Category Archives: HR

A letter from the CEO you should have had

August 11, 2017 By in Leadership, HR, Leadership Cornerstone Tags: , 1 Comment

CEOs have not valued their employees equal to the rest of their stakeholders.

Today I write the letter that your chief executive should have written to you. I’m assuming you are a man, but it is the same for a woman. Well, most of it, I won’t get into the issue of sexism as that would require whole volumes.

Dear Employee,

I would like to apologise to you. The past three years have been challenging, stressful and, quite frankly, confusing. It is a situation that I have never seen before, that no executive can be prepared for. This situation has created multiple dilemmas for me on how to manage the company. I have focused on profits, I have focused on the board, I have focused on shareholders, I have focused on suppliers, I have focused on clients. To my greatest shame I have not focused on you.

Did I start this letter with “Dear Employee”? I should have said “Dear Valued Employee”.

To apologise and to make amends I must first walk you through what I faced. In mid-2014 oil prices dropped fast. These things happen. It was a point of concern, but not much. All media reports and announcements from the relevant authorities pointed to a short-term price correction. Every indication was that the oil price would recover back to over US$100 per barrel within months. Continue reading →

Compensation Foundations: Long Term Incentive Plans

June 13, 2017 By in HR Tags: ,
Compensation Foundations: Long Term Incentive Plans
This entry is part 4 of 4 in the series Compensation Foundations

This week’s column is the third in a series that I co-author with Ray Everett, the chief executive of Aon Hewitt in the Middle East.

In our previous articles we spoke about salary – what you give people to show up every day, and incentives – what you pay them to do their job well. In today’s column we’ll cover Long-Term Incentive Plans (LTIPs) – what you pay people to do their job well over the mid to long term. Continue reading →

Your employee stock ownership plan probably increases company risk

June 4, 2017 By in Management, HR 1 Comment

Employee stock ownership plans (ESOPs) are supposed to align employee and company interests and in theory decrease risk. But as an employee, you actually materially increase risk if you get paid stock rather than cash: if your company gets into trouble you lose your job and your savings (stock price drops).When things go well for a company it should take more risk, but ESOPs might make employees take less risk, in essence locking in their profit.

When things don’t go so well a company should reduce risk. But employees, who might feel they are about to lose everything, might gamble with the hopes of saving their jobs and savings.

No values? Here's a promotion!

May 25, 2017 By in Management, HR

My insight into how those with no values are promoted: If a supervisor instructs an employee to do something, then an employee with values will push back if the action conflicts with their values. The employee with no values will immediately execute the instruction without hesitation. From the supervisor’s point of view it can look like the former employee is obstinate and the latter employee is loyal.

Of course this false view can easily be corrected by remembering that it is final outcomes that count and ensuring that long term performance is measured and reviewed. Not to mention that the mirage of the loyal employee is the foundation of the fraudulent employee (no values, remember?).

I got this insight from a young compliance officer who was struggling to do his job and keep it. I was told that a bank CEO was let go precisely because of this. The list continues. Is this a self-reinforcing downward spiral? Of course what’s true of governance is also true of risk-taking.

Compensation Foundations: Designing an Effective Incentive Plan

February 21, 2017 By in HR Tags: ,
Compensation Foundations: Designing an Effective Incentive Plan
This entry is part 3 of 4 in the series Compensation Foundations

This week’s column is the second in a series that I co-author with Ray Everett, the chief executive of Aon Hewitt in the Middle East. In the first article we discussed job identification, job grading and linking it to pay.

While people are paid salaries to do their job, incentives encourage them to do their job well. Nothing is more emotive in people management than communicating incentive numbers – people can be upset, happy or (as is often the case) neutral.

Continue reading →

Compensation Foundations: Grading and Job Evaluation

January 24, 2017 By in HR Tags: , 1 Comment
Compensation Foundations: Grading and Job Evaluation
This entry is part 2 of 4 in the series Compensation Foundations

This week’s column is the first in a series that I co-author with Ray Everett, the chief executive of Aon Hewitt in the Middle East, a position that he has held for the past year, and Asia-Pacific and Middle East and Africa regional head of McLagan (a division of Aon Hewitt focusing on financial services). Aon Hewitt is one of the world’s pre-eminent human resources consulting companies and I have worked with it in the past to help me unravel one of the toughest issues that I have faced in building and managing various businesses: how to think about compensation when recruiting and promoting or awarding raises and bonuses.

This area of business haunts many managers, starting with how much to offer when recruiting. The widespread approach of simply asking for a salary receipt from the candidate’s employer is simply an admission that the hiring company has little idea on how to think about pay. The extension of this ad hoc approach to raises can lead to unfair pay differentials that are not based on merit, which harms morale and the company.

In short, the more opaque or uncertain a decision-making process is, especially with regards to human capital, the greater the damage to the company, most notably via low morale and difficulty in hiring and retaining top talent. The answer is a transparent, well-defined approach.

Continue reading →

Ray Everett of Aon Hewitt on Compensation Foundations

January 21, 2017 By in HR, Executive Insight
Ray Everett of Aon Hewitt on Compensation Foundations
This entry is part 1 of 4 in the series Compensation Foundations

Compensation is a difficult management issue, not least due to the human element to it. Ray Everett. chief executive of Aon Hewitt in the Middle East, a position that he has held for the past year, and Asia-Pacific and Middle East and Africa regional head of McLagan (a division of Aon Hewitt focusing on financial services). Aon Hewitt is one of the world’s pre-eminent human resources consulting companies and there is a lot to learn from them in this series.

What makes for a Happy Workplace?

April 17, 2016 By in HR Tags: ,

It is thought that happy employees improve the performance of a company. This has been championed most publicly by Google, with its large assortment of toys, break rooms, food and beverages, services and transport for employees.

But is this concept correct?

Although it is relatively clear that unhappy employees would be harmful to a company, this does not necessarily imply the opposite. And it is even less clear that just giving workers goodies will bring them joy, either.

Continue reading →

Employee Operational Skills

October 20, 2015 By in HR Tags: 1 Comment

Developing and emerging economies go through a known cycle: export of local products and commodities, FDI including agencies and technology transfer.

But what about human operating skills? What use are large amounts of foreign investments, the factories and infrastructure that they build and the advanced technology that is imported if worker operating efficiency does not increase to match the advances in all of the other facets of the economy?

Continue reading →

Emirati Role Reversal: Learning to be an Expat

August 11, 2015 By in HR Tags:

Emerging economies go through the same cycle. The first step is the export of products or commodities that are relatively cheap or are native to the exporting community. For examples of emerging economies exporting product simply look at the history of nearly any country in Southeast Asia. As for commodities-based economies, the UAE is a perfect example.

This in turn triggers foreign direct investment (FDI) allowing for infrastructure investments that help improve the production capacity and efficiency of the emerging market. These upgrades will usually require the need to upgrade technology as well as processes and procedures. To that end operating expertise in the form of foreign advisers and managers is imported to upgrade the training of the local population to manage these changes.

The result is a virtuous cycle in the emerging economy of an improving workforce that becomes more efficient in its production which in turn spurs further FDI and the cycle continues.

Continue reading →