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Total Reward SystemsIdeas for Today and Tomorrow
VitaeCLIFFORD F. COLE
He is the principal in the CLIFF COLE HR ALLIANCE.
It is a team of experienced professionals dedicated to providing high quality HR solutions in compensation and organizational effectiveness through value-added outsourced human resource alternatives!
He is is past Chairman of Food Distribution’s Human Resource Executive committee. He is a former Group Vice President of Human Resources for Sara Lee Corporation and Vice President of Human Resources for PYA/Monarch Food Service Distributors with over 29 years of experience with Sara Lee at the corporate & operating level in food, food distribution, consumer personal apparel, printing and manufacturing.
He has in depth know how and experience in Compensation, Executive Coaching, Organization and Human Development, Succession Planning, Performance Management, Search, Recruitment and Selection, Employee & Labor Relations, Acquisition, Merger, and Start-Up Initiatives.
He is a speaker at management seminars for the food industry, human resource & productivity conferences, along with college & university development programs. He also has served on the Clemson University Board of Continuing Education. He is a former Board Member of the South Carolina Special Olympics.
The team services Fortune 100 companies along with small, medium and large businesses located globally and through out the United States. Representative clients both internally and externally are Frosty Acres, Centennial Foods, PYA/Monarch, Sara Lee, Sky Brothers, Sandler Foods, Coastal Foods, Schloss & Kahn, Capital Foods, Brooks Food Group, Earth Fare, Booth Fisheries, Idaho Frozen Foods, Bali, Hanes, Lexington & Bassett Furniture and Russell Corporation!
CLIFF COLE HR ALLIANCE124 Kingshead RoadTravelers Rest, SC 29690Phone 864.430.0630Email [email protected] 864.836.4935
ALIGNING PEOPLE FOR RESULTS
Have you HUGGED your kid today?
Why not?
How are you spending
your time?
What could be more fun?
The most important Reward component!
Where are we really going today?
Overview of a Total Reward System
Specifics on:
Building a sound cash compensation program
Focus on cash incentives
Why Do We Reward People?
There are not enough qualified kids!
What works in Reward Systems?
CERTAINLY NOT A PROGRAM OF THE DAY!
X
Rewards for Performance
Total Direct Compensation
Learning and Development Work Environment
Base salaryRewards & RecognitionAnnual bonus
Health & WelfareRetirement - 401(k)
Time off
Business knowledgeCareer developmentLearning experiencesPerformance managementTrainingHigh potential & succession
Organization climateLeadershipTeam spirit
Tools to perform jobWork/life balance
Benefits
Total Direct Compensation
Base Salary
Rewards &
Recognition
Performance-Based
Annual Bonus
Winning team
Focus on long-term strategic member value creation
Market competitive salary level
NeededTo
Play
NeededTo
Win
Incentive to focus on short-term tactical objectives
Immediate, cash / non-cash, on-the-spot recognition
FAB Work Environment
FFighters:
People who commit to a passion for excellence, integrity, trust and a winning culture.
Innovation:
Create our future.
Empowerment:
Provide freedom to take ownership, accountability and behave “FIERCELY” in all you do.
““FIERCE” - FIERCE” - is at the heart of our work environment and our success.
FAB Work Environment
Relationships:
Build relationships that improve the quality of people’s lives and their environment.
Communications:
Develop a fair and equitable culture that respects everyone’s ideas, opinions and experiences.
Education:
Take personal ownership and accountability for building know how, skills and ability.
““FIERCE” - FIERCE” - is at the heart of our work environment and our success.
Learning and Development
People
Equipped with proper tools to develop their leadership potential
Teamwork
Working togetherto achieve common business goals
Company Success+ =
Assessment
High Potential & Succession Planning
Personal Development
Educational Assistance Program
A bit of Rewards History The 40’s/50’s
A hungry worker is the best worker Not much in the way of rewards
The 60’s/70’s $ started to shake loose Benefits too Tricky Dick and Wage/Price controls
The 80’s % increases made for bigger pieces of the pie $ and benefits kept rolling
The 90’s to Tomorrow The $ slowed down Benefit cost shifting in vogue Benefits more costly
A word about Rewards Philosophy!
Total Direct Compensation
Our focus for today’s session!
Benefits
Learning & Development
Work Environment
What do you want and need to be?
Quality of Player
Competitive Market
To find, get and keep players who perform?
Business competitors and cost issues?
So where and how will you spend your money?
What will you get for it?
Cash Compensation Components
Total Cash =
Base +
Variable (Bonus and/or other cash incentives)
How do you build a sound program?
Job Content
Current Pay Practices
Plan Design Compensation Strategy Salary Grades and Ranges Pricing Philosophy Base Salary Annual Incentive Plan Administration
How do you look for example?
XXX’S compensation appears to be:
Base Salaries - Below Market
Annual Incentives - Incentive opportunities calculated as a % of existing
base salary are Below Market
Total Annual Cash Compensation - Below Market
Annual Incentive Payout is High vs. Actual Performance as a company
How do you look for example??
Employees see hurdle rate
Feel it is not attainable!
Thus bonus opportunity does not:
motivate employees
does not help attract or retain
What do you do?
Create new pay policy
Develop strategy for moving to it
Develop strategy for rewarding your:
Stars
High Pots
At risk
What do you do administratively??
Pool for:
Stars
High Potentials
At Risk
Performance Increases
Promotion/Demotion Treatment
KEEPING PLANS SIMPLE
The incentive pool should: Be visible to the employee participants as it
accumulates. Have a corporate performance component Be accumulated based on goals and measures which
best reflect employee influence on results Include a personal performance improvement target for
each employee
KEEPING PLANS SIMPLE
The best plans: Are supported by a flow of relevant management information
in time for corrective action.
Also have a component allowing corporate leaders to
spontaneously issue special recognition of employees in
cash,
KEEPING PLANS SIMPLE
A general rule exists: “when salaries are kept low,
incentives are paid easily and early”.
The higher the salary competitively, the higher the
standards to become eligible for incentives.
Incentive Measures (Major Categories)
Sales Volume Profit Return On Equity or Sales or Investment Products Procurement Distribution
Incentive Measures (Sales) Sales Volume Profit $ and/or % - Gross - Net - Margin Accounts - Target - New Products – Mix – New – Push Volume
Personal Team District Region Department Division Company Customers All - New - Existing
Incentive Measures (Distribution) Performance to Budget Total Operations Department
Dollar performance Through-put performance
inbound / outbound cases per hour or use tonnage per man hour cases unloaded by drivers per delivery hour average cases per outbound load
Total Distribution Center Service Level On time departure On Time delivery
Total Distribution Center Product Damage damage and Loss write off by warehousing damage and loss write off by transportation
Incentive Measures (Procurement)
Performance to Budget Total Department Merchandising allowances
Marketing revenue
Gross Profit $ and/or %
Inventory Turns
Sales Growth
Product cost
Measurement Units
Percent of Quota
Dollar Amount
Number Achieved
Points
Subjective Evaluation
Percent
Incentive Payouts for Performance
Threshold The beginning point, usually at least last years performance
Competent Performer Compensation Amount paid for achieving planned results.
Outstanding Performer Compensation Amount paid for significantly exceeding planned expectations.
Incentive Measures Weights
Communicate to the Person how important each
measure is relative to the total job. Sales Volume: 70% Product Mix: 20% Target Accounts: 10% Total: 100%
Incentive Linkages Internal External Sales Distribution Finance Procurement FAB Member
Have you HUGGED your kid today?
Why not?
How are you spending
your time?
What could be more fun?
The most important Reward component!