Compensation & Benefits Review

Private and public organizations around the world have been fixated on the potential Y2K crisis that is now nearly here. Whether Y2K turns out to be a minor operational annoyance or a fullscale technological disaster, U.S. organizations alone have already spent over $1 trillion on Y2K compliance measures. In spite of the precautions taken and preparations made thus far, the authors find that few organizations have addressed the core issue of what human efforts will be required to maintain operations in the midst of the crisis.

The authors' research demonstrates that, while tremendous resources have been poured into averting computer-related disasters, considerably less is being done to prepare workforces to respond to customers' needs should system failures occur. If and when Y2K problems happen, customers will not care whose system "went down." They will care only about how well a company responds to their problems.

"Because workforce and customer service constituents appear to be underrepresented at the Y2K table," state the authors, "we strongly recommend that experts in areas including compensation, benefits, staffing, and training get involved in the Y2K problem now."

Within your company's HR department, potential Y2K landmines may be waiting to explode. Anything and everything from payroll and the recording of stock options to healthcare eligibility and records of 401(k) contributions could be affected by the infamous and impending millennial computer glitches. Are you prepared to avert potential catastrophe?

The authors list the types of glitches in HR systems that might open a company to employee lawsuits and what HR directors can do ensure, as far as possible, that both internal and external human resources systems are Y2K compliant. The authors add that companies cannot rely on insurance to protect them against Y2K failures. Therefore, they must document their HR compliance efforts and develop contingency plans for dealing with unforeseen Y2K problems.

Pay is most powerful when tied to successful job contributions that help fulfill the organization's mission and achieve contemporary objectives. This pay strategy challenges organizations to reward employees who contribute to the successful fulfillment of the organizations mission, while providing guidance to those who want to improve and weeding out those who don't. Implementing this pay strategy requires management commitment and a willingness to review practices in six key dimensions of organizational practice: explaining organization and department missions; defining job results; clarifying job outcomes; planning, monitoring, and appraising job contributions; applying motivational rewards; and establishing an integrated and coherent organization culture.

Four years ago, following low customer service ratings from an independent national survey, the Network II Veterans Administration (VA) hospital group in upstate New York took the first step on a journey that would turn this flagging group of five hospitals into a flagship for the whole agency. "Innovation in government requires involvement, patience, and creativity," say the authors, "but federal agencies must proceed with caution." Unlike private sector organizations, employees of government agencies work within regulations and guidelines governing civil service, and these limitations must be considered when proposing any alternative rewards design plan. By thoughtfully addressing the challenges involved, here is how one public sector agency has been able to use alternative rewards with excellent results.

As employers struggle to provide competitive compensation packages in a demanding labor market, group legal insurance—an ancillary benefit that allows employees access to legal advice and representation in a timely, affordable manner—has become an increasingly popular offering in benefits packages. According to a William M. Mercer Inc. survey of employee benefit preferences, more than half of the survey respondents felt group legal insurance would influence their choice of employer, and 30% felt it would improve their productivity on the job. A group legal plan that incorporates flexible service and payment options, easy attorney accessibility for employees, and minimal start-up and maintenance time for benefits personnel can make group legal insurance plans an attractive benefit.

Most compensation professionals use compensation surveys to some extent. Survey users should be aware that some surveys are less accurate than others, and even valid surveys may be misused or misleading. The authors provide ten questions users of compensation surveys should ask themselves about the survey before using it to make critical compensation decisions. The questions include: "How well does the survey describe the job being measured?" "What is the effective date of the data?" and "Who were the participants in the survey?" The authors encourage compensation survey users to apply these ten questions to any compensation survey before using the survey in organizational decision-making.