The Journey to World-Class

Leveraging Best Practices

Compensation Administration
Presented to:
Lawson Software, Inc. / City of Columbus, Ohio

William Bacote

Manager

The Hackett Group

March 27, 2008



Page 2
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Objectives and Expectations

Examine current process efficiency, effectiveness, and structure
Understand current gaps to best practices, and service delivery model considerations
through examination of Hackett Best Practices
Begin the development of a best practices scorecard


Page 3
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Best Practices Defined:
A Hackett-Certified Practice is a proven technique that delivers measurable value

Aligns with strategy
Reduces costs
Improves productivity
Promotes timely execution
Enables better decision making
Leverages existing and exploits emerging
technologies
Ensures acceptable levels of control and
risk management
Optimizes skills/capabilities of the
organization
Promotes collaboration across the
extended enterprise
Hacketts Best Practices are certified when there is a correlation with world-
class performance metrics


Page 4
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Best Practice Scorecard
Best Practice Current Practice
Usage
Now | Future
End-State Vision
Applicability | Coverage
Comments
A description of each
Hackett best practice
for this process
A description of current
utilization of this best
practice
Coverage
High Widespread impact on the enterprise and/or significant value-add
Medium Impacts multiple areas, value-add is significant but less relative to processes
ranked as High
Low Impacts a single area of has limited span of adoption throughout the enterprise
Applicable
Yes Adoption of the best practice is in line with current/future business needs
No Best practice does not fit the current business needs
Comments
Statements pertaining to the technology enablement, policy enactment and other challenges and/or
prerequisites associated with improving the utilization of the Best Practice
No Usage Strong Usage


Page 5
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Best Practice Session


Page 6
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Process Overview
Process Definition
The process of administrating and executing all compensation, including hourly, salary,
commissions, and executive; in accordance with organizational policies, business practices and
government regulations
Major Activities
Collection, coordination and maintenance of the required knowledge, skills, and abilities
Job credential establishment and evaluation
Administration of Merit Review Program
Job Analysis / Job Evaluation
Support position and skills pricing
Establishment, tracking and execution of temporary labor pay practices
Communication and implementation of annual pay programs
Administration and training support for new compensation programs
Management reporting specific to Compensation administration
Administration of all compensation including
Administration of all fixed and variable elements (e.g. base pay, commissions, bonuses, stock options, and
allowances)
Administration and execution of hourly, salaried, expatriate and executive compensation
Administration of relocation
Administration of stock options




Page 7
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration
Best Practice Review Summary Results
Item Count % of Total Comments
Best Practices Reviewed 29 N/A
Best Practices Deemed
Applicable
16 55%
Best Practices Fully or Mostly In
Use at City of Columbus
3 19% or
Best Practices Partially in Use at
City of Columbus
5 31% or
Best Practices Seldom or Not In
Use at City of Columbus
8 50%


Page 8
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Assessment
Best Practice Current Practice

Usage
Now | Future
End-State Vision
Applicability Coverage
YesNo H M L
Comments
Position descriptions and job
evaluations are available online,
accessible by managers and
employees
HRCA002
No; class specs only
(similar to job description)
Class specs has general
duties for all positions
within the spec., available
to anyone. EPC (position
description) is available
online to dept. HR.
Yes M Provide online access to
managers & employees.
Number of traditional job
descriptions greatly reduced or
eliminated, standardized by job
function and families
HRCA016
Yes, number of job
descriptions have been
reduced and standardized.
646 class specs for 9k ees.
Yes L Maintain current
best practice.
Update of job descriptions
performed online with the use of
automated approval and
workflow
HRCA013
EPC updated electronically
upon vacancy or when
duties change with
approval & electronic
signature.
Yes M Expand to all positions
and interface with CHRIS
No Usage Strong Usage No Usage Strong Usage


Page 9
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Assessment
Best Practice Current Practice

Usage
Now | Future
End-State Vision
Applicability Coverage
YesNo H M L
Comments
Direct link created between job-
description preparation and job
evaluation process to maintain
consistency in performance
expectations
HRCA004
Yes, there is a link between
job description preparation
and job evaluation process.
Workflow N/A due to
council approval and BU
negotiations.
Yes L
Requires consistent
job evaluation
process & policy
Standardized job evaluation
process developed with
skills/competencies templates
for business and HR managers
to create new positions and
assign job levels based upon
evaluation process results
HRCA003
Request comes to CSC
from mgr/director for a new
class. Interview
(CSC/comp) with dept. reps
to define
duties/qualifications/KSAs
for new class. Present to
commission for approval.
Comp receives prior to
approval. Comp uses spec
to determine level and
recommend pay/grade
assignment to labor
relations. Negotiated with
appropriate bargaining unit.
Labor does legislation to
council for approval.
Yes M Skills &
competencies are
standard across the
business.
Develop
standardized
templates for use.
City sees use as
being low.
No Usage Strong Usage No Usage Strong Usage


Page 10
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Assessment
Best Practice Current Practice

Usage
Now | Future
End-State Vision
Applicability Coverage
YesNo H M L
Comments
Online, secure, role-based
access developed for viewing
current and historical
compensation data by employee
and management chain
HRCA007
Historical compensation
data is available to dept HR
but not mgrs. Have started
definition of reporting
structure.
Yes H Move toward ESS and
MSS for viewing.
Will require set up of
reporting structure.
Proposed promotions,
demotions and grade changes
input online by line managers
into central application
repository using Manager Self
Service provided through HRMS
HRCA010
This handled by dept. HR.
This is a paper process.
No H Not envisioned.
Variable compensation plan
developed based on business
and individual performance
results and implemented in
conjunction with performance
evaluations
HRCA001
N/A.
No variable compensation
plans.
No Usage Strong Usage No Usage Strong Usage


Page 11
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Assessment
Best Practice Current Practice

Usage
Now | Future
End-State Vision
Applicability Coverage
YesNo H M L
Comments
Online modeling capability
utilized to evaluate financial
impact of compensation/merit
reviews upon area of budget
responsibility
HRCA011
No, any evaluation is done
manually using
spreadsheets. Limited
reporting to assist with
financial impact.
Yes H Desire for modeling.
Requires online access
for depts.
Budget information must
be available.
Online, secure access to
compensation data in place,
including budgets, forecasts and
past history
HRCA014
Yes for comp data, not for
the rest
Yes M Access to historical
budgeting and forecasts
within HR system.
Must work with finance
for budget and forecast
information.
Online system established for
line managers to implement
merit-pay increases and
automatically verify against
predetermined criteria
HRCA009
No merit is not budgeted. Yes H Budget for merit
increases.
May want for division
level but not line
managers.
Begin process to identify
needs and training for
division.
No Usage Strong Usage No Usage Strong Usage


Page 12
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Assessment
Best Practice Current Practice
Usage
Now | Future
End-State Vision
Applicability Coverage
YesNo H M L
Comments
Approved merit/market
increases are automatically
loaded into the HCM system and
flow into payroll as base pay
HRCA008
No, approved on paper
(multiple steps) and
entered manually.
Yes H Workflow and interface
into payroll.
Manager self-service provided
through the HCM system is
available through all levels of the
managerial hierarchy to view
target bonuses and define goals
for reaching different levels of
bonus payout
HRCA033
N/A
Manager self-service provided
through the HCM system is
available through all levels of the
managerial hierarchy to
document performance against
bonus goals and recommending
a specific bonus payout related
to that performance
HRCA034
N/A
No Usage Strong Usage No Usage Strong Usage


Page 13
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Assessment
Best Practice Current Practice

Usage
Now | Future
End-State Vision
Applicability Coverage
YesNo H M L
Comments
Approved bonus payments are
automatically loaded into payroll
HRCA035
No, only longevity pay is
automatically loaded.
Yes H Automate for all bonus
types but maintain audit
function prior to pay.
Single point of contact
established for all stock option
related queries
HRCA028
N/A
Stock option agreements are
delivered to employees and
accepted electronically using
workflow and electronic
signatures
HRCA037
N/A
Internet-accessible self-service
provided to employees for
viewing option history, balances
and exercising vested options
HRCA040
N/A
No Usage Strong Usage No Usage Strong Usage


Page 14
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Assessment
Best Practice Current Practice

Usage
Now | Future
End-State Vision
Applicability Coverage
YesNo H M L
Comments
Commissions are calculated,
verified and reported on through
an HCM system module or a
separate solution that interfaces
with the HCM system, depending
on requirements
HRCA041
N/A
Employee self-service provided
to view commissions guidelines
and sales goals
HRCA042
N/A
Employee and manager self-
service is available through all
levels of the managerial
hierarchy to view performance
against sales goals and the
expected commission payout
related to that performance
HRCA029
N/A
No Usage Strong Usage No Usage Strong Usage


Page 15
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Assessment
Best Practice Current Practice

Usage
Now | Future
End-State Vision
Applicability Coverage
YesNo H M L
Comments
Approved commission payments
are automatically loaded into
payroll
HRCA043
N/A
Relocation administration is
centralized or outsourced to a
third party vendor
HRCA021
Centralized. Previously had
to receive council approval
but policy has been
proposed.
Yes L Need to implement
policy.
Employee relocation expense
claims submitted online
HRCA018
No No Use would be small
Single point of contact
established for all international
assignment / expatriate queries
HRCA020
N/A
Expatriate services are
outsourced to 3rd party vendor
(e.g. relocation, benefits and
taxation)
HRCA022
N/A
No Usage Strong Usage No Usage Strong Usage


Page 16
Document Name HRCA_Assessment
2008 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Compensation Administration Best Practice Assessment
Best Practice Current Practice

Usage
Now | Future
End-State Vision
Applicability Coverage
YesNo H M L
Comments
Integrated service capability
established for all international
assignment/expatriate activities
(e.g. relocation, domestic
residence management,
compensation, benefits and
taxation)
HRCA017
N/A
Total target compensation stored
by component of pay, including
salaries, bonuses, commissions,
allowances, etc
HRCA039
No, separate components
stored in pay history.
Yes M HRMS with standard
fields that support
components of pay for
bonuses and recurring
payments.
HR generates reports for
management to compare and
analyze total target
compensation versus actual
compensation by component of
pay
HRCA030
No Yes M Standard & ad-hoc
reporting related to
components of pay.
No Usage Strong Usage No Usage Strong Usage