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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
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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, NewYork 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
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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.
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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.
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EMPLOYEE PERFORMANCE METRICS(Presented to Business Unit HR
Officers)
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Performance Distribution Curve FY07/08
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Average Increase By Performance Rating FY07/08
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Average Annual Bonus By Performance Rating FY07/08
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FINANCIAL METRICS
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Total Spend by Increase Type
Total Spend FY2007
54.5%
15.5%
8.8%
21.2%
Upgrades
Salary Adjustments
Promotions
Annual Merit Increases`
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SERVICE DELIVERY
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Service Delivery – Turnaround Time
Num
ber of days
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Service Delivery – # of completed requests
Job Evaluations and Salary Requests Total # of Completed Requests
Fiscal Year 2005 through Fiscal Year 2008
723
818
510
853
333
760
289
552
0
100
200
300
400
500
600
700
800
900
FY05 FY06 FY07 FY08 First Three Quarters
Num
ber o
f Com
plet
ed R
eque
sts
604
214
581
142
685
168
217
72
60
456
96
# of Clerical &Technical Job Evals # of Clerical & Technical Salary Requests
# of Administrative & Professional Salary Requests# of Administrative & Professional Job Evals
273
126
53
707
384
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Service Delivery – # of Job Evaluations Completed
Job EvaluationsTotal # of Completed Requests
Fiscal Year 2005 through Fiscal Year 2008
604581
685
384
214
142168
126
0
100
200
300
400
500
600
700
800
FY05 FY06 FY07 FY08 First Three Quarters
Num
ber o
f C
ompl
eted
Req
uest
s
Administrative/Professional Clerical/Technical
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Service Delivery – Customer Survey
Overall Satisfaction with Compensation Department
86.7%
10.0%3.3%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Response Category
# of
Res
pond
ents
Very Satisfied/Satisfied
Neutral
Very Dissat./Dissatisfied
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Service Delivery – Customer Survey
Response Time for Salary Requests
87.1%
0
12.9%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Response Category
# of
Res
pond
ents
Very Satisfied/SatisfiedNeutralVery Dissat./Dissatisfied
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Service Delivery – Customer Survey
Response Time for Job Evaluations(new or vacancies)
83.9%
9.7% 6.5%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Response Category
% o
f Res
pond
ents
Very Satisfied/Satisfied
Neutral
Very Dissat//Dissatisfied
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Service Delivery – Customer Survey
Response Time for Position Upgrade Requests
16.1%
80.6%
3.2%0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Response Category
# of
Res
pond
ents
Very Satisfied/Satisfied
Neutral
Very Dissatis./Dissatisfied
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Service Delivery – Customer Survey
Compensation Advice and Consultation(i.e., - job evals, promotions, etc.)
77.4%
16.1%6.5%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Response Category
# of
Res
pond
ents
Very Satisf ied/Satisfied
Neutral
Very Dissat./Dissatisfied
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EXTERNAL PAY COMPETITIVENESS
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External Pay Competitiveness
NYU data is confidential
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POLICY DRIVEN METRICS
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Remedy Desktop Client
• Remedy Service Management is an application used by many serviceproviders 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
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Remedy Incident Reporting Screen
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Total Service Requests Created
1286
Total Service Requests Resolved
1265
% with 1-DayResolution
87.71%
Current OpenService Requests
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Average Days toResolve Requests
3.74
HR – Compensation Service Requests StatisticsSept 2008 – April 2009
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HR – Compensation Requests by SourceSept 2008 – April 2009
Phone515 (40.05%)
Email592 (46.03%)
Walk-in172 (13.37%)
Requester4 (0.31%)
Fax1 (0.08%)
Voice Mail1 (0.08%)
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HR – Compensation Service Requests Created Each MonthSept 2008 – April 2009
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HR – Compensation Requests by CategorySept 2008 – April 2009
38%
4%14%
17%
19%
8%
Salary RelatedBonus RelatedSystems RelatedPolicy InterpretationRecognition ProgramsMisdirected Inquiries
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GLOBAL METRICS
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Global HR/Compensation Metrics
• A Risk Framework is Beneficial for Establishing Global Metrics
Business Results
Regulatory Risk
Financial Risk
Operational Risk
Strategic Risk
Risks that generally creates ineffectiveness (costs you money, time, inconvenience)
Risks that can get you into trouble with the law
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A Closer Look at the Potential Risks
Strategic Risk Regulatory 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
• 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
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A Closer Look at the Potential Risks
Financial Risk Operational 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
• 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.)
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Global Metrics are Less Formal and Often Customized and Based on Available Data
Sample Compliance Metrics Sample “Sound Practice” 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
• 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
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
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Global “New Location” Metrics: 5 Driver Framework
Talent Peer Organizations Environment ClustersInfrastructure
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 produceA 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 industryThis driver studies the presence of recruitment, transportation, and other relevant support services industry
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Global New Location Metrics—5-Driver Framework
Talent(Faculty,
Student, Staff)
PeerOrganizations Environment Clusters
Peer Opinion
Legal Considerations
RealEstate
Services andLifestyle Amenities
DR
IVER
SFA
CTO
RS
PAR
AM
ETER
S(E
xam
ple)
ELEM
ENTS
Training and Recruitment Infrastructure
– 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
Talent Availability
Talent Quality
TalentCosts
Talent Sourcing
Further drill down in “element”level data
Power
GeopoliticalRisk
InternationalConnectivity
PublicTransportFacilities
Other SharedFacilities
ExpatriateServices
Security/Crime
Infrastructure
State/CountryPolicies
PeerPresence
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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.
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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.
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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.