Developing Employees

1. Developing Employees Kelly McDonald, BYU Westnet Conference Boise, Idaho June 11, 2013

2. What is Our Problem? • There is a large disparity between our best employees, and the average. Those we consider our best employees may be as much as ten times more productive. • This is not just a matter of skill. Rather, it extends to multiple dimensions of an employee’s abilities to produce, and to influence others to follow their lead. • The greatest waste we experience is employee stagnation. We do not have a methodical way to help employees develop their careers. Current Job Descriptions are not effective in this endeavor.

3. The Reference • Pink, Daniel H., Drive: The Surprising Truth About What Motivates Us, Riverhead, 2009 • http://www.ted.com/talks/dan_pink_on_motivation.html

4. The ‘Tom Sawyer’ Effect • When it comes to creative work, “if-then” incentives eventually make performance worse. • Intrinsic motivation has greater long-term improvement on employee performance. • Any extrinsic reward should be unexpected and offered only after the task is complete. • Turn ‘if-then’ rewards into ‘now-that’ • If compensation is perceived as sufficient and equitable, then natural human values will become the dominant motivator.

5. And These Human Values Are…. • Autonomy • People want to have control over their work. • Mastery • People want to get better at what they do. • Purpose • People want to be part of something that is bigger than they are.

6. The University’s Compensation Program? • Job descriptions are placed into pay-levels. • We increase pay within pay-levels to recognize good performance. • Job description families help us to plan longer term career paths for employees. • We move employees from pay-level to pay-level, to match skill mastery with the job need.

8. So What is a Job Family in this Paradigm? • We believe that it becomes a multi-dimensional career development roadmap, that helps both employee and supervisor to deliberately chart a path to career excellence and fulfillment. • Job descriptions become manifestations of career development goals, translated into day-to-day activity.

9. The Dimensions of a Job Family • Dimension 1 – Competence Factors (Mastery) • The person: • Has, or can quickly develop, the skills to perform their job assignments with only a minimal need for supervision or oversight • Recognizes that competence can always be improved, and is actively seeking improvement of the skills of their profession • Has an appetite to learn knowledge and skills outside of their profession • Measures: • Education level • Years of experience in the profession • Portfolio of successful work results that demonstrate the competence factors

10. More Dimensions… • Dimension 2 – Vision/Balance Factors (Autonomy) • The person: • Imagines future outcomes or goals, and plans a path to reach them • Balances the vision of the goal with the execution of daily work assignments • Recognizes their own weaknesses that may interfere with accomplishing the goal, and proposes ways to overcome/compensate for the weaknesses • Measures: • Portfolio of successful activities that demonstrate the factors of Vision/Balance

11. Still More Dimensions… • Dimension 3 – Leadership Factors (larger purpose) • The person: • Steps up and meets their challenges with optimism and hope • Influences others to do the same • Teaches and mentors others • Demonstrates an ability to be decisive, with thoughtfulness and humility • Measures: • Portfolio of successful activities that demonstrates applying the Leadership factors in their careers • 360-Degree review and evaluation

13. Is Compensation Sufficient at BYU? • Assume our Systems Engineer job family: • Pay-levels: 54-56 • Start career at age 25 (at entry salary of: $55,000) • Retire at age 62 • If they remained on “pay-level” they would, at retirement, be at: • Salary: $158,689 • MRP Value: $841,344 (23 year payout) • 401K Value: $1,452,540 • Home Value: $2,289,135 ($250,000 purchase) • Net Worth at Retirement: $4,583,019

14. Calculation Assumptions • Salary • Use 2.5% Inflation Rate • Additional 2% growth to stay on pay line • MRP • Use (.0075 x FAMS x months of service) • Use Joint and Survivorship-2/3 (.95) • 401K • Use 6% contribution and 6% match • Average annual growth of 6%/year • Home • Use starting salary x 4.25 for home to afford • Estimate appreciation at 6%/year

15. What is the current standard of living in Utah County? • Median income in Utah County (2009): • $59,701 • Average home selling price in Utah County (2010): • $222,373

16. Other Desirable Outcomes for an OIT employee • Debt-free at retirement • Children educated with minimal student loans • A career that was filled with professional development • Lifelong learning opportunity throughout retirement

17. Now the rest of the story… • I tried a sample compensation increase for 2011-2012, across our administrative employees • Here was the process: • Total 2010-2011 compensation: $ x • Set 2.8% across all employees: $y • Reduced to 2.0% all at top of their range; • Placed at 4.35%, any employee that seemed noteworthy in their merit, until the total increase equaled $y • I reached this threshold at 39 employees, which is 18.5% of our administrative workforce. • With further adjustments of compensation due to poor performance, we could probably get this to 25%.

18. It will take more than annual increases … • Pay level changes give us additional opportunity to bring someone back to the pay-level line. • Occasional merit increases can help, but this is unusual at the university and not readily approved. • We need to seek other opportunities to improve the compensation of staff. For example: • A retiring employee • Work can be reasonably spread across other employees • These employees are deserving of merit increases • Propose that the salary of retiree be used to bring the deserving employees back to the line

19. Some additional observations… • The evidence of our commitment to ‘career development’ will be the trend to only hire external applicants into the entry levels. If we are effective in developing our employees, there will be an employee on staff, ready and willing to accept the higher level assignments. • The Job Family Dimensions contribute to the desirable traits articulated by Daniel Pink; autonomy, mastery, and purpose.

20. The Critical Link to Improvement… • The Immediate Supervisor • Must be supportive of the compensation program • Must encourage a congenial place of work • Must allow staff to have some autonomy • Must provide ample opportunity to pursue mastery • Must link work assignments to larger purpose

21. Steps We Need to Take • Train the leaders to be more pro-active. • Make sure that promising administrative employees are in a career path. • Make sure the career paths are understood and clearly communicate their various dimensions • Recognize sustained performance with pay increases to keep close to pay-level • Reward the exceptional employees with pay level transitions that have been demonstrated through excellence in the career dimensions

22. How can Human Resource Services help? • We need your support of our paradigm. • We need pro-active employee counseling. • financial advisement. • benefits advisement. • real estate advisement. • Help employees understand that a long-term career with OIT is worth the sustained performance it takes to get there. • We need revamping of the Job Descriptions. • Change the 401K participation signup from Opt-In to Opt-Out. • Encourage home-ownership as a key to a fulfilled retirement.

23. When can this be done? • Significant progress in training and education, within one year. • Significant Job Description improvements within 1-2 years. • Probably need 2-3 pay-raise cycles to make significant impact on the pay level of the right people. • Probably need some retirements to clean up the equity in the upper pay-levels. (5+ years)

24. Questions and Comments?