ASSOCIATION OF COMPENSATION MANAGERS
Review of the Compensation Function: A Case for Change
Executive Summary
March 31, 2000
The business success of departments is clearly linked to the quality of HR
management. Deputy ministers are demanding that the public service become
an employer of choice for a new generation of public servants. The compensation
administration function is a pivotal point in the management of human resources.
Timely and reliable compensation services contribute to employee satisfaction
and can be a factor in positioning as an “employer of choice.” Compensation
administration is also the point where the management of people crosses over
to financial management. In most departments, human resource costs make up
the largest portion of current expenditures. Moreover, the liabilities associated
with pensions and benefits can also have a major impact on the balance sheet.
As a result, the achievement of comptrollership goals also depends on compensation
services providing reliable and timely information.
In this context, it is acknowledged that major improvements in HR services
are essential. Many of the innovations have direct implications for the compensation
community and their workload:
- The Universal Classification Standard (UCS) is the catalyst for a range of
other reforms to human resource management. UCS will serve as a foundation
for change in compensation approaches, and conversion will require complex
changes to pay.
- Collective bargaining is once again leading to wage settlements and the consequent
requirements to implement complex pay adjustments.
- Pension administration has become more complex with more people considering
retirement. Compensation advisors are expected to advise employees on their
retirement options.
- Benefits administration is expected to become more evolve into cafeteria-style
options. Compensation advisors are expected to be fully knowledgeable and advise
employees on these decisions.
Rethinking Compensation Service Delivery
While the demands on compensation have grown and changed significantly, the
strategic thinking behind the services that compensation offers has not changed
in many years. This report documents opportunities for far-reaching redesign
of the mode of delivering compensation services, with departments working
together and more extensive use of technology. However, achieving these opportunities
requires commitment far beyond the scope of the compensation community itself.
Decisions need to be made at the senior management level regarding “the
kind of business” that compensation should be in. For example, should
compensation continue to provide pension and insurance advice, for which departments
may be held liable? What level of service is required? What can be delivered
to employees and managers through the Internet or other technologies? What
can be streamlined, and what can be outsourced?
Once these questions are answered, models can be confirmed. The most widespread
model currently is the generalist compensation advisor who serves a specified
number of clients in a department, or branch or region of a department. There
are a variety of other models in place across the government as well, but in
general, departments and agencies work separately from one other. There is
a need for departments and agencies to consider working together where possible
to achieve efficiencies. Options include working together across departments
to serve clients, standardizing processes, establishing service delivery agreements,
directing all queries to all call centres and forwarding more complex queries
to specialists. Working together will enable new initiatives to be shared and
implemented jointly, common training to be provided, and more consistent processes
from department to department. All such arrangements must carefully consider
existing organization structures and existing service delivery requirements.
The diagram below illustrates the range of options for improving services.
Working in isolation, branch by branch or region by region, can have only
limited benefit. Greater benefit is derived by departments working together.
Resourcing and Training
There is an immediate need for a larger pool of experienced compensation advisors.
While the new models are being thought through, short-term recruitment should
begin to bring in compensation advisors at the trainee level. At the same
time, pools of resources should be established from a central location to
assist in longer-term major projects.
New models of service delivery will require new types of recruitment and training.
The approach to recruitment, retention, and career paths will depend very much
on the model of service delivery chosen, but should focus on the competencies
that are required for a more professional compensation workforce. New sources
of recruitment could be considered, such as the Humber College program in compensation,
Sherbrooke University, Algonquin College, Cite Collegiale, or the Quebec Cegeps.
Alternatively, a relevant compensation administration experience could be requested.
Training strategies need to be rethought to correspond to the new service
delivery models. The new training strategy would not just focus on content,
but on the required cultural shift. Compensation work today involves considerably
more theory and interpretation than it used to. The work is more abstract,
requiring strong analytical and cognitive skills. A common training model for
all departments would have enormous advantages. Common training would facilitate
the implementation of standardized processes and service delivery standards,
which in turn would facilitate the sharing of services. A mentoring arrangement
could also be implemented in the short term. Experienced advisors would be
partnered with trainees in a formal learning/working arrangement, and would
be recognized for their contribution.
While the HR community, and in particular the PE community, has come together
to make important strides in the public service, the compensation community
has so far been unable to benefit because they are seen as a community apart
from human resource management. In the future, compensation professionals will
need to understand the human resource and financial management context in which
they operate. Those with more varied experience will in turn have a greater
chance of promotion, as is the case elsewhere in government. This interest
will need to be developed among compensation staff in order to attain the compensation
workforce of the future. Tighter selection standards may attract a different
type of worker – one who is interested in both compensation and other
aspects of HR, finance, and information technology. A community with the competencies
for the new direction of compensation will be a professional workforce with
greater career momentum.
Senior Management Commitment
Without senior management attention and resultant action, the critical functions
that compensation performs – ensuring employees are provided with pay
and benefits from entry into the public service until their departure, as
well as implementing new policies such as the UCS – are at risk.
The Association of Compensation Managers is a voluntary organization without
senior management representation. Compensation managers can and do influence
many interdepartmental system issues with their colleagues at PWGSC, but they
are unable, for example, to adopt pro-active initiatives developed by one department
for all departments. Senior management has already begun to take charge of
the compensation community. The meeting of ADMs of HR and Corporate Services
instigated by this project was an important step in recognizing the gravity
of the situation. Their support will be crucial to going ahead with change
for the community. The compensation leader and HRC, together with the Association
of Compensation Managers, should nominate a small, senior management action
team, which would include representation from the Human Resource Council, and
the Association of Compensation Managers. The action team should undertake
the following:
- Set priorities on the initiatives that should be undertaken immediately, and
establish timeframes for the accomplishment of all initiatives. Consideration
should be given to the development of a multi-year strategic implementation
plan;
- Assign responsibilities for initiatives and convene working groups;
- Identify risks and a risk-related monitoring/reporting approach;
- Identify an individual or committee to develop a communications strategy for
all users.
Pressure on the compensation function has been building for some time. The
wave of work that followed the resumption of collective bargaining was followed
by pay equity. A new, much larger wave will hit soon: UCS conversion. The community
as it stands is not able to absorb this influx of work. The UCS creates the
proverbial “burning platform” that must drive much more fundamental
change in the compensation function. While resources are urgently needed, simply
adding resources to accommodate the UCS workload is not enough. Changes in
the compensation processes and structures and a commitment for improved technological
support for compensation services are also needed. These are the foundations
for a new compensation function, one providing strong career momentum, attracting,
developing and retaining compensation advisors for tomorrow.
Contact hrcs-scrh@hrma-agrh.gc.ca
to obtain full report.
|
