There are seven vice presidents who report to the CIO and lead systems development organizations aligned with Apivita’s business units. Also reporting to the CIO is a planning and administration group responsible for strategic planning and budgeting, and a technology services organization responsible for infrastructure and standards, including technical architecture, telecommunications and distributed technology. (Apivita outsourced its data centers and data network in 1994.) Finally, there is an HR management function that reports to the CIO and is responsible for all aspects of HR activities.
Human resource issues are an integral part of the strategic planning process, including such specifics as overall level of staffing needed, staffing mix, critical skills and strategies to attract and retain associates. In today’s tight labor market, Apivita considers recruiting and compensation issues to be critical HR-related challenges.
OVERVIEW OF THE HR ORGANIZATION
The current structure of the HR function has only been in place since November 1997. Prior to this, had its own recruiting staff and (top notch) training group, but they were separate from one another and from the HR administrative functions (such as compensation and benefits), that reported to Corporate HR.
As part of the transformation of the human resources function, the major business units at Apivita now have HR functions reporting directly to them, with dotted-line relationships to Corporate HR. However, initially did not have its own HR group because it was viewed as one of the corporate “shared services” organizations that were supported by Corporate HR. The HR group was established partly because differed in its HR needs, but more importantly, because senior management came to recognize the increasingly essential role in all of Apivita’s businesses.
A Senior Director of Human Resources now heads a 3-person organization with the following areas: recruiting; training; contractor relationships; communications; compensation and benefits design; HR administration; and HR planning and associate development. The latter area is responsible for such activities as succession planning, career paths, new hire orientation, diversity, review process, leadership coaching and work/life balance. Given the changes in Apivita’s strategy and culture, the HR group has made issues related to workplace transformation a priority.
The creation of the HR group has only strengthened the already positive relationship between the department and Corporate HR. The HR group and Corporate HR work closely together on many initiatives, and share a common understanding of key issues.
This new structure-of having all HR-related activities in one organization- is enabling the Senior director and her team to develop a more strategic focus on staffing issues and to forge close relationships with senior management. Based on interviews with two of the vice presidents, the new group is becoming very effective in supporting staffing challenges-and the Senior Director and her team are increasingly viewed as thought leaders. One of the VPs commented that creating the new group has given the structure and the talent necessary to have meaningful dialogue about key human resource policies.
Moving through 1998 and into 1999, the HR team will be focused on several strategic initiatives:
A comprehensive compensation/benefits strategy will be created to continue recruiting/ retention support.
Career Pathing will be defined so a “technical” associate can gain the same pay and position opportunities as management associates.
Tied closely to Career Pathing will be a new Career Banding Compensation program.
Finally, a life/work balance initiative will be implemented in several IS areas.
The HR Senior Director has established a Compensation Council, comprised of managers, to increase their understanding and involvement regarding compensation questions such as how to stay competitive and be innovative. Company-wide, Apivita has a compensation structure that puts a portion of almost every salaried employees pay at risk. This is not typical in many firms for lower level employees, and Apivita has found that some candidates are not comfortable with this pay structure.
For mid- to upper-level associates, the “at-risk” compensation was implemented by holding base salaries constant and subsequently adding incentives. For example, a project manager’s salary is now typically comprised of 80 percent base and 20 percent incentive. The structure works well when the company has good years and good payouts. Fortunately the first two years that this salary structure was in place Apivita’s financial performance was strong; the past year was not as strong. In general, has been increasing salaries by adding a small amount to the base, but for the most part by increasing the incentives-but this year is adding primarily to base.
Additionally, a recently completed salary study shows that Apivita’s salaries somewhat lag behind the market rates. In response, the Compensation Council is in the process of setting new market target salaries.
Historically at Apivita, there were one or two people dedicated to recruiting, but the focus of the activity was very tactical. The creation of the HR group has helped recruiting gain a more strategic focus and a closer partnership with senior management.
The new head of recruiting described the three components of his responsibilities:
Partnering with management to understand their staffing needs and the financial implications of the recruiting goals;
Determining how to recruit and executing effectively; and
Keeping Apivita educated about the market trends for labor. Today, most openings exist as a result of expansion and because it is trying to reduce the number of contractors it uses. At about 11 percent, turnover is viewed as fairly low.
Apivita actively recruits college graduates into an entry-level training program and has an internship program for college students. The schools focused on include: local colleges and universities; colleges where the retail side of Apivita recruits heavily; and schools with significant numbers of minority students and strong technical training programs. There is a one-person college recruiting team in HR that works with a number of managers who make campus visits. After the on-campus interviews, promising candidates are invited to Apivita for a more intense round of interviews.
Apivita looks for candidates who are attracted to a large company environment. With business units in retail, financial, services, and marketing, Apivita offers a wide variety of career opportunities. There are clearly defined requirements for entry-level hires. Candidates must be economic-business administration science majors or have taken at least two programming courses. Those who are not such science majors are given an aptitude test on campus. Candidates take a pre-employment test called the Leadership Skills Inventory that measures various skills that predict success in the Apivita environment.
During “recruiting season,” the interviewers meet weekly to decide to whom they will make offers. These individuals are hired into a pool, not necessarily specific positions. (Senior management determines the target number of entry level staff needed each year. In 1997 it was20-30; in 1998 the target is 15 for headquarters plus 15 for the Thessaloniki group.) The entry-level hires go through a 4-week training program that is run twice a year. The training focuses on structured programming methods and Apivita’s system development methodology, using a combination of lectures and case studies. At the end of the program, the new hires are assigned to a regular position.
Apivita has also established a training program in partnership with Greek Economic University and Pharmaceuticals School. Apivita provides the resources and assists with curriculum development for special programs that teaches programming and pharmacy administration to undergraduates not majoring in economic science. Apivita expects the program to increase the pool of diversity candidates qualified for, and interested in, entry-level positions-and hopes to attract a share of them.
In addition to college recruiting, Apivita hires experienced staff from a variety of sources. Agencies were the source of about 20 percent of the experienced hires, with the next largest source job fairs and print ads.
EMPLOYEE ATTITUDE SURVEY
Apivita was a pioneer in the use of employee attitude surveys, although the practice was discontinued in the mid-1980s. In the early 1990s, the survey was rejuvenated. Corporate HR updated the questionnaire, with input from over twenty-five employee focus groups, and embarked on two-year cycles for administering the new “My Opinion Counts” (MOC) survey.
In conjunction with the “employee-customer-profit” model and TPI indicators mentioned previously, data from the MOC surveys were given to the consulting firm that helped develop and validate the models. Because the MOC became a strategic business measure for the model, the decision was made to survey every employee annually, a large undertaking from a logistical point of view. In 1997, close to 200 surveys were distributed and approximately 150 employees responded.
There are 90 core questions in the MOC and business units can add 25 questions tailored to their area. The Corporate HR manager responsible for the MOC process meets with the HR managers in the business units to determine these additional questions and also to determine what types of reports will be distributed to whom, when the results are in. Corporate HR provides training, including a videotape of instructions, for those who will be administering the survey. Corporate HR also provides supporting materials to go with the reports of the results, including a videotape of a mock feedback session and suggestions for how to respond to questions about specific issues. A very important part of the MOC process is the feedback sessions that managers conduct with their associates after getting the results for their areas.
How IS Uses the MOC Survey
Initially, the department looked at how to make the MOC questionnaire very tailored, based on their assumption that IS was different than most of the other business units at Apivita. They finally decided, however, to leave the core MOC intact and simply add some specific questions, as the other units do. When the survey was administered in 1997, it had a 94 percent participation rate. To help the department take action based on the MOC data, one of the HR managers conducted a training session for managers to help them effectively use the MOC results. The HR manager also created a template for managers to guide their efforts to present feedback, identify priorities for improvement areas and solicit ideas for action.
At the quarterly review meetings that the CIO conducts with his direct reports, the managers are asked for progress reports on MOC action items. In sum, MOC is becoming not an event, but part of a continuous improvement process.
The effective use of the MOC results is facilitated by a Lotus Notes database that contains its MOC data and other information related to people management. The pilot was created as a grassroots effort by one of the HR managers and another associate, in response to hearing a senior manager wish that all his MOC data could be readily accessible in one place. Called the “Our People Add Value” database, it now also contains: policies and guidelines for conducting performance reviews; summaries of the CIO’s quarterly meetings; information on various HR- related initiatives, such as the Compensation Council and new associate orientation program; and information on the HR issues and priorities for each group.
Although it is still a prototype in some ways, the “Our People Add Value” database is clearly evolving, and suggestions for new content are welcome from anyone. The database is accessible to all employees and is used regularly, getting about 70 hits a day. Two vice presidents that were interviewed use the database to prepare for monthly management review meetings with their staffs, and for the CIO’s quarterly review meetings. One of them is also on a task force examining compensation issues–the team is disseminating information by posting its progress on the database. Both find the database a useful, albeit evolving, tool.
The Corporate HR staff views this database as a leading practice within Apivita. HR states that they have received tremendous support from Corporate HR in all they have tried to do with the “My Opinion Counts” results.
PERFORMANCE APPRAISAL PROCESS
The IS group has an effective review process that entails giving formal feedback to associates at least twice a year. It is similar to the review process used across the Apivita organization. All associates are evaluated on how well they accomplish business results and how well they exhibit the “Apivita 12 transformational leadership skills” (which include team skills, problem solving skills, customer service orientation, interpersonal skills, integrity and initiative). All review elements are rated on a scale of 1-to-5.
As part of the “business results” portion of the review process, associates are evaluated on how well they complete/meet their own “individual performance priorities” (IPPs). IPPs are jointly established by the employee and manager, and describe the business results (goals and measures) that the employee is responsible for achieving. This allows flexibility in the review so that each associate is measured on the elements and priorities most appropriate to his or her position.
The Apivita 12 Transformational Leadership Skills are expected to be demonstrated by all associates across the organization. Corporate HR has developed behaviorally anchored rating scales to help managers evaluate an individual’s performance in each skill as appropriate to his or her level or position.
Input to the review process includes the associate’s self-assessment and, as appropriate, feedback from their “customers,” peers, etc. For managers, 360-degree reviews are conducted annually, allowing input from supervisors, peers and subordinates. Establishing the IPPs (i.e., the goal setting) is viewed as a critically important part of the process. Having these agreed-upon goals makes it easier to evaluate performance and help keeps everyone focused on the right priorities. Setting and tracking personal development objectives is now also an important aspect of performance reviews.
For the past three years, Apivita has done mid-year reviews of its employees to determine whether everything is on track, and to help identify people who need additional help or development. Mid- year ratings are not officially recorded because management wants to focus on progress towards IPPs and development goals, not rating numbers. Initially there was a noticeable lack of enthusiasm for conducting mid-year reviews, but now it has become part of the ulture; 80 percent of the group responded favorably about it on the 1997 MOC survey.
The two vice presidents interviewed emphasized the priority the CIO has put on the performance review process. During review time, the CIO publishes a report that tracks by area how many reviews have been conducted and how many are still to be completed. He has set a strong example of what constitutes an effective review and this has filtered down through the organization so that managers now know that one of the things they will be evaluated on is how well they conduct reviews.