Linking Rewards to Strategy

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Linking Rewards to Strategy

• By R. Henry Migliore

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Tying Appraisals to Rewards

• How we usually reward people
• What is wrong with present approach
• Poor targets
• Emphasis on the form
• Too complicated
• Lack of training
• Understand basics
• Potential if done correctly

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Strategic Planning Process

• Define Strategic Plan
• Show where the reward fits
• Planning must have product and process
• Planning must be done right for evaluation,
  performance appraisal, and rewards to work

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Strategic Planning Process

• Performance appraisal and rewards usually come
  last
• Organization structure impact on success and
  performance measurement

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Strategic Long-Range Planning Process
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Theory Behind Reward Systems

• Higher level needs/intrinsic
• Pay for performance/extrinsic
• Must have both
• Emphasis on individual and team
• Regular reviews
• Athletic Team
• Business Team

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Reward Opportunities
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Performance Appraisal Form
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Reward Opportunities

• Athletic team
• Baseball
• win 20 games
• Go to World Series
• Football
• rush 1000 yards
• Go to Super Bowl
• Business Unit
• Sales
• Meet marketing objectives and ROI best in last 5
  years
• Manufacturing
• Increase production 15 and ROI best in last 5
  years

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• Reward as a team player
• Golden handcuffs
• Bonus paid over longer term
• Share equally?
• Boss Evaluation

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Benefits of Reward Systems

• The organization will determine where it is going
• It will be able to identify opportunities and
  risk
• All organization members will be forced into a
  consensus as the direction for the organization
  is identified
• As managers have the opportunity to have input
  into the planning process, they will experience a
  surge of excitement

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Benefits of Reward Systems

• Communication in all directions will be instantly
  improved
• Non-productive persons will fall by the wayside
• Increases should be expected in all measurable
  areas profitability, productivity, and so on
• Within a year, a personal training and
  development plan will evolve for all persons in
  the organization

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Rules for Compensation

• Salary administration should be centered around
  accountability, not activity
• Write job objectives instead of job descriptions
• People who are committed to your organization are
  worth more than people who are not committed to
  it
• People who feel they are underpaid will behave
  like unpaid employees

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Rules for Compensation

• People who arent meeting all of their regular,
  ongoing, and recurring responsibilities should
  not be given merit increases
• Bonuses should be paid only for beating an
  indicator
• Fair pay does not motivate, but unfair pay
  demotivates
• The higher the person is in the organization, the
  more you pay for strategies and creative thinking

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Opportunities For Any Organization

• Strategic Planning emphasis for Consulting
  Division
• Information systems supports planning system
• Provides performance appraisal/reward service
• Information system supports performance appraisal
• Strengthens SERVICE to clients
• Cost leadership, focus differentiation

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Discussion