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PRACTICAL TIPS

FOR REDUCING COMPENSATION CYCLE TIME & STRESS

Page 2

Practical Tips for Reducing Compensation Cycle Time and Stress

HRsoft is the trusted global leader in compensation management software whose COMPview solution is proven to control and simplify the full process and

allocation of merit, bonus and equity awards to drive manager and employee engagement.

Like most other cycles, the compensation cycle tends to have its ups and downs: there are typically periods

during which you’re very busy, and during others, your workload may be much lighter. While many organizations

are able to get through the lulls and surges, using a more proactive strategy can provide immense benefits by

allowing you to even out your efforts.

The objective of this guide is to help you take a more proactive – instead of reactive – approach to the

compensation cycle. As we all know, our decisions and outcomes are impacted when we’re forced to be reactive.

Because compensation is such a critical piece of your organization’s overall strategy, it’s better to be able to plan

ahead and make the best possible decisions that will fairly reward top performers and stay within your company’s

budget.

“Someone is sitting in the shade today because someone planted a tree a long time ago.”

Warren Buffett

(Images by Dan Walter, President & CEO of

Performensation)©2017 Performensation

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When you have ample time for planning, you’re better able to align goals, and thus, achieve them according to

schedule. Instead of being extremely overworked at the end of the year, following a strategic calendar allows you

to maintain a steadier pace on a consistent basis.

Throughout the coming pages, we’ll discuss ways that you can structure your calendar to get the most out of

your year, months, weeks, days, and even hours. We’ll help you design a compensation plan that gives you more

time to actually get things done (instead of thinking about how you’ll get them done), which will alleviate stress as

a result.

Specifically, we’ll cover the following key concepts:

What the typical annual compensation cycle looks like

How to break the cycle into 6-month intervals

Planning for a successful quarter

How to make the most out of each month

Ensuring you’re planning your week effectively

Getting the most out of every day

If you’re ready to discover how you can start reducing the stress and time spent on your compensation cycle, let’s

begin!

©2017 Performensation

Combination Code to Compensation

Planning

Top Down and Bottom Up Planning

5D-4W-3M-2Q-1Y

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What Does the Average Yearly Cycle Look Like?

Before we jump directly into discussing the ideal

calendar for your compensation plan, there are

a few key points that will be helpful to bear in

mind as we go along. For one thing, the ways in

which managers and team members approach

the compensation plan tend to be quite different.

While managers typically take a top-down

approach and use a “big picture” strategy to create

the compensation plan, team members are more

inclined to use a bottoms-up approach. They’re

more driven by ground-level tactics, and may be

more aware of potential roadblocks that managers

don’t tend to see.

A successful compensation cycle can be achieved by allowing team members to help you fill in the gaps. By

getting their input, you can create a plan that works at the ground level, and is well-received throughout the

entire company. Bearing this in mind will help you create a plan that has the greatest odds for success and works

well for everyone’s schedules.

Planning for the Year: It’s All About the Numbers

A year seems like a long time, but you probably know firsthand how quickly the calendar pages can start whizzing

by. It’s no wonder why: even though a year is 365 days, there are just 245 work days in the year. Plus, you also

have to take into account sick days and vacation time.

So, 245 work days leaves you with 2,340 work hours (for individuals working 45/hours per week). Again, this

sounds like quite a lot of time, but once we begin to break down the way that our time is used, you’ll see that it’s

easy to start filling those hours with tasks that aren’t always conducive to your compensation goals. The objective,

then, is to use the time we do have as strategically as possible to make the compensation plan come to life.

Another factor to consider: the average professional receives more than 25,000 work emails in a year. Of course,

it’s unlikely that you’ll read all of them, but this statistic alone stands as proof as to just how much time can get

chewed up with daily tasks.


*Source: Email Statistics Report 2011-2015,

The RadacitiGroup

1 Year =245 work days (including 3 weeks of vacation)

11,205 work hours (45 hr/week)

25,757 emails (avg*)

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A Glimpse at the Typical Compensation Cycle

If you’re working in executive compensation, it’s more than likely that your personal work calendar is the

compensation committee’s calendar. While there are some variations as to what the average calendar looks like

from one organization to the next, here’s a general idea:

As you can see, the year is filled with important steps, which could include:

Calculating & delivering incentive payments (February)

Analyzing compensation trends (mid- to late spring)

Reviewing the plan, including pay & performance linkage and its effectiveness against your company

strategy (August)

Executive & CEO market pay analysis (October)

Setting goals & targets for next year and preparing incentive calculations (year’s end)

13

Typical Annual Compensation Committee Schedule

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Executive and CEO Market Pay Analysis

• Review market trends in pay, short & long-term grants

• Prepare and review tally sheets for a full view of executive total

rewards

Year-End Preparation

• Set goals/targets for next year’s short & long-term awards

• Evaluate CEO performance

• Prepare preliminary current year incentive calculations

Incentive Payments

• Calculate and deliver actual prior year short & long-term

award payments

Plan Review

• Test effectiveness against company strategy

• Review pay and performance linkage

Compensation Education & Trends

• Update to remain in line with continuing

educational requirements

Fiscal Year End

Implementation Support

• Answer feature questions and provide guidance during

implementation with service provider

Issue Support

• Availability during non-standard events

• Support regarding questions on plan features

1 Year

©2017 Performensation©2017 Performensation

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This high-level calendar looks like it would work quite well. However, consider how the compensation

committee’s schedule looks when overlapped with the compensation department’s schedule:

It’s clear that there’s a lot of overlap at various points in the year.

For instance, in February when you’re doing incentive payments, you might also be setting goals and objectives.

Your executive and CEO market pay analysis will likely overlap with the time when you’re reviewing market data,

and by that point, year-end performance reviews are just around the corner as well.

14

Comp Committee Vs Comp Department


Executive and CEO Market Pay Analysis

• Review market trends in pay, short & long-term grants

• Prepare and review tally sheets for a full view of executive total

rewards

Year-End Preparation

• Set goals/targets for next year’s short & long-term awards

• Evaluate CEO performance

• Prepare preliminary current year incentive calculations

Incentive Payments

• Calculate and deliver actual prior year short & long-term

award payments

Plan Review

• Test effectiveness against company strategy

• Review pay and performance linkage

Compensation Education & Trends

• Update to remain in line with continuing

educational requirements

Fiscal Year End

Implementation Support

• Answer feature questions and provide guidance during

implementation with service provider

Issue Support

• Availability during non-standard events

• Support regarding questions on plan features

1 Year


Year End Performance Reviews

Pay for Performance

• Determine Merit, Market and Incentive pay decisions

Communicate Sales Plans

• Calculate and deliver actual prior year short &

long-term award payments Mid Year Performance

Reviews

• Check in with team on status of annual objectives

Market Benchmarking

•Review benchmark job matches and participant

in surveys

Fiscal Year End

Goal and Objective Setting

• Company goals cascaded to departments

•Comp Tem goal setting to align to the company goals

Pay Competitive Assessment

• Review market data

•Identify market pay concerns



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How to Make It Work

The goal of depicting the overlapping calendar above isn’t to overwhelm you; instead, it’s meant to illustrate the

ways in which you can plan in advance for the busiest times of the year. One effective way to do this is to simply

let your teams know which times are anticipated to have the most going on, so that everyone can coordinate

schedules effectively. Communicate this information to teams, and also encourage each party to be aware

of other departments’ busy schedules. Wherever possible, look for ways to coordinate efforts and eliminate

redundancies.

Most importantly, in order to achieve each of these steps, you must begin each year by mapping out your

company’s own calendar like the one listed above, keeping in mind your resources and unique needs.

While each organization is different, two factors that are common to all compensation plans are resources and

expectation setting. When creating your yearly calendar, be mindful of the following resources:

The people on your compensation team

Resources needed from other departments

Software and other external services, if needed

Time and money

Also, be aware that everyone involved can only exceed if they know what’s expected of them from the very

beginning. Thus, it’s critically important that you clearly communicate:

What you expect from your team members, and

What your team members can expect from the year

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Breaking The Cycle Down into 6-Month Portions

Most compensation teams would agree that Q1

and Q4 are the busiest times of the year. If you

already know that your most labor-intensive

periods are going to be the back-to-back quarters

of Q4 and Q1, perhaps a better way to view the

cycle is in two halves, instead of four quarters.

Breaking the annual cycle down into two six-month

periods, one intensely busy and one less busy,

helps you to think strategically and “plan to plan.”

In other words, if you know that you’re typically scrambling during the last three and first three months of the year,

you can avoid having to “run from the avalanche” if you also maintain a steady pace during the months that are

typically slower.

Additionally, it’s a good idea to hold two strategic planning sessions during the year as follows:

1St Strategic Planning Session

Held early in the year, this session should be held to review your overall company goals. Thereafter, you can

make sure that the overarching objectives of your compensation team are aligning with those company goals.

Now is also a good time to revisit past failures, as well as what worked effectively.

2nd Strategic Planning Session

During your slowest month (ideally during the late spring or early summer), hold a second strategic planning

session. During this one, you’ll discuss your long-term planning objectives for at least a year and a half down the

road. You can also revisit the successes and failures of the past cycle. Finally, you’ll also begin preparing for the

year-end process.

It takes 6 months to build a Rolls Royce and 13 hours to build a Toyota.

©2017 PerformensationSource: UberFacts

Page 9




Planning for a Successful Quarter

In the previous section, we discussed how you could break the yearly cycle down into two main portions to

ensure that your compensation team isn’t drowning in work during the first and last months of the year. Now, we’ll

discuss how you can spread out your work evenly through each quarter, so that no time goes by wasted.

Three-month cycles are revolving, and during each, you’ll revisit the same initiatives. This might include

performance metric tracking, bonus approval, financial reporting, communications, reconciliation, stakeholder

reviews, and other factors that fall in between as depicted below:

When planning the quarter, it’s important to remember that while public companies are driven by financial

performance and shareholder disclosure, private companies are typically driven by internal metrics and projects.

Bearing this in mind, we’ll take a look at how a three-month plan might appear for a typical public firm.

Quarterly Considerations

Performance Metric

Tracking

10Q

Bonus Approval

Review Comp Committee Charter

Financial ReportingCommunications

Review Plan Effectiveness

Reconciliation

STI Goals

Stakeholder Reviews3 Months


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Week 1: During the beginning of any quarter, most compensation teams find themselves answering any

questions from the previous quarter and performing a thorough “cleanup.” This is the time to refresh and get back

on track, and respond to any inquiries that may arise.

Weeks 2-3: The next phase of the quarter is the time during which you’ll finalize your plans for all of your

deliverables of the current quarter. Keep in mind that even though you’ve preplanned, there are likely still some

adjustments that need to be made during this period, and now is the time to address them.

Weeks 4-7: For roughly these four weeks, you can focus on the internal deliverables for the compensation

department. During this stretch of time, it’s unlikely that many people will be coming to you with questions, so

you can use this opportunity to narrow your focus on your most important priorities. Because this one-month

period recurs during every quarter, you essentially have four solid months out of the year to concentrate fully on

compensation department deliverables.

Weeks 8-10: This timeframe will mostly be spent on focusing on deliverables for stakeholders.

Weeks 11 & 12: The final two weeks of the quarter are spent finalizing results and generating reports. You might

also use this time for gathering quarterly performance numbers for commissions and short-term incentives.


Source: www.census.com

Total retail sales for the third quarter of 2016 were

estimated at $1,212.5 billion. (Employees compensation

supported every single dollar of that!)

Page 11




Scheduling a Successful Month

There are only 28-31 days in any given month, so but as you know, even during the middle month in the quarter

described in the previous section, the first and last weeks can still become filled with busywork. For instance, take

a look at the four-week timeframe depicted below:

As you can see, the first and last week will likely be consumed by running and delivering monthly reports, as well

as responding to questions. During the last week, you’re busy with prep work. Thus, the middle two weeks give

you the “prime time” to work on the compensation department.

So, to sum up what we’ve discussed so far, this means that you’ll typically only have one full month out of

every quarter and one two-week period out of most other months to focus the majority of your efforts on your

department. The good news about coming to this realization is that you can leverage that time and use it for

strategic and creative thinking to get your department under control, allowing you to move forward successfully

every month regardless of what time of year it is.

This is your time to get things done, and while recognizing it is an important first step, what’s more important is

physically blocking out these periods on your calendar so you know when to center your efforts on compensation

department initiatives. Some people like to say that “what gets planned gets done,” but you can increase your

odds for success by adopting the mentality that “what gets scheduled gets done.”

Monthly processes are the shortest segment of time that allow preplanning

Monthly closes, Commission Cycles etc.

T O O B U S Y

T O O B U S Y

P R I M E T I M E

4 Weeks


Page 12




Getting the Most Out of Each Week

While it’s not possible to plan out every single day of the compensation cycle in advance, what you can do is

utilize each week wisely to be as productive as possible.

Consider the drawing below: the work week is essentially like a hill, with peak performance topping out in the

middle.

While Friday tends to be the day we look at as our

deadline, it’s also been determined by surveys

to be the least productive day of the week. So,

it goes without saying that we shouldn’t plan for

Friday to be the day when we get the most done.

Wednesdays and Tuesdays, on the other hand,

are the most productive. Thus, if you need to set

aside time for tactical meetings, it’s best to do it

on a Tuesday: it’s not your teams’ first day back

from the weekend, but it’s also not before the

end of the week, when they’ll be focused on their

subsequent two days off.

An optimized weekly schedule for a compensation

department might look like this:

Monday: Execute the plan you made during Friday’s strategy meeting; check relevant industry news and inform

your network on any important findings; and complete your deliverables for Tuesday’s tactical meetings

Tuesday: Hold tactical meetings, but take periodic breaks and invest in yourself with webinars and training

Wednesday: Check in on your deliverables for the current week and assess whether or not you’re staying on

schedule

Thursday: Block out a few hours to work on any tasks that are taking longer to complete than anticipated

Friday: Hold strategy meetings; focus on deliverables for other departments; plan, prioritize, and most

importantly, schedule your work time for the upcoming week; check in on progress of goals and objectives; and

clean off your desk and clear work troubles for your mind before leaving

©2017 Performensation*Source: AccountTemps 2012

Nearly half (48 percent) of executives

surveyed recently said employees hit peak performance

on Tuesdays. Not surprisingly, Fridays were viewed as the least

productive day of the week.

Page 13




Making Every Day Count

We know that most work days are roughly eight hours, but most experts say that we can only count on having six

hours of work on any given day. That’s because lunch, bathroom breaks, and checking in with coworkers can take

up time, but it’s still possible to use the six hours we’re given as effectively as possible.

Another thing to be mindful of is that by understanding that you have more like six hours – instead of eight full

hours – you’re also giving yourself some leeway for fire drills. Situations are going to arise in your day-to-day work

life that demand your attention; that’s an inherent part of the compensation environment. Yet, as long as you don’t

jam-pack each day with back-to-back activities, you won’t compromise your other initiatives when you have to

put out fires.

Additionally, remember that a calendar doesn’t have to comprise work meetings alone. You can – and should –

schedule time for work that’s exclusively yours, because if you don’t, someone will take that time from you!

In fact, you can even schedule in activities that are often perceived as “time wasters” (though they still wind

up requiring our attention), such as communicating. This could include checking and responding to emails,

and networking on social media. Just be sure to categorize what’s most important by taking a now-and-later

approach: the head of HR and/or CEO demands your immediate attention, but a colleague can wait a bit.

Finally, reserve the last half hour of each day to focus on the perfect day called “tomorrow.” Ending your workday

by listing the first three things you have to get done the next day can set you up for a successful tomorrow, and

when you keep repeating the process, you’ll have a successful year, too.

“6 hours is only 25% of a full day, but it is 100% of your productively scheduled time.”

©2017 Performensation*Source: This presentation, Dan Walter, Sam Reeve

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Conclusion

By this point, you may have gathered some actionable

tips about how you can structure your year, months,

weeks, days, and even hours for a successful

compensation cycle. While it’s impossible to hash

out every detail of your schedule far in advance,

scheduling your most important compensation work

can help ensure that it will get done – and that it will

actually get done on time. By following the practices

listed in this guide, you’ll be able to reduce stress

and time spent as a result of the compensation cycle,

because you’ll be taking a proactive instead of a

reactive approach.

To sum up what we’ve discussed, just remember the numbers 1-6:

1 Year is the duration of the full compensation cycle, but you can break it down into smaller portions that can be

scheduled.

2 Halves can be useful to plan for, because the first and last three months of each year tend to be the most

intense, while the middle six are typically less demanding.

3 Months are in each quarter, and you can approach each one like a hill: do the majority of your compensation

initiatives in the middle months, and allow the last one to be more of a downhill coast.

4 Weeks are all you have in a month, but you can schedule your most important meetings in the middle two.

During this time, stakeholders will be less distracted, and you can follow up immediately to gauge the success of

any new ideas.

5 Days make up a week, though as you know, Fridays and Mondays tend to be less productive than the others.

You can use this to your advantage by scheduling your week to be most productive when others aren’t. Hold

strategy meetings on Fridays and tactical meetings on Tuesdays, and remember, the weekend is your time, not

work time!

6 hours are the most you’ll get out of any given work day, but you can block out certain times and actually

schedule your own work time to ensure that you’ll achieve your priorities.

Most importantly, keep this in mind: things that get scheduled get done! When you plan to use time as effectively

as possible, you can spread your efforts more evenly to avoid stress and time-consuming catch-up work for a

more successful and hassle-free compensation cycle.

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About the Contributors

Dan Walter | CEP, President, and CEO, Performensation

Dan is the founder of Performenseation and has more than two decades of industry

experience. His work includes both executive and broad-based programs, and he

has provided end-to-end solutions for private and public companies in the U.S. and

internationally. He has worked extensively throughout the Silicon Valley and in New York. He

is also a board member for the National Center for Employee Ownership and the Institute for

Human Resources.

Sam Reeve | EVP of Consulting Services, Performensation

Sam is a member of the Performance Management Advisory Board for HR.com’s Institute of

Human Resources. He is a global certified compensation consultant with 15 years of experience

in Total Reward Strategies. Sam is an expert in broad-based compensation and focuses his

talents on enhancing performance through the effective use of incentive and recognition

programs. Prior to joining the firm, Sam worked in the corporate compensation functions of

notable firms such as BlackRock, McKesson and Automatic Data Processing (ADP).

Resources

HRsoft is the trusted global leader in compensation management

software whose COMPview solution is proven to control and

simplify the full process and allocation of merit, bonus and equity

awards to drive manager and employee engagement.

Phone: 866.953.8800 | Email: [email protected] | Web: hrsoft.com

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