business needs and employee expectations. Participants reported the following three areas as the most important ones on their agenda:

  1. Increased employee engagement
  2. Manage cost
  3. Retain employees

The challenges are interlinked and are no longer answered by HR Business Partners or HR Generalists alone. Rewards professionals are being asked to create solutions to complex HR topics.  Some of the attendees at the Compensation and Benefits Forum described their challenges as “thrilling”, “not sure how to manage everyone’s expectations” and “a big step towards where we should be”.

Automated analyses

AI is everywhere these days and HR can no longer hide from it. Yet, not every company is prepared or ready for the digital transformation. Mohammad Salman Hashim from Nielsen suggested taking a data-driven approach for your rewards spend. Before starting, look internally and take stock. Which reports are currently available and which ones of these do you utilise?

Hashim advised to review these reports critically. Many HR Generalists still struggle to interpret the data and need to become more comfortable dealing with numbers. Nonetheless, reports can be set up with insufficient segmentation which can obscure the story for HR Generalists.

A regular activity for rewards professionals is to simulate various scenarios. To advise any business leader, they need to be given a full overview of options and the long-term impact of each proposal. For Hashim, this area is where HR and rewards teams can contribute substantially to the business: Predicting the impact before taking any actions. Business leaders can be stopped making a decision based on gut feeling that may end in financial loss or reputational damage.

Short-term incentive (STI) schemes

Discussing the regional application of STI schemes, Dr. Sabeeh Ghugharia, Regional Corporate Human Resources Manager at Mediclinic, emphasised the need to include the patient (or customer) experience to the performance matrix. The traditional components like company sales and individual performance can no longer be the driving factors in the bonus equation.

Sachin Bajaj, Head of Performance & Rewards, NEMEA at Takeda Pharmaceuticals, took it even a step further. Instead of offering a convention STI, he proposed employees opting for up to 100% bonus. While this is more common for sales roles, it would be a radical move for support staff. Companies would need to improve setting realistic targets and enabling employees to be able to reach their goals when implementing such an approach.

For most attendees, this was an approach too far out of the box for them to warm up to. Nevertheless consensus in the forum was that every employee should be incentivised for the part they play in an organisation’s success. STI schemes may need to become a profit sharing schemes for roles where the direct impact may be harder to measure. With that, the forum recognised the importance of incentives to engage and also retain employees.

Sustainable rewards

Oluyomi Okunowo carried on with this thought and he sees STI schemes as a cost-effective way to manage change. As STI schemes only pay out when results have been achieved (i.e. self-funded), the STI design can thus become inspiring and targeted while optimising its spend.

All too often, it’s the individual who gets rewarded on their own merits. Their interactions with other team members may not be fully taken into consideration during the STI design. To optimise the STI spend, Okunowo suggested a renewed focus on team-based initiatives.

Consistency

Consistency is key in 2018. Companies are required to create more strategic approaches to their rewards and overall HR activities. While economic conditions are favourable for companies, this may change and employees will dictate the rules. Organisations are to build employee loyalty now, as Okunowo urged. “How will you get loyalty when 40% of Americans will be Gig employees by 2020?”

Are you set to tackle the 2018 challenges in your company? Call us on +971-52-2516322 and find out how we can help you optimise your rewards programmes to engage and retain your employees while balancing your company’s budget.

Maximise a limit merit budget

For many organisations in this region, the 2018 merit rounds will bring new challenges. As in other parts of the world, merit budgets are limited while employees are experiencing a rise in cost of living. Since 1 January 2018, VAT has been added to most areas of our life. Employees have already asked last year how companies will compensate them for these increases?

Most companies still wait and see what other companies are doing and are planning to provide a merit increase only. Any cost of living increases may follow at a later stage. With budgets already set for many organisation, companies can still be creative and maximise a limited merit budget by using one or a mixture of the following course of action:

  1. Peanut butter approach
  2. Differentiation by performance
  3. Targeted increases
  4. Lump sum awards

The peanut butter approach

The peanut butter style provides the same percentage increase to every employee. It is generally taken by organisations wanting to give an equal increase to cover the employees’ cost of living, especially since the implementation of VAT. While managers are not involved in the process and no additional calibration and approval meetings, the process is reduced substantially. HR and Payroll can implement the new salaries almost instantly, freeing up resources for other projects. However, such increases become a mere cost of living adjustment rather than a merit increase.

Differentiation by performance

Companies may want to support their performance-driven culture by linking it to financial rewards. These organisations provide different increases for the different performance ratings. In general, a low performing employee would receive no increase or only a minimal one. In contrast, the efforts, achievements and behaviours of high or top performers are recognised with merit increases equivalent to 2x or 3x of the budget.

An effective performance management system is a pre-requisite for any pay-for-performance programme. While some companies set a fixed increase for each performance rating, the trend is to enable managers to determine the increase from a range. In the latter case, a realistic timeframe needs to be set for managers to provide their recommendations and calibration before the increases can be communicated to employees and executed by Payroll.

Targeted increases

Similar to differentiated increases by performance, organisations can provide targeted increases for certain employee groups. This could be for critical roles which create value in, for example, improved quality, financial performance or customer satisfaction. They could also be of a strategic impact where roles are linked to the organisation’s capability to maintain and strengthen its position. Other employee groups could include high performances, high potentials, individuals on the succession plan, hard to replace or employees with hot skills or those low in the salary range.

Knowing which roles, skills or individuals should be focused on, HR and management can identify an appropriate merit increase. For simplicity, all increases to the identified groups can be of the same amount (peanut butter approach), yet, such increases may not lead to the desired motivation boost amongst the workforce. Should the company wish to differentiate between these groups, the proposed merit increase can be distinguished based on certain factors, like the contributions made to the organisation and the implications and risks of leaving. This process, however, can easily be over-engineered, leaving to a lengthy planning and implementation period which, at times of a limited merit budget, may be counterproductive.

Lump sum awards

As merit increases not only increase the current salary, they also add costs to other salary-linked elements like bonus, end of service benefits, pension or social security contributions. For companies to control the rising long-term cost implications, lump sum amounts can be paid.

Even here, companies have options around the payout: For all employees or just specific employee groups. A flat amount or varying amounts based on a points system (e.g. for performance or criticality of the role or individual).

Each approach has pros and cons as explained above and HR teams need to their overall objective when identifying the appropriate one (or a blended one) for their business. Linking it to the company’s culture is as important as getting top leadership buy in before communicating the chosen way to management and consequently employees.

When facing financial challenges, companies win by communicating a transparent overview to their employees. It helps to manage employees’ expectations and reiterates the company’s philosophy for success. Line managers need to be supported by HR and be prepared to communicate potentially harder messages to employees not receiving any pay increase.

HR teams together with line managers should also look at non-financial rewards to recognise, motivate and retain while being challenged by a limited merit budget.

Do you want to ensure your limited merit budget achieves the desired outcomes? Are you uncertain about which approach is the right one for your company? Call us on +971-52-2516322 and find out how we can help you maximise your merit budget motivating and engaging your employees.

What’s happening around performance reviews?

Last year, the HR world saw large organisations like Deloitte and IBM abandoning their traditional performance management system. Instead of forcing managers to rate their employees, these companies switched to a rating-less review focusing on continuous feedback throughout the year.

At the 21st Compensation & Benefits Forum held in Dubai last week, the topic of performance management formed a large part of the agenda. How are companies getting on with their new performance management systems? Is it working for them? What lessons have been learnt? Attendees were all too curious to find out what happened over the last 12 months.

The performance management arena is still changing and no one solution has been found to fit all organisations. Performance management is still closely linked to the maturity of the organisation’s HR team and the culture of the business, as Madhur Mehta, Lead-Global Compensation Centre of Excellence at Western Union pointed out.

Managers are still as uncomfortable to have performance discussions with their staff as before.

HR teams are recognising the need to empower line managers to provide feedback to their employees. Moreover, they see the need to equip line managers with the tools to lead challenging conversations with their staff. While many organisations are training managers on a regular basis, these sessions don’t always make managers feel more comfortable having difficult performance discussions.

A training designed by Corporate HR may not take into consideration the local challenges. HR and the business need to speak the same language and the training courses need to represent this. Understanding the learning needs of line managers, HR teams may need to customise the training sessions, communication and tools to enable all line managers. Potential translations into Arabic, French and potential other languages may also be required, depending on the demographics.

Aggregate scores are used to provide fairer ratings.

Aggregate scores are a new trend. Rather than providing one rating at the end of the performance year, some organisations have introduced frequent discussions and are requesting ratings after each conversation. Throughout the year, the employee’s performance will have been rated 6-12 times, resulting in one aggregate score for the entire year.

For both manager and employee, this concept appears to provide a fairer evaluation. Often, the manager and the employee frantically review their emails in preparation of their year-end assessment and seem to focus only on the last few weeks, maybe months. The aggregate score removes this and allows for a consistent review and rating.

The number of ratings has been reduced to an even number.

Organisations like Abu Dhabi Commercial Bank (ADCB) have reduced the levels within their rating system, for example from 5 levels to 4 levels. Many managers use the middle rating as a safe and solid option. Moving to an even number, managers need to “make a decision” on their employee’s performance, as Susan Cunning, Head of Reward Design & Policy at ADCB, pointed out. They can no longer hide behind a rating in the middle of the spectrum.

Ratings are replaced with descriptive texts.

Moving away from numeric ratings, businesses have introduced descriptive texts of the employee’s achievements and improvements. Organisations that have applied this approach found line managers increasing constructive feedback, helping the employee to enhance their performance with specific actions.

HR teams are looking to optimise the effectiveness of the process.

Questions around the validity of KPIs led companies to remove traditional goal setting from the process. They’ve discovered that, despite all their training efforts, goals were not well defined, making the evaluation and measurement more challenging, as Samir Bajaj, Global HR Director at Cola-Cola commented. The exception remains the sales force.

Understanding the time required for performance discussions and documentations, HR teams are looking at software solutions to enhance the effectiveness of their performance management system. Applying a holistic view, HR teams are searching for possibilities to remove the natural dislike by both line managers and employees towards performance management and are identifying technological advancements to reduce the administrative work required for both customers.

Performance management and rewards have been delinked.

Too little differentiation between top, average and low performers has been found in this region. It does no longer warrant the many hours spent by line managers, senior management, HR teams and Compensation & Benefits teams during the annual merit and bonus cycle. Instead of looking at a forced distribution curve which then feeds into the actual merit increase or bonus payout, some companies are arguing for flat merit increases.

Differentiation of performance and the consequent rewards need to happen on new levels. Examples are spot awards during the year, training opportunities or special assignments and career advancements.

The findings from this year’s Compensation & Benefits forum highlight the moving state of performance management systems. The topic is still evolving with no clear solution for all organisations in sight. It further showed the importance for each organisation to identify the right approach for them. What may work for one business, may not be suitable for another.

You’re not happy with your performance management and are you looking to enhance it? Contact us and find out how we can create a programme fit for your company and culture.

Time to audit your HR function

The beginning of a year provides a great opportunity to conduct an HR audit. New laws and regulations often take effect on New Year’s Day. While companies may have some time to update their documentation, policies and procedures, you’ll need to be compliant with legislation or risk being fined.

Your HR team can carry it out on its own or, preferably, work with the internal QA team or an external consultant to obtain objective results. Working with a checklist and predefined evaluation criteria, the findings from the HR audit offer unbiased results. You have the chance to identify the strong policies, processes, procedures and, more importantly, the areas in need for improvement. Simultaneously, it lets you step back and review how closely your strategy is reflected in your operational work.

As you prepare for the audit, define which areas you want to check. Examples can include:

  1. Personnel files: Is the electronic or hard copy personnel file complete? Do you have all required visa and work permit documentation? Do you have all contracts signed by all parties and filed? Have performance evaluations and any related documents, e.g. warning letters, been recorded and filed?
  2. HR policies: Are your policies in line with the latest changes in labour law, immigration law, data privacy law or civil law? Do any of your policies stand in contraction to each other? Have all policies been written and, as a next step, been communicated to the employees?
  3. HR procedures: Are your procedures in line with your policies? Do the written procedures reflect the actual execution of them?
  4. Payments: Working together with your Payroll team or provider, have salaries, allowances, bonuses and commissions been paid by the required dates and as per the applicable plans? Do the number of overtime hours match the hours worked as per the time keeping records? Has overtime been calculated in accordance with the legal requirements and internal premiums?

HR audits need to be carefully planned and the auditors require the appropriate training to define the current state. Due to the time requirements, it may only be conducted at one point once a year. Some companies prefer to audit throughout the year, focusing on one particular area in each month (e.g. HR policies in January, salary payments in February and so on), thus keeping the impact on the daily operations low.

Once the findings have been gathered and analysed, you can identify any gaps and prioritise the corrective actions, if and as needed. The most important actions are to correct violations of the law and health and safety. These two areas can attract financial fines as well as imprisonment. Address HR inefficiencies and implement best practices once a solid foundation has been put in place for your HR team. This may mean (re-)training your team on getting the job done right the first time by understanding the required steps in the process, leveraging technology and applying their strengths.

Are you concerned that your HR operations may no longer be compliant with the labour law? Don’t have the time to create an HR audit from scratch? Call us on +971-50-5516322 and find out how we can support you to reduce risks of being fined while increasing your HR team’s efficiency.

Are you ready to communicate your total rewards?

Companies are spending hours and weeks on defining the total rewards philosophy that’s right for them. Yet, how much time is spent communicating it to all employees? Do your employees even know how much they receive in cash and non-cash elements?

In 2016, 53% of companies reported that most of their employees do not understand how base pay is determined (Willis Towers Watson). Do you know whether all your rewards programmes are understood or even known by all of your employees?

A clear and easy to understand communication strategy can increase the comprehension of your various rewards programmes amongst your employees. Follow these 5 steps to create an effective communications plan for your company:

  1. Define the goals for the communication initiative. Are you looking to increase general awareness about your existing rewards programmes? Are you rolling out a new benefit and want your employees to become more familiar with it?

  2. Be clear about the objectives. Refer to them throughout the process and measure your progress and achievement regularly.

  3. Identify all audiences. This goes from your top executive team to all levels below. Don’t forget to include spouses and other family members who will have an interest in programmes like medical benefits or retirement provisions.

  4. Working in a multi-cultural region, is every employee (and family member) fluent enough to understand the message in your working language? Do any messages need to be translated into other languages? Factor any translations into your budget and timeline.

  5. Articulate key messages and outline actions employees need to take. Review your messages and ensure they are consistent, concise and clearly written. Stick with either British or American English and proofread the messages before they’re sent out. Check that none stands in contrast to your EVP or any other HR programmes.

  6. If you’re asking employees to take any actions, specify what needs to be done by whom how and when. Provide details of who to contact for any support.

  7. Determine the most effective communication channels and the timing of the delivery. Consider the different channels you have available within your office and global organisation. These could be town hall, team or individual meetings, webinars and online training, newsletters, intranet and emails, to mention just a few.

  8. Select the channels most appropriate for the specific employee group. For a new employee, the new employee orientation may be the right place to start whereas for existing employees, performance reviews can be utilised.

    Line managers are a great channel to spread the news about the different rewards programmes. Provide them with a solid understanding of each programme and enable them to confidently answer any questions from their employees.

    The same message should be delivered through multiple channels and on a regular basis to maximise its effectiveness. Don’t stop after sending out one email! Keep the communication flowing throughout the year.

  9. Utilise total rewards statements. Total rewards statements illustrate the employee’s personalised total rewards provided by the company. They generally include a table showing the before and after a salary review details and/or a pie chart for all rewards elements. The employee’s manager can issue these and answer any questions directly.

Looking to overhaul your total rewards communication in 2017? Not sure how best to approach it? Call us on +971-50-5516322 and find out how we can establish a unique communication strategy for you.

Total rewards philosophy – Have you defined yours?

When was the last time you reviewed your total rewards philosophy? Or does your company belong to the 39% of companies without a formal, written philosophy, identified in World at Work/Aon Hewitt’s report (August 2016)?

The total rewards philosophy outlines the organisation’s intent of what and how to reward its employees – the total package. It drives and rewards the behaviours and competencies required to achieve the organisation’s goals, creates a framework for rewards decisions and provides corporate governance.

You can benefit from a well-defined philosophy in several ways. It supports the attraction of qualified talent, motivates your employees to behave and achieve the highest performance levels and retains employees as they move throughout their career life cycle.

To define your new or redefine your existing total rewards philosophy, start with these steps:

  1. Work with your leadership team to understand the organisation’s strategy, key objectives and company culture (including desired behaviours and competencies)
  2. Create and align the total rewards philosophy to best serve these interests
  3. Ensure the total rewards philosophy is also aligned to other HR strategies (e.g. talent management) and doesn’t contradict the organisation’s EVP
  4. Determine the desired competitive position (e.g. the percentile) within the chosen competitor set, considering also any financial constraints
  5. Create the optimal rewards mix for each employee group and possibly differentiated by job category
  6. Layout how each element will be earned (e.g. performance driven, individual vs group incentives).

Creating the unique rewards mix for your company can be one of the hardest steps. World at Work has developed a total rewards inventory outlining the various cash and non-cash rewards companies may offer. You can use this inventory as a starting point to select the appropriate elements for each employee group:

  • Compensation: The base/basic salary, premium and variable pay for the services rendered by the employee
  • Benefits: The non-cash rewards provided to the employee in addition to their compensation although with a financial value and cost for the company
  • Work-life effectiveness: The policies and programmes designed to help the employee achieve balance between work and (home) life
  • Recognition: The acknowledgment of the unique contributions, display of the desired behaviours or the value of expertise and experience of an employee or a team, contributing to the company’s success
  • Performance management: The continuous process ensuring the employee’s performance contributes positively to the business objectives and success
  • Talent development: The opportunities and tools for employees to advance their skills and competencies in both their short- and long-term careers.

While you are creating or updating your total rewards philosophy, use this checklist from the Society for Human Resource Management (SHRM) to ensure a high-quality and effective total rewards philosophy:

  • Is the overall total rewards philosophy equitable?
  • Are the programs included in the philosophy and policy legally compliant?
  • Is the overall philosophy defensible and perceived by employees as fair?
  • Is the overall philosophy fiscally sensitive?
  • Are the programmes and initiatives fair, competitive and in line with the TR philosophy and policies?
  • Can the organisation effectively communicate the philosophy, policy, programmes and initiatives to all employees?

Learn how you can successfully communicate your total rewards philosophy to your employees in our December newsletter.

Are you ready to formalise your total rewards strategy or to redefine your existing one but don’t know where to start? Call us on +971-50-5516322 and find out how we can create, enhance and implement a total rewards strategy fit for your organisation.

Where’s your performance management heading to?

With only 3 months left in the year, companies are preparing to close the last quarter on a high note. Managers are also getting ready for the oh so dreaded year-end performance discussions with their employees. Or are they really?

Companies like Deloitte and Microsoft have set a new trend towards cutting-edge performance management. The traditional approach was rather static and focused on the past with managers looking at the employee’s performance during a mid-year and a year-end conversation. Business leaders were stuck in admin work and had to label their employees with a rating often made to fit a forced distribution curve. Companies found little alignment to their strategic objectives and their pay-for-performance philosophy.

This criticism has forced a shift from traditional performance management to cutting-edge performance management which sets to achieve:

  • Greater forward-looking and strategic alignment
  • Improved behaviours and skills without forced labelling
  • Increased motivation for and true differentiation of high performance
  • Objective and meaningful conversations with the employee.

Continuous and timely feedback
Employees, especially Millennials, require more feedback than that given during the traditional mid-year and year-end performance discussions. Sheila Heen acknowledges 3 types of feedback: Appreciation, coaching and evaluation.

Giving real-time feedback, managers can recognise employees on the spot or pinpoint a problem and guide the employee when resolving it. Employees can now also adjust their behaviours, leading to improvements and increased efficiencies.

Assessment of the potential to grow and develop
Managers now also evaluate the potential of an employee and identify which skills they’ll need to acquire to drive the company forward. Performance management becomes forward-looking and specific plans for formal/informal training, coaching and mentoring can be established for the employee as a result.

Minimised low-value adding admin work
Companies can utilise ERP systems to reduce the time required to collect feedback from other people or to document the performance review. Managers are freed up to prepare in depth for an individualised conversation and make the review discussion much more meaningful for the employee and them.

Transparent processes
Knowing which behaviours are valued by the company and lead to increased performance, the employee can also see a clear link between their performance and their rewards.

This link between pay and performance has also been maintained by 80% of companies with rating-less appraisals. Here, managers have been given more discretion in the distribution of their merit and bonus budgets.

Empowered managers
Top executives lead the adoption of the cutting-edge performance management, yet, front-line team leaders, supervisors and managers need to be trained and empowered to make it a successful transition. HR teams need to equip the business with the tools to evaluate performance, provide feedback and make fair pay decisions.

While cutting-edge performance management is a relatively new approach, initial studies show a positive impact on performance and rewards. Clear improvements have been found in the way top performers are rewarded and also in the differentiation of pay based on performance.

Are you looking to raise your performance management to the next level but aren’t sure how? Contact us and find out how we can create a programme fit for your company and culture.