ORC Sightlines
October 2005
- White’s Keynote Describes Success Factors for Multinational Safety & Health
- Compensating Program Managers
- Aligning HR Strategy When Business Strategy Is Unclear
White’s Keynote Describes Success Factors for Multinational Safety & Health
Frank White, vice president of ORC, delivered the keynote address for the XVII World Congress of Safety & Health at Work last month. The World Congress is held every three years and this year’s Congress, hosted by the U.S. for the first time, was attended by participants from more than 100 nations. Responding to the International Labour Organization’s call for more aggressive action to curb work-related deaths and accidents in developing countries, Mr. White held up the combined efforts of ORC client companies as an exemplar of what can be accomplished. Data collected by ORC over the past five years show that multinational companies that belong to ORC’s Occupational Safety & Health (OSH) Group posted rates of injury and illness in Latin America and the Asia Pacific (two areas of the world where work-related injuries and illnesses are rising most sharply) that were as low as, and in some cases lower than, in the world’s most advanced economies.
Mr. White attributed this performance to the excellence of these companies’ management systems and to a pervasive culture of preventive safety and health. In particular, he noted, multinationals with good records in this area tend to:
- Apply consistent standards in all locations around the globe, striving to provide all workers everywhere with the same level of protection, rather than simply complying with local requirements
- Maintain high expectations while understanding that excellence can be achieved only by respecting the cultures in which the company is working, learning what motivates action within each culture, and adapting processes and systems accordingly
- Train their workers relentlessly, in their own language, and take important cultural norms into account in the design and translation of training programs and materials
- Frequently celebrate success to reinforce safe behavior
The companies that are most successful in achieving safe workplaces in developing regions have actually gone further. Recognizing that workers who come to the job healthy will be more productive, many of these companies reach out to ensure that their employees have adequate shelter, proper medical care, and safe and dependable transportation. They accept their social responsibility to assist their host communities and to steward the environment in which they have been granted a franchise to operate. “Corporations are now beginning to more fully understand,” White concluded, “that, in the end, businesses will not be able to maximize the value of their multinational operations unless the communities in which they operate also prosper.”
Frank White can be reached in ORC’s Washington office at 202-293-3684.
Compensating Program Managers
Program managers, who manage large programs across business functions from conception through delivery, are critical to the success of many companies in the high-tech industry, most notably in fast-growing fields such as homeland security, defense, and energy. Determining pay for these jobs can be a puzzle since they often do not fit traditional structures. The worth of program managers does not depend directly on the number of people reporting to them, but rather on the technical challenges, financial value, degree of difficulty or sophistication, and geographic complexities of the project, among other factors.
To help companies quantify the value of these important contributors, ORC’s 2005 SIRS® survey captured pay and specific scope information from more than 60 companies representing details on more than 3,700 individual program managers. From this data, we have developed solid market data based on the characteristics of the programs managed.
The SIRS® Program Manager Level Chart identifies and weights five key project factors:
- Program complexity – 15%
- Customer and subcontractor complexity – 20%
- Span of control – 15%
- Technical requirements – 20%
- Financial impact – 30%
The chart then illustrates what each of these factors means for each of five levels of importance. For example, the span of control of a program contained at a single domestic location and involving several business functions is considered consistent with a level 1 program manager’s position, while someone connecting major domestic and worldwide locations and coordinating their technology and/or production would be considered a level 5. The following chart shows average annual salaries and total cash compensation for program managers at each of the five levels.
| 2004 Program Size (millions) | 2005 Annual Salary (thousands) | 2005 Total Cash Compensation (thousands) | % Target Incentive | |||
|---|---|---|---|---|---|---|
| Scope Level 1 | Simple Average | $27.5 | $114.7 | $118.6 | 13% | |
| Number of Incumbents: | 565 | 50th Percentile | $10.0 | $107.3 | $109.8 | |
| Scope Level 2 | Simple Average | $36.2 | $121.2 | $130.1 | 17% | |
| Number of Incumbents: | 1,687 | 50th Percentile | $14.0 | $118.1 | $123.0 | |
| Scope Level 3 | Simple Average | $82.9 | $139.9 | $151.9 | 19% | |
| Number of Incumbents: | 1,185 | 50th Percentile | $25.0 | $137.3 | $144.4 | |
| Scope Level 4 | Simple Average | $131.2 | $157.6 | $187.2 | 27% | |
| Number of Incumbents: | 299 | 50th Percentile | $70.0 | $158.9 | $181.5 | |
| Scope Level 5 | Simple Average | $315.7 | $181.9 | $257.7 | 42% | |
| Number of Incumbents: | 30 | 50th Percentile | $194.5 | $173.7 | $249.2 | |
For more information about program manager compensation or the SIRS® survey, contact Tricia Richards, 425-746-6963. For a longer version of this article visit the ORC Reading Room.
Aligning HR Strategy When Business Strategy Is Unclear
Most advice to HR leaders on how to become a “strategic partner” to management assumes that the company has a clearly articulated strategy and all the intelligent HR executive need do is nudge his or her function into line with it. The messy truth, however, is that not all companies are managed according to a delineated strategy. In many Japanese firms, for example, management steers its course by the guidance of a long-term vision (sometimes anticipating the next 100 years!) rather than a specific strategic plan. Managers have internalized the values and mission of the company to such a degree that their individual business decisions are surprisingly aligned with one another, but others not accustomed to this process may find it difficult to get in step.
Members of ORC’s Senior HR Executives in Japanese Subsidiary Companies Network attacked this problem at last month’s meeting, discussing a number of ways HR leaders can align their functional strategies with the needs of their companies. One option is to concentrate on operational issues, making the HR organization more productive and service delivery more efficient. This approach requires coming up with innovative ways to stretch tight budgets (moving to e-enabled learning, for example) and replicating best practices from one area throughout the organization.
Another option is to build relationships with the CEO, senior leadership, and functional areas in order to increase HR’s understanding of the company’s strategic direction. Because even when it isn’t stated as such, there is usually an end-goal and a commonly understood, if drastically understated, idea of how to get there. This approach requires asking a lot of questions of senior leaders, such as:
- In the ideal world, what would this organization look like?
- What kinds of indicators will tell you when we have realized your vision?
- What are the organization’s major priorities?
- What would you like to see next year that you do not see now?
- Which business units will be instrumental in achieving these goals and priorities?
In most companies, the two options are not mutually exclusive, but where you choose to put the lion’s share of your resources—operational excellence or strategic realignment—may depend on the answers you get to these questions.