Do Titles Matter? Aligning Job Titles, Compensation and

Do Titles Matter?
Aligning Job Titles, Compensation
and Performance Management
Verisight delivers differences that count
For decades we have been redefining the industry by delivering differences that are
meaningful
to our clients and that standout among competitors
Verisight offers customized consulting solutions for clients based on our extensive industry
knowledge and objectivity.
•
•
•
•
•
•
•
•
•
•
Retirement Plan
Compliance and
administration
Compensation consulting
Health and welfare
consulting
Retirement consulting
Actuarial consulting
ESOP consulting
Government representation
and reporting
Surveys and benchmarking
Employee Education
Flex plan services
2
ThedaCare
• 5 Hospitals, including a Cancer Center, Heart Institute,
Level II Trauma Center, Stroke Center, Acute Rehab
Unit
• 6 Behavioral Health Locations
• 3 Home Care Locations
• 39 Employer Health On-Site Clinics
• 1 Skilled Nursing Facility
• 1 Senior Living Facility
Appleton Medical
Center
ThedaClark Medical
Center
Ahh, Titles
4
Session Objectives
•
In a constantly changing environment, organizations constantly struggle
with job titles, hierarchy, and the relationship to compensation.
•
The session will provide insight regarding current trends and share how
some innovative healthcare organizations aligned titles, span of control, and
relative contribution to the organization in order to engage top performers.
•
Connecting job family leveling concepts and compensation, this session
showcases human capital models that neatly package titling, compensation,
and performance management issues.
5
Verisight Perspective
•
As Organizations work to develop a consistent approach to titling nomenclature and job
leveling, the Organization should take the opportunity to consider a new approach to
defining jobs and managing careers.
•
Adopting a job family approach to broadly organizing positions by functional specialty and
responsibility level encourages employees to continuously add greater value in their jobs.
− Acknowledgement of increased responsibilities as well as expanded job mastery can
provide an environment in which employees will go beyond basic job requirements to
develop new and creative ways to serve patients and internal customers.
•
The current labor market puts a premium on engaging and retaining high performers.
− Organizations can provide valued employees with the opportunity to advance their
career by:
– Mastering skills that add greater value, or
– Expanding skills that equip them to take on greater responsibilities.
A job titling and leveling approach to compensation management is a great way to engage high
performers – especially with limited compensation budgets!
6
What’s in a title?
•
Google allows it’s employees to pick their own titles
– “Jolly Good Fellow”
– “Intergalactic Federation Leader of the Universe”
•
Wisconsin Non-Profit Client has interesting titles as well
– COO of People
– Seeker of Talent
– Upward bound Project Director
– CEO Chief Visionary and Storyteller
7
Job Families
•
Can represent a broad grouping of functionally related jobs.
– Marketing
– Information Technology
– Nursing
• Can represent career progression within a particular job.
– Medical Assistant
– Accounting Clerks
– Customer Service
– Administrative Assistants
•
Not all jobs fit a specific job family.
• Progression SHOULD be more than years of experience.
8
Benefits of a Job Family Approach
• Is less complex
•
Takes advantage of readily available market compensation data
•
More closely resembles the external market
•
Is adaptable and scalable to constant organizational growth (and change)
•
Is easy for managers and employees to understand as the job hierarchies are
based on the work specialty areas in which they’ve grow up
•
Creates a broader view of work and can facilitate cross-functional knowledge, a
proven approach to engaging high performers
•
Shifts the focus away from managers making frequent decisions about
compensation and places the focus on people progress and knowledge/skill
mastery
9
Not All Families Have The Same Path
Principal
Senior
Senior
Advanced
Advanced
Advanced
Associate
Associate
Associate
10
Administrative Support Job Family
Criteria
Administrative Assistant I
•
•
•
Experience,
Knowledge,
Skills, and
Abilities
•
•
Problem Solving
/ Decision
Making
•
•
Freedom to Act
•
Internal and
External
Working
Relationships
•
Responsibility
for Work of
Others
High school diploma or
equivalent
Up to 2 years of secretarial
Administrative support
experience required
Basic knowledge of personal
computers and related software
including word processing and
spreadsheet
Effective oral and written
communication skills (including
proofreading and appropriate
usage of punctuation and
grammar)
Ability to follow established
guidelines, procedures, routines
Resolves routine questions and
problems—complex issues are
referred to higher levels
Under supervision, standard
practices enable the employee to
perform routine work
Contacts may be regular but are
typically limited to fixing or
receiving routine information
None
Administrative Assistant II
•
•
•
•
•
•
•
•
•
•
•
High school diploma or
equivalent
2-5 years of secretarial
Administrative support
experience preferred
Personal computer knowledge
and skills in multiple applications
Ability to work independently and
recognize/ anticipate problems/
issues
Skill in drafting correspondence/
documents as requested
Ability to handle and organize
multiple tasks, projects and
priorities
Can identify some problems but
does not implement solutions
without approval
Under general direction, works
from procedures and project
objectives
Frequent contacts with others
Contacts are typically limited to
giving or receiving routine
information and may involve
determining the best person to
resolve a problem or issue and
then referring the contact
None
Administrative Assistant III
•
•
•
•
•
•
•
•
•
•
•
•
•
High school diploma or
equivalent
5+ years of secretarial
Administrative support
experience preferred
Demonstrated skill of personal
computer applications including
ability to answer questions/ train
team members
Demonstrated tact, diplomacy
and good judgment
Demonstrated initiative to draft
memos, correspondence and/or
documents
Ability to respond to questions
from lower level staff
Can identify most problems and
offer creative solutions
Prioritizes own workload
Operates under general direction
– some latitude for unreviewed
actions and decisions
Considerable contact with
others—often require discussion
about the best resolution to an
issue/ problem and may require
screening
Work with all support
departments to foster teamwork
None; answers questions from
lower level staff
Coaches/mentors lower level
staff
Administrative Assistant IV
•
•
•
•
•
•
•
•
High school diploma or
equivalent
Continuing education –
Management, supervisory or
business administration
Generally requires 8+ years of
secretarial administrative support
experience
Experience in Human Resources
systems and practices including
interviewing, hiring, performance
management, salary
administration, training and
development, polices and
procedures preferred
Can lead problem resolution and
contribute ideas regarding
systems, processes and
productivity
Considerable latitude for
unreviewed actions and
decisions
Contacts typically relate to
important issues that require
high levels of diplomacy, tact
and judgment
Supervises assigned project/
Administrative support staff
including hiring, orientation,
performance management,
salary review, coaching, training,
motivation and retention
11
Job Classification/Compensation Structure
12
Market Pricing and Matching Jobs
The Pressure Point of Job Pricing!
Job Title
Job Definition
• Why Market Price Your Jobs?
– Ensure competitive pay levels for all positions
– Building blocks for a structured compensation program and performance based
compensation system
– Compare current incumbent data to market and identify outliers
– Create a system and tools that managers can use when making pay decisions
• General rule of thumb: If 70% or more of the job content is similar, consider it a valid match.
13
Structure Development - Design Options
Annual
Market-Based
Rates
$500
Market Based Or Job
Evaluation Pay Grades
Broadbands
$0
Increases Based on
Performance
14
Case Study – ThedaCare’s Management
Compensation Journey
Tying it all TOGETHER
Job Titles
Job Leveling
Compensation
Management
Compensation
Program
Implementation
&
Communication
16
Titling
Leveling
Comp
Case Study - Background
•
•
Job Titling:
– Application of titles has been inconsistent
– Overall perception of dissatisfaction with titles
• Perception position titles are more prestigious at other organizations for like
jobs, ThedaCare had very few Director level positions in actuality
• Belief pay would be greater with Director versus Manager title
• Acquisitions had brought many organizational titling schemes together as
well
Leveling:
– Original compensation program was developed for the staff and management
level positions using point-factor job evaluation and market benchmarking
• Criteria no longer current, job evaluation was replaced by market
benchmarking 10+ years ago
• Contributes to difficulty recognizing differences between Manager, Director
and VP responsibilities
– Pay compression exists between Manager, Directors and VPs (approx. 10%)
• Perception that the VP job duties are significantly larger
17
Titling
Leveling
Comp
Case Study - Background
Compensation Management:
– A recent compensation program review concluded that the Management
Compensation Program needs to be better able to:
– Recognize individual contributors in the compensation system
– Facilitate hiring
– Provide managers/directors room to grow
– Encompass newly created positions
18
Titling
Leveling
Comp
Case Study – High-level Solution
•
•
Create new Management Compensation System
– Define job titles and apply consistently
– Utilize Job Family approach
– Fewer grades
– Continue to monitor market competitiveness
Transition to the new system must be cost neutral
19
Titling
Leveling
Comp
Case Study Observations: Titling and Level
The following table shows the titles used at three like-sized systems (numbers in
parentheses reflect incumbents). Titles have been aligned by levels within the
organizations.
Level
System A
System B
System C
1
CEO (1)
CEO (1)
CEO (1)
Chief Medical Officer/EVP (1)
SVP (4)
VP (10)
2
3
SVP (11)
SVP (2)
4
VP (22)
Medical VP (MD) (3)
VP/Chief Officer (10)
5
Director (14)
Executive Director (7)
Senior Director (5)
Director (36)
Admin Director (22)
Director (32)
Clinical Manager (82)
Manager (70)
Manager (109)
6
Manager/BU
Manager (62)
Verisight reviewed titling nomenclature across three Midwest health care systems
averaging approximately $600M in revenue.
20
Titling
Leveling
Comp
Case Study Observations – Titling: Direct Alignment
The following areas were in direct alignment as it relates to titling and matches to external
salary survey data:
21
Titling
Leveling
Comp
Case Study Observations – Titling: Aligned Differently
The Diagnostic Imaging area is aligned differently as it relates to titling, level within
organization, and matches to external salary survey data:
22
Titling
Leveling
Comp
Case Study Observations – Titling: Lower Title
The following areas utilize a “lesser” title at System A even though they match to the
same external salary survey data:
23
Titling
Leveling
Comp
Recommendations – Titling
•
•
Transition to a defined management structure:
– Establishes a management level for each official title
– Communicates membership in management team
– Defines span of control
– Should align with and support Organization’s Compensation Philosophy
– Directs Human Resources strategy, career and succession planning, and
ongoing investments in employees
– Establishes clear career development opportunities to increase engagement and
retention
Define official titles and apply consistently across the Organization
24
Titling
Leveling
Comp
Case Study Observations – Leveling Criteria:
WiSHHRA Organization Level
•
The next few slides compare average organization level and number supervised as reported
in the WiSHHRA survey. The levels correspond to the following description(s):
– The top position (i.e., President, Chief Executive Officer, Administrator) within your
facility. Generally this incumbent reports to the Board or to an executive at the system
level.
– The second level within your facility (i.e., Chief Operating Officer, Assistant
Administrator, Vice President).
– The third level within your facility (i.e., Department Head/Manager), one that assumes
full responsibility for a specific entity/department and reports to Level 2.
– The fourth level within your facility (i.e., Assistant Manager or Assistant Department
Head), typically a first line supervisor and reports to Level 3.
– The fifth level within your facility (i.e., first level supervisor). Generally will report to the
Assistant Director or Assistant Manager (level 4) within the department.
Source: WiSHHRA 1st Quarter Survey
25
Titling
Leveling
Comp
Case Study Observations – Leveling Criteria:
WiSHHRA Average Org Level & Number Supervised – Director/Managers
• These Observations should be included in the discussions for realignment especially when organization
level differences are high
• WiSHHRA “Head of” levels: Second, Third and Fourth level from top
• Organization Director/Manager roles: Third, Fourth, and Fifth level from top
• Significant span of control differences in Laboratory and Surgical Services
Org level
possibly too
low
WiSHHRA Title
Head of Development/Foundation
Head of Information Services
Head of Surgical Services
Controller
Head of Volunteers
Head of Housekeeping
Multi-Dept Head of Rehabilitation Svcs.
Head of Patient Accounts/Business Office
Head of Emergency Services
Head of Child Care Center
Head of Patient Care Unit
Head of Education
Head of Quality Improvement
Head of Medical Records
Head of Human Resources
Head of Plant Operations/Maintenance
Head of Compensation and Benefits
Administrative Head of Laboratory
Head of Public Relations
Head of Purchasing/Materials Management
# of
Fac
6
2
6
6
5
4
4
4
5
3
5
5
4
7
3
5
2
6
2
5
WSH Avg # of
Ees
1
1
1
1
1
1
2
1
1
2
15
1
1
1
1
1
1
2
1
1
ABC # of
Ees
1
2
2
1
1
1
1
1
2
1
8
1
4
1
1
1
1
1
1
1
WSH Avg
Salary
$111,170
$156,780
$126,268
$126,754
$65,296
$79,206
$92,251
$113,007
$112,163
$61,006
$91,531
$98,376
$95,264
$93,552
$108,597
$88,806
$95,763
$108,077
$74,111
$97,353
ABC Average
Salary
$77,646
$110,375
$89,825
$96,034
$51,189
$65,333
$77,979
$96,054
$98,498
$53,602
$88,028
$96,408
$94,921
$95,534
$116,688
$99,278
$116,688
$134,472
$101,005
$136,594
Avg Salary
Comparatio
70%
70%
71%
76%
78%
82%
85%
85%
88%
88%
96%
98%
100%
102%
107%
112%
122%
124%
136%
140%
WSH - Avg
Org Level
(n-1)
3
2
3
3
3
4
4
2
3
3
4
3
3
4
3
4
3
3
3
3
ABC OrgLvl
(n-1)
4
3
5
3
4
5
4
3
5
4
5
4
4
4
3
4
3
4
4
3
WSH Avg #
Supvd
4
75
185
15
8
26
47
92
96
30
67
12
14
49
14
46
9
90
2
24
ABC Avg #
Supvd
2
49
89
12
12
70
129
36
66
24
53
24
30
41
6
54
34
221
5
58
26
Titling
Leveling
Comp
Case Study Observations – Leveling Criteria:
WiSHHRA Average Org Level & Number Supervised – Managers/Supervisors
•
•
•
Org level
possibly too
low at ABC
These Observations should be included in the discussions for realignment
especially when organization level differences are high
WiSHHRA “Supervisor” levels: Fourth and Fifth level from top
ThedaCare’s Manager/Supervisor positions: Fifth and Sixth level from top
- Majority one level apart
- Significant span of control differences in:
o Food Service
o Housekeeping
o Medical Imaging
WiSHHRA Title
Supervisor Food Service
Supervisor of Housekeeping
Supervisor of Medical Imaging
Supervisor of Patient Admissions
Supervisor of Laboratory
Supv of Plant Operations/Maintenance
# of
Fac
6
5
5
2
5
4
WSH Avg # of
Ees
5
7
5
2
6
2
ABC # of
Ees
1
3
1
1
4
2
WSH Avg
Salary
$44,668
$44,977
$87,657
$50,388
$70,578
$66,675
ABC Average
Salary
$36,213
$37,773
$75,400
$47,278
$67,943
$67,735
Avg Salary
Comparatio
81%
84%
86%
94%
96%
102%
WSH - Avg ABC Org Level OrgLvl
(n-1)
(n-1)
5
6
5
6
4
5
4
5
4
5
5
5
WSH Avg #
Supvd
17
62
43
31
32
14
ABC Avg #
Supvd
70
23
19
15
20
27
27
Titling
Leveling
Comp
Recommendations – Leveling Criteria
Develop specific criteria to facilitate job title, level and grade assignment for current and
forthcoming leadership roles
– Utilize WiSHHRA “Definition of Supervisory Levels” as a starting point for title and level
criterion
•
Specified leveling criteria will allow Organizations to:
– Assign consistent titles
– Determine salary grade utilizing market data and
• Can be used as a “job slotting tool” when there is no clear market data for a job
•
Develop a Job Family Matrix (JFM) based upon:
– Job Families
– Management Level Criteria
•
If shared, ThedaCare understands that the JFM can facilitate an organization-wide
understanding of the internal hierarchy and titling, however, ThedaCare has yet to share.
– Transparency of career opportunities across the organization can result in a widespread
growth of knowledge and skills and less reliance on traditional vertical promotions.
•
28
Titling
Leveling
Recommendations – Leveling Criteria
Comp
WiSHHRA Definition of Supervisory Titles (from the survey)
Supervisory
Factors
Supervisor
Head of
Multi-Department Head
Top Executive
Supervision
Given
Takes action on hiring, firing, layoffs,
promotions and other personnel
activities.
Enforces rules and regulations.
Approves or endorses personnel
recommendations made by subordinate
supervisors.
Directs procedures and policies. Approves or
endorses personnel recommendations made by
subordinate managers. Assists in selection of key
personnel.
Directs efforts to achieve stated goals. Approves or
endorses personnel recommendations made by
subordinate directors. Selects key personnel.
Functions
Supervised
Oversees an activity of one function.
Oversees all activities of a department.
Integrates and coordinates a number of
departments.
As an officer, oversees major functional areas, and
participates as a full member of the senior management
team.
Employees
Supervised
Supervises employees of similar
occupational skills or a relatively limited
variety of skills. For the most part,
supervises clerical, service or technical
employees.
Supervises employees with some
variation in skills and pay including the
more complex skills. Supervises
professional and supervisory
employees.
Supervises senior department heads with
considerable variation in skills including the most
complex skills.
Supervises key personnel.
Work Performed
Directly oversees the details of work
performed by individual employees.
May perform the work of subordinates
but less than 20% of the time. Assigns
work in accordance with schedules fixed
by higher levels.
Concerned with both what is to be done
as well as how it is to be done?
Looks at and prescribes the general and not the
specific ways in which work is to be
accomplished.
Assigns general objectives. Little consideration is given
to the details of how work is to be accomplished.
Management
Focus
Integrates activities of employees to
achieve objectives.
Integrates short and long-range goals
into specific objectives and tactics.
Integrates short and long-range goals with
strategic plan.
Strategist. Develops long-range objectives and broad
policies. Reviews validity of objectives in light of external
and internal circumstances.
Direction
Received
Work performed under direction. Plans
work according to established policy and
procedures. Has contact with
immediate supervisor as to the general
phases and specific details of the work.
Work performed under general
direction. Receives general objectives
and, without much guidance, performs
work based on established policy and
procedures.
Work performed under administrative direction.
Usually self-supervising and free to use individual
judgment within broad limits of established
policy and procedures.
Work is subject to administrative or Board approval.
Generally self-supervising. Exercises the maximum
degree of initiative, judgment and freedom of action
within the limits of policies and plans laid down by
corporate management.
Effect of
Decisions
Provides input into budget projections.
Decisions impact monthly to quarterly
results.
Overall budget responsibility for
department. Decisions impact annual
financial gain or loss and staff levels.
Approves subordinate budgets. Decisions impact
achievement of business plans and strategic
goals in terms of financial results and
organization of activities.
Approves corporate-wide budgets. Decisions impact
organization success in terms of financial performance,
strategic relationships and long-term viability.
29
Titling
Leveling
Comp
Case Study Observations – Compensation Management
BU/Clinical
Managers
Directors
Managers
Supervisors
Current titles overlap and span more grades than “typical” and/or best practice
Leadership titles tend to correspond positively with salary grade progression
Grade
14
Minimum
$45,000.00
Midpoint
$57,000.00
Maximum
$67,000.00
15
16
17
18
19
20
21
$49,000.00
$52,000.00
$56,000.00
$59,000.00
$63,000.00
$68,000.00
$73,000.00
$61,000.00
$66,000.00
$71,000.00
$76,000.00
$82,000.00
$88,000.00
$95,000.00
$73,000.00
$78,000.00
$84,000.00
$91,000.00
$98,000.00
$105,000.00
$113,000.00
22
23
24
25
26
27
28
$78,000.00
$84,000.00
$91,000.00
$97,000.00
$105,000.00
$113,000.00
$126,000.00
$102,000.00
$109,000.00
$118,000.00
$127,000.00
$136,000.00
$146,000.00
$157,000.00
$121,000.00
$131,000.00
$140,000.00
$151,000.00
$163,000.00
$175,000.00
$189,000.00
Current titles
overlap and span
more grades than
“typical” and/or
best practice
Leadership titles
tend to correspond
positively with salary
grade progression
30
Titling
Leveling
Comp
Case Study Observations – Compensation Management
•
The situation could be the result of:
– Inconsistent application and definition of “Director” vs. “Manager” duties
– Flat organization
– Market pressure to pay certain functions at a higher level (i.e. Pharmacy)
•
Titles spanning multiple grades indicates the need for clarity around the following:
– Job duties/roles
– Scope of authority
– Chain of command
– Match and application of the external data from the marketplace
31
Titling
Leveling
Comp
Recommendations – Compensation Management
•
Prepare a Compensation Philosophy to serve as the guiding principles for the
compensation program
•
Identify current market value for all benchmark positions
– Prepare standard rules for scoping
•
Reset compensation structure and salary grades to reflect new titling convention
– Verisight suggests use of broader, more fluid pay bands to accommodate the everchanging nature of the organization. Differentials between midpoints (progression)
should be targeted from 10% to 30%.
•
Utilize slotting criteria to place non-benchmark jobs into the structure
•
Review market data yearly to ensure competitiveness with external market
•
Develop standard salary administration policy/procedures
32
Max
Mid
Min
Pay Band
8
7
6
5
4
3
$150.0 $200.0 $250.0
$130.0 $170.0 $210.0
$110.0 $140.0 $180.0
$ 90.0 $120.0 $150.0
$ 70.0 $100.0 $120.0
$ 80.0 $100.0
$ 70.0
$ 60.0
$ 50.0
$ 60.0
9
$ 40.0
10
$180.0 $240.0 $300.0
$ 70.0
Job Title
Leveling
$ 90.0
11
$220.0 $290.0 $360.0
12
$290.0 $390.0 $490.0
$540.0 $720.0 $900.0
Titling
Comp
Recommendations – Compensation Management
President
Exec Vice
President
Senior Vice
President
Vice President
Director
Manager
Supervisor
2
1
33
Communication
Implementation
•
Met first with Executive and Sr. Vice Presidents
− Reviewed structure, pay grades and job placements for their group
•
Group meetings
– Structure, pay grades, Salary Administration Guidelines
•
Individual Meetings
– VP and HR Directors met with each Director and Managers
Pay-for-Performance in Healthcare
Salary Increases – Industry Trends
*Source: 2012 WorldatWork Salary Budget Report
36
Pay for Performance Trends
•
•
Differentiating increases becomes more difficult when dealing with small merit budgets
Majority attempting to provide increases for top performers that are at least 1.5 to 2.5 times
the average
37
Pay for Performance Trends
38
Recommendations – Performance Management
ALIGN – Plan - Execute
Essential order
Starts from the Strategic Framework
Departments need to review the strategic imperatives and deploy those objectives to
their departments - ALIGN
Organizational
• Strategic Framework, key priorities and strategic initiatives
• Organizational Level Goals
Departmental
• Department Level Goals
• Directors / Managers responsible for execution
Individual
• Individual Level Goals
• Support Achievement of Department Goals or other goals
within the strategic framework
39
Recommendations – Performance Management
Measurement
While highly dependent upon each individual company’s situation and the metrics used, a
common threshold performance level would be 70% – 90% of target performance and a
common “Excellence” performance level would be 110% – 130% of target performance.
Target Performance
Threshold:
Excellence:
70%-90% of
target performance
110% - 130% of
target performance
100% expected performance
Budgeted based on
historical data
40
Recommendations – Performance Management
Department
Department Goal
Statement
(SMART)
Departmental Goals Measurements
Hitting it out
Threshold
Target
Connection to
of the
Measurement Measurement
Strategic Framework
Ballpark
Weight: 50% of incentive payout
.50% / # of
goals
Provide
competitive
benefits to staff
with a focus on
expense
management.
Provide competitive
benefits as a means
to show the value
staff provide, while
managing the
Organizational
resources.
Satisfaction with
Human Resources
policies, practices,
and procedures on
the employee
opinion survey
Continue to
strengthen internal
culture of trust where
collaboration,
innovation, and
healthy dialogue are
supported
1.50% / # of
goals
3.50% / # of
goals
Second
Quarter
Status
Third
Quarter
Status
An overall
An overall
An overall
8% increase 6% increase 5% increase
in health
in health
in health
benefits with benefits with benefits with
a minimum
a minimum
a minimum
of 2 plan
of 2 plan
of 2 plan
changes
changes
changes
84%
85%
Estimated
Fourth
Quarter
Status
Final
Measure
ment
7%
increase
with 2
plan
changes
86%
41
Questions?
Thank you!
Rena Somersan, MBA
Principal, Compensation Consulting
VERISIGHT Inc.
(414) -312-8189
Karen Garvey
Director of Compensation &
Benefits
ThedaCare Inc
(920) -830-5845