The Ever-Increasing Digital World of Work

With the acceleration of all things digital over the past five years, especially through the pandemic, training strategy and governance have become a priority for better practice human resources (HR) strategy and management across most industry sectors. It has also become a critical instrument for delivering and meeting customer/client/patient needs and expectations. Against this imperative, however, is the stark reality that many organizations do not recognize this reality, and the risks of not investing in and effectively managing this training and development priority.

With this “all things digital” context in mind, this article is focused on providing three key human resources strategy perspectives to elevate one’s approach to training strategy today, which include:

  1. a proactive approach on how to think about to considering (and categorizing) digital work applications and practices; and
  2. the heightened importance of related training strategy development, including segmented needs analysis and how it needs to be managed and governed; and
  3. how to bring the approach and management of enabling digital training to life.

This article will also highlight select applied insights from the Canadian healthcare and professional services sectors. These examples of challenges, priorities, and better practices are generally applicable to most organizations across the broader private and public sector spectrum, and for both unionized and non-unionized employers.

Download PDF: The Ever-Increasing Digital World of Work: Critical Implications for Training Strategy and Governance

Bringing HR Strategy to Life: The Importance of Delegated Authorities and How to Make Them Work

Introduction

One of the many lessons that the pandemic has taught us is that, more than ever, front-line managers and employees need to be ready and able to respond in the moment to the unprecedented demands and expectations of customers and colleagues alike. Effective empowerment and decentralized decision making, both virtually and face-to-face, are what drive great customer outcomes, as well as an engaged and healthy workforce. And in this dynamic digital age that cuts across diverse “brick and mortar” business models and geographies, the need to deliver customer and employee responsiveness and quality is key to both short and longer-term success. Anything less, and customers and employees alike can easily walk and take their buying power and human capital elsewhere.

So, in the face of these realities, how do employers translate human resources [HR] strategies and well intended policies into effective and responsive HR practices and results? A key driver of this success is the clarity and practical application of one’s HR “delegated authorities”.

Knowing what HR decision making authorities to delegate, to whom, and how they need to be supported and applied have become mission critical HR management realities for most organizations regardless of sector. Delegated HR authorities are key to “how” HR strategy is delivered, how desired workplace cultures and employee productivity aspirations are realized. They are also key to how meaningful line management accountabilities for employee engagement, wellness, and performance are achieved.

Download PDF: Bringing HR Strategy to Life

Hot Skills in a Dynamic Canadian Labour Market

Introduction

Up until March 2020, Canada had minimal to no real unemployment. Essentially, it was a seller’s market where anybody looking for work could find it. This reality, which defined and drove compensation priorities and strategies, was especially true for highly skilled and knowledge-intensive employees, and organizations that required their critical competencies to deliver on mandate expectations. Opportunities and challenges were particularly pronounced for unique job families and roles like Cyber-Security and AI Specialists that were short on supply and in high demand.

Over the course of the past 15 months as all industry sectors and employers navigated the devastating impact of the pandemic, and rapidly transitioned to a broad range of digital service and product platforms, the labour market imbalances for highly specialized skill sets became even more pronounced.  Quite simply, the existing supply of technical and knowledge-intensive specialists, and those being produced through apprenticeship, college, university and licensed programs, have not kept up with demand. More specifically, for example, labour markets have not been able been able to source an adequate supply of nurses in healthcare, digital software engineers and technicians in high technology, and environmental scientists in clean energy, to name but a few.  The net result of these pronounced labour market imbalances has been production and service delivery constraints, and ultimately material risk to customer, client and patient quality commitments. Strategically, this contextual reality and now a re-opening economy are forcing employers of all kinds to strategically think through what they can do from an HR and compensation perspective to better attract and retain these mission-critical resources or colloquially, “hot skills”.

Understanding the impact of hot skills on one’s business model and organizational capabilities can be both a challenge and an opportunity and, if not done thoughtfully and carefully, can result in a number of HR and economic risks. Knowing what hot skills are in this day and age, how they should be managed and compensated, and the risks and implications of ineffective choices for both one’s hot skill employees and broader workforce have become a critically important HR strategy issue for many employers.

What are Hot Skills?

Hot Skills are essentially an occupational or job-specific skill or a set of skills that are highly specialized and in high demand and in short supply (SHRM, 2011), and are viewed as being of critical importance to mandate value creation and customer satisfaction. These labour market imbalances can be found across multiple industry sectors and even geographies. In some cases, the skills may only be in high demand for a short period of time (e.g. Y2K conversion in the year 2000), and in other cases, the skills can remain in demand for a prolonged period of time (e.g. an experienced construction engineer).

So how does an organization determine if a skill is hot or not? The first signs are typically recruitment and retention challenges. If an organization is continuously having trouble attracting certain skill sets through external recruitment efforts, it may be because of a poor employee brand, ineffective recruitment efforts, or quite simply because of uncompetitive base and/or variable pay practices. Similarly, if an organization is continually having trouble retaining certain skill sets and the issue is not due to the working environment or organizational culture, but rather because of materially higher rates of pay being offered by marketplace competitors, the organization is likely dealing with a “hot skill” compensation challenge.  And of course, in this high-speed digital age where social media is driving the pace of both content and perception distribution, these hot skill attraction and retention challenges are being shared and perpetuated continuously by external candidates and employees alike.

Compensation for Hot Skills

Once a hot skill has been identified, there are several different human resources strategy options that could be deployed to address the attraction and retention issues. These options can include a select number of non-compensation solutions, and range from contracting out to revising specific HR policies and programs to attract and retain hot skill talent (for example, training and development, unique career paths, and even specialized benefits). Many organizations, however, conclude that a compensation response is also needed, especially when competing human resources strategies appear to be comparable and not differentiated.

A compensation strategy to address a measured hot skill challenge, however, is a major decision and can have profound ramifications.  As a starting point, an employer should consider its overall compensation philosophy – is it willing to offer a unique element of compensation to a designated workforce segment to the exclusion of its broader talent-base, and thereby alter internal equity practices to address external equity realities? Once these priorities and guiding principles have been confirmed, management can then explore a number of different compensation strategies or options for dealing with hot skills.  These options can be varied and include:

  1. Simply examining and better promoting one’s full total rewards package. Are there plans that your organization offers beyond direct total cash compensation to attract and retain hot skill employees? For example, better emphasizing above-market pension and/or benefits programs that other competing employers may not offer at all – as is typically the case in healthcare;
  2. Identifying and defining possible base pay premiums that would be selectively offered to hot skill jobs and incumbents, but on an annual renewable and without prejudice basis;
  3. Identifying and defining very specific attraction [e.g. sign-on bonuses] and retention-based [tenure] variable pay rewards for designated “hot skill” jobs and employees;
  4. Working within one’s existing base salary range framework and administering one-off in-range adjustments for existing hot skill employees whose compa-ratio positioning is below target control points;
  5. Possibly offering above minimum range base salaries for external recruits; and,
  6. Exploring other non-monetary benefits (e.g. extra vacation, paid membership or license fees, etc.).

For a number of reasons, including the varying nature of what skillsets are considered “hot”, how long pay premiums last, and the confidentiality of strategic compensation practices especially in the same industry sector, it is difficult to find and establish concrete external trends and data sources. Current but limited research, however, suggests that organizations offering hot skill pay supplements offer time-based premiums of 5% to 10% of base pay that are deemed separate from established classification and base salary policies – to do otherwise would blur and possibly compromise both core internal equity and pay equity principles. Some organizations may also offer a “sign-on” bonus [supported by specific tenure-based “claw-back” requirements], or one-time retention bonuses supported by specific tenure criteria in order to secure certain skills.

Contextual Considerations

Even in the face of identified and measured hot skills and related compensation challenges, not all organizations are able to respond and deploy an agile compensation response to address hot skill priorities. Unionized employers and unions working within an existing collective agreement will likely be constrained in this regard. Other constraints may include fiscal year timing and budget limitations, pay equity requirements and the gender predominance of designated hot skill jobs, as well as legislative pay restraints found across various public sector jurisdictions.  Finally, some employers may philosophically be of the view that they will not make unique provisions for the few to the perceived detriment of the many, and therefore, are prepared to explore other broader HR strategies to address hot skill shortages such as outsourcing, strategic partnerships, multi-skilling, and even incremental overtime.

Conclusion: Intended and Unintended Consequences

While the identification of hot skill jobs within one’s organization can be a straightforward exercise, the related compensation and human resources decisions that are made to address them will have profound policy implications, and possibly unintended consequences. For example, a decision to not offer some sort of compensation premium or adjustment when you have specific hot skill roles may undoubtedly impact your attraction and retention of these incumbents, and therefore materially constrain marketplace growth aspirations and customer expectations. Conversely, a deliberate strategy to offer a select compensation adjustment or premium runs the risk of perceived internal inequities and broader employee disengagement. More specifically, providing a hot-skill premium to a very select number of roles and employees within a particular function [e.g. IT/IS] or job family [e.g. digital] may be viewed as being overly generous and unfair to the balance of employees in the function or business unit.  Increased absenteeism and turnover, let alone declining employee engagement and productivity may then be the unintended consequences!

Even in the case where the hot skill premium is profoundly needed because of profound competitive pressures, the decision may be costly, and difficult to undo in the future if related labour markets strike a balanced demand/supply equilibrium.  Employers must also weigh the need for additional administrative and management efforts that will be required to monitor and assess external labour market and compensation practices, and related policy responses. For some organizations, this incremental management cost has become more pronounced because of the speed and impact that the COVID-19 pandemic has had on labour market and compensation practices, and how quickly they can be up-ended and render one’s compensation program, let alone hot skill strategies, irrelevant.

As many of us can attest, the COVID-19 pandemic has turned well-intended compensation strategies upside-down, including measured hot-skill premiums. With the economy and labour markets now rebounding as we hopefully move into a post-pandemic era, those employers that are able to identify their hot skill jobs and people, and determine and “stress test” relevant compensation strategies, will be strategically well-positioned to optimize attraction, retention and related performance for years to come.

About the Authors

Ian Cullwick

Ian Cullwick is a retired Partner with an international consulting firm, and served as the Vice-President of HR and Organization Research at the Conference Board of Canada. Ian is a specialist in human resources governance, organization and performance management, and compensation strategy.  He is also a noted thought leader and has authored articles on organization design, performance management and compensation strategy. In addition to serving as a Queen’s IRC Instructor, Ian also teaches in the Executive MBA program at the Telfer School of Management.

Katrina Galic

Katarina Galic is a Compensation Specialist at a large asset management organization in Toronto, responsible for the development, governance and administration of compensation programs and practices. Katarina specializes in job evaluation, broader workforce market benchmarking, salary structure design, and total rewards for a global organization. Previously, Katarina was a consultant in Ottawa with an international HR consulting firm, where she supported clients on competitive pay analyses and job levelling in the public, private, and crown corporation sector. Katarina holds a Bachelor of Commerce specializing in Human Resource Management at the University of Ottawa.

 

References

Perez, T. (2019, January 30). Which Skills Are the Most Valuable? – Compensation Research. Retrieved July 09, 2021, from https://www.payscale.com/data/which-skills-are-most-valuable.

Ledford, G., & Heneman, H. (2011, June). Skill-Based Pay. Retrieved July 09, 2021, from https://www.shrm.org/hr-today/trends-and-forecasting/special-reports-and-expert-views/Documents/SIOP%20-%20Skill-Based%20Pay,%20FINAL.pdf.

 

 

Performance Management – Many Possibilities…and Implications

Performance Management (PM) has become a core organizational strategy and management priority for many organizations. From Boards of Directors to front-line managers, PM can effectively be used to drive accountability, quality, productivity, competence, and rewards and recognition. Going beyond simply a tool to drive “appraisals” and incentive rewards, PM can be complex and not without risk but it can also drive a sophisticated quality and performance-based culture.

Performance management has also become both a strategic imperative and a challenge for many organizations in this data analytics day and age. As a core enabler of performance optimization and accountability, many executive and HR leaders view PM as a core management practice and a key ingredient to becoming a higher performance organization. As a result of various regulatory, methodological and technological developments over the past five years, however, PM has become a misunderstood topic that is confusing for many organizations, especially for those that do not recognize the interdependencies that cut across other management and human resources practices at the enterprise-wide, team and individual levels of performance.

Best practice performance management is clearly not a “one size fits all” endeavor. Rather, it needs to fundamentally reflect the unique contextual needs of one’s strategic direction, business model, workforce profile and leadership preferences. Best practice PM also needs to be thoughtfully configured, and in many cases, phased in and allowed to mature, otherwise, the policies and programs that it supports will collapse and be rendered ineffective – a management risk that could be quite damaging, ultimately constraining front-line performance and of key importance, customer satisfaction.

Why is performance management such an important and trendy topic these days? The answers are numerous and fundamentally include:

  • A variety of inter-related governance and accountability developments over the past five to ten years that believe that PM is key to better oversight processes and outcomes;
  • The ever-increasing availability and power of technology to produce relevant operational performance data and analytics;
  • Recognition that effective PM can actually connect and translate strategic direction to front-line teams and employees;
  • The need to better support and drive executive and employee pay for performance with focused and measurable value added metrics;
  • Competitive pressures and the belief that PM can really impact and contribute to quality management, cost reduction efforts and improve the customer experience;
  • Given the dynamic state of various labour market segments and the importance of top talent attraction and retention, a view that good PM can be used to inform employee and workforce performance, their engagement, career development and deployment; and
  • An historical perspective that PM is one of the key means for validating the performance/compensation employment relationship.

The current trend and focus on PM these days is also being driven by a provocative point of view that is challenging the PM value proposition and a debate that suggests that individual performance ratings have had their day in the sun. This debate is certainly timely and is serving to raise the bar on how PM could be used and optimized, and what management and HR applications should PM actually be used to drive and enable. At a minimum, the debate is stimulating real and thorough discussions around the boardroom table and in the executive suite, with the net result that PM strategies and practices will continue to evolve and mature, albeit possibly in a different form.

This new “rating-less” form, however, is contextually unique to certain types of businesses – those with knowledge-intensive workforces, project and team-based work delivery, mature operational performance measurement systems that are woven into the fabric of work and job designs, increasingly sophisticated competency and behaviourally-based assessment practices, and an organizational commitment to ongoing performance dialogue and discussions between managers and employees, where managers have limited spans of control that are conducive to the necessary preparation and time for regular performance coaching sessions. Again, one size doesn’t fit all! Adopting and applying these characteristics [and trends] to all types of business models, organization designs and cultures would be folly and highly risky – as such, business and HR leaders truly need to understand context, choices and implications before they make strategic PM decisions that could possibly compromise enterprise value and people’s careers.

Finally, current PM trends are also being driven by the fact that we have passed the technological and information management point of no return – web-based technology systems and information management practices, social media and transparency of disclosure, and workplace automation and data analytics are fundamentally changing the way organizations plan, measure and operate. This profound change is and will increasingly drive foundational PM in the vast majority of industry sectors and businesses. Technologically-based workplace performance measurement is now becoming embedded in and inherently core to how work is done and how customer value is created. As a result, management across all sectors and enterprise sizes now have low cost and ease of access to measurement analytics, and more PM choice than ever before – the dilemma for many then will be why, what and how do they want to use more easily accessible, timely and accurate measurement data for PM? And as we all well know in this day and age, and to the consternation of many private and public sector leaders, if organizations don’t embrace and control the instant messaging and social media wave, interested or vested stakeholders will, in some shape or form, get access to performance data and use it to suit their needs and agenda in a very transparent and immediate way! So the bottom-line now is that more sophisticated and complex PM strategies and practices aren’t just the purview of high performance organizations and their controllable management systems!

So in the context of these trends, opportunities and implications, where is the interested business or HR leader to begin on the PM journey? Start by answering key questions:

  • Why do you need performance management, how should it work, and what do you want to use it for?
  • Do you have foundational planning and measurement practices and systems to support various PM applications?
  • Given the nature of your mandate, business model and workforce, will more sophisticated PM practices contribute to better operational processes and productivity, marketplace results, employee engagement and motivation, and strengthened pay for performance linkages?
  • What are the risks and implications of pursuing a contextually misaligned PM strategy or not executing the PM program well?

Like most core annual management practices, the risks and challenges associated with poor strategy and methodological decisions can be quite challenging, constraining and difficult to address in the short term:

  • Strategy dilution and misalignment of focus, efforts, and ultimately, less than optimal quality outcomes and results;
  • Line management and employee distraction and confusion;
  • Low value added administrative time and opportunity cost; and
  • Poor pay for performance, training, and career management decisions and investments.

Fundamentally then, and as the wise adage suggests – you need to be careful for what you ask for and aspire to achieve with PM! Do your homework and be careful about your aspirations, strategic approach, the implications and risks, and the intended consequences…but if you can contextually and successfully make PM happen, the benefits are enormous, ultimately contributing to a high performance culture and more importantly, sustainable competitive advantage and customer loyalty, and simply, a great place to work!

 

About the Author

Ian Cullwick

Ian Cullwick, CCP, CHRL, CMC, is a Partner in Mercer’s Ottawa office. He joined Mercer in 2015 after having served as the Vice-President of HR and Organization Research at the Conference Board of Canada, and as a Partner at a major international consulting firm. Ian specializes in governance effectiveness, performance management, human resources strategy, and organization design.  He consults to a broad cross-section of organizations in both the private and public sectors, including high technology companies, financial institutions, crown corporations, health care and not-for-profit organizations.  He is also a noted thought leader and has authored a number of articles on organization design, performance and compensation. Ian has an MBA from the Ivey Business School (Western University), an MIR from the University of Toronto and an undergraduate degree from Queen’s University.

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