Reward Systems

1
Reward Systems

• Aaron Dobbs
• Shola Ewulo
• Howard Graber
• Mirco Migliari

2
Reward System Categories

• Compensation
• Base pay adjustments
• Short Long term Incentives
• Benefits
• Health / Retirement plans
• Work / Life programs
• Careers
• Continuing Education
• Career Incentives

3
Performance Based Pay Systems

• Individual Performance
• Merit Pay
• Performance Bonus
• Group Performance
• Gainsharing
• Team Rewards
• Organizational Performance
• Profit Sharing
• Stock Ownership / Options

4
Pay for Performance

• Pros
• Fair
• Motivating
• Aligned with strategy roles
• Tool to improve company performance
• Cons
• Misleading indicators
• Short term emphases
• Employee resistance
• Potential complexity / confusion

5
Considerations

• What should companies take into account when
  evaluating a reward system?
• Pay for skills that apply to current business
  goals
• Assign reward resources throughout the workforce
• Reward high performers to keep valuable talent
• Control fixed salary and benefit costs, use
  variable pay
• Weigh program elements for equitable
  considerations
• Offer reward packages that meet workforce needs

6
Straw Poll (of the class)

• Which would the class prefer to receive
• Guaranteed Salary Adjustments
• 3 base pay annually
• Bonuses
• Individual Performance Based
• Up to 10 of base pay
• Team Performance Based
• Up to 10 of base pay

7
Case Studies

• Bad Practices
• Low Collaboration
• Misaligned Reward Strategy
• Ineffective gathering and use of data
• Disparate performance mgmt practices
• Best Practices
• Expanded training
• Appropriate allocation of compensation
• Identify key competencies
• Identify and reward high potential employees

8
Trends

• Where is all this going?
• More use of performance based compensation
• New types of bonus plans will be developed
• Increasing variable pay schemes
• Increase of incentive plan coverage

9
Conclusions

• Under optimal conditions plans improve
• Business performance
• Employee commitment and satisfaction
• Fit is essential
• Company organizational structure
• Human Resources strategy
• Involvement and commitment is key
• Review and revitalize regularly

10
Works Cited

• (9 May 2002). Bonus and Incentive Plans.
  Retrieved 26 February 2005 from CIPD Web site
  http//www.cipd.co.uk/NR/rdonlyres/7D1EB757-F709-
  4A07-9027-z33DDD1C5FFA/0/bonus01.pdf
• Gross, S.E., and Nalbantian, H.R. (2002). Looking
  at Rewards Holistically. Retrieved 26 February
  2005 from Mercer Human Resources Consulting Web
  site http//www.mercerhr.com/attachment.dyn?idCon
  tent1054790idFile145025
• (12 September 2003). Payment for performance,
  and capital sins. Retrieved 26 February 2005 from
  Mercer Human Resources Consulting Web site
  http//www.mercerhr.com/knowledgecenter/reportsumm
  ary.jhtml?idContent1109675
• (May 2002). Reward Systems Surveys Shed Light on
  Chasm Between Theory and Practice. IOMAs
  Performance Report. Retrieved 26 February 2005
  from Business Source Premier.
• (2005). Services Workforce compensation.
  Retrieved 26 February 2005 from Mercer Human
  Resources Consulting Web site http//www.mercerhr
  .com/summary.jhtml/dynamic/idContent/1046515
• (14 September 2004). Striking the right balance
  Total rewards that work. Retrieved 26 February
  2005 from Mercer Human Resources Consulting Web
  site http//www.mercerhr.com/knowledgecenter/repo
  rtsummary.jhtml?idContent1138560