In our last post we introduced you to Step # 3 of the Seven Step Compensation Diet - the need to establish written operating instructions for your Managers. These policy and procedural guidelines will clarify the company's strategy, educate those making reward decisions and help minimize aberrant behavior and damaging precedents. Now let's really get our arms around things.
Step # 4 - Establish Position Control
When developing the business model for your company or department the number and type of positions required for successful operations was likely laid down somewhere. "We will need three of these, five of those, a manager here, etc." This Table of Organization (TO) is similar to a floor plan for your business, carefully describing the human factor blueprint necessary for efficient and profitable operations. The plan creates first critical, and then necessary positions. You won't find "nice to have" jobs around here.
The trick though, is to stick to the plan.
And of course the problem is that most companies don't. For those less careful a slow job creep inevitably slinks in, whereby titles (or additional headcount) become added that are not on the original TO.
The Chinese have a phrase, "death by a thousand cuts", which is an apt description of how a company's fixed costs can grow - one little action at a time. After awhile you'll look around and wonder how your cost structure became so bloated. While there are many culprits, a particularly insidious practice that adds no ROI - only increased costs - is the used of inflated titles.
Have a care to avoid this nasty virus, a subtle backdoor practice that needlessly increases only costs - not value. These are typically additive positions with incremental titles like Senior, Lead, Assistant, etc., where the job description barely changes at all. Or they may take the form of important-sounding titles that really mean something else. My personal favorite is the First Impressions Manager, who is really the Receptionist.
If management feels that they need to offer an employee a more expansive title, remember that jobholders will soon claim that such titling deserves greater reward (higher grade, higher salary range, increased base salary). Again, more cost with no ROI.
The process of Position Control is like an old-fashioned girdle for organizations. It forces you into shape, to control the number and function of jobs within your organization. Here's what you do:
- Understand what jobs your business requires (as compared to wants), and the number of positions (employees) per job
- Allow only those approved jobs and that amount of headcount to be filled
- Establish strict procedures for recommending and approving changes to the job list
Some companies tag each position (headcount) with a unique code, to better track where employees are being placed. For example, you may currently employ five senior engineers, but perhaps your organization only requires four. "You are where you are," the Brits would say, but once you know the problem you can plan remedies.
The Position Control process can help you re-establish and then maintain the organizational requirements you need for operational success. This process will help educate managers on the difference between required and superfluous jobs.
Make sure you have complete and accurate job descriptions, and then hire / promote to those specifications. A critical test is that you fill only required jobs, not simply because an employee gained certification or additional experience. If the business requires four senior engineers, paying for a fifth delivers no additional ROI - only higher costs.
Begin with the low hanging fruit. Start a spring cleaning campaign by first eliminating from your systems any position title without an incumbent. Then nip the backsliding problem with procedures that tighten up the new position approval process.
Congratulations! You've moved from the planning and consideration phases to actually having a cost impact. Well done. Now, stay the course.
Next up - Step # 5: Have a Budget and Stick to It
Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations. He is also associated with several HR Consulting firms as a contributing consultant. With over 30 years Rewards experience Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation. He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats.
Image: Creative Commons photo by alancleaver
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