Taking care of customers by taking care of employees, (give them all a raise edition)

ETERNAL TRUTH: Better engaged employees are happier, more productive, are retained at higher rates than less-engaged folks, and provide higher levels of customer service, all things being equal.

So if you want/need/desire improved customer service, all you have to do is find a way to improve employee engagement levels of the folks meant to be providing the customer service. 

Easy, right?

Except when it's not. I have written plenty here, (and so have lots of other folks), about how despite tossing money and effort at improving engagement for at least 20 years, that in aggregate engagement levels are about what they have always been since it became a member of the 'something we measure' club.

But what if there was another, simpler way to improve customer service that didn't involve 'engagement' at all, but did impact those employees that are on the front-line working with and helping customers every day? You'd be interested in something like that, wouldn't you? What if it was as simple as cutting a check? Well, make that several thousand checks.

Check this excerpt from a recent Fortune piece - McDonald's Says its Wage Hikes Are Improving Service:

The hamburger chain in April announced it would raise the average hourly rate for workers at the U.S. restaurants it owns to $9.90 from $9.01 starting July 2015, with average wages climbing above $10 per hour by the end of 2016. The company also said it would allow those employees to earn up to five days of paid vacation every year following one year of employment.

McDonald’s CEO Steve Easterbrook, who took the helm in 2015, has since moved swiftly, closing hundreds of weak stores, bringing back all-day breakfast, and simplifying the chain’s menu, reducing bottlenecks in serving customers quickly. But improving the customer experience hinges on workers being on board with all these changes, hence the raises.

“It has done what we expected it to—90 day turnover rates are down, our survey scores are up—we have more staff in restaurants,” McDonald’s U.S. president Mike Andres told analysts at a UBS conference on Wednesday. “So far we’re pleased with it—it was a significant investment obviously but it’s working well.”

The move reportedly created friction with franchisees, who hire and pay their own workers, as they felt pressure to match the wage hikes. Still, there are early signs it is paying off: In October, McDonald’s reported its first quarter of comparable sales gains in two years. The company built on that growth with a huge 5.7% increase in the following quarter.

Wow, is it that simple? A general 10% across the board wage increase and sales and customer service both rise enough to offset the costs of the increased wages? That's it? Man, what took them so long to sort that out?

In truth, there are a few things to tease out of this experiment, and it could be that some of the non-wage increase changes have been at least somewhat responsible for this recent turnaround in McDonald's fortunes. But as CEO Easterbrook rightly observes, in order for these operational and strategic changes to really work, the employees had to be on board, and raising wages was the simplest, (and possibly best) way to accomplish that.

There are probably a few special circumstances that make this strategy more effective than it would be in other places, even small reductions in turnover are likely to have a big impact on service levels in the fast food business, and even with a high number of employees, giving blanket increases of 10% does not represent massive spending. So get turnover down just a little, keep a few more longer-tenured staff on each shift, and boom - the drive thru lines move a little bit faster and the customers are happy.

Sometimes, maybe most of the time, we tend to over think what it takes to keep people (reasonably) happy, and give them a situation where they feel good about the work they are doing, and the customers that they are serving. 

You might not be able (nor necessarily should you), give everyone on the staff a 10% bump. But there probably is some other, simple, reachable change you can make that would serve the same purpose. It's out there. You can find it.

Just don't call it "employee engagement" and you will be fine.  

Yelp and a missing piece of HR Tech

By now I am pretty sure you've heard the story of the call center rep at Yelp who was summarily fired after posting an 'open letter' to the CEO claiming (among other things), that the company's failure to pay a living wage was placing her and her colleagues under tremendous financial pressure. Here's a quick two paragraphs from coverage of the letter and the firing from the Washington Post:

The Yelp employee who said she was fired after she blogged about the financial pressures she felt while working for the multibillion-dollar business said Monday that her breaking point came one night when she went to sleep — and woke up "starving" two hours later.

Talia Ben-Ora posted an open letter Friday afternoon to Yelp chief executive Jeremy Stoppelman, saying she wasn't earning a living wage while working in customer support at Eat24, Yelp's San Francisco-based food delivery arm.

She was out of work hours later, she said.

Yesterday at the HR Capitalist, KD had some great takes on the entire Yelp employee hullaballo, but it was this one, KD's point #3 that I found the most interesting and wanted to expand upon a little bit here:

"The company has some responsibility here as well.  It's San Francisco, people. Maybe 20K annualized jobs don't belong in the Bay Area.  It's called workforce planning - put a call center in Detroit and do some civic good. "

KD is quite correct of course, it doesn't make a tremendous amount of sense to attempt to locate, staff, retain, and motivate the team for a call-center or similar kind of low-wage filled business operation in one the most expensive cost of living places in the world.

Heck, there have been reports that teachers, police officers, nurses and many other professionals can't afford to live in San Francisco or the nearby cities and towns that the tech boom in Silicon Valley have made incredibly expensive compared to most of the rest of the country. Super expensive places to live and work are always going to be extremely challenging for workers on the lower end of the wage scale, as made clear by the ex-Yelp employee's post.

So let's get back to KD's point - Yelp shouldn't realistically try to locate a call/service center, staffed by what the market would force to be low-paid workers, in a place like San Francisco. The reason this point resonated with me is that for a long time I have thought that one of the big gaps in the HR technology landscape was a solution or platform for helping organizations make these kinds of decisions - the 'Where should we locate the call center?' ones that the Yelp story reminds us are so important.

In fact last year when I was setting up the first-ever HR tech hackathon at the HR Technology Conference, I toyed for a time with making the 'challenge' for the hackers would have to tackle be that very thing - to build a tool that would help HR and organizational leaders answer the 'Where should we locate the call center?' question.

So what kinds of considerations and inputs would such an HR technology that could help answer that question have to encompass?

Here's a quick, incomplete list...

1. Inventory of the needed talent/skills to staff the call center, (I am going to keep using the call center example, but the technology would naturally have to be flexible enough for all kinds of workforce planning decisions).

2. Assessment and comparison of the available talent/skills to the needed set of talent/skills from Step 1. This would have to factor in the existing employee base, the candidate/prospect database and funnel, the alumni database, public networks like LinkedIn, 'on-demand' portals like Elance, and perhaps other external candidate repositories or resources like local staffing companies. Somehow you would need a decent idea of the addressable talent/skills that could be applied to the needs developed above.

3. Capability to cost and analyze a range of options with different talent mixes from the potential sources above. In other words what difference does it make if we staff using 80% temps/contractors and 20% FTEs? How much longer and more costly would it be to push the FTE level to 40%? What are the chances we could even find enough readily available talent in the local market to choose that mix?

4. Ability to incorporate site specific factors like land/building acquisition costs, infrastructure costs, tax implications, cost of compliance with any local regulations, and the 101 other things that go into building or leasing, (and then maintaining), company facilities. 

5. And finally, incorporate, or at least make folks aware of other factors that could influence the decision like an evaluation of how average commuting time/cost might be impacted by the choice of location of the new call center, the likelihood of delays in facility construction or with acquiring needed permits, or any location specific elements like local climate or even political landscape.

There are probably lots of other factors that any major business decision like 'Where should we locate the call center?' would need to be taken into account, but I think at least I touched on the obvious ones. And the fact that these kinds of decisions are so complex, involve data from so many disparate sources, and have to be incredibly flexible in order to adapt to meet the requirements of highly complex scenarios is probably the reason why a technology for this use case does not seem to exist.

So to circle this back to the Yelp story it is for sure an accurate observation that trying to run a call center operation in a high-cost place like San Francisco is likely a terrible, no good idea.

But where should the call center be located? 

That's a simple question that is hard to answer. I hope that we will see some movement in the HR tech space in the coming years that will help to make answering that question a little easier, and will help lessen the kinds of situations like the one about the starving Yelp employee.

Fondly remembering the days of 3% raises

Quick shot for a busy Tuesday - check out this piece that ran on USA Today online over the weekend - Is the annual pay raise dead?, a look at some recent studies and trends in the world of employee compensation.

For what seems like ages, once per year the big total rewards consultancies like Towers Watson or Aon Hewitt would diligently report back that for the average employee annual salary increases would be about 3% (again). The news that annual salary increases would be about 3% became somewhat of a running joke, since it was so consistent and predictable. The phrase of employees being '3-percented until retirement' was fairly common.

Well, if the latest news on annual salary increases is accurate, we may all look back on the 3% raises of the past and wonder what happened to them. Check out some of the comments in the above-mentioned USA Today piece:

"Base salary increases are flat. We don't see the prospect of that changing much at all in the next several years," said Ken Abosch, who studies compensation issues for Aon Hewitt.

In other words, the annual raise is dead. It was already on life support last decade, but the Great Recession has finished off the raise. It's been replaced by "variable compensation" — the bonus.

"The quiet revolution has been the change in compensation mix," Abosch said. "Through a series of recessions, organizations have pulled back dramatically on fixed costs. And base salaries are often a company's most significant fixed cost ... [They] have a compounding effect, and create a drag on an organization's ability to change."

Awesome isn't it when your salary, (and by extension, you), are described and probably considered as 'a drag on an organization's ability to change', instead of, I don't know, a strategic investment of organizational resources in order to hire and retain great people.

One of the effects of a relatively higher percentage of one's overall compensation being shifted towards bonuses or other kinds of variable pay is that it makes 'regular' employment look and feel more like contingent labor. One of the reasons people like 'regular' jobs is the 'regular' nature of their weekly, monthly, and annual earnings. Drive more of these earnings into more company-friendly (and easier to reduce and/or eliminate), irregular compensation, then, well, earnings stability becomes much more tenuous.

Companies need to be more agile and flexible these days, no doubt. But at least in the US they have had the benefit of pretty much universal employment-at-will arrangements to ensure labor and labor cost flexibility. Now it seems like that might not be flexible enough for many organizations.

They want your 3% as well.

Should you ask for a 1200% raise?

Hey it's October!  The best month of the year by far. If you don't believe me, check out Months, ranked and get up to speed.

So happy October. 

Hey question for you career-minded folks or for those of you who might sit on the other side of the compensation table, making decisions about comp offers, raises, and bonuses for your teams.

Should you (or anyone) ever have the gumption to ask for a 1200% raise?

Sounds kind of ridiculous in the land of 3% annual salary increases, (maybe 4% if you are a 'top performer'), and with organizations continuing to do everything they can to resist the inevitable upward pressure on wages that an improving economy with falling unemployment will drive.

But 1200% of a pop? You would have to be really confident to make that kind of a salary demand.

Why is that particular figure on my mind?

From reading recent piece on Business Insider, Vikings part ways with their mascot after he demanded a 1200% raise.

From the piece:

Ragnar, the Vikings' unofficial mascot, and his motorcycle have been a fixture at Minnesota Vikings games for over two decades, but that appears to be over as the two sides have been unable to reach an agreement on a new contract.

Ragnar, whose real name is Joe Juranitch, was seeking a new contract that would pay him $20,000 per game, according to Michael Rand of the Star Tribune. That would translate to an annual salary of $200,000 for eight regular season and two preseason games, and an increase of more than 1,200% from his previous pay of "about $1,500 per game" last season.

I have never been to a Vikings home game, so I am really not too sure what exactly Ragnar brought to the table, and particularly what he thought would be worth about $5,000/hour (game lasts about 3 hours, add 1 hour for pre and post game work). But it is pretty clear from the way the Vikings basically responded to this demand with a 'Thanks Ragnar, it's been really nice working with you. Good luck!' that Ragnar had severely overestimated his value and his leverage.

What can us normals take away from this little viking adventure, even if we are just trying to secure a reasonable bump, say 10% or so?

1. Have some idea of how much actual value, (revenue, increased customer retention, tangible cost savings, etc.), we are directly responsible for creating. 

2. Have some idea how painful it would be to the company if we actually walked out when our crazy demands were not met.

3. Have some idea of the market more generally for folks who do what we do.

Our pal Ragnar pretty much failed on all accounts. He likely did not generate any appreciable revenue for the team. Even though his Facebook page was full of comments from fans expressing support and anger towards the team, it would take an enormous stretch of believability to conclude that any actual fans would refuse to attend games due to his absence. 

He also didn't really grasp that the games would carry on pretty much unaffected once he was no longer a part of the show. The team preparation certainly would not be affected. His absence actually would create less work not more for the game day operations staff. In fact, other than the small number of fans who missed his performance at the game, everyone else lives got a little bit easier.

Finally, there is almost no chance that Ragnar surveyed the landscape of professional sports mascots to come up with market comparables that led him to make a $20K per game demand. If team mascots were really pulling down anywhere near that kind of scratch, there would be line hundreds of people long to try out for those gigs. More than likely, one of Ragnar's buddies got into his head that he was somehow underpaid and under appreciated, (and that he was WAY more important to the product than he was).

Look, I get wanting to make every last dollar you can. We are probably all underpaid for the amount of crap we have to put up with. But the key question is knowing just how much you are really underpaid, and making sure you are honest about your value, how replaceable you are, and your ego.

Happy October.

LEAKED: Two observations from the Sony Pictures hack

I am sure you have heard or read about the widespread hack and subsequent leaks of massive amounts of corporate information like email archives and other sensitive organizational (and HR) data at Sony Pictures.

If you would like to be familiar, or at least caught up, a useful timeline of the hack and the leaks, (which appear to be ongoing), is here.

Embarrassing email exchanges, written potshots being taken at various industry players, and even a dump (in the form of an Excel spreadsheet), of salary and other HR data for the organization's executives.

A mess. And seemingly not going anywhere, not for a while anyway.

So here are my two, thought about this for 10 minutes, observations for HR/Talent professionals from this brouhaha.

1. It's time to stop thinking of Email as private, secured communication. I think since the rapid rise, and subsequent realization of the lack of privacy of public social networks like Twitter and Facebook, we somehow look at email, in comparison, and think it is private and secure. And while it should be, the Sony hack is just another example that reminds us that any communication in written, digital form is not ever 100% secure. We use Email so much, and in the large company environment it is so essential and ubiquitous, we have become beguiled to accept it as (mostly) private by default. And that is, in a word, insane. Forget about getting hacked by a malicious 3rd party - all it takes for your private, sensitive, possibly career-threatening email to get out into the world is one tiny error in the CC box, or one slip-up when forwarding something to John Jones and having it go to John Johnson instead. Lesson: Stop emailing so much (general). And talk to your leaders, managers, and employees about maybe picking up the phone once in a while.

2. Employee and HR data in Excel spreadsheets is likely your single largest HR data-related risk area. Every single company has HR or Comp people with salary, bonuses, and other HR/Compensation data sitting in Excel spreadsheets on individual PCs and company servers. For smaller companies, this is usually out of necessity: Excel is the only tool available to them to do comp calculations and analyses. But even in larger companies that have powerful and sophisticated Compensation Planning tools, often these tools are used to simply dump Employee and Comp data into Excel for additional manipulation and even file sharing. The Comp planning systems are powerful and secure. Excel spreadsheets are powerful and highly insecure (ask Sony). Where should you insist your Comp data remain?

We have spent literally years reminding our kids and each other that nothing that gets posted on Facebook or Instagram is really private.

It is also time to remind ourselves and our employees that nothing posted anywhere is really private either.

Have a great week!