Effective Performance Based Reward Practices GETTING WHAT YOU PAY FOR

Once Upon a Time Ago.....

Performance/Reward Connection World At Work Survey: 89% of Employers are Using Short Term Incentives (up from 2004 & 2005) Employee Confidence in Long-Term Rewards is dropping ”Generational Shift:What We Saw At the Workplace Revolution. Tulgan & Rainmaker Thinking Inc. Business Finance Survey of Readership: Only 17% of Pay-For-Performance plans are considered to be highly successful.

Effective Performance Based Reward Practices Basics of Effective Pay for Performance An Example Some Technical Details

Pay-For-Performance “We believe that careful examination of criticisms of monetary pay-for- performance systems indicates not that they are ineffective but rather that they are too effective: strong pay-for- performance motivates people to do exactly what they are told to do.” Baker,Jensen, Murphy, Compensation & Incentives: Practice vs. Theory Journal of Finance

“.... strong pay-for-performance motivates people to do exactly what they are told to do.”

Know Your Business

Vision & Mission Employees To achieve the Vision & Mission What must our employees be? Development To achieve our Vision & Mission How will we sustain our ability to grow & change? Business Processes To achieve the Vision & Mission what business processes must we excel at ? Financial To achieve our Vision & Mission What must our earnings be? Customers To achieve our Vision & Mission Who will our customers be & How must we treat them? Drivers Goals Factors Metrics Drivers Goals Factors Metrics Drivers Goals Factors Metrics Drivers Goals Factors Metrics Adapted from Paul Arveson, 1998 Drivers Goals Factors Metrics

Define Exactly What You Want And exactly what you don’t want

Create A Performance Culture Vision Mission Success Drivers Strategic Goals Critical Success Factors Success Measures

Vision & Mission Organization Long-Term Goals AKA Success Drivers Organization Short-Term Goals AKA Strategic Goals Critical Success Factors Annual Business Plans Long Term Plan Vision & Mission Success Measures Organizational Metrics Success Measures Individual Metrics

Tell Everyone About It Again & Again

Make it Personal

Make It Real Define Exactly What You Want and How You Want It At the Individual Level

Connect The Rewards to the Results =

A Knowledge Services Example Planting the Seeds

A Knowledge Services Organization Excels At Transformation of Information Into Knowledge Useable by the Customer for at least its original purpose

Vision & Mission Employees To achieve the Vision & Mission What must our employees be? Development To achieve our Vision & Mission How will we sustain our ability to grow & change? Business Processes To achieve the Vision & Mission what business processes must we excel at ? Financial To achieve our Vision & Mission What must our earnings be? Customers To achieve our Vision & Mission Who will our customers be & How must we treat them? Drivers Goals Factors Metrics Drivers Goals Factors Metrics Drivers Goals Factors Metrics Drivers Goals Factors Metrics Adapted from Paul Arveson, 1998 Drivers Goals Factors Metrics

Knowledge Services Example Business ProcessDevelopment Success Drivers Clearly Defined, Efficient & Effective Processes Innovation & Learning Strategic Goals Business Processes Mapped Process Benchmarks Established Niche Development Critical Success Factors Turn-Around Time Met Budgets Met Niche Knowledge Repository Established Recognition of Expertise Established Success Measures 100% Realization of Fees Billed Niche Clientele Established

Knowledge Services Example FinancialCustomersEmployees Success Drivers High Consistent Earnings Deep Relationships Right Talent Available When Needed Strategic Goals Gross Revenue /Person Managed Costs Client Base That Meets Criteria Employee Satisfaction Critical Success Factors Billing Rate Acceptance Client Qualification Criteria Career Planning Mentor Program Assignment Management Success Measures ProfitabilityClient Satisfaction 100% Retention of the Right People

Performance Management Process Anchored to Business Success Drivers Clear Expectations Clear Performance Standards Forward Focused Feedback Specific Achievable Success Measures

Individual Measures FinancialCustomersEmployees Utilization Rate Realization Rate Turnaround Times met Investment in Self & Others

Performance Based Rewards Linked to the success measures Organizational Team Individual

Connecting Rewards to Results Individual Team Organization Individual Goal Achievement Business Process Development Business Process Financial Customers Business Process

Technical Details Establish & Communicate How the Pay-For Performance $$ Will be Determined & Paid Weighting on Individual, Team, Organizational Results

Technical Details Ensure Noticeable Differences

Technical Details Timing of Rewards (Short-Term & Long-Term) Actual Results Consistent with Plan =

Getting What You Pay For Know Your Business Know Exactly What You Want & Don’t Want Create A Performance Culture Communicate Make It Personal Make It Real Connect Rewards to Results

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