When you’re ready to grow, I’m the one to know. Total Rewards and Motivation: Mistakes, Myths...

When you’re ready to grow, I’m the one to know.www.CultivateCC.com

Total Rewards and Motivation: Mistakes, Myths

and What’s Working

Laura WolfeApril 27, 2012 - LA SHRM


Objectives

• Present new information about total rewards and motivation

• Cover body of knowledge required for CE credit

• Provoke you to think in new ways and about new ideas


Big Picture


Total Rewards

• monetary & nonmonetary rewards companies use to attract, motivate and retain employees

• more than comp & benefits

• a philosophy


Foundational Stuff

• Behaviorism

• Law of Effect


Equity

Inputs/Outcomes


Equity

• External– Labor markets– Market conditions

• Internal


Org Justice

• Distributive

• Procedural


Discussion

• Best thing a company has ever done to motivate you?

• Is your company using incentive pay plans? – How are they working?

• Effective recognition programs?


Is money the best and ultimate motivator?


Research

• Teresa Amabile and Steven Kramer

• Book: The Progress Principle

• Support workers’ everyday progress


Research

• Carol Dweck

• Book: Mindset

• Fixed or growth?


Research

• Dan Pink

• Book: Drive

• Autonomy, Mastery, Purpose


www.idonethis.com


Empowerment

• Empowered employees:– Felt worthy, competent, capable– Performed better, more innovative, more job

satisfaction, greater commitment, more OCB

• Related: – flexible work hours – vacation policies (Netflix)


Happiness

• Frequency, not intensity, of happy experiences more important to creating happiness


Incentives

• Economy a factor

• Shifts

• Technology


Incentives & On-time Behavior

• Timeliness improved through rewards and recognition program

• Computer system to track arrival and departure times and calculate compensation for arriving early

• Most workers arrived early when additionally compensated


Sales Compensation

• Proportion of incentive to base

• Engage others in design process

• Communication

• Technology

• Planning


10 Sales Incentive Design Mistakes

1. Trying to Keep Everybody Happy

2. Failing to Separate Novices from Veterans

3. Negative Reward on High Productivity

4. Targeting Prizes Toward Entire Sales Force

5. Planning a Contest with No Sales Force Input


10 Sales IncentiveDesign Mistakes

6. Leaving Top Management Out of the Plan

7. Being a Do-Gooder

8. Being Inflexible

9. Hoping for X While Rewarding Z

10.Forgetting that Good Salespeople Always Work for Their Own Good First

– From HR Daily Advisor


Executive Compensation

• CEO pay and performance– Significant yet modest relationship– Executive boards dynamically adjust current pay

according to historical performance


Executive Compensation

• Top Mgt Team turnover impacted by pay dispersion – > the pay differences > likelihood of turnover– Market pay levels and “cut” of total TMT also

influence turnover decisions

• NBA example ?


Merit Pay

• Advantages– reward key talent– once or recurring– nudges poor performers

• Disadvantages– difficult to measure performance – good systems take resources– divisive– communication


Before PFP Ask:

• What is our philosophy? • Where do we want to be? • How does it align? • Do we have:

– high performers?– a performance culture– managers able to:

• identify high performers• Communicate


Reward Behaviors,

Not Just Results


Point-based Rewards

• Medical center example

• Points earned by using shift-scheduling software and for working shifts


Recognition

“Attention is a powerful nutrient. It amplifies and accelerates the situations on which it is focused.”

--Martha Beck

http://marthabeck.us2.list-manage1.com/track/click?u=c57068f5b1eb0f6ec956dd3b3&id=b4576b70ff&e=e76582f8c7


Workplace Recognition Study

• 38% tangible rewards• 21% opportunities to learn and grow• 19% verbal or written praise• 20% nothing

• 65% of ees b/t 18-34 more likely to leave if they don’t feel like they are recognized

– Office Team Survey


Recognition Blunders

• Acknowledging incorrect facts

• Offering token gestures

• Being vague

• Going overboard

• Overlooking contributors

– Office Team Survey


Praise

• For effort or for ability?

• When not to use it.


Best practices

FORTUNE

100 Best Companies to Work For


Best Practices

Zappos


Best Practices

• Discovery Communications

• Sprint


Moving toward Total Rewards

• Meeting with Leaders

• Permission to align rewards with strategy

• Ask for any resources needed to get the project going


Good Data

• Data based planning

• Metrics and benchmarking

• The big ?


Benchmark & Metric Data

• SHRM• Saratoga Institute• WorldatWork• Consulting firms

– Mercer, Hewitt, Hay, Towers Perrin, Watson Wyatt Worldwide

• Professional associations• In-house pay surveys


HR Metrics for CompensationHR Performance

AreaMethod of Calculation

Pay and benefits as percentage of operating expense

Total pay and benefits expenditures/Total operating expenses

Human value added Revenue – Operating expense – Pay and benefits = Adjusted profit/Full-time-equivalent employees (FTEs)

Return on human capital invested

Revenue – Operating expense – Pay and benefits = Adjusted profit/pay and benefits

Employee cost factor Total compensation and benefits/FTEsadapted from Mathis and Jackson, Human Resource Management, 12th edition, Thompson-Southwest


Metric Options for Variable Pay

• Production performance – Actual change vs. planned change– Revenue growth– Return on investment– Average employee productivity change

adapted from Mathis and Jackson, Human Resource Management, 12th edition, Thompson-Southwest



• Sales Programs– Increase in market share– Customer acquisition rate– Growth of existing customer sales– Customer satisfaction



• HR Related Program Measures– Employee satisfaction– Turnover costs– Absenteeism cost– Workers’ comp claims– Accident rates


Cost and ROI of

• Health and wellness benefits• Wellness programs• Recognition programs• EAPs• Retirement plans• Time-off programs• Stock purchase


Alignment Strategic Goals & Objectives

• Compensation is not an HR program– Org owns compensation

• Appropriate mix of total reward elements

• Profit sharing – Nucor Steel


AlignmentValues

• Employee Value Proposition

• Rewarding what is valued– Values=culture=strategy


Keys

• Communication

• Personalize

– Win over family when possible


Questions

?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????


ResourcesDan Pink

• RSA Animate - Drive: The surprising truth about what motivates us– http://www.youtube.com/watch?v=u6XAPnuFjJc

• Drive: The Surprising Truth About What Motivates Us, Riverhead Books, 2009, by Dan Pink

• Twitter: @DanPink• http://www.danpink.com/ • https://idonethis.com/

http://www.youtube.com/watch?v=u6XAPnuFjJc

http://www.danpink.com/

https://idonethis.com/


Resourceswebsites & blogs

• http://www.zappos.com/index0.zml • http://www.ioatwork.com/ • http://www.shrm.org• http://hrdailyadvisor.blr.com/ • http://danariely.com/ • http://www.inc.com/ • http://blogs.hbr.org/

http://www.zappos.com/index0.zml

http://www.ioatwork.com/

http://www.shrm.org/

http://hrdailyadvisor.blr.com/

http://danariely.com/

http://www.inc.com/

http://blogs.hbr.org/


Resourceswebinar

• SHRM e-learning webinar– Aligning Your Compensation Strategy with

Business Priorities by Stacey R. Carroll, SPHR, Director of Customer Service & Education, PayScale, Seattle, Wash.

– 1.5 strategic CE credit


ResourcesThe Startup Daily

• Play to Your Strengths– http://thestartupdaily.com/2012/02/play-to-your-strengths/

• Why Do You Do What You Do?– http://thestartupdaily.com/2012/02/why-do-you-do-what-you-do/

• The Magic of the Mundane– http://thestartupdaily.com/2012/02/the-magic-of-the-mundane/

• The Cost of Focusing on Results– http://thestartupdaily.com/2011/09/the-cost-of-focusing-on-results/

• Benefit from the Success of Others– http://thestartupdaily.com/2012/02/benefit-from-the-success-of-other

s/

http://thestartupdaily.com/2012/02/play-to-your-strengths/

http://thestartupdaily.com/2012/02/why-do-you-do-what-you-do/

http://thestartupdaily.com/2012/02/the-magic-of-the-mundane/

http://thestartupdaily.com/2011/09/the-cost-of-focusing-on-results/

http://thestartupdaily.com/2012/02/benefit-from-the-success-of-others/

http://thestartupdaily.com/2012/02/benefit-from-the-success-of-others/


Resourcesonline articles

• The Secret Document That Transformed China– http://www.npr.org/blogs/money/2012/01/20/145360447/the-secret-

document-that-transformed-china

• Best Ways to Recognize Employees– http://www.toiletpaperentrepreneur.com/the-right-actions/ways-give-

employee-recognition/

• The Folly of Stretch Goals– http://blogs.hbr.org/cs/2012/04/the_folly_of_stretch_goals.html

• How to Set Your Employees Free: Reed Hastings– http://www.businessweek.com/articles/2012-04-12/how-to-set-your-

employees-free-reed-hastings

http://www.npr.org/blogs/money/2012/01/20/145360447/the-secret-document-that-transformed-china

http://www.npr.org/blogs/money/2012/01/20/145360447/the-secret-document-that-transformed-china

http://www.toiletpaperentrepreneur.com/the-right-actions/ways-give-employee-recognition/

http://www.toiletpaperentrepreneur.com/the-right-actions/ways-give-employee-recognition/

http://blogs.hbr.org/cs/2012/04/the_folly_of_stretch_goals.html

http://www.businessweek.com/articles/2012-04-12/how-to-set-your-employees-free-reed-hastings

http://www.businessweek.com/articles/2012-04-12/how-to-set-your-employees-free-reed-hastings


ResourcesInc. Magazine online

• Why Flexible Hours Inspire Performance– http://www.inc.com/margaret-heffernan/why-flexible-

hours-inspire-achievement.html

• Now’s a Good Time to Reward Employees– http://www.inc.com/michael-alter/nows-a-good-time-to-

reward-employees.html

• How to Keep a Superstar Employee Happy– http://www.inc.com/jeff-haden/how-to-keep-a-superstar-

when-you-have-little-to-offer.html

ResourcesInc. Magazine online

• Why Flexible Hours Inspire Performance– http://www.inc.com/margaret-heffernan/why-flexible-

hours-inspire-achievement.html

• Now’s a Good Time to Reward Employees– http://www.inc.com/michael-alter/nows-a-good-time-to-

reward-employees.html

• How to Keep a Superstar Employee Happy– http://www.inc.com/jeff-haden/how-to-keep-a-superstar-

when-you-have-little-to-offer.html


ResourcesHR Daily Adviser

• 10 Incentive Design Mistakes– http://compensationdailyadvisor.blr.com/?

p=2001?source=CDA&effort=11 – http://compensationdailyadvisor.blr.com/

2012/01/10-dogooder-acts-that-drive-good-salespeople-to-the-competition/#


Resources100 Best

• FORTUNE (magazine) 100 Best Companies to Work For– The 100 Best issue comes out every year late

January/early February and includes select data on each company and an in depth story on the #1 company and at least one other that made the list

• http://money.cnn.com/magazines/fortune/best-companies/


ResourcesHR Magazine

• Fill Those Unpopular Shifts, 4/2009• Money Matters in the Hiring Process, 9/2009• Salaries Looking Up, 10/2009• Treating Employee Like Customers, 10/2009• At Work in 2020, 1/2010• No Good Deed Goes Unrewarded, 1/2010• May the Sales Force Be with You, 9/2010• All For Incentives, Incentives For All, 1/2011• Benefits Choices: Educating the Consumer, 3/2011• Make a ‘Deal’,1/2012


ResourcesBooks

• Mindset: The New Psychology of Success, Ballantine Books, 2006, by Carol Dweck

• The Progress Principle: Using Small Wins to Ignite Joy, Engagement and Creativity at Work, Harvard Business Review Press, 2011, by Teresa Amabile

• The 5 Languages of Appreciation in the Workplace: Empowering Organizations by Encouraging People, by Gary Chapman & Paul White, Northfield Publishing, 2011


ResourcesBooks

• 1001 Ways to Reward Employees, Workman Pub., 2005, by Bob Nelson

• Instant Influence, How to Get Anyone to Do Anything – FAST, Little Brown, 2011, by Michael Pantalon

• Investing in What Matters: Linking Employees to Business Outcomes, SHRM, 2009, by Scott Mondore and Shane Douthitt

When you’re ready to grow, I’m the one to know. Total Rewards and Motivation: Mistakes, Myths...

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