Implementing a salary review system that creates a valuable
Implementing a salary review system that creates a valuable
John Strazzanti simply wanted a fair, quantitative salary-review system. What he created was an ongoing company dialogue that pays back much more than it pays out* * *
As a manager for several companies John Strazzanti had lamented the lack of review systems. "They just told me not to mention raises. The goal was to make people feel as if they'd be hassled if they asked for more money." When employees did work up the nerve to ask for a raise, he adds, they came armed with all sorts of rationales; few had anything to do with their performance or what other companies paid. "It became this really emotional thing."
As general manager and, since 1985, president of Com-Corp Industries, a Cleveland metal stamper that supplies light-bulb shields to General Motors to the tune of $12 million a year, Strazzanti was determined to do away with the "keep 'em in the dark" approach.
He wanted his new review system to do two things: establish a fair and open standard of pay, and make people feel important and involved. If he could do that, he figured, employee motivation would take care of itself. So he asked for volunteers for a salary committee and gave the group the job of setting wages by surveying the marketplace to find out what other manufacturers were paying. He also asked all his employees what criteria they thought they should be evaluated on, and incorporated their responses into a scoring system.
Now, three times a year, each Com-Corp employee's technical proficiency and professional attitude are evaluated both quantitatively and qualitatively. All workers are measured not only against their past performance and the goals that have been set for them, but against industry conditions and standards -- how the marketplace values their jobs.
To encourage improvement, Com-Corp offers a variety of instructional classes -- from corporate finance to blueprint reading -- on an ongoing basis to employees with problems in a given area and to those who want to move up in the organization.
Each employee also submits a detailed review of the company's performance three times a year, often questioning methods and values and suggesting improvements -- suggestions that many times are acted upon.
Strazzanti finds that this review process has shone a spotlight on just about every corner of the business, from benefits to manufacturing techniques.
Today it's hard to separate the employee-review system from the everyday workings of the company, he claims. "A meeting might start out with something that came out of a review and leads into a discussion of continual improvement or engineering. For most people here, the review process is just a way of life."
What's the return on this investment of time and energy? Turnover is low, about 3% last year and 2% for the first half of 1991. Absenteeism and tardiness stand at 2.5%. The company has made money every year since Strazzanti began the program, 10 years ago. Last April General Motors gave Com-Corp one of the highest ratings ever awarded under its Targets for Excellence program for GM suppliers.
Strazzanti believes many companies don't understand the wealth of valuable information that can come out of the review process. But it doesn't just jump off the pages of the review. "Half the time it's not obvious what the problem is from what they've written down," he says. "You have to dig."
That's why Strazzanti, his supervisors, and his human-resources director pore over the results of workers' evaluations of the organization, looking for oddball scores and trying to read between the lines. And that's why the president schedules a companywide meeting, three weeks after the reviews, to talk about common concerns.
Below, Strazzanti, reliability manager Al Treichel, and human-resources director Kathleen Pullella explain how they go about reaping the benefits of that dialogue.* * *
"The review process," Strazzanti emphasizes, "goes hand in hand with classes."
Taking classes made [one particular] employee not only technically more proficient but more aggressive about spotting problems and suggesting solutions. "In a past review of the company, this person was one of the few employees that felt our equipment was the reason for our 1% rate for bad welds. I said, 'Gee, we thought 1% bad parts was pretty good,' but this employee thought we could do better, pointing out that we were throwing away $500 a week in bad parts. That made it a $30,000 problem. The equipment turned out not to be the problem, but bringing the whole thing up made us realize we could do better. We've got it down to .2% bad parts now.
"Every review, I get a handful of major improvements like that. We get all the suggestions because people know it will benefit them as well as the company."* * *
"You can tell a lot from the scores for 'making the company a better place to work.' This is where people gain or lose the most points," reveals Treichel. "We review people so often they do get more involved. [A particular] employee had been getting almost all zeros in this category before, but with this review, started speaking up, making suggestions. I wanted to bring that out. This person has been making more suggestions ever since and, in a recent review, went from 9 to 12 points.
"After a while, you don't have to get as detailed in the attitude section because people know what's expected. I'm not limited by a real tight structure. It's the involvement I'm looking for. If someone takes a class, it's the effort that counts on the attitude side. It's an investment; the employee is going in a direction that will help the company. On the technical side, I focus on how he or she actually did."* * *
Key In to Industry Trends
"The salary committee spends about an hour a day for the last three months of the year contacting manufacturers," says Pullella. "We describe the job and ask what they would pay someone who does it."
"If the high for a job is $9 and I have someone making $7, that doesn't make me feel good," says Strazzanti. "I'd rather have someone performing at the $9 level, because the multiple of the effect on sales is much higher than with that $7 worker.
"The high rate for this job [floor inspector], which is based on the research we do, is a lot lower than the high rate last year," notes Strazzanti. "That doesn't happen too often. The marketplace is showing that floor inspection is becoming a dinosaur. That basically confirmed a trend we could already see happening here as we brought in new technology. The important thing was to encourage this person to move up, take more classes."* * *
Once Is Not Enough
Doing a two-way review three times a year with each employee creates an ongoing dialogue about every aspect of the organization. "You get to see trends -- good and bad -- before they've gone on for too long," says Treichel. "If things are left for 12 months, they tend to stew. This is a way of stirring the pot."
Strazzanti adds, "You really have to be in tune with what's gone on in the past. If someone usually gives the company all 10s, and I see an 8, that also concerns me."
New employees are reviewed once a month in the crucial first 90 days. "When I came to Com-Corp I thought the whole thing was a little strange," admits Treichel. "But doing it every four months forces you to take a look at an individual and really tailor his or her job. I don't think I'd get the same results if we did this once a year."
Define and Redefine the Jobs That Need to Be Done
In [the floor inspector's] case, the pay rate is actually above the industry high. Treichel emphasizes the employee is "earning every penny of it. Still, the marketplace is saying that the absolute best floor inspector is worth only $8.70 an hour. It wasn't the employee's fault; I realized our job description wasn't reflecting reality anymore, so we weren't getting the right numbers. That told me it was time to rewrite the job description. The new job definition is more about process improvement. The new high rate will be about $11 an hour. We're definitely getting a better return on what this employee is doing for us now. The whole point of this system is to say, Here's what you can do to make more."