How FuelCell Energy Improved Compensation Planning & Transparency With Halogen

This is part four of a five-part series. Check out parts one, two and three here:

In the latest installment of our ongoing employee engagement series, we talk with Sandi Mauro, director of human resources (HR) at FuelCell Energy. After a near-disaster, Mauro and her team decided they needed a new system to reduce compensation errors and tie performance to pay.

That new system, Halogen TalentSpace, not only eliminated errors, but also brought much-needed transparency to a process that previously eluded FuelCell Energy employees.

“The software makes it easy for everyone. The ability to link performance and merit pay is a vast improvement, and I think employees feel that compensation is better communicated now.”

Sandi Mauro, Director of HR, FuelCell Energy

Q: What type of company is FuelCell Energy?

Our company was born in 1969, and we make an alternative energy called a fuel cell. It’s a molten carbonate fuel cell, and we provide power to a variety of industries. We have nearly 4 billion kilowatt hours of power that has been produced in this alternative energy space.

Q: How many employees do you have right now?

A little over 600 worldwide.

Q: What are your primary responsibilities as director of HR?

I do a lot of employee work, but my role as director is organizational development and training. [I manage] the whole social part of our organization: the integration of groups, [the] bringing together of leadership skills, succession planning, compensation planning and performance management.

Q: What did compensation planning look like before you got Halogen?

Bleh—it was paper. We had spreadsheets that got designed and broken up by CompPlanner; then they had to be reintegrated back together [every time we did compensation planning]. Two years before we purchased [Halogen], we created a database that could actually gather the data in the background, but [two users] couldn’t be in the file at the same time. The errors were reduced [when we implemented the database], but it was ugly.

Q: So you went from manual methods to a proprietary database to Halogen?

We did.

Q: Do you have any horror stories from when you were doing things manually?

You don’t want me to tell you about the spreadsheet that went to payroll that was wrong, do you?

Yes; yes, I do [laughs].

[Laughs] These spreadsheets were all spread out, and they were coming back together again. One spreadsheet got sorted wrong. At the end of the compensation planning process, we actually sent the spreadsheet off to payroll, and payroll processed that spreadsheet. … It wasn’t until the payroll run came back that the payroll manager realized it was wrong. We caught it before it was fully processed … but it really just solidified the need for much better controls over the compensation process.

Q: How was it wrong? Were the wrong amounts assigned to the wrong people?

Yes, exactly.

Q: Was compensation tied to any type of performance appraisal?

In those days, no.

There was a lot more discussion on the side, based on observation of performance, [instead of]: “You got a seven, so therefore your compensation increase is 2.5 percent.” It was a lot more subjective.

Q: What did these subjective appraisals look like before Halogen?

It was paper[-based]. There was no integrity to the process at all. It was supposed to be confidential and vaulted inside our IT directories—but it didn’t work. People moved around, and it was very hard to track what was going on. The process didn’t have much weight to it, either.

It was one of those, “yeah, let’s just do this every year because we’re supposed to” type of things.

Q: What was the employee sentiment about all of this?

Compensation was a mystery. It was handled at the very high end of the company, amongst the two or three executives [who] were here at the time. There was no visibility into the process whatsoever.

Compensation management in Halogen TalentSpace
 

 

Q: So an employee might get called into an office one day, told they were doing a great job, got their raise and was sent on their way?

Pretty much [laughs].

Q: When did the company decide to look at different options?

We bought [the Halogen Compensation], [Halogen Performance] and [Halogen 360 Multirater modules] way back, as an early adopter customer with Halogen in 2004. I wasn’t part of the team that chose Halogen, but I was part of the implementation and the training. I’m the one [who] ended up owning it afterwards.

Q: What do you like about Halogen?

I love it. It’s easy. I like the workflows [and] the flexibility, because I can choose a variety of different things and the way we’re going to run the [compensation planning] process. I can keep it locked down tight if I choose to or, if I want it to be more flexible, I can leave it open.

Q: What do the performance appraisal and compensation management processes look like now through Halogen?

[There are] two different processes now.

We have our hourly shop floor: about 250 people [who] work in manufacturing, and [performance appraisals happen] on their anniversary date. In their process, it’s a supervisor review. [Workers] get their assignment, they sit down and have their meeting with their supervisor and then their compensation is approved. It’s score-driven, so their score equates to a compensation increase. It’s anywhere from five to 15 people a month, and it’s not difficult to manage and easy to audit.

The rest of the organization, we do it every year. There [are] almost 400 people in that process. They’ll first run through a self-review [in Halogen], and then a supervisor review and a second-level approval. We do a HR review in the middle of that. Then the employees sit down and have their meeting [with their supervisor]. They also get a score which equates to their bonus.

Compensation budget management in Halogen TalentSpace
 

 

Q: What positive effects have you seen as a result of using Halogen?

The process itself has been greatly reduced. [The performance review process] used to take six months; now it takes three. When we do the compensation planning piece, we’re really in crunch time, because it’s right in front of the Christmas holiday in December. Being able to easily use the software, we can go in and literally do compensation planning in a week for over 500 people.

Errors in recommendations have been reduced to zero, as the software controls both budget and integrity of the process.

Q: Since the change, what has been some employee feedback on the process?

The employees are happy. The transparency of it is great. From a software point of view, people are really excited. They know how to get in and out, and they love that their history is all there for them. They like the consistency of the process.

The software makes it easy for everyone. The ability to link performance and merit pay is a vast improvement, and I think employees feel that compensation is better communicated now.

Over the last five days, I’ve trained 200 people and the feedback I get from new employees is: “Wow, this is really cool.” A lot of people have never worked for a company that does formal performance management, and it shows [the company] off.

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