Ce diaporama a bien été signalé.
Nous utilisons votre profil LinkedIn et vos données d’activité pour vous proposer des publicités personnalisées et pertinentes. Vous pouvez changer vos préférences de publicités à tout moment.

Pay, Performance and Productivity

22 vues

Publié le

As a prudent enterprise leader, you want your employees’ compensation tied to their performance. However, to accomplish that you must be able to distinguish the results your employees’ are producing from those driven by other factors (such as market conditions or shareholder investment).

So how do you do that? How do you ensure that you are rewarding performance and productivity actually attributable to your people?

This broadcast will address these and other important “pay for performance” questions. you will learn what high-performance companies do to ensure they are rewarding the right results. If you have been unsuccessful in your attempt to build such a plan for your business, you will not want to miss this event.

VisionLink has been building rewards strategies for over 20 years. Now we want to share our secrets with you. Join us to learn the four steps to effective pay design and why each is essential.

Publié dans : Direction et management
  • Soyez le premier à commenter

Pay, Performance and Productivity

  1. 1. Pay, Performance and Productivity
  2. 2. 22 Today’s Presenter: Ken Gibson SeniorVice President (949) 265-5703 kgibson@vladvisors.com 7700 Irvine Center Drive, Suite 930  Irvine, CA 92618  949-852-2288 www.VLadvisors.com  www.PhantomStockOnline.com
  3. 3. 33 We’re happy to provide a copy of today’s slides. To open or close the control panel: Click the red arrow For questions during today’s presentation: Use the question area on your control panel Webinar Q: Are the slides available? A: Yes, more info will be provided at the end
  4. 4. 44 Take advantage of one-hour consulting call with a VisionLink principal at no charge. Indicate interest on final survey Consultation Offer & Survey Request a copy of our slides and complimentary consultation We value your input.
  5. 5. 55 Post Webinar Intro 5 Minutes:  Who We Are  What We Do  How We Do It
  6. 6. 66 7700 Irvine Center Dr., Ste. 930 Irvine, CA 92618 (888) 703 0080 www.vladvisors.com www.phantomstockonline.com www.bonusright.com  Headquartered in Irvine, CA  Founded in 1996  Over 450 Clients throughout North America
  7. 7. VisionLink’s Focus: Help Business Leaders Build and Sustain a High Performance Culture Accelerate performance through pay strategies that transform employees into growth partners.
  8. 8. If you do that… • Quality of talent will improve. • Employee engagement will expand. • Performance will be magnified. • Business growth will be accelerated. • Shareholder value will increase.
  9. 9. 99 CEO Conversation “How would you describe the culture you will need to accomplish your growth goals?”  Outstanding products  Compelling value proposition  Fully engaged employees  Premier talent  Consistent performance  Ownership of results
  10. 10. 1010 Response “ Sounds like what you want is a high performance culture. Is that a fair summary of what you said?” “Yes, that about sums it up.”
  11. 11. 1111 What is a High Performance Culture?  Clear Roles  Strategic Focus  Consistent Execution  Sustained Success Pattern  Regular Wins  High Confidence
  12. 12. 1212 Role of Rewards
  13. 13. 1313 Key Questions About Compensation Does your pay strategy--  …help or hinder the company’s business model?  …clarify or confuse roles and expectations?  …reward outcomes or behaviors?  …encourage stewardship or entitlement?  …reinforce or undermine a high performance culture?
  14. 14. 1414 Key Questions About Compensation To what extent should compensation--  …be tied to employee, team and company performance?  …be guaranteed as opposed to variable?  …be measured for ROI  …reward short-term vs long-term performance?  …impact employee engagement?
  15. 15. 1515 Therefore, What? Pay needs to become an asset instead of a liability in your pursuit of a high performance culture. So how do you accomplish that?
  16. 16. 1616 4 Keys to Creating a Performance Pay Strategy 1. Respect the Relationship Between Pay and Motivation 2. Commit to a Wealth Multiplier Rewards Philosophy 3. Share Value instead of Paying Incentives 4. Measure and Track Productivity ProfitProfit
  17. 17. 1717 1. Pay & Motivation
  18. 18. 1818 Drive “Pay people adequately and fairly, get the issue of money off the table, then give them lots of autonomy.”
  19. 19. 1919 Drive Autonomy Mastery Purpose
  20. 20. 2020 Total Rewards Approach Compelling Future PositiveWork Environment Opportunities for Personal and Professional Growth Financial Rewards
  21. 21. 2121 Total Rewards Approach Compelling Future Purpose PositiveWork Environment Autonomy Opportunities for Personal and Professional Growth Mastery & Purpose Financial Rewards Partnership
  22. 22. 2222 With Pay, Start with the Employee View Everything you do in your organization gives your employees clues about two things: 1. What you value 2. Where they fit
  23. 23. 2323 Clue Taken from Pay Strategy “Does my employer understand why I care about my compensation?”
  24. 24. 2424 Link Company & Employee Goals Financial “Hierarchy of Needs” Cash Flow & Living Standard Risk Protection Retirement Planning Value Sharing Wealth Accumulation Qualified & Executive Retirement Plans Comprehensive, Flexible Benefits Plan Short & Long-Term Incentive Plans Salary & Bonus Wealth Multiplier Philosophy Clear Pay Philosophy 1 2 3 4 5
  25. 25. 2525 6 Reasons Employees Care About Pay Personal 1. Lifestyle & Wealth Accumulation 2. Career Measurement 3. Contribution Ambitions Business 4. Roles, Expectations & Priorities 5. Partnership 6. Continuity & Fairness
  26. 26. 2626 2. Wealth Multiplier Philosophy
  27. 27. 2727 Old School Defensive Wealth Creation Wealth Multiplier 27 Pay Philosophy Evolution
  28. 28. 2828 Wealth Multiplier Let’s Secure Growth Partners Philosophy Share economic value. "If you create financial value, you will participate in a generous portion of it." Cost or Investment? Compensation is allocated to produce the highest possible return for both shareholders and contributing employees. Salaries We use data for benchmarking, but our pay philosophy drives where we want to be vis a vis market pay. Bonuses Bonuses (value sharing plans) are tied to crucial metrics, recognize personal contributions, and are not capped. Long-term Incentives (quasi-equity) Viewed by top performers as the most meaningful part of their rewards program. Results If you want to be able to attract and retain the best talent in your industry and have them adopt a stewardship mindset regarding shareholder goals, this is your system.
  29. 29. 2929 Wealth Multipliers vs. Wealth Creators Wealth Creators  Profitability focus  Recruit to skills and experience  Pay is an expense to be managed  Salaries and total pay should be “at market”  “Pay-for- performance” Wealth Multipliers  Accelerate value creation  Recruit premier talent that fits performance framework  Pay is an investment that should produce a growing return  Market pay for bench marking but pay philosophy drive comp strategy  Sharing value with value creators
  30. 30. 3030 The Value of Profit Wealth Multiplier Profits Future Business Employees Shareholders
  31. 31. 3131 A Sense of Partnership Translates to a Growth Multiple The Value of Profit Wealth Multiplier Profits ShareholdersFuture Business Employees
  32. 32. 3232 Case Study
  33. 33. 3333 Keith Williams  Assumed leadership of UL in 2005  Company carrying considerable debt  Losing market share  Low employee morale  UL had become bureaucratic and “siloed”
  34. 34. 3434 Core Changes Shift from “Incentives” to “Value Sharing”  Took away local measurements driving management incentive plans—all paid on same metrics  “We live together and we die together”  Aligned everyone behind company success  “I call it ‘pay the company first.’ ”
  35. 35. 3535 Pay the Company First “Basically, up to the company’s operating profit target, all of the profits go to the company; and only after that target is met, do we start funding the incentive pool.” Example: If UL’s target is $80 million--  100% of first $80 in profit goes to company  The next $20 million goes to the incentive pool  From there on, 50/50 between company & incentive pool
  36. 36. 3636 Pay the Company First Once value creation is defined, compensation can follow a formula for sharing value in a way that aligns key producers with the company’s business plan and priorities.
  37. 37. 3737 3. Share Value Instead of Paying Incentives
  38. 38. 3838 Concept of Value Sharing  “We are part of a team. If we all work together we will generate greater success. That success will be shared with everyone if the company succeeds.”  When structured appropriately, value sharing programs are perceived as a partnership.
  39. 39. 3939 Results, not Methods "You cannot hold people responsible for results if you supervise their methods.“ (Stephen R. Covey) 39
  40. 40. 4040 The Right Premise Reward employees for achieving the shareholders’ most important financial results and treat them as growth partners.
  41. 41. 4141 Shareholder’s Most Important Result Sustainable and growing profitability 41
  42. 42. 4242 Central Metric (for value sharing) Focus on One of These:  Profit  Increase in Profits (% or $) (Sometimes: Revenue Growth) 42
  43. 43. 4343 Balanced Value Sharing "Peter Drucker once wrote that the manager’s job is to keep his nose to the grindstone while lifting his eyes to the hills. He meant that every business has to operate in two modes at the same time: producing results today and preparing for tomorrow.” (Ken Navarro, Strategy + Business)
  44. 44. 4444 1 Philosophy, 2 Rewards Periods 1. Short-Term Performance (12 months or less) 2. Long-Term Performance (over 12 months)
  45. 45. 4545 Performance Incentives (Value Sharing)
  46. 46. 4646 Basic Construct  All employees are told they will share in the creation of company value  Every employee has a defined incentive opportunity aligned to forecasted company results  Base – Minimum performance  Target - Forecast  Superior - Overachievement
  47. 47. 4747 Value Sharing Calculation  Actual incentive can be tied to actual company performance.  If company results are halfway between Base and Target. Incentives will be calculated halfway between Base and Target  Actual Results = $47,500,000  Calculated Incentive = $5,625
  48. 48. 4848 Plan Weighting/Allocation  Pool allocation to plan participants contingent on:  Company Performance – Employees should have all or a majority portion of their bonus based on company performance  Org Unit Performance – A portion of an employee’s bonus can be allocated based on department, location, division, or business unit
  49. 49. 4949 Plan Weighting/Allocation  Make overall company performance the primary objective (e.g. ~60 - 100%)  Organizational unit success should be secondary objective (e.g. ~10-40%)  Weight the overall incentive:
  50. 50. 5050 Individual Performance  Trend is to de-emphasize personal performance  Performance Management  Managers more likely to be honest about performance if incentives are not directly correlated to performance rating  If performance is deemed “unacceptable” discretion can be exercised to eliminate incentive payment
  51. 51. 5151 Growth Incentives (Value Sharing)
  52. 52. 5252 Select the Right Plan Type Stock Option Performance Shares Restricted Stock Phantom Stock Option Performance Phantom Stock Phantom Stock Profit Pool Performance Unit Strategic Deferred Compensation
  53. 53. 5353 Grant Equity or Not Equity? Full Value or Appreciation Only? Yes Appreciation Stock Option Full Value Performance Based? Yes Performance Shares No Restricted Stock No Reward for Value Increase or Financial Performance? Value Increase Full Value or Appreciation? Appreciation Phantom Stock Option Full Value Performance Based? Yes Performance Phantom Stock No Phantom Stock Financial Performance Appreciation- Performance Based or Employee Directed? Performance Based Reward for Profit/Cash Flow or Other Metrics? Profits Allocation or Objectives Based? Allocation Profit Pool ObjectivesOther Metrics Performance Unit Employee Directed Strategic Deferred Compensation
  54. 54. 5454 Rules of Thumb  Senior Executives • Short-term--50% • Long-term--50%  Management • Short-term--60% • Long-term--40%  Rank and File Employees • Short-term--75-90% • Long-term--10-25%
  55. 55. 5555 4. Calculate Productivity Profit
  56. 56. 5656 Determining Value Creation Focus on Productivity Profit
  57. 57. 5757 Value Creation Example: Item Amount Capital Account $20,000,000 Cost of Capital 12% Capital Charge $2,400,000 Operating Income $10,000,000 Productivity Profit $7,600,000 Total Rewards Investment $25,000,000 ROTRI™ 30.4% (ROTRI™ = Productivity Profit/Total Rewards Investment)
  58. 58. 5858 ROTRI™ Example: Item Figure Capital Account $20,000,000 Cost of Capital 12% Capital Charge $2,400,000 Operating Income $10,000,000 *Productivity Profit $7,600,000 Total Rewards Investment $25,000,000 ROTRI™ (Return onTotal Rewards Investment) 30.4% (ROTRI™ = Productivity Profit/Total Rewards Investment) *Variable Pay Plans (Value Sharing) are financed from Productivity Profit
  59. 59. 5959 Build Accountability into Your Pay Design Accountable Pay
  60. 60. 6060 4 Keys to Creating a Performance Pay Strategy 1. Respect the Relationship Between Pay and Motivation 2. Commit to a Wealth Multiplier Rewards Philosophy 3. Share Value instead of Paying Incentives 4. Measure and Track Productivity ProfitProfit
  61. 61. 6161 www.BonusRight.com www.bonusright.com
  62. 62. 6262  New SaaS tool  Build and manage your bonus plan online.  Indicate on survey if you would like to schedule a demo.
  63. 63. 6363 Take advantage of one-hour consulting call with a VisionLink principal at no charge. Indicate interest on final survey Request Consultation & Take Survey Request a copy of our slides, report, complimentary consultation and BonusRight demo. We value your input.
  64. 64. 6464 www.phantomstockonline.com www.vladvisors.com Subscribe to our blog!
  65. 65. 6565 The Ultimate Guide: THE CEO’S ROLE IN BUILDING A PAY STRATEGY Request your copy on the final survey
  66. 66. 6666 Q&A
  67. 67. 6767 Today’s Presenter: Ken Gibson SeniorVice President (949) 265-5703 kgibson@vladvisors.com 7700 Irvine Center Drive, Suite 930  Irvine, CA 92618  949-852-2288 www.VLadvisors.com  www.PhantomStockOnline.com  www.BonusRight.com ThankYou!
  68. 68. 6868 Post Webinar Intro 5 Minutes:  Who We Are  What We Do  How We Do It
  69. 69. 6969
  70. 70. 7070
  71. 71. 7171 7700 Irvine Center Dr., Ste. 930 Irvine, CA 92618 (888) 703 0080 www.vladvisors.com www.phantomstockonline.com www.bonusright.com

×