Using Metrics to Support and Achieve Strategic Goals The NYU Story

Transcription

1 Using Metrics to Support and Achieve Strategic Goals The NYU Story Michael Camuso, CCP, CBP, GRP Director of Compensation, NYU Marina Kartanos, CCP Compensation Manager, NYU Paul Shafer Principal, Hewitt Associates 1

2 Background Founded in 1831, New York University is now one of the largest private universities in the United States Of the more than 3,000 colleges and universities in America, New York University is one of only 60 member institutions of the distinguished Association of American Universities. 30 schools and administrative units Over 12,000 full time faculty and staff Financial budget of over $2 billion More than 40,000 students attending 14 schools and colleges at five major centers in Manhattan Compensation responsible for total reward administration for all administrators Units operating in an environment of shared governance each unit has the flexibility to run an autonomous operation Expanding dramatically both here in the US and abroad NYU operates in more than 25 locations around the world including Argentina, China, Czech Republic, France, Ghana, Italy, Singapore, Spain, the UAE and the UK 2

3 Business Challenge Customer service for the compensation team was a problem area in 2006, turnaround times for requests were poor and confidence level was low. Stronger push to pay for performance, implementation of new performance management system and to input employee ratings during the merit increase process. Given the state of the economy and NYU s current economic environment, the challenge for Human Resources is to demonstrate overall significant contribution to the business. Performance evaluation of a department or unit recap accomplishments, but can be construed as subjective. New Executive VP for Administration was pushing for process improvement, re-engineering, sustainability and measurement. Utilization of METRICS provides objective documentation that a department has fully achieved expectations. 3

4 Types of Metrics Employee Performance - Metrics related to employee ratings, and the effectiveness of merit increases and bonuses by performance level, etc. Financial - Metrics related to "spending" including the total spend on increases, adjustments; promotions and bonuses by unit and the overall pay spend Service Delivery - Metrics related to the operational effectiveness of the Compensation Team and the measurement of overall customer satisfaction External Pay Competitiveness - Metrics related to competitive market position, by business unit and overall Policy Driven Metrics What are the policy gaps for our customers? Global metrics - Formal metrics are often less developed around the world, but still critical. The compensation team examines not only the categories mentioned above, but adds compliance categories to the list for global locations. 4

5 EMPLOYEE PERFORMANCE METRICS (Presented to Business Unit HR Officers) 5

6 Performance Distribution Curve FY07/08 6

7 Average Increase By Performance Rating FY07/08 7

8 Average Annual Bonus By Performance Rating FY07/08 8

9 FINANCIAL METRICS 9

10 Total Spend by Increase Type Total Spend FY % Upgrades Salary Adjustments ` Annual Merit Increases Promotions 8.8% 54.5% 15.5% 10

11 SERVICE DELIVERY 11

12 Service Delivery Turnaround Time Number of days 12

13 Service Delivery # of completed requests Job Evaluations and Salary Requests Total # of Completed Requests Fiscal Year 2005 through Fiscal Year Number of Completed Requests FY05 FY06 FY07 FY08 First Three Quarters # of Administrative & Professional Job Evals # of Clerical &Technical Job Evals # of Administrative & Professional Salary Requests # of Clerical & Technical Salary Requests 13

14 Service Delivery # of Job Evaluations Completed Job Evaluations Total # of Completed Requests Fiscal Year 2005 through Fiscal Year Number of Completed Requests FY05 FY06 FY07 FY08 First Three Quarters Administrative/Professional Clerical/Technical 14

15 Service Delivery Customer Survey Overall Satisfaction with Compensation Department 100.0% 86.7% # of Respondents 80.0% 60.0% 40.0% 20.0% 0.0% 10.0% 3.3% Very Satisfied/Satisfied Neutral Very Dissat./Dissatisfied Response Category 15

16 Service Delivery Customer Survey Response Time for Salary Requests 100.0% 87.1% # of Respondents 80.0% 60.0% 40.0% 20.0% 0.0% 12.9% 0 Response Category Very Satisfied/Satisfied Neutral Very Dissat./Dissatisfied 16

17 Service Delivery Customer Survey Response Time for Job Evaluations (new or vacancies) % of Resp ondents 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 83.9% 9.7% 6.5% Response Category Very Satisfied/Satisfied Neutral Very Dissat//Dissatisfied 17

18 Service Delivery Customer Survey Response Time for Position Upgrade Requests 100.0% # of Respondents 80.0% 60.0% 40.0% 20.0% 80.6% 16.1% Very Satisfied/Satisfied Neutral Very Dissatis./Dissatisfied 0.0% 3.2% Response Category 18

19 Service Delivery Customer Survey Compensation Advice and Consultation (i.e., - job evals, promotions, etc.) # of Respondents 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 77.4% 16.1% 6.5% Response Category Very Satisfied/Satisfied Neutral Very Dissat./Dissatisfied 19

20 EXTERNAL PAY COMPETITIVENESS 20

21 External Pay Competitiveness NYU data is confidential 21

22 POLICY DRIVEN METRICS 22

23 Remedy Desktop Client Remedy Service Management is an application used by many service providers at NYU to record, track, process, resolve, and report on service requests and incidents. Remedy tracks activity and provides detailed context for future access to historical precedent Helps identify existing information gaps and frequently asked questions, which can then be pro-actively addressed 23

24 Remedy Incident Reporting Screen 24

25 HR Compensation Service Requests Statistics Sept 2008 April 2009 Total Service Requests Created Total Service Requests Resolved % with 1-Day Resolution Current Open Service Requests Average Days to Resolve Requests %

26 HR Compensation Requests by Source Sept 2008 April 2009 Fax 1 (0.08%) 592 (46.03%) Voice Mail 1 (0.08%) Walk-in 172 (13.37%) Phone 515 (40.05%) Requester 4 (0.31%) 26

27 HR Compensation Service Requests Created Each Month Sept 2008 April

28 HR Compensation Requests by Category Sept 2008 April % 19% 17% 14% 4% 38% Salary Related Bonus Related Systems Related Policy Interpretation Recognition Programs Misdirected Inquiries 28

29 GLOBAL METRICS 29

30 Global HR/Compensation Metrics A Risk Framework is Beneficial for Establishing Global Metrics Strategic Risk Financial Risk Business Results Regulatory Risk Operational Risk Risks that can get you into trouble with the law Risks that generally creates ineffectiveness (costs you money, time, inconvenience) 30

31 A Closer Look at the Potential Risks Strategic Risk Incentive plans deliver poor ROI where goals are low or overly stretched Inequities in job levels contribute to recruiting, mobility, or retention issues Poor alignment of plan design resulting in mobility difficulties, cross unit teamwork Low employee understanding leads to disengagement/lack of appreciation Regulatory Risk Non-compliance with local legislation leads to potential liabilities and investment of time Non-compliance with home country legislation may create issues, even when abroad Data privacy issues abound Employee communication may create contractual obligations Inaccurate classification of employees such as contractors may create overtime pay and other issues Lack of documentation may make it difficult to defend or justify pay decisions 31

32 A Closer Look at the Potential Risks Financial Risk Non-competitive pay creates added cost or talent risk Incentive compensation may be higher than needed for competitive practice Higher inflation leads to higher than expected compensation costs Compensation programs are tax inefficient Inaccurate long-term incentive valuation assumptions Acquired businesses may present change-in-control, severance, or retention costs Operational Risk Lack of clarity over roles and responsibilities Insufficient compensation plan documentation (review and audit) Ambiguous decision making processes Inability to obtain complete or accurate market data information Inaccurate payment calculation procedures Lack of internal controls over decision making Incomplete or inaccurate compensation administration data (hours worked, allowances, etc.) 32

33 Global Metrics are Less Formal and Often Customized and Based on Available Data Sample Compliance Metrics Immigration Renewal of fixed term contracts Accuracy/existence of employment contracts Labor Law Attendance, overtime records Commuting allowance records Medical exam records Data Privacy violations Tax Sample Sound Practice Metrics Documented Policies, Procedural Guidelines and Audit Process for: Hiring and appointments Global assignments Job descriptions Payroll process Allowances Performance management Job evaluation, market pricing, salary structure administration Benefit plans Proper categorization of income for allowances Proper categorization of non-cash benefits such as housing as income Violations in withholding levels Regulatory Filings New hire, employee documentation Policy and postings documentation 33

34 Global New Location Metrics: 5 Driver Framework Talent Peer Organizations Environment Infrastructure Clusters The talent driver covers various factors associated with people and talent Success of all services operations are highly dependant on the availability of a significant and skilled talent pool. Therefore, this criterion is highly significant The factors considered under this driver include: Talent availability Talent quality Talent cost Ease of sourcing talent Peers refer to similar players operating in a particular city This driver maps peer presence so as to understand the stage of development and maturity of a location with regard to the relevant industry segment This driver gauges the location experience of peers which are operating in the selected cities While evaluating locations for establishment of operations it is important to assess the macroeconomic, business, regulatory, and geopolitical environment factors for a location This analysis presents key insights on factors which can have a bearing on the long term development of a location Under the infrastructure driver assess the availability, quality, and cost of physical infrastructure which is necessary for the operation This includes analysis of factors including: Telecommunications infrastructure Power infrastructure Real estate Urban infrastructure A cluster is defined as a concentration of companies and industries in a geographic region, that are interconnected by the markets they serve and the products they produce A business environment in which clusters are already present and have potential to grow and prosper, impacts the overall favorability of the location for that particular industry This driver studies the presence of recruitment, transportation, and other relevant support services industry 34

35 Global New Location Metrics 5-Driver Framework DRIVERS Talent (Faculty, Student, Staff) Peer Organizations Environment Infrastructure Clusters FACTORS Talent Availability Talent Sourcing Talent Quality Talent Costs Peer Presence Peer Opinion State/ Country Policies Security/ Crime Legal Considerations Geopolitical Risk Power International Connectivity Real Estate Public Transport Facilities Services and Lifestyle Amenities Other Shared Facilities Training and Recruitment Infrastructure Expatriate Services PARAMETERS (Example) Indicative demographics Availability of domain skills Availability of leaders Attrition rates Talent sourcing time Accept rates Technical literacy Language skills Work culture Employee attitude Labor environment Compensation and benefits Indirect labor cost Payroll taxes Cost of living ELEMENTS Further drill down in element level data 35

36 OUTCOMES OF METRICS FOR NYU-HR Salary spending caps starting in FY2010. Monitoring of total salary expenditure metrics moved to Compensation from Finance. This increased partnership between HR and Finance. Ability to demonstrate to the Head of HR activity levels, overall volume and turnaround times on our work. PeopleAdmin System Internet-based system that provides self-service functionality through which authorized NYU administrators can create new position descriptions and modify existing ones, create job postings from position descriptions, and move job applicants through the interview and hiring process. This was a big efficiency gain for Compensation. 36

37 The Future Transition to new salary structure (grades to banding) Continuous Improvement Continue to streamline work processes, increase productivity, lower cost and provide a high level of customer service Continue to put data in front of top management that can be used to educate and set business objectives and strategy. Global metrics must continue to be compiled and evaluated to help drive decisions regarding the global locations that NYU decides to do business. 37

38 The Importance of Metrics Demonstrates goals attained for the performance period. Provides the basis of a healthy and realistic performance evaluation, ensuring both leader and employee share the same understanding and agreement of accomplishments. Allows for year-over-year comparisons and help determine productivity and improvement. Continuous improvement is necessary to remain competitive with industry peers, particularly in the current economic crunch. Demonstrate departmental impact to overall organization. The collective efforts of employees should have a significant influence on organization objectives. While most departments impact profitability or margin improvements of a company, few can readily demonstrate how or to what degree. Facilitates change in the strategic direction of pay for any organization. Provides a framework to implement departmental changes to achieve optimal efficiencies, contributing to greater employee satisfaction and morale. All employees have a desire to feel successful within their professional lives. 38