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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.