Transcript The Three R’s…Recruiting, Rewarding and Retaining
2007 APPA National Conference
Recruiting & Retaining Utility CEO’s
Winston L. Tan Principal, Human Capital and Rewards Practice Cooperative Benefits & Financial Services, LLC (678) 355-3610 [email protected]
www.TeamCBFS.com
The Employment Value Equation
Time/experience Competencies Skill Network Compensation Benefits Work Environment Organizational culture Work/life balance
Set Your Compensation Strategy
What are you willing to pay for experience and talent?
• Quality is generally expensive.
With whom do you need to compete for talent?
• (Bargain hunting can work but there is a risk…) Geographical considerations Evaluate your retention drivers.
Surveys Tell Only Part of Story
Reported data aggregated into a statistical array Company success relative to peers Incumbent experience skill or migration Participant relevance Participant retention drivers Work environment Geographic Considerations • Recreational opportunities • Access to medical, higher education, arts, etc.
Monitoring the Value Scale
Recruitment The “Honeymoon Window” • Newness= happiness • Fear of failure • Challenge of the unknown • Honeymoon dance with the Board/Council • “It’ll get better” optimism Retention Seen some warts Job changes • Networking requirements • Non-core business focus Monitor work/life issues History says that it is not going to change
Tools in Addition to Base Pay
Incentive Plans • Among cooperatives about 20% offer bonus programs • Among “for profit” companies about 70% offer bonus programs Retention mechanisms (golden handcuffs) Executive benefits Employment/severance agreements
Sample Rolling Incentive/Retention Plan Payout
Core Utility Benefit Offering
• Health (medical, dental, vision) • Group term life • Short and Long term disability insurance • Defined benefit pension plan • Defined contribution pension plan • Dependent coverage • Employee Assistance Program • Holidays • Vacation, sick leave and other time off • Retiree benefits
Executive Benefits
Vehicle Financial planning (estate, retirement, etc.) Voluntary deferred compensation Supplemental disability insurance Supplemental executive retirement plan (SERP) Supplemental life insurance (Key man, Split dollar, etc.)
Executive Perks
Country club membership Tax planning Flexible perquisite accounts (cash value) Signing bonus Extra time off Airline VIP lounge membership Corporate jet First class air travel (if you don’t have a corporate jet!) Spousal travel
Performance Feedback
Generally missing at the CEO level Essential to provide a clear communication link between governing board and CEO regarding performance expectations Clarifies executive focus and organizational resources Establishes a baseline for incentive achievement Supports “reasonable” compensation decisions
Performance Process
Directly survey key stakeholders (Board, council, etc.) to identify key CEO skills and competencies Evaluate consistency of responses.
Define performance criteria (financial, operational, customer satisfaction, etc.) Obtain CEO input for each criteria Poll each evaluator and obtain individual ratings Compile results (numerical and narrative) into a collective response Ensure that responses are indicative of the entire group
In Summary
Articulate your compensation strategy • Balances cost with value • Rewards performance results • Supports sound governance practices Monitor your competitive target market Connect rewards to your business • What are your key business imperatives?
• What does the company need to be successful?
Celebrate success
Winston L. Tan
Winston Tan is the Principal of the Human Capital & Rewards Practice for Cooperative Benefits & Financial Services, LLC (CBFS). He has worked in a variety of public and private industries providing management consulting and assistance in the United States and overseas. He specializes in total compensation solutions (including base pay, variable pay, and benefits analysis), strategic planning, organizational design, and human resource performance development.
Prior to joining CBFS, Winston was the Principal of Human Resources for the National Consulting Group, a management consulting organization within the National Rural Electric Cooperative Association (NRECA). For over 15 years he has provided compensation, organizational development, and other consulting services to the electric cooperative members of NRECA. Winston and his wife Julie just relocated to the Pacific Northwest and spend leisure time creating memories with their children Michael, 12 and Madison, 10.