HR Group Newsletter, April 2009

Donya B. Rose, Managing Principal, The Cygnal Group
Marieke A. Pieterman, Sales Compensation Consultant, The Cygnal Group

If you are responsible for compensation policy and planning for your company, the current economic situation may present you with an unprecedented opportunity to contribute to your company’s success. Across the human resources department there will be opportunities to support the company’s senior management team with reviews, analysis, and re-evaluation of the organization’s staffing levels, compensation packages, and benefit programs.

Specifically within the compensation area, companies are reviewing merit pay increases or salary freezes, reducing bonus payouts or eliminating them entirely, adjusting sales compensation payout levels, and perhaps even reducing the amount of stock option distributions. Every aspect of “the deal” between employer and employee is being evaluated and is fair game for review and negotiation. Those working to perform such analysis will benefit from careful preparation and documentation of their work.

We have compiled a few tips, all of which are good practices in any economy, but which are especially critical in today’s environment.

  • Use cell notes to document planning assumptions. These will help 3 / 6 / 9 months to a year from now when it becomes necessary to re-trace steps and assumptions to figure out which scenarios were presented, based on what assumptions, which ones were approved, which ones were not approved, and which ones were identified for revisions.
  • Use parameters rather than hard-coded values. For example, if the organization is considering reducing the incentive payouts with an “across the board factor of X%,” be sure to set up “X%” as a parameter in the spreadsheet, then have all formulas that need to “know” that value refer to the single cell in which it is entered. Examples of value to set up as parameters are those that define to what level you might decrease incentive payouts, reduce the merit budget, or cut headcount. These can be easily set up in a single field, with formulas referring to that field; this facilitates quick changes even during a meeting so that various scenarios can be evaluated dynamically without wasting precious time.
  • Assume the role of “secretary” of the project team and document religiously. Keep a journal / log of conference calls and meetings. Document and date conference calls and meetings, noting who was present on the call, the options that were presented, and the final decisions that were made and who were the final decision makers. This will become critical in the midst of “corporate amnesia” when many look to Human Resources to be that unbiased “collective memory” for the organization during these difficult decisions. It will also help when developing the employee communication piece around these topics, helping to identifying the reasons why decisions were made and other alternatives were rejected.
  • Find out the business need behind the data or analysis request. Ask questions and restate until the “question behind the question” becomes clear. Then ask a better question and answer that one as well. From the vantage point of human resources, the entire organization is visible, along with data and insights that offer a more “holistic” perspective and could potentially offer a more systemic analysis and solution to the current problem.
  • Avoid a sense of dismay. We are embarking on unmarked territory in many cases, and big changes are afoot. Break big challenges into manageable tasks and stay focused on execution. Organizations across the globe are making difficult decisions in areas that they have never had to face before in their careers. Embrace the challenge during these tough economic times –no one knows for sure what’s next.

What we have before us is nothing less than an opportunity for greatness – so be ready. This could be the moment that proves the true value of the human resources function.