Important Notice:
This site has moved to, please update your bookmarks. If you were looking for a specific post, you can use the site search option or archives at the new domain to find it. Thank you!

Friday, August 24, 2007

The High Cost of Geeks

Dear Evil HR Lady:

I just discovered your site, and it really is great! And as fate would have it I now have an evil HR question. My employer recently implemented an ERP system and took the occasion of scrapping all the existing HR data as an opportunity to reclassify every single position in the organization, not a bad thing in and of itself. Here's the problem: back in the day (e.g. pre-ERP) we knew how to write job descriptions so as to maximize the paygrade that would be assigned to the position -- a critical skill when trying to attract technical staff to positions in a tight, tight market for this talent. Now the whole compensation analysis criteria scheme is a mystery...nay it is a secret! The grades that our compensation analysts are assigning to positions that we know are high-five figure jobs in our market are just not competitive, and we're facing having to hire and train bozos right out of college rather than being able to attract the high-level techies we NEED to run our crap. (And by crap I mean a complex server environment that houses several billion dollars worth of financial data.)

My question: Is it standard evil HR practice to keep the criteria by which a position description will be analyzed and assigned a pay level a secret? Do you have any advice for gaming on the system so that we can hire for newly created positions and replace high-level staff members at appropriate salary levels?

Geeks Cost, and Right Here Is Where You Start Paying

Methinks someone is on a cost saving power trip. To quickly answer your question, paygrades should be based on market data. Your compensation department should be looking at salary surveys to determine what other companies are paying for similar jobs. This should not be secret at all. They should be able to show you what the market rate for the job is and it should correlate pretty closely with the assigned pay grade.

Make an appointment with your compensation analyst, don't be accusatory, just ask her to explain how she comes to a decision about the grade for any given job. She should be able to do so. If she hemms and haws, produce a job descriptions and say, let's level this together! This will make her very annoyed, because chances are she's operating under stupid rules put into place by the power hungry cost saver above her.

However, some companies think they can get by with a "cheap" labor force. This always cracks me up because a cheap labor force will cost you more money in the long run--for several reasons. I'll start with my two favorite.

1. You get what you pay for. (Generally, we all know there are exceptions to this rule. We all wish we could be exceptions to this rule--being overvalued, that is.) If the market rate for one of your techie positions is $95,000 (not unrealistic in my neck of the woods either), and you can only pay $75,000 you aren't going to have as many candidates to choose from. Sure, you'll be able to hire someone (because IT jobs are frequent targets of outsourcing), but that person will lack the skills and experience of the person you could hire at $95,000. You will have to train. This costs money. You will have more mistakes. This will also cost money.

2. Once you get this person up to speed she'll say, "why am I working here for $75,000? I can go across the street to the competitor and make $95,000. Plus they'll give me a sign on bonus!" And so she leaves. Now you've got recruitment costs, overtime costs (sometimes) when others have to fill in and do her job until you find someone. And you are stuck with the same low pay grade, so you have to start with the under-qualified person (not a bad person, mind you, just an inexperienced one) and the cycle continues.

One of the big overarching HR problems is our lack of understanding of not only the financial side of the business, but everything else. Once upon a time I led a task force to determine how our business wanted to look at turnover. The consensus among the senior HR people was that we only really wanted to look at the professional population. The factory workers--an hourly, unionized group--didn't matter. Heck, they're cheap labor.

I was flabbergasted. The hourly factory workers made up a really high percentage of our workforce, and their turnover was quite high. I suggested we include them in our turnover. No, no, no. We only want to see the professional people.

Finally, a plant HR manager spoke up, "we have a really hard time filling positions" she said softly.

Everyone was shocked. You do? Really?

Here was a bunch of senior HR people who literally had no clue what was really going on. Factory labor is cheap, so they didn't care about it. Except it's not cheap and it's necessary to keeping the business running.

If your business is in the business of storing financial data, your IT people are beyond critical to your business. But, HR may be focused on the sales force or the stock brokers or whatever is the glamor group for your company.

You may have to do some hard work to help them understand the critical nature of getting the right geek on board.


Wally Bock said...

Evil is so right. Let me add something to that. Far too many HR folk do not have clue one about how the actual work of their business gets done. They have never visited a factory floor, or a cross-docking distribution center, or watched a support tech work on some VP's computer.

Without the knowledge of how the work gets done, it's easy to get tricked by slick paperwork. In the geek world right now there are lots of people who've been to weekend boot camps to pick up a certificate or two and enhance their earning power. The problem is that they can't really do the job their certificate implies.

Someone in the hiring process needs to know things like this. Somewhere in the process you need to assess real capability. And you have to pay for the good ones.

Janette Rallison said...

Totally off topic--I loved your bad first sentence entry--but that is probably because I identified with the heroine so strongly.

Evil HR Lady said...

Wally--why is that? I think it's true, but why is that?

Janette--thanks. If anyone cares, what Janette is talking about is here. My entry is in the comments.

Wally Bock said...

I'm assuming you mean, "Why don't many HR people have clue 1." I don't know for sure, but I do have some ideas. Let me divide the reasons into those I think apply to lots of people in many businesses and those specific to HR.

As organizations have gotten bigger, more and more people have gotten farther and farther away from the actual work of the company and from the work that other parts of the company do. When I worked with a small, regional trucker, the yard and loading docks were right outside, the dispatchers had an office next to accounting. In a much larger trucking company I worked with, loading docks/distribution centers were scattered about the west. Accounting was in Phoenix. Dispatchers worked out of a facility in Nevada.

In those situations you have to make a special effort to connect. Most companies don't work at that. We've lost human scale in our organizations. They're too big for you to know everyone. That's only getting worse in this age of "virtual teams."

Now for the HR-specific part. Many of the people I've met in HR are process people. They are responsible for part of a process. They do their part well, but by temperament, selection or corporate culture, they don't look their own little part of the world. Their world is neat, tidy, and rule-based.

Most of the parts of a business that create products or customers are quite the opposite. They are messy, and they see rules as guidelines.

There is also some white collar/blue collar conflict here. Except you can count the sales people among the blue collar folks.

The very first and one of the best HR people I ever knew joined the company I worked for and spent his first month mixing in days on the road with sales people, in the plant where we made metal alloys, in the shipping and credit departments in the headquarters and field service centers. There are lots of HR people like him. There aren't enough.