Archive for business consulting
McKinsey Quarterly recently published the results of a survey they conducted of over 1,300 U.S. employers on the impact of recent U.S. health care reform legislation on their plans for dealing with employee benefits. Take a second to digest some of the key findings of this survey:
- 30% of employers (and 28% of large employers) report that they either definitely or probably plan to stop offering employer-sponsored insurance (ESI) after the year 2014, when many of the provisions of the recently passed Affordable Care Act take effect.
- 45 – 50% of employers say they will either definitely or probably pursue alternatives to ESI, such as using defined-contribution models or offering ESI only to certain employees.
- Among employers who report a high awareness of health care reform, the proportion who plan to stop offering ESI jumps to 50%, and the proportion who plan to pursue alternatives to ESI jumps to 60%.
- Although 85% of employees surveyed (and 90% of higher-income employees surveyed) indicated that they would stay at their current jobs if ESI was no longer offered by the company, 60% would expect increased compensation if ESI was removed from their benefits packages.
Given these findings, McKinsey expects that there will be a general tendency for employers to stop offering ESI altogether or to offer alternatives to ESI instead; the report also predicts that employers will offer increased compensation in order to “make employees whole” and to continue to attract and retain top talent at the same rates they did when they were offering ESI as a part of their benefits packages.
But are the implications of this kind of decision really purely financial? Does a pay raise necessarily make up for cutting ESI out of an employee’s benefit options, or is ESI worth more than just its absolute monetary value? For example, take a look at the CNNMoney.com 100 Best Companies to Work For in 2010: the top-ranked company, SAS, was cited for several of the supportive benefits it offers to its employees, many of which were health care-related – including unlimited sick days, a company medical center that employees can use free of charge, and 90% coverage of health insurance premiums (view the full story here). While the company was also commended for several non-health care related factors, such as its on-site library, affordable high-quality child care, and a children’s summer camp, compensation was not included on the list of reasons why this is a great place to work (in fact, on CNNMoney’s accompanying list of the 100 “Big Pay” U.S. companies, SAS did not even rank. The second-ranked Best Company to Work For of 2010, Edward Jones, was praised for its commitment and loyalty to its employees during the recession: in fact, while this company actually froze salaries during this difficult economic time, profit-sharing continued and no layoffs were made (full story here). The stories behind many of the other companies on this list follow a similar pattern: compensation in and of itself is not mentioned, and the focus tends to instead be on the steps each company takes to provide support to its employees.
This seems to suggest that a simple hike in employees’ salaries may not be enough to offset the impact on employee perceptions of the organization that could result from discontinuing ESI. It may also be detrimental to a company’s image to stop offering these programs as a benefit. While the McKinsey report predicts that many companies will elect to make these changes and such decisions will not necessarily put an organization at a disadvantage compared to its competitors in terms of attracting and retaining top talent, it does seem that the absence of such options on an organization’s list of perks might have at least some small effect on both current staff and general public perceptions of the organization.
Companies may be able to substitute the supportive benefits of an ESI program by not only adjusting salaries to compensate for the removal of this option from benefits packages, but also investing in other measures that communicate a similar kind of whole-person support and offer additional convenience and work-life balance to its employees. Options might include increasing opportunities for flexible work hours and telecommuting, offering extra rewards for employees who demonstrate positive health behaviors (such as the “cash for health” program offered by Paychex), or by adding on-site perks such as daycare centers, fitness centers or libraries, like those offered by SAS.
The Impact of Breaking News on Business: Not Quite What You Might Expect
Posted by: | CommentsIf you turned on a TV or a radio, opened a newspaper, or even glanced at your Facebook news feed yesterday, odds are you were bombarded with multiple reports of the death of Osama bin Laden, founder of al-Qaeda. And of course, every online news source is already full of opinion pieces about the impact this major event will have on a wide variety of outcomes: President Obama’s chances for re-election, the state of the economy, worldwide air travel, and even the fate of a Hollywood film based on a failed attempt to capture bin Laden, which had reportedly been in the works at the time of his death.
Interestingly, while many political analysts are predicting a boost in President Obama’s approval ratings as well as an increased chance for his re-election as a result of this breaking news, Wall Street does not seem to have been affected much. Compared to the 7.1% drop in the Dow Jones Industrial Average that was reported on September 17, 2001 when the stock markets reopened after the September 11th terrorist attacks, in the wake of bin Laden’s death we saw less than a 1% increase in the same index, and the Dow actually closed slightly lower yesterday (by about 0.03%):
http://www.reuters.com/article/2011/05/02/us-markets-stocks-idUSTRE74120Z20110502
These numbers are certainly not encouraging for business interests: according to many financial analysts who have sounded off on this issue so far, it seems that our progress toward economic recovery remains at about the same point today as it was the day before yesterday. As one blogger for the Wall Street Journal put it, “absent attacks related to Osama’s death, the economy’s future will be driven by the same trends that concerned us last week, and the war on terrorism will remain a large expense.” You can read the full blog at the link below:
So what does all of this mean for your business? Do you feel any more optimistic about your bottom line today than you did before the news broke? Do you see this development as a small step down the long road toward economic recovery, or do you expect that the only real impact this will have on your business is the likely even further heightened restrictions on air travel? Leave a comment and tell us what you think!
Single vs Multi-Source Performance Appraisals
Posted by: | CommentsEveryone has had one of those performance appraisals that neither the manager nor the employee wanted to have. The company thinks that performance appraisals are a good idea for many reasons but doesn’t disseminate them to the rest of the organization. The company doesn’t train the managers on how to conduct appraisals either. Wouldn’t it be nice if appraisals were something employees and managers didn’t dread? There are several types of performance appraisals out there. Each has its strengths and weaknesses.
The question is: Which type of performance appraisal should your organization use?
There are two distinct approaches to performance appraisals: single source and multi-source. Both approaches have strengths and weaknesses. Single source appraisal systems are less time consuming than multi-source. The appraisal only has to have the input of one person i.e., the manager.
The single source approach can be especially useful with a manager who has a lot of observation time with his/her subordinates and in more bureaucratic organizations. It also has the benefit of the manager knowing the job. The manager already supervises the subordinate and therefore should have information on the subordinate’s performance. The manager also generally helps to determine goals with the subordinate. It has a natural flow from top to bottom of the hierarchy. It is accepted that supervisors rate subordinates. All of these benefits of single source make it a popular approach to performance appraisal.
The downside of single source deals with the lack of variety in input. Because the manager is the only input for the appraisal, it can lead to skewed and incorrect information. The manager may not know every aspect of the job and may attribute more power to inconsequential tasks than larger more important tasks. This misattribution can lead to skewed ratings and other types of bias. Sometimes the manager is not even in the same location. This lack of contact and observation can make it difficult for the manager to accurately rate the subordinate’s performance.
Multi-source appraisal systems were originally developed due to the constant dissatisfaction with performance appraisals. They have many benefits but are not the best option for all organizations. Multi-source appraisals help counteract the problem single source appraisals have with limited single perception input. More input creates a more well rounded picture for the employee.
Managers may not always have a clear understanding of all aspects of a job. With multiple sources of information, a better understanding of the job is created. Peers and customers of the employee will be more likely to rate the employee accurately when the appraisal strives for anonymity. Since these appraisals will not directly affect the employee’s pay, peers can be more accurate with no fear of consequence.
The downside of multi-source appraisals is the utility in all organizations. In very bureaucratic organizations employees and managers would not be comfortable with using multi-source appraisals. This appraisal does not follow the natural flow of highly bureaucratic organizations. Some employees may not feel comfortable with evaluating their peers and supervisors.
The important take away is that the type of performance appraisal chosen depends on the organization in question. Each type is better suited to a different organization. The best choice for your organization may not be the same for another organization. In essence, choose the appraisal that suits your organization and don’t choose one just because it is quoted to be “the best.”
Adult Learning Part 2
Posted by: | CommentsTen employees are sitting in a classroom at 9:00am waiting for the trainer to arrive and begin a training that is scheduled until 5:00pm. I look around the training room and everyone looks bored and ready to leave. If polled, most employees in the training would respond that they had better things to do. Most wonder how this training will benefit them and will not have this question answered by the end of the training.
I have sat through a training where I was explicitly told that this would not be used in my department. I am sure that many employees have had similar experiences in training. What benefit does this training have for organizations and employees? What would be a better approach to training?
Considering that most employees are adults, andragogy would be a vital piece of knowledge for organizations to have. The design of a training program for adults would look a lot different than the design for a group of children. Experiential learning is the preferred way for adults to learn. They like to learn by doing the task themselves. Give the participants a chance to practice the newly learned skill. This is especially helpful with a complex task. Allow time in the training after each new skill to practice. Conclude the training with a practice session that combines all of the skills learned.
Adults also like to know how the training benefits them. They like to know that the training will not be a waste of time. Tell participants how this training will be useful as soon as they leave the session. Give them reasons other than that it is required by the organization. Show them how it can be beneficial in their everyday tasks.
Adults like to have control over how they learn. If your organization has several ways to conduct training (traditional classroom, online e-learning, discussions boards), then allowing adults to choose which way they learn will increase their engagement. It will also be cost effective to allow employees to use e-learning rather than traditional classroom learning.
Adults prefer multiple methods of training. The tell, show, do method can be very beneficial. This method involves telling participants what is going to be taught, showing them how to do it, and then allowing them to do the skill. A small lecture followed by a demonstration and then a practice session. This is three methods combined to create a form of training that will engage adult learners.
So the next time your organization decides it needs training, look to Malcolm Knowles theory on adult learning. Employees will be more engaged and appreciative of the training method. Engaged employees are happier and more productive employees. Employees engaged in training will learn more and be able to utilize this training faster and better.To learn more about Malcolm Knowles andthe theory of andragogoy click on the link below:
The Compilation of 12 Adult Learning Presentations Part 1
Posted by: | Comments“Western managers need to get out of the old mode of thinking that knowledge can be acquired, taught, and trained through manuals, books, or lectures. Instead, they need to pay more attention to the less formal and systemic side of knowledge and start focusing on highly subjective insights, intuitions, and hunches that are gained through the use of metaphors, pictures or experiences.” I. Nonaka and H. Takeuchi, The Knowledge-Creating Company (excerpt from Life at the Edge of Chaos by Mark Youngblood)
After sitting in class for three hours through 12 presentations on the same topic, I think I have a much better understanding of adult learning. There are two distinct learning theories: andragogy and pedagogy. Pedagogy is the oldest theory of learning. It stems from the process of teaching children. Andragogy was introduced in the early 20th century and is focused on how adults learn. The difference between the two theories is that adults have experience to draw from and prefer to use this experience to link to new knowledge. Children don’t have as much experience and therefore don’t have insights to share with a teacher.
Malcolm Knowles is credited with introducing adult learning theory. He introduced 5 principles of adult learning which are shown in the figure below.
Adults have experience to draw from, they are internally motivated, ready to learn, self-directed in their learning, and problem-oriented. All of these prinicples should be taken into account when designing training for adults.
Question: How can an organization benefit from the knowledge of the difference between andragogy and pedagogy?
Ahhh! Performance Appraisal!
Posted by: | CommentsThe time of the year that every employee dreads, managers and subordinates alike. I have had jobs that either didn’t have a performance management system or did not take the system seriously. My most recent position fell into the latter category.
My performance appraisal meeting involved me and several other employees being handed our appraisal and told to sign it and let our supervisor know if we had any questions. We were also told that no one would get fives on the five point scale. “There is always room for improvement,” my supervisor informed all of us. So we all sat in the hallway outside her office, signed our appraisals, and gave them back to her. We later grumbled about our results. One employees was extremely surprised by receiving a 1 for professional appearance. “I wish someone would have told me they didn’t approve of how I dressed before my appraisal.”
This scenario is prevalent in many organizations. Nobody likes performance appraisals and nobody thinks that they are important. Employees view them as a way to get a raise. Managers view them as a tedious part of their job that human resources requires them to do.
The questions is: Why are performance appraisals important and how do we make them useful?
Performance appraisal systems are important to organizations for many reasons. They help organizations keep track of employee’s performance. They are useful for documentation. When used correctly, they can help employees to become more productive. They are also good for identifying high performers in succession planning. They are also an integral part of a good talent management system.
Making performance appraisal systems useful is much harder than just creating the system. Though it may be an excellent system, it may not be used in exactly the way that it was intended. Managers may use the system how they interpret it and not how it was intended to be used.
Many managers do not want to be the “reason” that employees don’t receive a raise. They may also think that by giving high ratings they will be viewed as a good manager. Or even if they give low ratings they will be viewed as a tough manager. They also may give everyone all 5′s and then when they get fed up with 1 under-performing employee want to fire them without any supporting documentation. Another common interpretation is that by giving a low performer a high rating will motivate them to perform higher and giving a high performer a low rating will do the same.
The key to improve performance appraisal systems’ effectivness is to make sure that all employees and managers are informed of the process. Managers will need some direction on what the performance appraisal does for them and the organization. Rater training is also beneficial in getting all managers to agree on what each rating means. Rater training will help with both accuracy and consistency in ratings.
Managers will need to understand that this is not a one time a year occurrence. The appraisal should be an accumulation of smaller meetings throughout the year. Employees should not be surprised by anything on their performance appraisal.
Employees need to know that the performance appraisal is for their development and not just administrative decisions. They should view it as a way to make improvements on weaknesses and highlight their strengths. They should be prepared for their appraisal with concrete examples of exceptional work. They also need to take responsibilty for eliciting feedback from supervisors.
Performance appraisals are not a perfect system. They can be useful and important to the organization, managers, and employees. Each benefits from a correctly executed performance management system.
Talent Management Part 2
Posted by: | CommentsI’m sure that you are all dying to know the answer to yesterday’s cliffhanger. Well here it is. Talent management is not something that companies stumble upon in their recruiting effort. It is also not just recruiting but encompasses much more than that.
Talent management starts with recruiting. In this aspect of talent management companies make sure that they are attracting the right people for the company and for the position. If a company does not recruit to the right people, they will never hire the right people.
Retention is the next step in the talent management process. Once a company hires good people it has to retain them. It is not beneficial to the company to just keep hiring good people only to lose them soon after. Companies will want to devise a strategy for how to retain employees. This retention can be achieved by benefits or incentives. A support system for employees will also aid in retention.
Having an employee development program shows employees that the company is interested in helping them grow. A good employee development program will also help the company achieve greater performance and productivity from their employees. It’s a win-win situation for both the employees and the company.
Leadership development is another key aspect of talent management. Companies will achieve greater success if they identify employees with leadership potential early and can then develop those employees for leadership roles. Again the company and the employees benefit. The company benefits by having leaders ready for open positions who know the company well and are invested in its success. Employees benefit by gaining valuable leadership skills.
A performance management system is an integral part of an effective talent management system. Employees need to know how to perform their jobs well. They will require feedback in order to achieve high performance. Performance management systems can be used for both employee development and administrative decisions but it is most beneficial to focus on employee development when it is part of a talent management system. In this way employees will view the performance appraisal as a development tool and not just a way to get their raise every year.
The last two aspects of an effective talent management system are more abstract. Workforce planning is looking ahead and planning for any workforce changes such as the aging workfoce and the amount of baby boomers who will be retiring soon and leaving a skill shortage within companies. The idea behind business culture is to have a culture that supports and encourages all aspects of the talent management process. If the business culture does not support the talent management process then this process will not succeed.
All of the above aspects are great for an effective talent management system. An important detail that is often forgotten is alignment. In order for a talent management system to be successful, all aspects from recruiting to the business culture need to align with each other as well as the business strategy.
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