People value management – An introduction

1.   Introduction

In most organizations, more than 50% of the fixed costs are “people” related costs. Furthermore, the cost of “people turnover” (quality people) is extremely high. The PVM process is a “market driven” remuneration philosophy, which looks at people as “value agents” as opposed to “Cost centers”.

            There is nothing worst than losing a top grade competitor because of poor PVM process, It is very very costly to lose top talent specially in top middle management  and always time consuming and risky to find right replacement.

The scope of People Value Management is to identify roles from CXO level to grass roots across the organization. For each of these roles we have to identify skill set at three levels, basic, intermediatory and proficiency. The whole backbone of the PVM process is that it is based on “market rates”

PVM has 2 wings classified firstly competency benchmarking to arrive at benchmarking competency matrix is the prior step and second Compensation benchmarking put together arrives People value management.

People value management is a conceptual approach a detailed methodology and a set of tool to enhance the value of all categories of employment through value realization plans, improvement methods for value oriented processes and systems, and mechanisms for capturing and ensuring the expected value. 

1.   Competency

Competencies are derived from specific job families within the organization and are grouped around categories.

Eg., strategy, relationships, innovation, leadership, risk-taking, decision-making, emotional intelligence, etc.

1.    Competency matrix

A skills matrix, or competency matrix, is a tool to map required and desired skills for a team or project. The main goal of the matrix is to identify the skill sets a specific role requires, match them with those of a team member and identify any gaps between the two.

Create competency matrix:

1. Determine the skills needed to complete a project.

2. Gauge each team member’s current level of skills:

1. No competency/experience
2. General level of competency/experience
3. Intermediate level of competency/experience
4. Advanced level of competency/experience

3. Rate each team member’s level of interest in a skill.

4. Use the information from the skills matrix to determine any missing skills needed.

There are three key elements of the PVM process which must clearly be explained and understood

1.4   Job type

A job type is a “category” which is comparable within a company or an industry. Examples of job types are: 

Leadership: CEO, Marketing directors, Factory manager, Profit center head etc 

Grass roots: Nurse, Machine operators, Store Keepers, HR executives, etc          

1.5   Job ladders

Create job ladders that categorize all these “job types” into a ladder with the most “skilled job” on the top and the most “unskilled job” at the bottom. 

1.6   Job strategy sheets (JSS)

This is a critical document in the PVM process. All ‘job types’ (specially the ones with many people within it) should have a ‘JSS’; the main purpose of which is to analyze the current remuneration package vs market rate and to develop the remuneration strategy/level/engineering for this job type… so that we attract and retain the talent we wish to 

Compensation benchmarking: Considering job description to establish salary survey in order to identify external market for each benchmark position

The main purpose is to analyse the current remuneration packages vs market rate and to develop the remuneration strategy for the job type

1.7   Skill, Matrix, Grading of Operations & Employee Grading Criteria

• Review the skills and competence required for the role of different categories of the employment
• It helps to identify the gaps in the skills and assess the training needs.
• Plan the manpower budget to execute the particular task and increase the productivity.

To evaluate and recognize the set of standard performance of the employees

1.8   Pay Benchmarking & PVM Master Data Sheet  

• To ensure that the employees are being compensated as per prevailing market rate of wages/ salary.
• To retain the talent and reduce the attrition rate
• Some of the factors that can affect pay rates include geographic location nature and type of industries located in surroundings, dependable sources of live hood, transportation facility.
• Job strategy plan sheet-developed for each category of employment at the beginning of financial year, and are aligned with the pay-benchmarking.
• PVM Master data sheet-Generated and reviewed on monthly basis to ascertain the pay, overtime cost, Incentives and other compensation variance compare to market rate, and for identification of anomalies in term of Overtime, Incentives and bonuses paid to employees based on job types.