A. Michael Hiles & Associates Inc.

                 Human Capital Management

Case 3 - Organizing The HR Function

We frequently say that our clients may not need an HR department, but all organizations need an HR function. Our goal is to provide that function.

Our client is the Canadian subsidiary of a small European pharmaceutical company. The Canadian company works clinical trials, regulatory approvals, marketing and sales.

Organization and Base Pay

CEO and VP Finance wanted to put order and control into compensation, which was getting out of hand and costing more than was warranted.

After reviewing the current status, we developed job levels and relative job sizes using our job evaluation system, and from that, we proposed a series of job levels. We then researched the external market from our survey sources, and developed salary ranges to assure that the company was competitive.

With department managers, we analyzed actual salaries, recommended plan for changes that would respect the budget. We additionally developed a rule-based system to assess employee competencies and to recommend actual salaries.

Variable Pay

The client asked us to develop a new Bonus Plan to replace a scheme that relied on executive judgment. We proposed a system that required setting objectives, and defining what would be paid when objectives were met, what happened when the objectives were exceeded, and under what circumstances would bonuses not be paid. We looked at a mix of individual and corporate objectives, depending on the level of the job.

Performance Assessment and Management

For this client we developed a performance assessment system based on competencies, and the employee's success in applying those competencies in delivering on their job accountabilities.

Measured effectiveness in applying required competencies drive development plans, and also drives base salary. Success in achieving annually assigned objectives drives the annual bonus.

This performance assessment system is now web-based and is used all through the year by employees and managers entering progress and achievements, much like a diary system. At least twice per year, the manager and employee review progress and adjust their work plan.

The system is also linked to the compensation system to assure that annual salary adjustments are linked to corporate affordability.

We also advised and assisted in internal communications to assure buy-in from managers and smooth implementation.