咨詢師的薪酬手冊ppt課件

1、The Compensation HandbookLance A BergerDorothy R Berger.Alignment model.BUSINESSCLASSIFICATIONSTRATEGIESGROWMarket share GrowthPrice to buy shareProduce developmentExpand manufacturing sales force & distribution systemMarketing Market shareCapitalized ROIRelative qualityRelative priceFlat Decentrali

2、zedFewer staff functionsUtilize leading technologies Plan information system expansionRecruit Minimize trainingIncentive is “fast career growthHigh-level trainingCulture: high energyRisk seeking Venturesome Innovation / opportunisticVolatile Maximum participation Flexible rangesHigh incentivesEquity

3、 orientedHigh competitive level total compensationLong range orientation EARNMarket share retentionOptimize margins Differentiate products Segment marketsOptimize value chain Operating Marketing expenses/sales R&D expenses/sales Value added/employeeLimited centralization Hold staff size Consider end

4、-to-end solutionsCreate continuous improvement loops Retain Selective job training/hiring Job competition is the incentive Intermediate focusCulture: motivational Risk accepting ProgressiveCreativeStable Strongly participative Balanced mix of bonus/incentiveLong-range plan: moderate Medium competiti

5、ve level total compensation HARVESTProfit vs. market focusHold price/margin Decrease capacity Shrink sales forceIncrease efficiency Financial ROINet cash flow/inventory Gross margin/salesSales/assets Functional Facilities reduction Increasing centralization Reduction in staff functionsIntroduce reen

6、gineering Hold training Staff reduction Motivation: securityShort-term focusCulture: efficiency Risk averseConservative Pragmatic Efficient Participative Cost control Tight incentives, short-term orientedMinimize long-range plansReduce competitive level total compensation GoalsMeasures Strategy Stra

7、tegy Risk OrientationStrategyOPERETIONSCULTURECOMPENSATION1. The role of compensation in corporate transformation .Customizing a compensation system.Highly and widely personalizedModerately flexible packagesSelective personalizationHighly standardized packagesLow Medium High Availability of talentHi

8、ghGrowth of industryMediumLow 1. The role of compensation in corporate transformation .Business situation and pay techniques.Business situation/pay techniques High cyclicality Emerging businessFinancial difficultyInflated wagesControlling turnover Down-sizingCulture changeSimulate entrepre-eurshipFr

9、equent job content shifts Profit sharing xxxxxxxxxxxxxxxxxxxSubjective Perf. Bonus xxxxxxxxxxxOpportunity/Gain share xxxxxxxxxxxxxxxxxxxxxGroup/Team incentive xxxxxxxxxxxxxxxIndividual incentive xxxxxxxxxxxxxxxxxxKey contributor programs xxxxxxxxxxxxxxxxxxxxxxxxxCompetency, knowledge or skill-based

10、pay xxxxxxxxxxxxxxxBroadbanding xxxxxxxxxxxxxxxxxxxxxLong-term plansxxxxxxxxxxxxxxxxxxxxxxxxxxPay cutsxxxxxxxxxxxxxxxPay freeze xxxxxxxxxxxxxxxxxxTwo-Tiered Pay System*xxxxxxxxxxxxLump Sum in Lieu of IncreasexxxxxxxxxxxxExtended Pay Review Intervals xxxxxxxxxxxxWork-LifexxxxxxxxxxxxxxxxxxNon-Monetar

11、yxxxxxxxxxxxxxxxxxxxxxxxxXs indicate the effectiveness of the technique* New employee at lower rate than current employees1. The role of compensation in corporate transformation .Pay techniques: descriptive matrixPay techniqueHow does this technique work?What business situations lead companies to co

12、nsider this technique?What conditions are important for this technique to succeed?What are the risks of using this technique?Profit sharing Share the profit once-a-year. Profit can be taken as: - Cash/stock - Deferred for retirement - Split between options above Promotes employee involvement in impr

13、oving profits. Underachieving financial performance. Need to lower relative labor costs. Desire to create of common fate. Shift from entitlement mentality to performance. Quality orientation. Sense of common fate. Management credibility/trust.Employee involvement/participation. Open communications.

14、“Accurate” financial statements. Profitable years are rare. Employee view plan as a benefit. Link between individual payout and organization performance is weak. Expectation are not met. Management uses the plan as a low pay supplement. Application is forced. Employees focus on short-term results. U

15、ncontrollable factors exist (adversely impact profits). Subjective Performance Bonus Unexpected bonuses. Intent is to “present”behavioral models AXZto the organization. Rapid change. Trust,support,and commitment on everyones part. Good communications.Use of reinforcement in addition to other alterna

16、tive rewards. Credible performance. Credible management judges. Sound communication system. Weak selection. Poor communications. Inequity of awards. Does not inspire most employees.1. The role of compensation in corporate transformation .Pay techniques: descriptive matrixPay techniqueHow does this t

17、echnique work?What business situations lead companies to consider this technique?What conditions are important for this technique to succeed?What are the risks of using this technique?Opportunity/Gain Sharing (Small Group,Rucker,Scanlon,Improshare,Team) A group of highly interdependent workers is se

18、lected. Piece rate or measured day,standard hours,sales,R&D,technical milestones or unit measures can be used. Need to word in groups. Highly interdependent employees. Group can influence its own work. Group must be able to collaborate and work together. Measures must be group not individual. All aw

19、ards paid on group results. Employees trust management. Group identity. Group unable to influence end result. Payouts may not relate to corporate performance. Groups sometimes act to destroy another group. Manipulation of standards.Group/Team Incentive Rewards quality,production,project milestones o

20、r other financial or operational objectives. “Shares” profit according to pre-determined formula. Targeted incentive awards vary based on organization level,total targeted compensation. Need to improve productivity and quality. Shrinking margins. Focus on information sharing,employee commitment/invo

21、lvement and teamwork. Management credibility/trust. Employee opportunity to impact/improve. Sufficient demand/market potential. Workforce interdependence. Adequate support systems. Management acceptance of employee work. Commitment to change. Strong measures. People cant work together. Lack of top m

22、anagement commitment. Use as a “Band-Aid”. Inadequate information sharing/employee involvement. Inadequate design,administration,and follow-through. Lack of understanding of risks. Payouts for gains are not a result of employee efforts. Weak measures.1. The role of compensation in corporate transfor

23、mation .Pay techniques: descriptive matrix. (Continued)Pay techniqueHow does this technique work?What business situations lead companies to consider this technique?What conditions are important for this technique to succeed?What are the risks of using this technique?Targeted Individual IncentivesOnc

24、e a year: -Develop a pool or fund based on affordability, performance,and pay. -Distribute to employees.There is a threshold before a payout can be made.Typical focus on financial measures resulting from cascading goals.Formula for payout ties to corporate goals and measures.Total value of pool ties

25、 to total compensation levels.Allocate funds on the basis of individuals or groups.Performance focus.AffordabilityGoals/measures focus.Risk accepting or entrepreneurial culture.measurable results and good follow-up.Attainable goals.Individuals influence results.Organization doesnt define performance

26、 measures.Entitlement culture resists risk based pay.Decisions are to under executive control.Organization unable to objectively judge performance.Targeted Individual Incentives-Piece RatePay individuals for each unit produced with predetermined of money for each unit(typically sole performance meas

27、ure).Differentiate base rate on levels of production.Create a clear link between pay and performance.Need to motivate employees in de-skilled environment.Simple, repetitive manufacturing process.Results of the work are easy to measure.Minimum amount of interdependence.Minimum need for cooperation.Tr

28、ustJob security.Employees create counter-productive behavior tying to “beat the system”.High costs to maintain the incentive system because every time a technological change is made or a new product is introduced, new rates need to be considered.1. The role of compensation in corporate transformatio

29、n .Pay techniques: descriptive matrix. (Continued)Pay techniqueHow does this technique work?What business situations lead companies to consider this technique?What conditions are important for this technique to succeed?What are the risks of using this technique?Targeted Individual Incentives-Measure

30、d DayFixed pay assuming employees maintain specified level of performance.Guaranteed incentive payment in advance.Pay does not fluctuate in the short-term.Inappropriate condition for piece rate.Long job cycles.Total commitment of management/employees.Effective work measurement / control system.Logic

31、al pay structure.Worker ingenuity has lowered the standard (used to create measured day work rate).Relives pressure to perform.Escalates labor cost (additions to staff).Key Contributor ProgramsIndividuals with historical high performance are priced in plan (usually in technical or R&D).Special compe

32、nsation in addition to traditional pay is give (stock/cash).There is usually a waiting period to receive the award.Strong need for innovation culture.Retention is imperative for certain employees.Business is in growth stage.Special pay market conditions.Able to clearly identify ”must keep” employees

33、.Environment must provide for individual contribution.Employee has resources and can influence resources.Selection of recipients not credible.Non-recipients may be discouraged.Competency, Knowledge or Skill-Based PayDetermine pay progression based on competencies (skills, behaviors, knowledge)associ

34、ated with superior performance.Large skilled, technical or professional workforce and/or presence of career ladders.Focus on work teams and need for workforce flexibility.Slower growth rates/fewer opportunities.Linkage to broadbanding.Well-defined position competencies.Value person,not job.Well-deve

35、loped training and assessment programs.Willingness to pay for unused capacity.Weaken the pay-for-performance link.Majority of employees with limiter growth opportunities.Unaffordable labor cost.Investment on faith.1. The role of compensation in corporate transformation .Pay techniques: descriptive m

36、atrix . (Continued)1. The role of compensation in corporate transformation Pay techniqueHow does this technique work?What business situations lead companies to consider this technique?What conditions are important for this technique to succeed?What are the risks of using this technique?BroadbandingP

37、ay structures which consolidate large numbers of grades and ranges into a smaller number of “bands” (ranges) with wide salary spreads between minimum and maximum.Reengineering.Downsizing.Organization restructuring.Fewer upward job prospects.Need for multi-skilled employees.Focus on career developmen

38、t.Current program is not credible.Company has commitment, money, and time for major change.High level of trust between management and supervisors/managers.Viable/credible performance and career development systems are in place.Workforce is change ready and a crisis is perceived.Lack of trust in mana

39、gement.Poor understanding of broadbanding .Poor implementation.Loss of control over compensation.Cultural resistance.“Old wine in a new bottle.”Inadequate support systems (performance/management).Low sense of urgency by management/employees.Long-Term PlansEmployees are provided with special forms of

40、 pay based on results over a 3 to 5 year period.Stock options give employees the right to purchase shares at a fixed price over a time period, creating a long-term financial interest;alternative stock plans can be used.Some long-tem plans use cash instead of stock.Need to focus on strategic issues a

41、nd measures.Attraction of key talent.Retention of key talent.Need to create sense of common fate.Need to align more closely with shareholders.Encourage entrepreneurship, particularly in start-ups.Measures must be correctly established.Employees must be willing to take risks.Management/employee trust

42、.Options “under water”.Limiter participation in plan.Windfalls can produce exaggerated payouts.Poor measures of competitiveness.Overly complex stock and surrogate programs.Pay techniques: descriptive matrix . (Continued)1. The role of compensation in corporate transformation Pay techniqueHow does th

43、is technique work?What business situations lead companies to consider this technique?What conditions are important for this technique to succeed?What are the risks of using this technique?Work-lifePackage of benefits designed to help balance conflicting demands of family, personal life, and work.Pro

44、vide childcare, paid time off, family services ,flexible work arrangements, eldercare, convenience services.Recruiting in tight market.Meet specific needs of workforce.Strategy is to become “employer of choice.”Employees wanting to make culture statement.Accurate determination of workforce needs (su

45、rvey).High levels of communication.Cost/benefit analysis.Employee/management trust.Ongoing monitoring.Pay at or above market.Inability of supervisors and manager to implement program.Pay levels not competitive.Low employee perception of value of benefits.Insufficient management commitment.Non-moneta

46、ry AwardsRecognition of outstanding performance using non-cash awards.Focuses on creating awareness of successful behaviors exhibited by recognized employees (role models).Awards include:merchandise, travel, time-off, symbolic (trophy), praise.Awards can be individual, group or team.Supplement to so

47、und cash programs.Retention of key people in tough market.Helpful when goals change frequently.Can apply across most employee populations.Recognized employee behaviors must be credible to organization.Award “judges” must be credible.Communications system explaining program before and after awards mu

48、st be in place.Rewarding wrong behaviors.Rewarding weak or wrong results.Using non-cash in place of cash program.Culture and pay techniques.Pay techniqueRole of employee/management trustAchievement orientationCapacity to measure performanceCurrent compensation issuesProfit SharingCould add to dissat

49、isfaction if trust is low.Culture must be performance oriented.Can be used where accounting data is all that is available.Consider total compensation effect.Subjective Performance BonusTrust level varies with individuals relationship with management.May be counter-productive in risk adverse organiza

50、tion.Successful plans have good measurement.Opportunity/Gain SharingMost need neutral to positive level.Standards are an issue.Requires good cost to goods and labor data.Group IncentiveShould be positive.Standards are an issue.Varies with degree and focus desired.An additive built on sound base sala

51、ry, not a substitute.Targeted Individual IncentivePerceived attainability of goal is critical.Works best with achievement individuals.Largely dependent on culture.Objectives must be measurable.Consider total compensation effect.Key Contributor ProgramsIf negative, participant backlash could be a pro

52、blem.Able to identify key contributors.An additive built on sound base salary, not a substitute.Competency, Knowledge or Skill-Based PayMust be able to assess level of knowledge of skill.Can be expensive.Must be justified by impact on productivity.1. The role of compensation in corporate transformat

53、ion .Culture and pay techniques.Pay techniqueRole of employee/management trustAchievement orientationCapacity to measure performanceCurrent compensation issuesBroadbandingAspects of application requires high levels of trust at all organization levels or could be perceived as arbitrary.Lack of qualit

54、y performance management system and performance culture will negate approach.Must have solid linkages between corporate strategy and performance measures down to individual and/or team level.Can disrupt and distract organization or improve morale, performance, and organization strength when compared

55、 to existing system.Long-Term PlansTrust in equitable assignment and appropriateness of measures is critical.Achievement orientation must be focused over a longer term.Must be able to select appropriate measures which satisfy all stakeholders.Predicting long-term stock payouts can be a source of con

56、flict.Work-Life BenefitsEmployees must believe management is sincere and supportive.Compensation levels must at least equal and preferably exceed pay market.Non-CashPotential for arbitrary decisions makes it important to make basis of reward explicit.Does not require organization wide achievement or

57、ientation.There should be clear measures of behaviors and results.Compensation levels should approximate pay markets.Awards are taxable.1. The role of compensation in corporate transformation .Culture and pay techniques. (Continued)1. The role of compensation in corporate transformation Pay techniqu

58、ePower of the techniquePotential impact on employee compensationOrganizational issuesCulture characteristicsOrganizational pressure for performanceProfit SharingDiffuse unless backed by culture.Can be demoralizing if no profit to share.A good option where measurement capability is limited.Most compa

59、tible with a group-oriented culture.Can reinforce and help raise level of demand.Subjective Performance BonusArouses desire to do well, but does not focus employee in advance.Unpredictable.Often found where direction is unclear.Focuses on individual accountability.Can be successful if clearly define

60、d.Opportunity/Gain SharingPowerful if done right.Effective at focusing efforts.Upside 5%-15%.Downside varies by plan type.Fits a group-oriented culture best.Supports emphasis on performance.Adds peer pressure.Group IncentiveStrongest with small cohesive group.Upside potential controlled by group out