ORC Sightlines

March 2010

In this issue:

Everything Old Is New Again: Job Architecture Regains Attention

There’s nothing new about describing jobs, giving them titles, and slotting them into organizational levels. What is new—or at least renewed—is an appreciation of these activities as elements of a total system of job architecture that can be a driving force for growth, integration, and change. Strategic job architecture is a comprehensive, unified structure—aligned with business strategy—for the work done in an organization. When done right, a thoughtful, strategic job architecture helps employees and managers understand who does what and how each job and each organizational unit fits into the big picture.

Today’s organizations are in a constant state of flux—expanding into new countries, assimilating acquisitions, and integrating merged entities, even creating whole new disciplines that never existed before (for example, biostatistics in the life sciences industry). In the course of these events, the way jobs are defined has a tendency to become variable and disconnected across the organization, which in turn makes it difficult to make people decisions that build the organization’s strategic capabilities, are transparent to employees, and comply with legal mandates.

“Job architecture is the foundation on which everything else is built,” maintains Susan Carter, ORC’s director of human capital management consulting. “Once you have a good understanding of how the work of the organization is divided into roles and how those roles fit together, then you can start to make sense out of all sorts of other questions, like how many layers of management do we need, where should a function reside, what kinds of people do we need to hire and how many of them, what skills and knowledge do our people need in order to do their jobs, what are the feeder jobs that will help them develop those skills, and how do we determine compensation that maintains internal equity and is competitive in the marketplace? Job architecture impacts everything.”

Carter’s observation may explain why so many companies are overhauling their job architectures. “I’d say that nine out of ten inquiries we get these days include a job architecture element,” notes Vic Dayal, director in ORC’s global compensation practice.

Carter and Dayal worked with colleagues within ORC to form the Job Architecture Consulting Team. Key to the team’s effectiveness has been its ability to leverage ORC’s proprietary SIRS® Salary Surveys. The SIRS® system is built on a validated, logical underlying structure of benchmarks, job families, and job levels that makes it possible to map relationships among jobs and levels accurately—even when they are obscured by layers of distortions and misalignments that have accumulated over years. Once job descriptions, titles, and job levels have been rationalized, the team works with business leaders to apply the new structure to the organization’s pressing strategic issues.

“Sometimes the leading issue in a company is title proliferation, which is causing confusion regarding job responsibilities, pay, and career growth as well as difficulty comparing and mapping jobs across functions and geographies,” Carter explained, “so we’ll look at things like key job responsibilities and requirements, performance expectations, and reporting relationships, and recommend changes and improvements in job titling and structure that align jobs and titles with company objectives and industry benchmarks.” Dayal recalls other situations where the priority has been staffing costs. “Because we’ve got this great SIRS® database that allows us to compare apples to apples,” he says, “we can easily see where a company’s staffing plan is out of kilter with the rest of the industry. Let’s say the bulk of one company’s engineering jobs are at level 4 when industry competitors have the majority of their engineers in level 3. Then the company knows it is paying more on average, and they’re at a disadvantage from a cost standpoint. Maybe there’s a good reason for it and the company decides to leave it that way. It’s our data and analysis that help the company make an informed, strategic decision.”

No matter what the issue, the contribution of job architecture is the same: to make HRM practices as consistent, clear, and equitable as possible so the work of the organization is accomplished as effectively and efficiently as possible.

For more information about job architecture and its role in HR management, or to find out how ORC’s Job Architecture Consulting Team might be able to help your organization, contact Susan Carter or Vic Dayal.

Strategic Management of Expatriate Assignments

In the last several years, expatriate compensation has become widely recognized as a key component of a strategic HR system and is being purposefully managed to accomplish several goals simultaneously:

Among the options for structuring international assignments are: traditional multiyear assignments compensated according to the traditional balance sheet approach, an “expat lite” plan following the basic equalization philosophy of the balance sheet approach but providing lower premiums and allowances, developmental assignments that might not include some of the incentives of other plans, and short-term assignments during which the assignee’s family generally stays at home. Which of these is used for a given assignment depends on the purpose of the assignment and the circumstances of the individual employee. For example, a short-term assignment might be appropriate for the purposes of knowledge transfer or other circumscribed goals. A developmental package might be appropriate for someone early in his or her career, for whom the assignment is an opportunity to learn new skills and further his or her career.

ORC’s expatriate compensation seminars help HR professionals understand and apply the options available to them. The basic seminar, Principles of the Balance Sheet Approach, introduces ORC’s balance sheet methodology and addresses the challenges involved in providing fair, competitive, yet cost-effective, compensation.

Data Applications, Compensation Techniques, and Policy, offered the day following the basic seminar, presents more advanced approaches for implementing international compensation data associated with housing, goods and services, business travel, and other components. This session helps HR managers align the organization’s compensation philosophy with its strategic goals, while designing competitive policies and maintaining the morale of employees and their families.

In Advanced Policy, Compensation Issues, and Current Trends, practitioners explore leading-edge techniques, nontraditional pay policies, and emerging trends involved in paying third-country nationals, assignees from less-developed countries, local-national employees, localized employees, short-term assignees, and others.

For more information on ORC’s expatriate compensation seminars, contact Tricia Danielsen (+1-212-852-0438), or contact one of our worldwide offices.

CSR and Diversity Move Closer Together

Corporate Social Responsibility (or corporate responsibility or civil responsibility; CSR) and diversity and inclusion (D&I) operate separately in most companies, but there is increasing collaboration between the functions, through shared activities and occasionally through reporting structures. Deirdre Golden, director of ORC’s Global Equality, Diversity, and Inclusion practice, spoke about the trend at the World Diversity Leadership Summit in Vienna in March.

The aims of D&I and CSR are similar, Golden noted:

However, the actions to achieve these aims differ. While D&I’s primary focus is on internal policies and processes, CSR works with external stakeholders and reports publicly on company activities that impact the external environment. However, there is already considerable overlap among these, and the potential to develop more. Already, D&I activities involve considerable outreach into communities to engage and develop potential future employees, support businesses owned by women and minorities, and inform public policy. Other ways the two functions currently partner include:

There is opportunity for a good deal more collaboration between D&I and CSR, especially in areas where both are already active, such as empowerment of women and indigenous peoples and other human rights issues. By working more closely together to coordinate strategies and action plans, the two functions can augment their resources and magnify their impact (not to mention avoid unintentionally stepping on one another’s toes).

Over the past 10 to 15 years, corporations have been learning to understand themselves in a global context and to do business in a different way. The next decade, Golden suggested, will be about learning how to be good global citizens. The market and the future employee base will demand it. Increasingly, B-to-B customers and consumers are demanding evidence of contribution to both CSR and D&I from their suppliers, and young people entering the workforce look for the same in their employers. For a number of reasons—sharper focus by governments and the public on governance and social/economic impact of corporate activities, the current recession, and the activities of the financial institutions—we can only expect to see this interest grow.

Read Golden’s remarks at the WDLS Summit. ORC’s recent study, Diversity and Its Relationship to Corporate Social Responsibility, is available to members of ORC’s diversity and inclusion networks. For more information about this subject or the ORC family of global equality, diversity, and inclusion networks, visit us online or contact Deirdre Golden.

The Challenges of Executive Pay in the Development Sector

An article by Curtis Grund, ORC’s vice president of global development sector consulting, offers cogent advice to nongovernmental organizations struggling to attract and retain high-quality leaders (“Balancing Market Pay and Organizational Goals”, Monday Developments, January/February 2010). As more board-level positions are filled with people with private sector backgrounds, executive pay in development and humanitarian organizations is rising, and the sector is eyeing pay practices usually associated with for-profit companies. This situation has led to “an ongoing debate in the not-for-profit community” about how to compete for the best management talent and still uphold the ideals of the organization.

It isn’t practical or necessarily desirable to adopt private sector practices wholesale. However, there is a growing trend toward adapting some executive pay practices from for-profit companies. Already, we are seeing compensation for directors in NGOs rising at a pace faster than general salaries in the sector, and some attempts to implement incentive plans. However, cautions William N. Brown, ORC’s vice president of executive compensation consulting, organizations must consider a number of factors when designing their pay strategies. While NGO leaders coming out of the private sector might expect to be paid for performance, measuring results in the volatile world of aid is difficult and, large donors may not want to see their contributions used for executive bonuses or incentives.

For more information on executive compensation in not-for-profit organizations, contact Curtis Grund or Bill Brown. A PDF of the Monday Developments article is available on Interaction.org.

 

 

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