Compensation Session 1 Ppt

8/2/2019 Compensation Session 1 Ppt

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Business today is dynamic, with a steadily increasing pace of

change. Timely and actionable information is the best way to

combat the elements. Every organization needs three types ofresources e.g. FINANCIAL RESOURCES, HUMAN RESOURCES

and TECHNOLOGICAL RESOURCES.

No organization can achieve success without its employees. Success

and failure of business somehow depends on the employees they

have. Until and unless a worker is satisfied, he cannot beproductive. Employee satisfaction is important for its humanitarian

value and for its financial benefit (due to its effect on employeebehavior), and the most important tool for this is the best suitable

COMPENSATION PLAN.Although, there are other forces which drive employee

performance,but

COMPENSATION IS THE CRUCIAL OF ALL.


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EMPLOYEES IN COMPANIES WITH

COMPETITIVE COMPENSATION PLAN:

Believe that the organization will be satisfying in the

long run

Care about the quality of their work

Are more committed to the organization Have higher retention rates, and

Will be more productive.


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Concept of compensationCompensation is not the cut-and-dry subject it used to be.Once you had to worry only about an employee's base salary

or, at most, a base salary and commission. Today, you need to

think in terms of compensation packages including salaries,

stock options, employee stock ownership plans, pay-for-performance plans, bonuses, profit sharing, commissions, non-

cash rewards, variable pay, and much more, i.e., you need to

be more innovative.

Attribute it to what you will - the Silicon Valley effect, a boom

economy, unparalleled competition for skilled workers, the

increasing value of IPOs and stock options - but there's noquestion that compensation has become a more complicated

and strategic issue for employers.

To recruit, retain, and motivate the best employees, you need

to understand compensation and reward plans and how they

relate to your company's growth.


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Why should companies consider changing the way they

approach compensation and benefits?

In todays complex environment, rewards management requires

many of the same specialized competencies necessary to run a

stand-alone business, including:

Skilled operational and HR resources to select and administer

plans, negotiate contracts, manage vendors and monitor service

levels

Experienced tax, legal and risk management professionals to

navigate U.S. and international employment laws and regulations

successfully

Sophisticated finance and accounting capabilities to keep the

books, file taxes, manage investments and liabilities, and run

rewards programs cost-effectively


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Clearly, companies dont actually have to spin off their rewardsprograms into separate legal entities to improve the way they are

operated.

But many of them do need to change the way they approach rewards

management

and this will require a change in perception amongexecutives and other employees at all levels of the organization.


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Food for thought for CEOs and HR Executives :- To

determine if they could benefit from rethinking their

approach to compensation and benefits management?

Are there concerns about the overall effectiveness or compliance

of your rewards programs?

Are your companys average health care costs per employee

greater than $6,000 or are your overall annual health care cost

increases greater than 10 percent?

Are new FAS 123 rules compelling you to investigate executive

compensation costs, and will you incur larger than expected

expenses in 2005 as a result?

Do your pension contributions as a percent of free cash flow

exceed 25 percent?

Are you struggling with managing the financial and credit risks

of your rewards programs, as evidenced by issues with your

liquidity and credit rating?


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ORGANIZATION COMPENSATION DECISIONS

Compensation decisions are typically micro (individual) or macro (total

organization) focused. Although organizations are under no constraint to

separate these decisions, a course of study should. In practice, most

unsophisticated organizations make the decision on compensation level (howmuch to pay) and compensation structure (relationships to competitors) at the

same time. More administratively advanced organizations realize that

individual decisions within a proper administrative structure are more

consistent, fair, and cost-effective over time.

STRATEGIC COMPENSATION LEVEL DECISIONS

Most employees are aware that some employers pay more than others for thesame type of skill in the same market. The actual cost to employers of employee

service is total hourly compensation plus benefits. Unfortunately, labor cost per

unit is not Information that is easily obtained by employers. It must be

estimated from in-house information on the average productivity of employee

groups and organization units and from the average pay of these groups.


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NON-MONETARY COMPENSATION CAN INVOLVE

DIVERSE CONSIDERATIONS

When conditions are right, employees derive non-monetary compensation from

those aspects of the employment experience that provides value or satisfaction

without necessarily delivering a measurable reward. Said differently, non-

monetary compensation is nothing more complicated than psychic income. It

rewards the employee in some uniquely psychological way, largely unrelated to

salary or employee benefits.

A firms ability to deliver meaningful non-monetary compensation depends on

the answers to some very important questions:

- Culture of the office- project characteristics

- nature of the process

- working conditions

- location of the office


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Every firms answers to these questions will differ, as every

employees decision about whats important also will differ.

There are no absolute rules about whats right, just varying

degrees of appropriateness.

The essential question about monetary vs. non-monetary

rewards is not an either-or question. The best firms endeavor

to deliver both. In the end, every employee makes a subconscious

calculation of the two:

monetary income + psychic income = total income

When available in reasonable quantities, psychic income helpsthe design professional see a clear path toward advancement and

satisfaction. Most designers are able to make rational decisions

about the trade-off between professional satisfaction and

economic reward. Ultimately, most design professionals willchoose the option that provides the highest total income.


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How to create incentive plans that are in

line with your corporate strategy?

Incentive compensation plans are designed to motivate sales and

service professionals to achieve goals and strive for excellence. But the

disturbing truth is that these same compensation plans are often in

opposition to the corporate strategy and CRM initiative. The effect isthat employees willlose sight of what's important: their customers.Compensation is the first litmus test for a company's seriousness about

the customer.

Pay for the Results You Want

Share Ownership

Keep It Simple and Up-to-Date


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Have You Selected the Right

Compensation Plan?

Getting your compensation plan to align with corporate CRM goals

also means implementing the right plan. Here are four types ofvariable compensation plans from Compensating the different types of

Industry:

-Gain sharing

- Reward employees for achieving pre-established goals

- Management bonusplans- Tie compensation plans with performance


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HR-2010,

INNOVATEOR

STAGNATE!


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Engagement and innovation are the hallmarks of all

successful organizations. Continually engaging yourworkforce will yieldgreater productivity, less turnover and

significant contributions to the organization.

Types of Innovative Compensation Practices

Innovative compensation practices encompass cash compensation

and recognition plans. The following are examples of innovative

cash compensation or recognition plan options .

a)Individual incentives

b)Team or group incentives

c)Bonuses

d)Spot awards

e)Special cash recognition

f)Special non cash recognition

g)Company Owned Life Insurance (COLI)


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ISSUES1. Create a plan that can be flexible to the needs of the college.

2. A plan that is nurturing to employees of longevity.

3. A plan that can recognize individual and team performance.

4. A plan that creates incentive for higher and/or additionalperformance.

5. A plan that is flexible with work schedules and work places.6. A plan that rewards special qualifications and requirements.

7. A plan that encourages advancement.

8. A plan that doesn't just follow the rules, but can be a leader in

compensation plans.


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SUGGESTED ACTIONS

a)Pay bonuses for job performances.b) Budget a lump sum for a team function and divide it

among members.

c) Include all employee groups in a compensation plan(i.e. supplemental).

d) Offer more flexible work schedules and work places.

e)A broader schedule may give better average for hours.


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THE BEST LAID COMPENSATION PLANS...

Compensation plans come in a million varieties - and each one's a disaster

waiting to happen.

In one way, compensation plans are the hammer of the employees motivational

toolkit - almost every company uses them to build revenues and reward

excellence.

But unlike the implements that hang from the average handyman's belt,

commission plans come in millions of shapes and sizes.

Instead of picking what you need from the shelf at Home Depot, you're expected

to work the millions of combinations and permutations into a compensation plan

of your own which is new, unique, and a disaster waiting to happen.Countless compensation structures fail despite the best intentions of business

owners.

Many plans are too complicated to be properly understood or effectively

implemented.

More fail when HR Managers don't explain their plans properly.


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The result:

Everyone comes up with their own interpretation of the rules,

and forms a unique opinion of which compensation they share.

Before you know it, inside work is battling with poor

performances and non achievement of targets, and you'recaught in the middle of the fray.

Job time is wasted, morale plummets and employees start to

resign.

That's no way to grow a company.


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THERE HAS NEVER BEEN A COMPENSATION PLAN

ENCOUNTERED THAT ELIMINATED ALL CONFLICTS

But with careful design and reinforcement of cooperative relationships,you can have a commission plan that works.

Here are things to consider:

1. Keep your plan simple

The more complex the compensation plan, the easier it is to misunderstandor manipulate. For example, if your employees are assigned to geographic

territories, be sure to develop and communicate clear guidelines on how

they can communicate to counterparts that cut across territories, and how

they'll be rewarded for those sales.

2. Understand the plan and all its rules yourself

Review and edit the plan with the HR manager, Departmental Heads and

bring a third manager into the discussion for a different point of view.

Together, you should anticipate the questions your team will have and

prepare solid answers.


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3)Make sure everybody knows and understands the rules

Introduce the plan a couple of weeks before you plan to implement it, giving

your team a few days to digest its contents.

Then hold a group meeting to discuss it.

Meet with each team to reinforce the plan and address questions and concerns

that wasnt raised before the group.

Ask your people about the plan to check for understanding.


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4)Encourage team building to ward off conflict before it

startsHave competing peers (for instance, inside and outside the team) meet to establish

relationships and build trust.

The most successful teams always engage with their other partners.Bring teams together to discuss potentially problematic accounts.

5. The team will behave exactly according to how the plan

best rewards themConcentrating their efforts on what pays the most. If you have a specific objective(e.g. new projects, more repeat quality checks, higher levels of client service), then

you must reward the behaviors that pursue those goals.


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THIS APPROACH OFFERS MANY BENEFITS TOCOMPANIES:

Increase profitability

Improve the financial standing of your business with compensation designs.

Supported by the software, company can accurately plan for profit.

Improve recruitingUsing unique motivational plans gives a competitive edge in attracting a high-

quality, experienced sales force.

Retain/attract top producers


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Manage mergers & acquisitionsAnalyze another companys compensation plans to reveal their actualprofitability and weaknesses. Create new compensation plans for the

combined company.

Plan for the future

With Compensation Master, you gain a long-term business-planning toolthat helps you analyze the impact of changes to your business before you

implement them. An analysis that used to take months can now be done in

minutes, allowing you to explore endless possibilities. Building in specific

profit levels allows you to invest in the growth of your company and

achieve other business goals.


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Manage mergers & acquisitions

Analyze another companys compensation plans to reveal their actualprofitability and weaknesses. Create new compensation plans for the

combined company.

Plan for the futureWith Compensation Master, you gain a long-term business-planning

tool that helps you analyze the impact of changes to your business

before you implement them. An analysis that used to take months can

now be done in minutes, allowing you to explore endless possibilities.

Building in specific profit levels allows you to invest in the growth of

your company and achieve other business goals.


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Thank you

Date post:	05-Apr-2018
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Compensation Session 1 Ppt

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