Incentive scheme nightmares
September 30, 2008
Having recently been involved in introducing a variety of different bonus/commission/incentive schemes, I’ve experienced the difficulties organisations face in putting these sorts of schemes with the aim of encouraging increased productivity, commitment and results, whilst making the process equitable and inclusive for all staff.
The first issue I have faced is that, working for a heavily sales based business, all bonus and incentive schemes are based on money brought in – i.e. as a percentage of a ‘deal’. This is good because the bonus is based on a tangible measure – a number, but it does mean that a scheme brought in across a company will only benefit those who have the opportunity to earn, i.e. have contact with customers in order to increase orders or ‘up-sell’, which means more ‘back-office’ or production staff may have a big contribution to the ‘deal’, for example by making suggestions as to what could be offered, but will get no recognition and therefore no bonus. It soon becomes apparent that one incentive scheme size does not fit all.
So the next question is, do you just have an incentive or bonus scheme for those who have the opportunity to bring in the money on which they can be measured and paid, or do you develop alternative schemes for the ‘knowledge workers’, and if so, how do you measure outputs and what do you allocate as a payment? A percentage of a deal is transparent and straightforward, but what is an appropriate payment for increasing performance in an area that is apparently un-measurable? One answer is to avoid incentives altogether in these circumstances, make it clear that a flat basic is the remuneration for the job carried out, and find other non-financial ways to motivate and drive employees, all of which should take place in addition to an incentive scheme anyway.
An obvious issue arising from bonus/incentive schemes is the damage they can do to teamwork, with individualised schemes sometimes leading to underhand and unhelpful behaviour from staff who are looking to increase their wages, and will do so at the expense of other staff and often the customer. There may be arguments over who is due to be paid for a certain ‘deal’ when more than one person has been involved in making it happen, and this is something that just has to be handled case by case as it arises. Many companies allocate team bonuses to avoid these problems and encourage a stronger team ethic, but of course this will bring different issues when one member of staff perceives that another hasn’t pulled their weight in contributing to the team bonus.
These issues will never be eradicated completely, but with careful management problems can often be kept to a minimum. The main thing, as usual, is effective communication on a regular basis. This might seem very time consuming and often frustrating but it must be remembered that money is a very emotive subject and the last thing any manager wants is staff under-performing because of the way they feel about fairness within the team, especially when it might be something that can be sorted out very easily and quickly with a simple conversation. If a member of staff doesn’t think the scheme is fair, ask for an explanation why and a suggestion for how it could be made more equitable. Also, when introducing a scheme, make it clear that the way it works is not set in stone and can be changed if either employees or management don’t think it is fulfilling the purpose intended. Having struggled through quite a few really frustrating issues recently, I personally would advise any company to think really carefully before introducing an incentive scheme – is there not another way that you can increase productivity and performance without making it money-related?
I would love to hear from anyone who works with an incentive or performance related bonus scheme, especially if you have experienced any of the above problems (or any others) and managed to overcome them.
New rates for national minimum wage
September 29, 2008
On 1st October, new rates for the national minimum wage will come into place. The National Minimum Wage legislation was introduced in April 1999 to stop workers being exploited by under-paying employers, and at the time there was a lot of criticism of the rule as people were worried that it would lead to job losses or wage drops for those earning higher than the minimum wage, however these fears did not materialise for the majority of places and the legislation is now accepted as part of employment practices.
The new rates for the national minimum wage from 1st October are as follows:
- Workers aged 22 and over: £5.73 per hour
- Workers aged 18-21: £4.77 per hour
- Workers aged 16-17: £3.53 per hour
The existing rates are £5.52, £4.60 and £3.40 respectively. Since the introduction of the legislation, the rates have gone up by around 60%. As well as increasing the rates, the Government also wants to crack down on rogue employers who do not pay the statutory rates, and there could be an unlimited fine for those failing to adhere to the legislation. According to a BBC report, ‘more than £27m in unpaid wages has been recovered on behalf of 80,000 workers since 1999’.
If you employ people on low salaries, don’t forget to check your annual salaries reflect the new rates for the national minimum wage.
Being a self-employed consultant
September 26, 2008
Yesterday I was discussing the practice of using self-employed HR consultants to add value to a business, small or large, in a variety of areas (‘using self employed HR consultants’, 25th September). This made me think about the people doing this job, and the pros and cons of making the move to self-employment.
All of the different areas that can be and are covered by individual self-employed HR professionals mean there are real, exciting possibilities for those considering a change of career and a move to self-employment. There are real benefits in terms of job satisfaction, if you want a career that involves delivering real solutions that make a difference, without being caught up in the day to day problems that an in-house HR role brings, such as office politics and changing goal posts. As an external contractor or consultant, if you are given a brief to deliver and the goal posts change half way though, then you are able to negotiate a new brief and price for the job.
On the other hand however, there are many insecurities and risks associated with becoming a self –employed consultant, not least the fact that the workload can have peaks and troughs which could make it difficult to maintain a steady income. Many people would not want to take this risk unless they had a secure backup, e.g. a partner who can support you in times where work is slow. Added to this is the fact that you need to take care of your own income tax issues, and self-employment comes with no added benefits such as healthcare, pension or even paid holidays.
Another issue to consider is the negative effects of working alone, without the social support of a group of colleagues or the professional support of a manager. A lack of somewhere to actually work could also be a problem. The self-employed consultant may work at home a lot of the time, which could be difficult when working for companies at a distant location, and you might end up working out of a hotel room or even your car, which isn’t ideal. There are ways of overcoming some of these issues, with serviced office or hot desking options. This means that you can have an office space to use, with added benefits of a reception/admin service if you needed it, or the use of meeting rooms if you wanted to meet with a client away from their site. You can normally get short term contracts with these offices, so for example you might need a serviced office in the west end of London for a few months whilst you completed a one off change management assignment for a nearby organisation, but after this you might go back to working from home whilst working with a local company on employee relations issues. Building a relationship with a provider of such solutions might help you to manage the different practical issues you might be faced with when working as a self-employed consultant.
Clearly, there is a lot to think about when considering such a huge decision and changing your whole career path and employment status. This decision would be a matter of weighing up the benefits against the drawbacks and thinking carefully if the enjoyment and fulfilment you might gain from this kind of work would negate the problems you would no doubt face at one time or another.
If you are a self-employed HR consultant I would love to hear from you, tell me what made you take the leap and make the decision to go for it, and what are the daily ups and downs of the profession.
Using self-employed HR consultants
September 25, 2008
I’ve noticed a lot of articles recently discussing or advertising independent, self employed HR specialists, to work on a consultancy basis within organisations. The subject of HR outsourcing has become quite popular in recent years as new models of delivering HR support and management to organisations have emerged. A lot of organisations outsource specific areas of HR such as payroll or recruitment, however what is an interesting development for any practicing HR professional is the increasing use of individual self employed HR specialists to fulfil specific needs within companies, on an ongoing basis or for a one off project, for example in a time of significant change or to develop specific skills for a set of employees or managers.
There is a wide range of areas a HR consultant can cover. A lot of chief executives or senior teams are now employing strategic HR Advisors from outside of the business to come in and help them plan how they will deliver the people side of their business strategy. Others will be required on a much more basic level in terms of implementing systems and processes for the day to day management of personnel issues, such as selection of staff, discipline and grievance, ensuring contracts and handbooks are implemented, and assisting managers with performance management activities. A third, and even more interesting prospect for the HR consultant is the use of executive coaches, particularly in large organisations. This is a response to the realisation that people and their ‘personal’ attributes, i.e. their softer people skills, are extremely important in keeping the organisational cogs well oiled and moving effectively. Many managers who are exceptional at managing a function require support and advice in effective people interaction and dealing with problematic organisational situations in a constructive and diplomatic way. What organisations like about external coaches is their lack of a connection to the business, so they can see things from a different perspective and point out to the individual things that are hard to see when you are in the thick of it. There is also the added value of complete confidentiality and impartiality.
For an organisation, a self-employed HR consultant could be a viable option to consider if you are struggling to deliver a business strategy because of a lack of direction on the people side. For very small businesses, it is a good starting option when you need HR support but don’t have enough employees to justify a full or even part time employee. Many small companies add HR onto another employee’s role (e.g. the office manager) but this could mean that the function is lacking the experience and skills that is needed to help the business push forward and perform well through its people.
Does your organisation use self-employed HR consultants, and in what capacity? Or are you self-employed, and if so what sort of assignments do you get involved in?
New maternity rights from 5th October.
September 23, 2008
On 5th October 2008 women taking maternity leave (and parents taking adoption leave) will be entitled to increased rights in relation to their benefits whilst on leave.
At the moment, employees only have the right to their full contractual benefits (except pay) whilst on Ordinary Maternity Leave (OML), which is the first six months of the leave period. For the Additional Maternity Leave (AML) period, i.e. the second six months of the leave period, employees are only entitled to statutory benefits (e.g. statutory holidays) unless their contract of employment states otherwise.
The change means that any employees whose expected week of childbirth (or due placement date for adopting parents) is on or after 5th October 2008 will be entitled to their full contractual benefits (except for pay)throughout the whole 52 weeks leave period. This would apply to things like company cars, health insurance, and holiday entitlement, which is probably the most significant benefit as many employers will provide more than the statutory minimum holiday entitlement.
So, the way it works at the moment with holidays for example, is that employees will accrue their full contractual holiday entitlement during OML – for example if their annual entitlement is 30 days (including bank holidays)they will accrue 15 days. But in AML they would only accrue 12 days; half of the current statutory entitlement of 24 (including bank holidays). But for those whose expected week of childbirth is on or after 5th October, they would accrue the full 30 days across the 52 weeks’ leave. Lots of companies already allow the full accrual of contractual holidays across the year, but they don’t always continue other benefits; however this will have to stop from 5th October. To avoid the problem of the employee having up to twice their holiday entitlement when they return from maternity or adoption leave, many companies allow the employee to take the accrued days at the end of their leave period before returning to work.
If your contracts of employment or maternity/adoption polices currently operate on the old system, they will need to be updated to allow for the new rules. This might mean that for the next year you will be operating two systems – one for those whom the old rules apply and another for those who fall into the new rules. If you need advice on changing your policies then a good place to start would be ACAS, which has an employer advice helpline, or if you have an employment law advisory service, they should probably be contacting you to make the changes in the next couple of weeks.
Keep equipment records
September 22, 2008
I’ve recently heard of an issue at a friend’s place of work that made me think about equipment security policies, and I reviewed the procedure for equipment security at my organisation as a result of this.
When an employee is given equipment such as a laptop, mobile phone or blackberry, a form would normally be completed to indicate what equipment was issued, with serial numbers so that the individual machine could be identified. What had happened at my friend’s company was an employee had ‘lost’ the mobile phone charger that came with their phone, but then claimed that they had never been given one in the first place – they said they had been charging their phone with the charger from their personal phone as it was the same make. My friend was sure he’d issued a charger with the phone, but because he hadn’t kept a record of this as well as noting the phone’s serial number, he had no way of proving that the employee wasn’t telling the truth.
It sounds simple enough, but it seems that it’s quite easy to make a small oversight in the process of issuing equipment to employees, so the best thing to do is to create a form which will prompt you to note down everything that could be included when issuing a particular piece of equipment. This could include things like a spare laptop battery, chargers for the various pieces of equipment, a mouse/keyboard, or it could even include a USB stick or extra hard drive.
Fortunately, when I checked with the systems and security manager in my organisation, he always takes a record of every piece of equipment issued to staff, including the various add-ons. He also asks the employee to sign the form to agree that this is what is issued, and will ask them to sign again, with his counter-signature, when the equipment is returned or changed.
If you are responsible for company equipment, perhaps you should double-check your procedures to ensure that they are water-tight, to avoid any possible situation like the one my friend faced.
Work-life balance: more than just a place and time thing
September 20, 2008
I’ve been quite busy lately, and I think it’s been affecting my work-life balance. I’ve been working slightly longer hours, and whilst this isn’t ideal I wouldn’t say this is the main cause of the imbalance. I’m fortunate enough to work in a place where the building is opened and shut at particular times and it’s therefore not possible to be ‘at work’ excessively, and I haven’t got a blackberry or home access to the work network so I don’t suffer from the overworking issues caused by mobile technology I talked about a while back (Technology contributes to long hours syndrome: 8th May 08).
I think the real lack of work-life balance I’ve experienced lately actually relates to the stress levels experienced in work time. The increase in responsibilities and actual amount of work to do has meant that it’s become increasingly difficult to leave work at work – mentally. I’m not sleeping well and at the weekend, unless I’m actually occupying myself with things to do it’s become all too easy to start thinking about what I need to do on Monday. Just last weekend for example, I was out looking at oriental furniture with my brother for his new flat, and I couldn’t take my mind off what’s happening with what I need to speak to my boss/that manager/the recruitment consultant about. Perhaps oriental furniture is a bad example as it’s not exactly intersting enough to keep my mind occupied, but sometimes the end of the weekend comes around and I feel as though I’ve not really left the office.
I’m convinced this is a problem many people could identify with, and it’s something organisations need to seriously consider, because an overworked and stressed out workforce is anti-successful in every way. Work-life balance is now an important area of concern for employees, and many organisations are looking into a variety of ways of getting the best out of their staff whilst meeting their personal and family related needs, such as flexitime or home working,but it’s no good having these schemes in place if issues of workload, job design, support and planning leave people feeling more exhausted than ever. At the end of the day, if you can’t let go of ‘work’ when you should be in ‘life’ mode, then you’re still ‘at work’, and where’s the balance in that?
Hopefully my situation is only short term, but I imagine there’s a lot of people for whom this is not the case. Does this sound like you? Or do you know people in your organisation to whom my description above applies? What do you think should be done about it?
Today’s climate: a good example of the benefits of older workers
September 19, 2008
Us HR people are used to preaching the business benefits of diversity in the workplace, and I think the massive national catastrophe it appears the UK is now facing perfectly demonstrates the argument in relation to our older workforce, particularly in relation to HR and senior/executive management positions.
What do I mean by this? I mean that thousands of people gain their CIPD qualification every year, moving through the ranks to middle and senior management. Likewise many top level managers across industry have moved into these positions in the last few years. At the other end of the age bracket a lot of the HR professionals and managers who have the experience to deal with the problems thousands of companies are now facing have retired. So despite the fact that us fresh faced CIPD grads may have all the newest people management theories and ideas to hand, quite a lot of us were doing our GCSEs the last time the country faced a recession (or were maybe even younger than that!) Skills such as dealing with large scale re-structure or redundancy are in high demand at the moment, and many people who have been in the profession less than 10-15 years will have not seen anything like the current conditions before, or were not in a position to deal with them the last time and therefore have no experience to draw on.
There’s a lot of help and advice out there for companies facing these issues and requiring skills of this type, so I don’t think this is a massive concern. I just think that this situation highlights the benefits of having a good age range within organisations, in order to deal with the day to day needs of the business through a combination of theoretical knowledge and practical experience, and to look at things from a variety of perspectives.
Why the structured interview is better
September 18, 2008
If like me you’re carrying out a lot of recruitment and selection at the moment, then you may be involved in interviewing candidates, as this is probably still the most popular selection method in most organisations. We’re all well aware of the financial turmoil the UK (and other countries) are experiencing at the moment, so in organisations that are still recruiting rather than laying off staff, it’s even more critical to avoid a poor recruitment decision as this can turn out to be a very costly mistake.
Some interviews I have been involved in have turned out to be quite an informal discussion based around the CV or information the candidate has submitted, and I can see why some hiring managers wish to make the discussion more like a business related ‘chat’ than an interrogation, as this can often put the candidate at ease and make for a more open and honest discussion. However there are several reasons why this method fails to help interviewers make a good decision about the candidate:
- Talking about the candidate from the point of view of their history, i.e. around their CV, leaves the risk of discussing a lot of irrelevant information that may appear to be impressive, but bears little importance in relation to the job in hand.
- Of course, even parts of a candidate’s history that are not directly linked to the available role can still be relevant in terms of transferrable skills and situational experience, but it is possibly only the skilled interviewer that is able to make these connections without a direct linking question. And how many organisations out there can honestly say that it’s only staff that are trained and experienced in interviewing that carry out the process?
- Failing to work from a structure that is based on the job needs means that all the candidates that interview for the same role may not be assessed against the same criteria. How can you make a sound judgement about a group of people’s ability to negotiate if you have only covered this subject with half of them? A lack of structure means that your decisions could be made on areas that aren’t the most critical
It really makes sense that candidate selection should follow a clear, flowing process: analysis of the role that needs to be filled; creation of a comprehensive job description and person specification or set of competencies; then the building of the interview questions or other selection methods from these requirements. Clearly this is the ‘process’ that many hiring managers will follow almost subconsciously; they know the job and they ask questions to find out if the candidate can do it. But there’s no reason not to prepare for this process, and really think about it so that every aspect of the job and the role requirements are covered comprehensively. As for the actual style of the interview, it is possible to make the candidate feel relaxed and make the interview chatty or informal without having to sacrifice the structure that will help you make an informed choice. This is more of a skill for the interviewer to learn than a technique or process, and often comes with experience and confidence in conducting interviews.
Council to fingerprint staff
September 16, 2008
Westminster County Council has introduced a biometric recognition scheme for its staff.
The technology has been introduced to try and prevent “buddy punching”, which is when an employee checks in for another. The system requires employee’s to clock in using the fingerprint reader and will be used for community protection staff and road sweepers.
Westminters Director of communicty protection, Dean Ingledew has said:
“We have a duty of care to know where our staff are, that they are safe and that council taxpayers are getting value for money from staff who are working properly. The system mainly applies to members of staff who are street-based and often work alone late at night. Many say they actually feel safer with this system because if anyone fails to sign in or out it is flagged up immediately and calls are made to find out where they are.”
Although Mr Ingledew may be all up for this new system, other people are not so keen. The Westminster branch of Unison certainly doesn’t agree to this and has told its members not to co-operate, as the scheme is based on “mis-trust”.
“We don¹t trust the council to hold this data securely and see no justification for the scheme.”
Working in an office environment means that this sort of technology would not be necessary with our employee’s, but i do think it is a good idea in other industries?
What’s your opinion on this and is it something that could be incorporated into your company?