1.
Winning in 2013
Alternative Compensation Strategies to Boost Your Competitive Edge
Presented by: Lance Berger
May 16, 2012

2.
Lance Berger
Lance Berger is Managing Partner of Lance A. Berger & Associates, Ltd., a
management consulting firm he founded in 1991. His firm provides advisory
services in the areas of talent management, compensation, and change
management.
Lance has written and edited eight books including The Compensation
Handbook. His work has been selected as one of the top 30 business books
by Executive Book Summaries.
Lance previously held a position at the Hay Group, Inc., where he was
General Partner in charge of the firm’s worldwide compensation business
and coordinator of all strategy for human resources practices.
He has appeared on CNN, been quoted in The Wall Street Journal, and is
listed in several Who's Who publications. He also has been a speaker for
the United Nations, The Conference Board, Human Capital Institute,
American Management Association, Wharton School, WorldatWork®,
Linkage, United States Chamber of Commerce, Society for Human
Resources Management, American Society for Training and Development,
and numerous trade associations.
Lance A. Berger & Associates Ltd. May 16, 2012

3.
Winning in 2013
Alternative Compensation Strategies to Boost Your Competitive Edge
Presented by: Lance Berger
May 16, 2012
Lance A. Berger & Associates Ltd. May 16, 2012

4.
Learning Points
Business Strategy
Talent Management
Compensation
Lance A. Berger & Associates Ltd. May 16, 2012

5.
Drivers of Business Success
• Growth rate
• Winning Strategies
• Risk profile
• Target culture
Lance A. Berger & Associates Ltd. May 16, 2012

6.
Targeted Growth Rates
• Hyper growth
• Fast growth
• Growth
• Moderate growth
Lance A. Berger & Associates Ltd. May 16, 2012

7.
Strategic Plan
A plan created today whose outcomes will occur
sometime in the future
Lance A. Berger & Associates Ltd. May 16, 2012

8.
Winning Strategies
Risk
Current New
Strategies Products/
Products/
Services Services
Risk
New Braver Bolder
Markets
Current
Better Broader
Markets
Lance A. Berger & Associates Ltd. May 16, 2012

9.
Risk Profile
Risk
Current New
Strategies
Products/ Products/
Services Services
Risk New Architect Innovator
Markets Braver Bolder
Level 2 Risk Level 1 Risk
Current Engineer Designer
Markets Better Broader
Level 4 Risk Level 3 Risk
Lance A. Berger & Associates Ltd. May 16, 2012

10.
Culture
• Unspoken
conventions
• Stated rules
• Observable reality
Lance A. Berger & Associates Ltd. May 16, 2012

11.
Target Culture
• Risk craving
• Change driving
16% • Creative
Innovator • Opportunistic
• Venturesome
14% • Highly adaptive
• Highly participative and collaborative
12%
• Risk seeking
• Change seeking
10% Architect • Innovative
• Progressive
8% • Adaptive
• Participative and collaborative
6% • Risk oriented
Designer • Change responsive
4% • Pragmatic
• Efficient
•
2% •
Flexible
Directive, participative, and collaborative
Engineer
0% • Risk accepting
• Change cautious
Strategic Orientation • Highly pragmatic
• Highly efficient
• Flexible
• Directive, participative, and collaborative
Lance A. Berger & Associates Ltd. May 16, 2012

12.
Learning Points
Business Strategy
Talent Management
Compensation
Lance A. Berger & Associates Ltd. May 16, 2012

13.
Talent Management
30%
Innovator
25%
• Creed
Architect
20%
• Strategy
15%
Designer
• System
10%
Engineer
5%
0%
Strategic Orientation
Lance A. Berger & Associates Ltd. May 16, 2012

14.
Talent Management Strategy
Investment Within Culture Culture
Superkeepers
• Innovator
•
Very High
Architect
• Designer
Moderate High
• Engineer
Solid Citizens Key Position Keepers
Lance A. Berger & Associates Ltd. May 16, 2012

15.
Talent Management System
Education
Training Development
Culture
Termination Compensation
Assignments Selection
Lance A. Berger & Associates Ltd. May 16, 2012

16.
Learning Points
Business Strategy
Talent Management
Compensation
Lance A. Berger & Associates Ltd. May 16, 2012

17.
Compensation Strategy
Alignment of Compensation Elements
Affordability
Pay Markets Hyper grow
Fast grow
Competitive
Level Grow
Moderate Grow
Mix
Allocation
by talent
category
Strategic Orientation
Lance A. Berger & Associates Ltd. May 16, 2012

18.
Pay Strategy Components
80
Better
70
Broader
60
Braver
50 Base
Bolder
40 Short Term Incentives
30 Long Term Incentives
20
10
0
Hyper Fast Grow Moderate
Grow Grow Grow
Innovator Architect Designer Engineer
Lance A. Berger & Associates Ltd. May 16, 2012

19.
Keys to Compensation Strategies
80
• Affordability 70
• Annual funding 60
• Long term 50 Base
funding 40 Short Term Incentives
30 Long Term Incentives
20
10
0
Hyper Fast Grow Moderate
Grow Grow Grow
Lance A. Berger & Associates Ltd. May 16, 2012

20.
Strategic Compensation Transitions
Future Hyper Fast & Moderate
Orientation
Current Grow Grow Grow
Orientation
Tweak
Hyper Compensation
Same Strategy Strategy Won’t Work
Grow
Tweak Tweak
Fast & Compensation Same Strategy Compensation
Strategy Strategy
Grow
Tweak
Compensation
Moderate Won’t Work
Same Strategy
Strategy
Grow
Lance A. Berger & Associates Ltd. May 16, 2012

21.
Variable Pay
Top Culture Driving Programs
Culture/ Variable Pay
Innovator Architect Designer Engineer
Profit Sharing X X
Group X X
Incentives
Individual X X X X
Incentives
Long Term X X X
Combination X X X X
Lance A. Berger & Associates Ltd. May 16, 2012

22.
Merit Pay
• Purpose
• Performance metrics
• Market driven
Lance A. Berger & Associates Ltd. May 16, 2012

23.
Merit Pay: Historical Reality
• Poor performance
standards/system
• Inability to differentiate
performance levels between
people
• Unwillingness/inability of boss
to apply standards
• Low trust in organization and
leadership
• Merit amounts below true
incentive thresholds
Lance A. Berger & Associates Ltd. May 16, 2012

24.
Alternative to Merit Pay
• Separate the market pay adjustment
from the performance adjustment
• Introduce achievement awards
Lance A. Berger & Associates Ltd. May 16, 2012

25.
Alternative to Merit Pay
• All fixed salary increases
based on “meeting
• CR <80% =5.0% expectations”
• CR>80% & <90%=3.0% • Salary progressions based on
• CR>90% & <100% =2.0% range position
• CR>100% & <110% =1.0% • Achievement pool reserved for
• CR>110%=0% “true” top 20%
• Meaningful achievement
increases (10% +)
Lance A. Berger & Associates Ltd. May 16, 2012

26.
Recommendations
• Construct a clear compensation strategy based on your
business and talent management strategies
• Determine affordability level of fixed base salaries
• Determine the competitive level of base pay in your pay
markets you can afford
• Position compa ratios for solid citizen groups 5% below
affordable midpoints
Lance A. Berger & Associates Ltd. May 16, 2012

27.
Recommendations
• Reward all solid citizens (+) based on compa ratio
• Eliminate fixed merit increases-shift to variable lump sum
• Introduce annual funded incentive or bonus programs
• Introduce funded long term incentives
Lance A. Berger & Associates Ltd. May 16, 2012

28.
Wrap-Up
80
70
Current New Products/
60
Strategies Products/ Services Services
50 Base
40 Short Term Incentives
New Architect Innovator Bolder 30 Long Term Incentives
Markets Braver Level 1 Risk 20
Level 2 Risk
10
0
Hyper Fast Moderate Grow
Current Engineer Designer
Grow Grow Grow
Markets Better Broader
Level 4 Risk Level 3 Risk
Education
Training Development
Culture
Superkeeper™ Termination Compensation
Assignments Selection
Solid Citizens Key Position Keepers
Lance A. Berger & Associates Ltd. May 16, 2012

29.
Questions?
Lance A. Berger
Managing Partner
Lance A. Berger & Associates, Ltd.
17 Courtney Circle
Bryn Mawr, Pa. 19010
610-525-5332
lberger@voicenet.com
www.lanceberger.com
Lance A. Berger & Associates Ltd. May 16, 2012