All Posts Tagged With: "compensation"
How Would You Measure a Society’s Performance?
If you could apply the Baldrige model to a society, how would you measure its performance?
One way would be to identify key indicators of performance excellence. One indicator would be productivity, which many organizations include in their Baldrige applications. The following chart, from an article in Mother Jones, shows that productivity in the U.S. has improved by 80% since 1979. According to NationMaster.com, the U.S. ranks second in overall productivity behind only Luxembourg.
Some of that is due to automation and technology, but it’s also because Americans are working harder. Forty percent of professional men and 23% of middle-income men work more than 50 hours a week. In a healthy society, one would expect that the people responsible for improving productivity—and working longer and harder to do it—would benefit from their efforts. Not in the United States. As the blue line on the chart shows, average overall wages increased about 3% in 30 years. As Mother Jones reports, “If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.”
The red line on the chart shows where some of the value of our productivity increase has gone. More is going for corporate…
22Jun2011 | Steve George | 0 comments | ContinuedComing Together with Baldrige
I’ve written several times about the obscene amounts of money being made by senior leaders while the wages of average workers have been relatively stagnant for years. The current recession combined with Republican leadership at the federal and state levels have further widened the gap between the rich and the middle class. AFL-CIO President Richard Trumka summarized the problem in a speech recently at the national Press Club in which he decried the assault on Social Security and Medicare:
“Why is our national conversation in such a destructive place? Not because we are impoverished. We have never been richer. The American economy has never produced as much wealth as it does today. But we feel poor because the wealth in our society has flowed to a handful among us, and they and the politicians who pander to the worst instincts of the wealthy would rather break promises to our parents and grandparents and deny our children a future than pay their fair share of taxes.”
What does this have to do with Baldrige? In my opinion, everything. One of the core values of the Baldrige model is valuing workforce members: “Valuing the people in your workforce means committing to their engagement, satisfaction,…
23May2011 | Steve George | 0 comments | ContinuedBest Practice People Management
Last year, Deloitte, The Manufacturing Institute, and Oracle surveyed U.S. manufacturers about their people management practices, which included asking them to identify the key drivers of their future business success. The most profitable of the largest 142 companies in the survey shared three best practices that differentiated them from the least profitable companies:
- They defined a clear and explicit people strategy linked to their business strategy.
- They conducted formal succession planning across the workforce.
- They linked employee pay directly with the productivity of the company or the manufacturing plant.
(from “People Management Practices and Profitability in Manufacturing” by Richard Kleinert, Emily Stover DeRocco, Atanu Chaudhuri, and Robert Maciejewski, IndustryWeek, October 11, 2010)
The Baldrige Criteria address all three best practices with questions about:
- Human resource plans that support your strategic objectives and action plans. The IndustryWeek article notes that, “In many organizations, the HR function does not participate in the strategy development process nor does it have complete visibility into corporate or business unit strategies.” That won’t fly at a Baldrige organization.
- Managing effective career progression for the entire workforce. Organizations that integrate Baldrige develop what the articles calls “a long-term talent management strategy” that looks “beyond the C-suite to prioritize succession of all critical positions based on specific…
Overcompensated Leaders and Their Tools
According to the Institute for Policy Studies, American CEOs make 263 times the average compensation for American workers. The average pay for CEOs is eight times what it was in 1970 while American workers are taking home less in real weekly wages than they were in the 1970s.
Most Americans seem to be okay with that. A good number want to extend the tax cuts for these rich folks for reasons that escape me. And we all know the inequities will only continue to grow: The system for paying CEOs is broken beyond repair since the people in control of the system, who are the CEOs and their boardroom buddies, are the ones who benefit from it.
Randall Stephenson, the CEO of AT&T, made more than $20 million in 2009 while laying off around 12,000 people. Many Americans, including a good number of workers who are making less now than they or their parents did in 1970, seem to care more about protecting Mr. Stephenson’s right to earn and keep as much money as he can than about the 12,000 people who lost their jobs because of his management team’s incompetence. Verizon CEO Ivan Seidenberg only earned around $17 million in 2009…
2Sep2010 | Steve George | 2 comments | ContinuedFixing the Financial System
How does your organization review and achieve accountability for management’s actions? For fiscal accountability? For transparency in your operations? For protection of stakeholder and stockholder interests?
If every financial institution in the U.S. had been forced to answer these Baldrige questions honestly and accurately in the past few years, and if regulators had been verifying their responses, the financial crisis and the bailout it triggered could have been averted. Either they would have had processes in place to deliver ethical and effective leadership or their irresponsible practices would have been exposed.
“I think the last two years have revealed the single largest failure of senior management in the financial sector, and of the board system in American history,” wrote Bo Cutter in new deal 2.0 (November 24, 2009). Cutter has been a managing director of Warburg Pincus, a global private equity firm, and led President Obama’s Office of Management and Budget transition team. Considering the savings and loan crisis in the 1980s and 1990s and the scandals involving Enron and Worldcomm earlier this decade, one could argue that senior management and boards of directors in the financial sector have been failing miserably for thirty years. One could also make the case that the…
4Dec2009 | Steve George | 0 comments | ContinuedEffective Employee Communication
“Effective employee communication is a leading indicator of financial performance and a driver of employee engagement,” according to the 2009/2010 Communication ROI Study Report by Watson Wyatt. “Companies that are highly effective communicators had 47% higher total returns to shareholders over the last five years compared with firms that are the least effective communicators.”
The Baldrige Criteria ask four questions specifically about communication:
- How do senior leaders communicate with and engage the entire workforce?
- How do senior leaders encourage frank, two-way communication throughout the organization?
- How do senior leaders communicate key decisions?
- How do you foster an organizational culture that is characterized by open communication?
An organization that can answer these questions with effective processes can claim effective employee communication, which, as the Wyatt study shows, improves employee engagement and financial performance. Representatives of 328 organizations in more than 25 industries worldwide participated in the study.
The report offers five steps your organization can take to become an effective communicator:
- Re-communicate your employee value proposition. Be clear about what employees can expect from your company and what the company expects from them.
- Talk about the new deal now. Educate employees about your company’s values and culture.
- Help employees appreciate what they have today. Make sure employees understand the value of their compensation and benefits…
