2 Compensation Project Client History This client had grown from 30 employees to over 100 in just 18 months and had salaries all over the board. Some employees had large base salaries and low bonuses and others had just the opposite. Some employees, doing the same job, were being paid differently for slight differences in background based upon when they were hired and by whom they were hired. The CEO wanted to make sure he was paying the appropriate salaries, move the company to a performance based system that would level out total cash compensation and provide additional reward to employees for setting and meeting goals.
3 Compensation Project Project Goals This compensation project consisted of accomplishing the following goals:Conduct a job analysis of all employeesObtain current base, bonus, and total cash compensation data for comparable companies.Realign salaries to fair and consistent standards.Develop Performance based compensation plan (PBCP) with all associated forms, overheads, training manuals, and materials.Leverage materials for an annual employee review process.
4 Compensation Project Project Components Job Analysis It was decided to use AON Consulting's Radford data for survey purposesEach employee’s position was analyzed, compared, and matched to a corresponding Radford job description and code.Positions were “leveled” according to the characteristics of the position and the level of responsibility.
5 Compensation Project Project Components Survey data With the client, we determined a list of comparable companies and decided on a compensation payment philosophy – (X%ile for base, bonus and total cash compensation).Next, we pulled the appropriate Radford data.Charts were developed comparing existing salary data and compared to Radford data.Compensation data was then individually adjusted (where appropriate) and realigned to appropriate levels taking into account job differences and background.
8 Compensation Project Project Components PBCP Working with the CEO and CFO, we determined a performance objective philosophy that led to a Performance Based Compensation Plan (PBCP).Next was developed an easy to use and track tool - Quarterly Performance Score Card.Next we developed an employee and manager handbook.Lastly, an overhead presentation was developed to explain the program to employees and managers.The following selected pages are from the overhead presentation.
9 Performance Based Compensation Plan (PBCP) COMPANY’s Compensation PhilosophyCOMPANY’s compensation philosophy is to pay employees at the most competitive market rates.Your compensation consists of:Base salaryPerformance based compensation plan (PBCP)Benefits (medical, dental, vision, disability insurances, etc.)Employee perks (health club, meals, sports, etc.)Company stock options
10 PBCP The philosophy of the PBCP Plan It allows individual achievement to be rewarded consistent with one’s performance contribution. The company believes that your success can be achieved by balancing at least 3 factors:Commitment and execution to your quarterly Individual ObjectivesCommitment to your own personal growth and development (Training Objective)Commitment and execution of our Company Values and your Department GoalsThe first of these is the most important. We want you to deliver what you say you will do.
11 PBCP PBCP Setting Objectives Individual Objectives - are to be within your ability to influence the resources necessary to accomplish, and are to be realistic, measurable, and achievable.Training Objectives- aid in your growth within your position or the company.“Stretch” (BHAG) goal - is a goal that is most likely out of your complete control, but is within your ability to influence the outcome, which when achieved is beyond you and your supervisor’s expectations.Department Goals and Corporate Values - aid in the growth of your department and our company.
14 PBCP Determining and calculating the amount of the quarterly PBCP You will receive the percentage of your PBCP equal to the number of points received (100 points equal 100% of your PBCP).The majority of the actual incentive you receive is based on how you perform on your Individual Objectives along with some element of Training Objectives and support of our Company Values and your Department Goals. Your Individual and Training Objectives add up to 100 points.
15 PBCP Determining and calculating the amount Your supervisor may award you 100%, 50% or 0% of the points for each Individual and Training Objective.Example - You fully accomplish two out of your three objectives and those two total 70 points, and then you would receive 70 points of your PBCP. If you accomplish some of a third objective worth 20 points, your manager can award you 50% of the points or 10 points. That would bring your total to 80 points.
16 PBCP Determining and calculating the amount If you contribute to the Department Goals and Corporate Values, you will receive additional points.More than 100% - If you accomplish all of your Individual & Training Objectives and contribute to Department Objectives and Corporate Values you can receive in excess of 100 points but not more than 125 points.The maximum points and maximum amount of your PBCP is 125%.
17 PBCPIssues You’re Responsible - Should issues arise that affect your ability to accomplish your objectives, it is your responsibility to meet and discuss these with your supervisor. They will determine what steps or adjustments to the objective are necessary. If this is determined, a revision will be made to the Quarterly Performance Score Card.Lastly, in order to be eligible for a quarterly bonus, you must be employed by COMPANY on the day following the end of the quarter.
18 PBCPConclusionOur objective to reward employees who contribute to the growth and success of COMPANY.The PBCP plan is designed to motivate and compensate you based on your specific contributions to COMPANY’s overall success.This plan allows you to be in control over this portion of your compensation.If you have any questions regarding the PBCP plan, please speak to your supervisor or Human Resources.