Thought leadership

COMP DOCTOR™: Don’t Overlook the ‘Must-Haves’ for Annual HR and Compensation Reporting

COMP DOCTOR™: Don’t Overlook the ‘Must-Haves’ for Annual HR and Compensation Reporting

We have been asked to provide an HR and compensation summary of the past year for elected officials. Looking back, it is hard to remember everything we have done.  Where should we start, and what should we include?

If you are like many of us, you may just be happy (or relieved) to have wrapped up the year and had a moment to take a breath during the holidays before launching into the next twelve months.  As we begin a new year, it’s important not to minimize the role of compensation in the success of your organization. The bigger question is—what do you need to tell internal and local government leaders so your message can rise above the clutter?

Your HR and compensation functions are more than simply transactional.  Reporting on last year is not only about looking at the turnover rate, the number of positions filled, exit interviews, percentage increase of salaries, and recruitment cycles.  Your work in compensation and HR is more than numbers—is directly affects organizational wellbeing. That is the message to send when reporting on your work, whether the audience includes public officials or your own workforce. We are not saying to ignore numbers.  Consider summarizing the work of your team to show the quantity, efficiency, impact, and advisory nature of your contributions. 

What you really want to communicate is that your HR team has added value, and not just spent more money on getting the same results. That means that you have to focus on the numbers that have an impact on the organization’s performance. While your successess may not rival the latest upset in the NFL, you probably have a strong message that should resonate with your local officials.  

Track and report both quantity and efficiency of your department’s work
In terms of the quantity of work, we hope you are tracking the number of reclassifications reviewed, new job classifications developed, market data collected, job postings filled, job evaluations conducted, and other data that states the amount of work completed. These numbers are important to show not only how your team is contributing, but statistics also provide a framework to assess the effectiveness of the current classification and compensation systems.  Unfortunately, numbers alone do not tell the story. Unless they are put into context, they easily become lost or forgotten. 

Now, all this quantity is helpful to the organization only if you also provide efficiency. Your officials, and the public too, want to know what you have done for them in the last hour or two. Sometimes they will actually give you credit for something you did earlier in the year. The question you need to answer is, we did all these things this past year, but so what?  If you saw a significant number of reclassification requests that all started in 2018, referencing such a general time frame may not be helpful. What you want to say, is why did this happen and what have you done to make sure that the reclasses resulted in a better outcome. 

Many organizations use specified time frames for reclassifications completed for represented employees. Be sure to track the level of compliance with defined objectives, along with the number of days to fill a position, response time for employee questions, number of recruiting rounds to find a qualified candidate, and other efficiency metrics that demonstrate the speed and quality of support.

Report the positive impact of salary budget increases
The impact of HR and compensation on staff career wellbeing and overall organizational wellbeing is significant. This is because employees who are more engaged are more pleased with their compensation. Each year the overall salary budget increases; that amount—usually expressed as a percentage—is approved by elected officials.  But did the organization benefit from the additional dollars spent?  To tell the whole story, you also will want to communicate in your reporting the overall dollar impact, inclusive of where the money went, such as which departments, employee levels (support, management and professionals), job titles, and functional areas. 

Along with the dollar amount, include how the money has improved the organization’s market competitive position as well as internal equity, which is important to competitiveness as well as to compliance. (Search “pay equity” and related topics on gallagherhrcc.com to see other HR and compensation articles.)

Reporting on your advisory work is critical
Last, and possibly the most difficult, is to communicate the important advisory work of your team.  Many times there is no data to track the conversations held; and, summaries of the conversations should remain confidential. However, these are the conversations that help the organization avoid or mitigate larger HR issues.  For example, a department head may recommend the hiring of an applicant. However, HR may see the need for several conversations to alter course in favor of another candidate, or to re-open recruitment in order to avoid a poor hire.  No doubt you have also been involved in matters that either could lead to, or result from litigation. Inquiring minds want to know about this stuff.

By combining the stats, efficiency, budget impact, and the advising function provided by HR, you will help to tell the full story of the important contributions of the department to the larger wellbeing of the organization.  As you begin to implement your 2020 planning, don’t forget to track the important numbers and advisory activities of the department. Now, the next step may be to fight for more space in the annual report or more time in front of the elected officials. That’s a topic for another column!

All of us at Gallagher’s Human Resources & Compensation Consulting practice wish you and your team a successful year. Please contact us if we can answer any HR or compensation questions, at gallagherhrcc.com or 612-979-0546.


© 2020 Arthur J. Gallagher & Co.

Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc. is a licensed insurance agency that does business in California as “Gallagher Benefit Services of California Insurance Services” and in Massachusetts as “Gallagher Benefit Insurance Services.” Neither Arthur J. Gallagher & Co., nor its affiliates provide accounting, legal or tax advice.