Usually I would look to publish a piece like this one on my remuneration blog, however as I discovered this issue while reviewing employee data I think it’s relevant to post here. I gained this experience while working for a subsidary of a large multinational, I had a position which was split between HR data and remuneration. In this particular organisation three short term incentive (STI) levels existed, one targeted at general employees (the bulk of the workforce), one targeted at senior managers, and finally one which was exclusively targeted at executives. Without delving too far into the remuneration side (I will be covering STI weightings in a future post on my remuneration blog) the three STI’s had three internal weightings: individual performance, group/division performance, and finally organisational performance. With the weightings applied differently across the three employee groups, for example an executives have far more ability to influence company performance than a typical employee does, while a senior manager has less ability to influence the organisational performance than an executive, but far more ability to influence overall performance of a group or division than a typical employee.
However in viewing the data some significant inconsistencies presented themselves, a number of senior managers had been placed on the executive STI program. A key aspect of motivating employees through goal setting is that the goals must be achievable for the individual for whom they are set. By placing senior managers against an STI which rewarded their ability to influence something which was beyond their roles (whole of organisation performance), the company had unknowingly reversed their STI from a potential motivator of performance to a potential demotivator.
On finding this error discussions were entered into with the Head of HR and reworked remuneration packages were offered and accepted by those impacted. The key to this experience however, is that without the review of data being carried out, the chances are that this error would have gone unsee for at least another incentive round before they were discovered.
Being able to review organisational data on mass provides the analyst with the opportunity to see patterns, not typically picked up when viewing the data on a single employee in isolation. Social sciences has appreciated the power of mass analysis for the past forty years, forgoing the historical single subject experiments in favour of statistically powerful large scale experiments or observational/correlational studies.
Unfortunately, what I see often in HR teams is practitioners focusing on the individual, rather than determining if the incident is firstly an isolated case, or if it is more widespread. This need to determine the scope of the issue is not to undermine the importance of working with employees (who are of course key clients of human resources), but rather to acknowledge that different approaches to problem solving are applied depending on the scale of the issue. Often times I’ve been brought in to assist with scaling a solution, only to determine very quickly that had the scale of the issue first been determined, then the applied solution would never have been considered.
Recently I was working with an organisation on some training initiatives they wanted, the managers I was working with knew it was needed – they had the grassroots understanding of the needs of the organisation. What they needed however to complement and support this grass roots understanding was hard data, so I got the call. An interesting organisation, employing primarily university educated professionals, with a good demographic spread in regards to age (some other areas I need to help them with, but I might cover than in another post). However, the good spread of ages within the organisation hid an alarming fact – a fact which is lurking in many organisations. Over the next five years this particular organisation can expect to lose 30% of its workforce purely through retirement, the baby boomers preparing to leave the building as they say, and once it starts organisations like this will bleed employees faster than they can comprehend.
Solutions are not easily applied, outsourcing wont work, the industry has specific skill shortages which are only getting worse (this is before the baby boomer exit is taken into account – these shortages are also not just local, there are global skill shortages in this profession). One would consider that the pending exit of employees would be a focus of the organisation? Actually no, no its not. The issues are meaty, they’re challenging, the organisation is competing for university graduates that can earn more in other jurisdictions or indeed in other professions. But the largest challenge, the single largest challenge to gain some traction on this issue? The people that are leaving are also the ones who make the decisions in this organisation, the 30% that are leaving through retirement comprise of most of the executive, most senior managers, and many of the senior advisers within the organisation. As Nicolas Cage so aptly put it in Lord of War, ‘those that know don’t care, those that care don’t know’. When I speak to people about this, they either think I’m joking, or simply shrug and admit its a concern – unfortunately that’s where the concern starts and ends.
For those who aren’t patient of course, this exit has already started. In the city I mostly work in, I can cite an example of a very senior member of an organisation who declared his intent to retire. This intent was common knowledge for sometime (read: months of advance notice) before they departed. This organization went for four months before they were able to find an acting replacement, literally a couple of months latter the individual came out of retirement to assist the organisation in their old role. The organisation was incredibly lucky that they managed to attract this person back from the golf course and beach front, however being lucky is not a business strategy. Succession management is a business strategy, unfortunately in the current environment its a strategy which is not being implemented as well as is required.
Is your organisation prepared for the exit of its baby boomers? As always keen to hear your thoughts on this topic.