Session 9 Compensation and Rewards

Transcription

1 Session 9 Compensation and Rewards

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3 Rewards vs. Recognition Reward Significant o Year-end or quarterly bonus o Promotion Includes some sort of monetary increase Usually recognizes long term Recognition Reserved to highlight an event, episode, and/or going above and beyond Often includes something of value (money, time, etc.) Thank you is recognition but recognizes a job well done (not necessarily above and beyond) Quantitative Measurements (the What) Health and Safety OSHA recordable Lost time case rates Employee Engagement (for Line Managers) Turnover of staff Performance review (EDP) completion % (Managers) Employee engagement survey results Recognition budget spent (%) Learning budget spent (% of payroll) Profitability Budget management Individual profit contribution Utilization Days sales outstanding Cost Management Working capital management Non-labor cost management Client Satisfaction and Quality Net promoter score Repeat business (%) Overruns and write-offs Revenue Growth Opportunity backlog Proposal backlog Bookings Account management Lead generation Gross sales Net sale Qualitative Measurements Teamwork Health & Safety Awareness Self-Starter Solution Driven Support of Company's Strategic Initiatives Efficiency Cost Considerations Work Life Balance Quality Client Service Innovative 9-1

4 Case Study #1 Katie Mullins is finishing her first six months as a new Department Manager. Six months ago, Katie got promoted from another division to head up this department, consisting of a diverse team of 7 employees. Two of them, Frank and Donna, are exceptional employees. Frank has been with the firm for 15 years and has received top pay increases every year. Unfortunately, this has put his salary at a higher rate than his internal and external peer group. Frank also has a huge ego, quite aware that the organization thinks very highly of him. In fact, he has already mentioned to Katie that he is deserving of a promotion at least 2 times during her first 6 months. Donna on the other hand, is relatively junior, but continues to amaze everyone with her performance and attitude. A couple of senior leaders have even remarked, Donna is a keeper we can t lose her! Aaron, Connor and Ashley are all in the middle of the pack of performers - doing their jobs without a lot of maintenance. Aaron has recently joined Katie s team and she had to pay him higher than Connor and Ashley just to bring him on board, creating some equity issues as they all have similar experiences. Connor has greater upside than he is showing, primarily due to his work-life balance priorities as he is very involved in his kids sports. This means that Connor is never available to help out with overtime. If he just put in additional hours, he could be something special Katie has pondered. Ashley on the other hand, always puts in extra hours, but the quality of her work is almost always subpar. But her attitude is so positive, people tend to put up with her mistakes. Jacob has been with the company forever it seems, and though his performance has been marginal for quite some time, his long tenure has resulted in him making a number of friends in corporate. What am I going to do with this sacred cow? Wonder if I can transfer him somewhere else? Katie continues to ask herself during her first 6 months leading this team. And then there is Heather, a mistake hire if there ever was one. Katie s predecessor even told her that he regretted hiring her and probably should have put her on a correction action plan. Unfortunately, her personality is so abrasive, Katie s predecessor never had the courage to confront her with these performance issues. In fact, she actually gave her a fully satisfactory performance review 9 months ago. As you close out your calendar year, you just learned that you have a 4% salary pool to work with, and a $50,000 bonus pool (all of your employees are bonus eligible though the plan is entirely discretionary) Come up with a plan to divide both your salary pool and bonus pool. How do you base your decisions? What additional decisions would you make as department manager 9-2

5 Compensation in Today s Business Environment Pay increases have been small Promotions have been few (slow growth and low turnover is perfect storm for status quo) Hiring is just now picking up (we ve been doing more with less) Bonuses have returned but smaller Layoffs have slowed Survivor anxiety/burnout continues to exist Generation X employees are most at risk Compensation Principles Compensation communicates Compensation is emotional Compensation should drive the behavior you re looking to drive Compensation should reward achievement 9-3

6 Compensation 10 Commandments How do you stack up against the 10 Commandments of Compensations? Commandment 1. Frequent and transparent communication 2. Pay for performance 3. Balance of qualitative and quantitative metrics We don t do this well We are exceptional 4. Avoid the peanut butter approach 5. Avoid greasing the squeaky wheel 6. Do not over pay base compensation 7. Hot markets and sectors are rewarded with variable pay 8. Differentiate between rewards and recognition 9. Emphasize achievement 10. Fairness Look at what you don t do well and identify actions you can take to improve. 9-4

7 Types of Bonus Programs These are some of the bonus plans that are used in organizations. Profit sharing Notes Gain sharing Spot bonus awards Sign-on bonuses Mission, task, or milestone bonuses Referral bonuses Retention bonuses Holiday bonuses Sales Commission Other Other 9-5

8 Performance Assign Bonuses Think about 10 people in your organization. If you were to assign bonuses to those 10 people, in what quadrant would you put them? High X% 2X% 0% X% Low Low Potential High 9-6

9 Case Study- A culture of mediocrity in Generico s Geotechnical Division Generico s Geotechnical division was initially a small startup geotechnical engineering department that quickly took off and became wildly successful growing at a rate of 45% annually over the past 7 years. Because of their unique niche, the Great Recession didn t negatively impact the Geotechnical Division s growth. Since its beginning, the company has expanded, but is barely staying ahead of the competition. The Geotechnical Division s line General Manager, Howie Duet has been eager to identify the source of this dilemma, which he believes is attributed to lack of talent. Most recently, the division has been struggling in terms of finding top talent, despite aggressive recruiting efforts. As a result of their continuous failure to find top talent, the Geotechnical Division s managers have been reluctant to let go of mediocre employees ( below average is better than another open req! ) as they fear adding to their open positions. While a large majority of employees in this division meet their current job requirements, there are many who are delivering the bare minimum of what is expected of them (disengaging the high performers!). Howie has identified this as an issue for several reasons. Not only has mediocrity been accepted, but it is also beginning to impact client satisfaction. He perceives this issue as a major weakness considering it is setting the bar for the division s future success, while tarnishing his image with the executives of Generico Consulting. Howie understands his division can t achieve its goals without having talented employees. Looking ahead, Howie is fearful of how this issue could impact his division s market share and brand in the market place. Not to mention his own future growth potential within Generico Consulting. 9-7

10 Incentive Plans Eligibility can vary usually mid to senior level Can be designed as formulaic or discretionary Best plans incentivize high performance Best plans differentiate high and low performance Best senior leadership plans link metrics with company-wide results (to reduce silo behavior) Best mid-level plans tie payout window (timing) as close to behavior as possible Best plans also have both quantitative and qualitative metrics 9-8

11 Work Life Blending What do you do with the following work life blending ideas? What could you do? What ideas did you get from others in the workshop? Flexible work hours Telecommuting Vacation time Job sharing Sabbaticals Part-time benefits Community involvement Other Other Other 9-9

12 Work Life Exercise Rate your organization on how it views the following work life blending options. Place an X in the column that best describes your organization s view. Work / Life Blending Topic We don t offer this We re thinking about this We offer a limited version We re putting a full version in place now We offer a strong package Flexible Work Hours Telecommuting Unlimited vacation time Job sharing Sabbaticals Part time benefit package Time to do Community involvement Other Other In what areas could the organization do better? What specifically could you do to help improve these areas? What s preventing your organization from being more focused on work life balance issues? 9-10

13 Evaluate your Recognition Processes Recognition: How is this valued by the employee(s)? Are there employees that wouldn t value this? Are there consequences for receiving this recognition/reward? In what circumstance would this not be valuable? Are there employees who are not eligible? Are there alternative rewards and recognitions for support staff? How do you monitor that the reward is delivered consistently and fairly? Are there audits in place? Back-up systems? Who delivers if you are away? What is the specific goal or outcome this is tied to? How is the outcome measured? Is the outcome or goal evaluated and changed periodically? Recognition: How is this valued by the employee(s)? Are there employees that wouldn t value this? Are there consequences for receiving this recognition/reward? In what circumstance would this not be valuable? Are there employees who are not eligible? Are there alternative rewards and recognitions for support staff? How do you monitor that the reward is delivered consistently and fairly? Are there audits in place? Back-up systems? Who delivers if you are away? What is the specific goal or outcome this is tied to? How is the outcome measured? Is the outcome or goal evaluated and changed periodically? 9-11

14 Recognition: How is this valued by the employee(s)? Are there employees that wouldn t value this? Are there consequences for receiving this recognition/reward? In what circumstance would this not be valuable? Are there employees who are not eligible? Are there alternative rewards and recognitions for support staff? How do you monitor that the reward is delivered consistently and fairly? Are there audits in place? Back-up systems? Who delivers if you are away? What is the specific goal or outcome this is tied to? How is the outcome measured? Is the outcome or goal evaluated and changed periodically? Recognition: How is this valued by the employee(s)? Are there employees that wouldn t value this? Are there consequences for receiving this recognition/reward? In what circumstance would this not be valuable? Are there employees who are not eligible? Are there alternative rewards and recognitions for support staff? How do you monitor that the reward is delivered consistently and fairly? Are there audits in place? Back-up systems? Who delivers if you are away? What is the specific goal or outcome this is tied to? How is the outcome measured? Is the outcome or goal evaluated and changed periodically? 9-12

15 Engagement Action Plan And Session 10 Pre-Work

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17 Session 9 Action Plan Rate your organization on how it views the following work life blending options. Place an X in the column that best describes your organization s view. Work / Life Blending Topic We don t offer this We re thinking about this We offer a limited version We re putting a full version in place now We offer a strong package Flexible Work Hours Telecommuting Unlimited vacation time Job sharing Sabbaticals Part time benefit package Time to do Community involvement Other Other In what areas could the organization do better? What specifically could you do to help improve these areas? What s preventing your organization from being more focused on work life balance issues? All Rights Reserved. Session 10 Pre-Work Use additional pages if needed. Please finish all sections and be prepared to discuss during session 10

18 Session 10 Pre-Work Flow chart or outline your recruiting and hiring process Flow chart or outline your onboarding process Identify how you determine cultural fit in an interview Bring a job description and a resume submitted for that job to the next session All Rights Reserved. Session 10 Pre-Work Use additional pages if needed. Please finish all sections and be prepared to discuss during session 10