Guiding through divesture

Making a deal…to divest.

Deal breakers?
A company was in the final stages of spinning off a division.  In the eleventh hour, the executives going with the new owner began questioning their compensation packages, threatening the consummation of the deal. They raised questions about retention, severance, and change of control provisions.

Our advice: stay the course
Commonwealth HR Consulting (CHRC) analyzed the employment agreements of the executives, evaluating the facts and business circumstances around the divestiture. Based on our experience with similar situations, we advised the divesting company on what obligations it did or did not have under the circumstances.

  • The CFO returned to the negotiating table with a strong grasp of both the spirit and letter of the underlying employment agreements
  • He understood that the departing executives were being treated fairly and in accordance with typical practice
  • He was able to bargain and focus on the financial aspects of the deal

Changing an approach to compensation

‘Acing’ a Pay Plan

How do you make money?
A company wanted to migrate from a seniority-based salary approach to market-based compensation. Commonwealth HR Consulting’s (CHRC’s) first action: interviews with top executives to understand how the company went to market, differentiated itself, and made money. We developed a clear understanding of the labor markets in which the client competed for talent. CHRC then selected compensation data from the appropriate labor markets for the correct job matches.

Know your PIQs
CHRC’s analysis revealed that some jobs did not have equivalent matches in published salary surveys. We led the client through “Position Information Questionnaires” (PIQs) to gather data on roles that were not easily defined and for which there were not clear or accurate job descriptions. With this customized approach, we established an internally equitable system anchored in market-based data.

Making the grade
CHRC applied strategic assessment, a collaborative process, and left the company with a market-based compensation plan for equitable and simpler salary administration.

  • CHRC created the client’s first Grade and Range Structure
  • We anchored it with benchmark roles priced in the appropriate labor markets   
  • Once the PIQs were reviewed and collected, we began slotting the non-benchmark roles based on internal and external equity
  • We facilitated a slotting exercise in which senior executives worked together to discuss, understand, and determine the hierarchy within their company. This was a departure from their historic preference for working within silos.

Improving retention

Improving retention

Why the turnover?
A company experiencing high employee turnover contacted Commonwealth HR Consulting (CHRC). Exit interviews suggested that people were leaving for higher compensation, but was this the real reason?

Connecting the dots of performance and pay
Commonwealth HR Consulting (CHRC) analyzed five years of compensation and financial data to determine if pay had correlated the company’s financial results. We discussed that there was little relationship between employee performance and the company’s results, in either base salary or bonus pay. Through market analysis we gleaned that high performers could expect to make substantially more than their peers in the broader market.

Recognizing strongest contributors
To reduce the turnover and improve retention, we redesigned their incentive approach:

  • CHRC modeled incentive plans against prior years’ results to reveal how different approaches could have paid out historically.
  • This helped the client understand which plan was the best fit for their industry, company, and culture.
  • It illustrated that differentiated pay for high performers would have been more in line with packages that “A” players were being offered at other companies.
  • CHRC designed the incentive plan and provided the client with the tools to model and calculate payouts tied to the value created by outstanding employees.

A problem with compensation

Getting to the real problem

A Vice President of human resources was convinced the compensation processes for his company were awry. “Why can’t people just get their increases?” An HR Director called us in.

In a half-day fixed fee session, Commonwealth HR Consulting (CHRC) listened to the Vice President’s concerns. We learned that the company had not conducted market pricing in three years, the compensation manager had insisted a market study be done, and in fact, appropriate time had been spent on a thorough analysis.  

In conversation it emerged that the boss was a high potential executive placed in HR as a developmental role. He had no previous human resources experience. A strategic marketer, he could not understand the delay in “just getting people their raises.”

After assessing the situation and supporting the manager’s due diligence, CHRC brought the Vice President and Manager’s relationship back to health by:

  • Translating data from the manager’s internal compensation analysis (dozens of columns on multiple spreadsheets) arriving at strategic compensation recommendations
  • Educating the vice president of human resources about his department’s duties and responsibilities
  • Verifying the compensation manager’s actions and elapsed time on her analysis
  • Recommending future formats for the VP’s consumption
  • Saving the compensation manager’s job