Ericsson Compensation

1
Ericsson Compensation Benefit???????
2002?9?18?
2
Ericsson Compensation Benefit???????

• CB vs Company strategy HR management
• ?????????????????
• CB system establishment, competitiveness,
  impact to
• company finance
• ???????????????????????

3
What are Ericssons business measurements??????
??????(?????????????,???????????????????,???????
???????)
4
The business measurements decide the cB
strategy ??????????????????(????????????????
????)
5
Why HR need to look at money????????????

• all HR activities can be put in money term
• ???????????????????
• No financial mind-set analysis, HR is blind.
• ?????????,???????????

6

• Net sales per employee
• ??????
• Net sales ????
• total no. of employees ????

7
Employee cost vs OPEX ????/????

• OPEX run rate/total turnover
• ????/????
• Employee cost/OPEX run rate
• ????/????

8
How to build HR management into business
process????HRM????????
9
Key elements of HR operation???????????
10
Motivation characteristics of Successful
Companies ???????????

• support company strategy and development
• ?????????
• fully align with company goals
• ???????
• each motivation action has its specific
  objective
• ????????????????
• flexibility, fit into individuals desires
• ????

11
MOTIVATION????
12
Compensation Benefit????
13
????,?????????
14
CB Program Management Cycle ????????
Organizations Strategy ????
Human Resources Strategy ??????
C B Strategy ????
Program Design ????
Program Evaluation ????
Administration Implementation ????
Communication Training ?????
15
Factors to be considered in CB Strategy ?????????
16
CB Objectives ????
Employees ??
Company ??

• Attract ??
• Retain ??
• Motivate ??

Achieve Objectives ??????
17
Key Elements of CB ?????????

• IPE (International Position Evaluation) System
  ????????
• CB Package ????
• Performance Management ????

18
IPE - International Position Evaluation IPE -
????????
- A Human Resource tool which measures the
impact and contribution of each position
?????????,??????????????

• Salary survey to benchmark competitiveness
  ????????????
• Establish salary level and structure ???????????
• Facilitate recruitment ????
• Facilitate career planning ?????????
• Promotion and job rotation ???????????????
• Organization development ????????????

19
The Four IPE Factors IPE ?????
Factor 1 Impact ??? Factor 2 Communication
?? Factor 3 Innovation ???? Factor 4
Knowledge ????
20
Factor 1 Impact ???
Contribution ??

• Size of organization ????
• Influence on its area of responsibility /
  operation ??????????

Impact???
Organization ????
21
Factor 2 Communication ??
Frame ??(?????)
Positions responsibility for communications
both within and outside the organization ????????
??????
Communications ??
22
Factor 3 Innovation ????

• Identify, develop and make
• improvement to new ideas, techniques,
• procedures, services, or products
• ????????????????
• ????????

Complexity ???
Innovation ??
23
Factor 4 Knowledge ????

• Knowledge required in job to
• accomplish objective and create value
• ????????????????

Teams ??
Knowledge ????
Breadth??
24
Steps to set IPE System ??IPE???
25
CB Package ????
competitive in the market to attract, retain and
motivate ???????????????????
Compensation??
Benefits ??
Fixed Salary ????

• Social Insurance ????
• Housing Fund ?????
• Supl. Housing Fund ??????
• Sports allowance ????
• Leave holiday ??
• LifeMedical Insurance???????
• Overseas Travel Insurance ??????
• Transportation ??
• Meal allowance ??
• Others - welfare, rewarding ??...

• Base Salary ????
• 13 Months Salary ????
• Overtime Payment????
• Travel Allowance ????

Variable Pay ????

• Short Term incentive ??????
• Sales Incentive ????
• Performance bonus ????

Stock Option ????
26
CB Package Designing Principles ??????

• Externally competitive ?????
• Internally equitable ?????
• Cost Affordable Appropriate ?????????
• Understandable ?????????
• Efficient to administer ????

27
Externally Competitive ?????

• Select competitors. ??????
• Select the appropriate type of survey
  ?????????
• Determine current market position
  ???????????
• Set target on Market positioning ???????? (e.g.
  25P, 50P, 75P or 90P)
• Adjust CB policies accordingly ????????

28
Who are our reference? ???????
XX???????
29
Example1Market Survey Data Analysis
??1????????
- Market Movement????
Overall Variance ?? 2002 April fixed salary is 3
and 2 higher than 2001 April and 2001 October
respectively. 2002?4??????2001?4??10??????3?2?
At IPE 60 Level 2002 April is 15 higher than
2001 April and 5 more than 2001
October. IPE60???,2002?4??????2001?4??10??????15?
5?
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Example2Market Survey Data Analysis
??2????????
- One Companys position in the market ?????????
31
Internally Equitable ?????
Internal equity is reflected in the following
areas ????????????

• Base Pay - Systematic Salary Structure ???? --
  ???????
• Variable Pay - based on Co.s achievement. ????
  -- ???????
• Benefits - secure program for every employee ????
  - ?????????
• Stock Options - to retain motivate key
  contributors ???? -- ?????????
• Performance Management - Standard measurements
  ???? -- ???????

32
Cost Affordable Appropriate ?????????
- Financial Analysis ?????

• CB Cost Forecast - decides if its affordable
• ?????? -- ???????????
• OPEX Forecast - decides if its appropriate and
  acceptable by Management
• ????????????(OPEX)??? -- ????????,??
• ???????

33
Understandable ?????????

• Win-Win Principle ????
• Employees create value for Company ?????????
• Company provides employees competitive
  compensation and helps employees to achieve
  individual objectives. ??????????????????????????
• Efficient Communication ?????

34
Efficient to administer ????
Negative Example ????
35
??1
Base Salary Setting ??????

• Salary Structure Setting ???????
• Salary revision ??

36
Salary Structure Setting ???????
a b c Mid-Point Progression ???? a1 - a2
Range Spread ???? s1 - s2 Range Overlap
????
37
Salary Policy Line ???

• market data current salaries are reference
  ?????????????
• Use regressed trend line ?????
• Consistent with the CB strategy of the
  organization ???????????

38
Midpoint-to-midpoint Differential ???????

• 5-10 between grades for Adm. staff (IPE43-49)
  ????-??????5-10
• 8-15 between grades for professional and
  management (IPE50 - 57)?????????-??????8-15
• 30-35 between grades for executive levels
  (IPE58) ??????-??????30-35

39
Range Spread????

• Narrow range (30-50) for adm. staff
  ??(30-50)???????
• Wider range (40-60) for professional staff
  ?????????????
• Widest range (60-300) for managerial
  executive staff. ???????????

40
Range Overlap ????

• A function of midpoint differentials and range
  spreads ????????????
• Overlap of five grades is common. ???????????
• Broad banding may produce substantial overlap.
  ?????????????

41
Factors Influence Salary Revision ???????????

• Performance Rating ??????
• Individual Pay Position to Salary Structure
  ??????,???????
• salary exceeding the maximum lump sum
  ???????,?????,?????
• salary beneath the minimum special adjust
  ???????,????
• Competence and Market Value ???????
• Cost of Living ????

42
??2
Incentive Setting ????

• Incentive vs Guaranteed Pay ??????????
• Incentive objectives setting ???????

43
Incentive vs Guaranteed Pay??????????
- Market Movement (example) ????(??)
44
Incentive Objectives Setting ??????? -Sales
Incentive????
1999
2000

• Turn Over(order booking, net sales) ???(??,????)
• Market Share????
• Cash Flow???
• Product Mix????

• Turn Over(order booking, net
  sales)???(??,????)
• Market Share????
• Cash Flow???
• Product Mix????

45
Incentive Objectives Setting ??????? -Sales
Incentive????
2001
2002

• MU China Net Sales (compulsory) ????????(??)
• MU China Cash Flow (compulsory)???????(??)
• Customer Satisfaction?????
• ...
• (half-year evaluation payment) (??????)

• Max. 4 Objectives ??4???
• Orders Booked (compulsory)???(??)
• Net Sales (compulsory) ????(??)
• Market Contribution (for managers) ????(????)
• Product Mix (strategic products services)????
• Customer Satisfaction?????
• Account Receivable ????

46
Incentive Objectives Setting ??????? -STI
Performance Bonus???????????
1999
2000

• Maximum 4 objectives ??4???
• At least 1 objective is financial??????
• ???
• 1 objective from the unit in which the
• employee works ????????????
• 1 objective from the unit of line manager
• works ??????????????
• Each organization decide objective weight
• ??????????????
• Grandfather principle reinforces
• objective alignment ???????????
• ????

• Based on 5 business perspectives of financial,
  customer, employee, innovation, internal
  efficiency, Y2K ?????????????????5???,??Y2K?
• 25 of financial objectives, 75 of KPIs with
  financial non-financial ????25?????
• No restrictions on number of objectives
  ????????????

47
Incentive Objectives Setting ??????? -STI
Performance Bonus???????????
2001
2002

• Maximum 4 objectives ??4???
• Overall objectives of Net Sales/Orders Booked,
  Market Contribution, Quality/TQM is cascaded
  down ????????????????????????????
• One of managers objectives should be shared by
  subordinates ??????????????

• Maximum 5 objectives??5???
• MU China Net Sales (compulsory)????????(??)
• MU China Cash Flow (compulsory)???????(??)
• Others??
• (half-year evaluation payment) (??????)

48
CB Program Evaluation ??????

• Impact on organizations performance (Customers
  Satisfaction, Profit, external image, etc.)
  ???????? (?????,??,????,?)
• Costs ??
• Employee turnover rate ?????
• Human Resources Effectiveness ??????

49
Performance Management ????

• PD Discussion (Q1) ??????
• Review job description
• ??????
• Set Objectives Measurements
• ?????????
• Competence Profile ????
• Individual development plan
• ??????

• Development Actions ????
• (Q1-Q4)
• Training ??
• Coaching ??
• Counseling ??
• Review ??

• Performance Appraisal (Q4) ????
• Evaluate Objective achievements
• Assess personal performance factors
• ????????,????
• Input for next years PD Discussion
• ????????????
• A base for salary revision ???????
• A base for career advancement ?????????

50
PD Discussion ??????
51
When To Have PD Discussion? ???????????

• First quarter of the year ???????
• 6 months after new employee on board(Objective
  can be set once employee on board)
  ???????6??(??????????????)
• Employee status change ???????
• Promotion??
• Demotion ??
• Transfer ????
• ...

52
Step 1 Review Job Description ??????Step 2 Set
Objective/Goals - SMART ??SMART??Step 3 Set
Standards and Measurement??????Step 4 Discuss
Competence Profile ??????Step 5 Individual
Development Plan ????????
PD Discussion Steps ????????
53
Setting Objectives,Standards and
Measurements?????????
Examples ??
54

The Ericsson Competence Model ???????
Examples ??
55
Competence Profile ???????
56
Individual Development Plan ??????
Examples ??
57
Development Actions ????
58
Development Actions ????

• Training ??
• Coaching and Feedback ?????
• Counseling??
• Review ??

59
Coaching Feedback ?????

• Coaching??
• Coaching is the following up of
• feedback, incl. Solving the problem
• and action plan. ?????????,
• ?????????????

Feedback?? Effective feedback describes the
behaviors under specific situation
?????????? ??????????

• Good Communication Skill
• ???????

60
Feedback The IDEAL State ?????????

• F Frequent ??
• A Accurate ??
• S Specific????
• T Timely ??

61
Some examples??. . .
One approach That was a great job on the
presentation you did last month. I got a few
comments about how it could have been shorter,
but overall you did fine. Keep up the good work!
Preferred approach Your presentation this
morning went well. You conveyed very clearly the
supporting rationale. In fact, the team agreed
with your recommendation and well be moving
ahead. One suggestion Id make for future
presentations is spending less time on the
alternatives considered. That way the audience
remains clear on whats being proposed.
62
Performance Appraisal ????
63
What to be appraised? ????

• Results achievements ??????
• Objectives ??
• Responsibilities/key results areas ??
• Performance factors ??????
• Attitude in performing ????
• Competence ??

64
Performance appraisal ????

• Rating and Weighting ?????
• The overall rating of Performance Appraisal
  should derive from both rating of
  objectives/responsibilities and performance
  factors.
• ?????????????/???????????
• Weighting ??
• Objectives/Responsibilities 60 ??/???60
• Performance factors 40 ?????40

65
Performance Factors ????Examples ??
. Initiative ??? . Problem solving ?????? .
Customer oriented ???? . Team work ???? .
Communication????
66
Five Levels of Performance ???????
Training ??
Termination ??
Promotion ??
67
Normal Distribution of 5 Performance
Ratings ???????????
Unacceptable ???
Acceptable ???
Good ????
Excellent ????
Outstanding ????
68
Performance Appraisal Form ?????
Examples ??
69
Thank You ????!
70
???????

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