Total Reward Systems

1
Total Reward Systems

• Ideas for Today and Tomorrow

2
Vitae

• CLIFFORD 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 Distributions
  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     cole2877_at_bellsouth.netFax 
         864.836.4935ALIGNING PEOPLE FOR RESULTS

3
Have you HUGGED your kid today?
The most important Reward component!

• Why not?
• How are you spending your time?
• What could be more fun?

4
Where are we going today?

• Due North?

5
Where are we really going today?

• Overview of a Total Reward System
• Specifics on
• Building a sound cash compensation program
• Focus on cash incentives

6
Why Do We Reward People?
7
There are not enough qualified kids!
8
What works in Reward Systems?

• CERTAINLY NOT A PROGRAM OF THE DAY!

X
9
Rewards for Performance
Total Direct Compensation
Benefits
Health Welfare Retirement - 401(k) Time off
Base salary Rewards Recognition Annual bonus
Organization climate Leadership Team
spirit Tools to perform job Work/life balance
Business knowledge Career development Learning
experiences Performance management Training High
potential succession
Learning and Development
Work Environment
10
Total Direct Compensation
Focus on long-term strategic member value creation
Needed To Win
Incentive to focus on short-term tactical
objectives
Winning team
Immediate, cash / non-cash, on-the-spot
recognition
Performance-Based Annual Bonus
Rewards Recognition
Market competitive salary level
Needed To Play
Base Salary
11
FAB Work Environment
FIERCE - is at the heart of our work
environment and our success.
Fighters 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.
12
FAB Work Environment
FIERCE - is at the heart of our work
environment and our success.
Relationships Build relationships that improve
the quality of peoples lives and their
environment. Communications Develop a fair and
equitable culture that respects everyones ideas,
opinions and experiences. Education Take
personal ownership and accountability for
building know how, skills and ability.
13
Learning and Development
People Equipped with proper tools to develop
their leadership potential
Teamwork Working together to achieve common
business goals


Company Success
Assessment High Potential Succession Planning
Personal Development Educational Assistance
Program
14
A bit of Rewards History

• The 40s/50s        
• A hungry worker is the best worker
• Not much in the way of rewards
• The 60s/70s               
• started to shake loose
• Benefits too
• Tricky Dick and Wage/Price controls
• The 80s          
• increases made for bigger pieces of the pie
• and benefits kept rolling
•  The 90s to Tomorrow   
• The slowed down
• Benefit cost shifting in vogue
• Benefits more costly

15
A word about Rewards Philosophy!

• Total Direct Compensation
• Our focus for todays session!
• Benefits
• Learning Development
• Work Environment

16
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?

17
Cash Compensation Components

• Total Cash
• Base
• Variable (Bonus and/or other cash incentives)

18
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

19
How do you look for example?

• XXXS 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

20
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

21
(No Transcript)
22
What do you do?

• Create new pay policy
• Develop strategy for moving to it
• Develop strategy for rewarding your
• Stars
• High Pots
• At risk

23
(No Transcript)
24
What do you do administratively??

• Pool for
• Stars
• High Potentials
• At Risk
• Performance Increases
• Promotion/Demotion Treatment

25
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

26
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,

27
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. 

28
Incentive Measures (Major Categories)

• Sales Volume
• Profit
• Return On Equity or Sales or Investment
• Products
• Procurement
• Distribution

29
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

30
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

31
Incentive Measures (Procurement)

• Performance to Budget Total Department
• Merchandising allowances
• Marketing revenue
• Gross Profit and/or
• Inventory Turns
• Sales Growth
• Product cost

32
Measurement Units

• Percent of Quota
• Dollar Amount
• Number Achieved
• Points
• Subjective Evaluation
• Percent

33
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.

34
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

35
Incentive Linkages

• Internal
• External
• Sales
• Distribution
• Finance
• Procurement
• FAB
• Member

36
Have you HUGGED your kid today?
The most important Reward component!

• Why not?
• How are you spending your time?
• What could be more fun?