Part6 Strategy

Strategy Implementation
Copyright by Authors Tom Koplyay and David Goldsmith July 1998
6-1
Strategic Implementation
Strategic Alternative
Status quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring
Each with its own focus

Internal or external Product Market Control Risk etc...
6-2
Status Quo
Strategic Alternative Status Quo

Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring
Focus
Internal Stability Continue in present products/markets
6-3
Concentration
Status Quo
Focus
Internal Single product line Do one thing well
Concentration
Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring
6-4
Horizontal Integration
Status Quo Concentration
Focus
External Ownership of control of competitors Gain market power and economies of scale
Horizontal Integration
Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring
6-5
Vertical Integration
Status Quo Concentration Horizontal Integration
Focus
External Transform cost centres to profit centres Improve economies of scale, reduce dependence on suppliers or distributors
Vertical Integration
Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring
6-6
Diversification
Status Quo Concentration Horizontal Integration Vertical Integration Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring
Focus
External or Internal Broadening of product line Reduce competitive pressure; gain greater profitability; spread risk
Diversification
6-7
Joint Venture
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Retrenchment Divestiture or Liquidation Innovation Restructuring
Focus
External Complementary benefits Spread risk; create synergy
Joint Venture
6-8
Retrenchment
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture
Focus
Internal Reduction of activity or operations Respond to adversity by permanent phase-out
Retrenchment
Divestiture or Liquidation Innovation Restructuring
6-9
Divestiture or Liquidation
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment
Focus
Internal Removal of entity that does not fit Realign products/markets or organization
Divestiture or Liquidation
Innovation Restructuring
6-10
Innovation
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation
Focus
Internal Seizing of leadership position Take initiative; gain position early in product life cycle
Innovation
Restructuring
6-11
Restructuring
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation
Focus
internal Cost reduction, growth potential Concentrate on products and divisions with high potential
Restructuring
6-12
Strategy Implementation Variables

Key Tasks
Staffing and Leadership Style
Recruiting, selection Transfer, promotion Training and development Leadership
Structure
Division of labor Shape Distribution of power
Reward Systems
Compensation Promotion Job design Special awards Performance measures
IM and Decision Making Process

Planning and control Resource allocation systems Integrating roles and departments Information systems
Effectiveness
Efficiency
6-13
Strategy Implementation
Strategy Implementation Variables Information/Decision Making Follows Strategy Staffing Follows Strategy Incentives Follows Strategy Culture/Leadership Follows Strategy Structure Follows Strategy Project Profiles Along the Lifecycle
6-14
Implementation Design Guide

Staffing Structure Decision Supports
Incentives
Effectiveness staffing, incentives Efficiency structure, decision supports Integrators staffing, decision supports Differentiators structure, incentives Ex: Corporate culture + Integrators reinforce culture Differentiators dilute culture Downstream company effectiveness/consumer markets Upstream company efficiency/costs/contract sales
6-15
Connections
External Contingencies
Strategic Performance Technology Environment Firm Size Centre of Gravity
Strategy
Product Based Niche Based Market Based
Market Structure
Market Share Market Strength Market Growth Market Margins
Structure
Functional M-Form (SBU, Core) Holding Matrix (weak, strong, balanced)
Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-16
Performance
ROA, ROCE ROI ROE EPS Growth
Strategic Controls
High Industry Growth Rate
(Cash use)
???
? ?
$
Low Low Relative Market Share

(Cash Generation)
High
Culture/Leadership Follows Strategy

Organizational Life Cycle Transformational (revolutionary)
Leadership Style
Directive
Leadership Style
Logical
Leadership Style
Organizational Culture
Production
Supportive
Leadership Style
Inspirational
Quality
Supportive
Transactional (evolutionary)
Focus Niche Cost Focus Cost Leadership
Creative
Product Differentiation
6-18
Decision Style Model
Low Structure
Analytic (Achievement) Dell
Conceptual (Recognition) Stentor
High Structure
Directive (Power) Gp Schneider
Behavioral (Affiliation) Giant Tiger
Task
People
VALUES ORIENTATION
Leadership Styles
Efficiency Logical
Production/people based (IBM system integration) Theory J
Effectiveness Inspirational
Creativity based (IBM software)
Theory E
Directive
Production/asset based (IBM chip manufacturing) Theory J,Z
Supportive
Team/knowledge based (IBM outsourcing)
Theory J,Z
6-20
Types of Change
Theory X - Control Theory Y - Incentives Theory Z - Paternalistic
Change hygiene factors

Executive style Corporate Culture Individual values Organizational commitment
(Japanese) hierarchy, rigidity Theory J - X + Y Theory E - Opportunistic
6-21
Organizational Cultures
Quality
Planning/ Problem Solving Accepts change
Creative
Risk Taking Innovative Initiates change
Production
Productivity/Procedures
Supportive
Teamwork
Resists change
Responds to change
Technical Social Organizational Culture Efficiency = differentiation

Effectiveness = integration
6-22
Importance of Cultural Fit to Strategic Change
10
Constrained
Reconsider cultural change
Supportive
Incorporate culture explicitly in pursuing strategy
Importance of Elements in Culture
Inconsistent
Consider factors other than culture 0 0
Related
Minimal attention required to cultural elements 10
Compatibility of Elements with Proposed Strategy

Staffing Follows Strategy

Organizational Life Cycle
Functional differentiation Risk containment Functional Proactive but grouping reactive capability Risk reduction Some planning Change Results/process questioning Discipline by tradeoffs Change accepting routines Team discipline Specialists Risk avoiders Anticipative Process motivated Predictable Change resistant Disciplined
Generalists Risk takers Reactive Improvisers Results motivated Change promoting Undisciplined Product Differentiation
Focus
Niche
Cost Focus
Cost Leadership
6-24
Information/Decision Making Follows Strategy

Planning and guessing Experience anchored Formal systems and executive by function More internal Organized Regular silos emerging Proactive Deductive Structured process System based Internal focus Deliberate Continuous Compartmentalized
Reactive Inductive Informal External focus Spontaneous Sporadic Widely shared Product Differentiation
Some planning Experience based Formulize by functions More organized Regular sharing by skills and functions Focus Niche
Cost Focus
Cost Leadership
6-25
Impact of Information Needs on Structure

Factors increasing information flows in organizations
More team based decisions Decentralized decision making Smaller span of control Emphasis on quality/innovation/customer Higher level skills Weakening of culture/structure/performance Unstable market dynamics Geographical dispersion complexity of performance Standards and measurement
6-26
Incentives Follows Strategy

Short term (quarterly) Process oriented Individual based Differentiated (by functions ) Objective (Formulize based) Risk Avoiding Formalized
Long term Output oriented Team based Uniform Subjective Risk promoting Informal Product Differentiation
Shorter term (yearly) Quality/reliabili Medium term ty based Output/production More individual oriented and some team Team and Differentiation individual by functions and levels Segregated by function Risk tolerance Objective with Formalized with subjective elements some informal More risk averse aspects Mostly informal with formal components Niche Cost Focus
Focus
Cost Leadership
6-27
Incentives
Why bonus pay?

Variable cost base Responds to extra performance Links to corporate goals Flexibility in design and implementation
6-28
Incentives
Basic requirements (SMART)

Specific
Line of sight / match
Meaningful
Reality / perception (ROI)
Achievable
Levels of expectation / control
Reliable
Easy to determine
Timely
Pay-off proximity
6-29
Incentives
Organizational hygiene factors

Organizational stability
Competitive stability
Consistent measurements
Absolute / relative results
Positive culture
Leadership / champion / change agents
Employee buy-in
Track record (premise / promise)
6-30
Incentives
Measurement Challenges
Objective / subjective component Outcome / process orientation Time span Performance level specificity Performance variation sensitivity
(0/1 schemes vs. continuity)
6-31
Design Criteria for Good Incentive Measures
Linkage between individual performance and corporate goals Maximize payoff/payout ratio Accuracy of measurement
Verifiable and objective methods to determine results
Proximity of payoff to accomplishment Maximum control by employee of factors producing expected achievements Buy-in by employees
Preset, stable, simple, fair and challenging standards or performance and meaningful incentives
6-32
Key Aspects of Incentive Compensation

Policy Financial Performance Issues Instruments Measures Degree of Size and Discretion in Frequency Allocating Of Awards Bonus Awards
Non-discretionary, formula based bonuses tend to encourage a shortrun point of view Frequent bonus awards encourage concentration on short-term performance
Short run Mix of current vs. long bonus awards run and stock options should reflect the relevant time horizon for policy level execs Deferred instruments are weak reinforcers of short-term performance
Mix of quantitative measures of performance and more qualitative measures should reflect the relevant time horizon for execs. Qualitative measures usually reflect long run considerations more effectively than quantitative measures.
6-33

Performance Policy Financial Issues Instruments Measures Size and Degree of Discretion in Frequency Of Awards Allocating Bonus Awards
Completely discretionary, highly personalized bonuses do not clarify the rules of the game and as a result can discourage risktaking behaviour. The size of both salary and incentive awards should be commensurate with the business and personal risks involved.
Risk Aversion vs. risk taking
Current bonus awards, in cash or stock, can reinforce risktaking behaviour
Qualitative measures of performance can reinforce initiative by assuring execs that total performance will be evaluated for purposes of bonus awards.
6-34

Policy Issues Financial Performance Degree of Instr.s Measures Discretion in Allocating Bonus Awards
Bonus pools can be based on divisional performance, total corporate performance or some mix of the two. Each arrangement sends different signals in terms of interdivisional cooperation Non- discretionary, formula based bonuses for division managers are most practical in companies where little cooperation among divisions is required. Discretionary bonuses are practical when top management wants to encourage cooperation among divisions.
6-35
Size and Frequency Of Awards
Interdivisional relationships

Policy Issues Financial Performance Degree of Instr.s Measures Discretion in Allocating Bonus Awards
Use of objective measures of performance for division managers is more meaningful where the primary role of headquarters is to allocate capital than it is in instances where the head office plays an important role in managing the business of the divisions. Non- discretionary, formula based bonuses for division managers are most practical in companies where headquarters does not interfere in management of the profit centers. Discretionary bonuses are most useful when top management wants to exert a direct influence in the divisions.
6-36
Size and Frequency Of Awards
CompanyStock options division can relationships effectively link the interests of division personnel to the interests of the corporation
Structure Follows Strategy

Lack of Market Research (Adapt) Lack of Market Flexibility (Control) Lack of market Fit (Align) Lack of Market Match (Invent)
SBU Matrix
Divisional Structure Functional Structure
Entreprene ur
Product Differentiation Focus Niche Cost Focus Cost Leadership
6-37
Structure - follows Strategy
Example
GVA horizontal Functional Strategy GVA Vertical Divisional Strategy
Whenever market rejuvenates

Delayer structure
Structure
Effectiveness shallow structure Productivity deep structure
6-38
Entrepreneurial Structure
Entrepreneurial Firm President
Employees
Context: Environment: Highly uncertain/Unstable Technology: Simple/Routine Size: Small
6-39
Entrepreneurial Structure
Internal Systems
Market capture/Product introduction Informal contacts Lack of consistency/reliability of information flow
Strengths
Pursuits, maximum flexibility and innovation Rapid response to start-up situation Pursuits initiative & informality
Weaknesses
Critical dependence on CEO Employer flexibility is a must Non-specialization leads to inefficiencies Avoidance of responsibility by individuals Manageable to adjust high growth
6-40
Functional/Bureaucratic Structure
CEO
Marketing
Finance
HR
Engineering
Operations
Context: Lower uncertainty, more stability Technology: Routine, low interdependence Size: Small to medium Goals: Internal efficiency, technical quality, sales growth
6-41
Functional/Bureaucratic Structure
Internal Systems
Internal efficiency, technical quality Cost basis planing & budgeting
Strengths
Economies of scale Skill development Best in small to medium companies Best for one or few products Slow response time Hierarchy overload Low innovation Restricted view of goals
Weaknesses
6-42
Divisional Structure
Divisional/Product Firm CEO
Corporate Staff
Manager Division A
Manager Division B
Manager Division C
Context: Technology: Non-routine, high interdependence Size: Large Goals: External effectiveness, adaptation, client satisfaction
Product/Multi-Divisional Structure
Internal System Goals: Effectiveness, client satisfaction Profit-based planning Product managers formal authority Strengths Fast change in unstable environment High client satisfaction high functional coordination decentralized decision making Weaknesses Poor economies of scale Poor coordination across product lines Eliminates tech specialization
6-44
Matrix Structure
General Manager
Head of Programs
Head of Marketing
Head of R&D
Head of Professional Services
Head of Corporate Services
Director Program 1
Marketing Specialist
R&D Specialist
Professional Specialist
Specialist (e.g. Finance)
Director Program 2
R&D Specialist
Director Program 3
R&D Specialist
Environment: high uncertainty, high stability, changing, constant demands Technology: innovative, many interdependencies Size: moderate to large Goal: external effectiveness, innovation, tech specialization, adaptive capacity Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-45
Matrix Structure
Internal System Dual goals: product & technical Plan & budget by product & function Joint authority: functional/product Strengths Flex sharing HR Suitable for unstable environment Best in medium-sized company with many products Weaknesses Two bosses requires good interpersonal skills Frequent coordination meetings Must be a collegial culture
Symptoms of Structural Deficiency

A. Decision making is delayed or lacking in quality -decision makers may be overloaded -delegation to lower levels may be insufficient B. The organization does not respond innovatively to a changing environment. -lack of horizontal coordination -department responsibilities including environment scanning and innovation must be specified. C. Too much conflict is evident -conflicting departmental goals -horizontal linkages mechanisms are not adequate
Structures
Design Principles
- formal reporting relationships - groupings of individuals into departments - systems regulating communications coordination and integration
Vertical Structures (efficiency)

- linkage mechanisms - chain of command - rules and procedures - plans and schedules - vertical information flow and filters - systems based
Horizontal Structures (effectiveness)

- linkage mechanisms - teams and task forces - integrating departments - direct contact - organizational goal setting
Integrating Mechanisms
Hierarchy Rules Goal Setting (Planning) Direct Contact Interdepartmental Liaison Rules Temporary Task Forces Permanent Teams Integrating Roles Integrating Departments
Integrating Mechanisms
Centre Diversity (tasks) of gravity Info. incentives staffing Hierarchy Rules Goal Setting (Budgeting/Planning) Direct Contact Interdepartmental Liaison Temporary Task Force Permanent Teams Integrating Roles Integrating Departments O O O High Low Cost of maintenance Low Degree of centralization High Org/Env. stability High
Y Y
Y Low behaviour control/passive X organization control/passive Y contingency based O prescription based High Low
High
Low
6-50
Business Profiles
Product Structural rigidity Info. Flow Use of incentives as control high low Service low high Service/Product medium medium
low
high high
medium medium
Staffing skills span (variety) low
6-51
Centres of Gravity
Supply Stages or Vertical Integration in Manufacturing
Supply Flow
6-52
Centres of Gravity
Paper Companies - Different Centres of Gravity
Weyerhauser
International Paper
Container Corporation
Appleton
Proctor & Gamble
6-53
Centres of Gravity
Upstream
Commodity Standardize Maximize End Users Low-cost Producers Sales Push Line-driven Org. Process Innovation Capital Budget Capital Intensive Technological Culture Supply & Manuf. & Engineering
Downstream
Proprietary Customize Target End Users High margins Marketing Pull Line/Staff Product Innovation R&D/Advertising Budget People Intensive Marketing Culture Product Development & Marketing
6-54
Business Stages
Stage
Stage 1 Entrepreneurial Single Business (Market Introduction)
Business Dynamics
Entrepreneurial management style Small size, informal and vague structure Emphasis on creating initial product and marketing
Transitional Crisis
Entrepreneurial skills not appropriate to manage demands of growth Founder may be unwilling to acknowledge that he can no longer the company on his own Effective transition to Stage 2 requires introduction of professional manager
6-55
Business Stages
Stage Business Dynamics Transitional Crisis
Decision to diversify into a multi-business operations represents a major shift in strategy requiring new management behaviour Stage 2 Centralized analytical Professional decision making and Single Business directive leadership (Growth Stage) Formalized, functional organization structure Emphasis on increased efficiency in operations Stage 3 Professional Multi Business (Maturity) Decentralized analytical decision making Divisional or strategic business unit (SBU) structure Emphasis on portfolio management, especially where businesses are unrelated
Strategy Organization Fit
Strategy Rewards
Dominant Business
Unrelated Diversified
Related Diversified Bonus based on divisional and corporate profit performance Mix of objective and subjective performance measures
Performance against Formula-based bonus functional objectives on ROI or profitability of divisions Mix of objective and subjective Equity rewards performance Strict objective, measures impersonal evaluation
6-57
Strategy People and careers
Dominant Business
Unrelated Diversified
Related Diversified Broad requirements for general managers and integrators Career developments cross-functional, interdivisional, and corporate-divisional
Primarily functional Aggressive, specialists independent general managers of divisions Some interfunctional movement Career development to develop some opportunities are general managers primarily intradivisional
6-58
Strategy
Dominant Business Unrelated Diversified No integration across businesses Coordination and information flows between corporate and division levels around management information systems and budgets
Related Diversified Coordinate and integrate across businesses and between levels with planning, integrating roles, integrating departments
Information Coordination and and decision integration through process structure, rules, planning and budgeting Use of integrating roles for project activity across functions
6-59

Strategy Dominant Business Unrelated Diversified Related Diversified Centralized Structure functional and decisionTop control of making style strategic decisions Delegation of operations through plans and procedures Highly decentralized Multidivisional/ product divisions/profit profit centres centres Grouping of highly Small corporate office related business with some centralized No centralized line functions within functions groups Almost complete Delegated delegation of responsibility for operations and strategy operations within existing businesses Shared responsibility for strategy Control through results, selection of management, and capital allocation
6-60
Strategy
Dominant Business Unrelated Diversified Growth through acquisition Degree of diversity Types of business Resource allocation across discrete businesses
Related Diversified Growth through internal development, some acquisition Realization of synergy from related products, technologies, markets Resource allocation
Vertically Strategic Focus/ Task integrated Focus Degree of integration Market share Product line breadth
6-61
Project Profiles
Supports strategy Supports strategy /implementation Supports implementation
Low success rate (1-10%) Product focus
Higher success rate (>50%) Delivery focus: suppliers/channels
Medium success rate (10-30%) Alliances focus: M&A, joint ventures Inter-company based
Portfolio based (R&D motivated) Short duration (3-12 months) High immediate payoff People centred
Functional based (marketing, logistics,etc) Longer duration (6-18 months) Payoff spread out in time People/asset centred
Longer duration (2-3 years) Payoff only end of project Asset centred (people problems) Focus both on company and target
Company based
Focus outside company
Outside funded (venture capital)
Internally funded
Internally/ investor funded
6-62
Lifecycle Summary
External forces External/ Internal forces External/ Internal forces Leveling Shake out Decline Take off Intro Specific Strategy Concentration Diversify Status Quo Innovation (product) Focus No structure culture max Focus/niche Defensive Functional culture Matrix culture Divest Liquidate Restructure Innovation (process) Horizontal Vertical Expansion Joint venture Cost Divisional M-Div culture Leadership Divisional Functional Retrench Status Quo External forces Maturity Internal forces
Generic Strategy Structures
6-63
Lifecycle Summary
Intro Market Structure Mkt share min Mkt strength max Mkt growth margins max Take Off share strength growth margins Product Leveling share strength growth margins Product /process Maturity share strength growth margins Process Decline share strength growth margins Process
Tech Focus Product Incentive Emphasis
Incentive Features
Sales/ Sales/ marketing product design product design product design manufacturing process innov. manufacturing finance Discretionary Predetermined MBO risk taking medium term risk Individual management company short term based company/ risk avoidance individual medium term
advertising process manuf. process manufacturing finance finance Formula based Multi level risk averse long horizons long term risk averse multilevel company performance
Lifecycle Summary
Intro Strategic Info markets financing Maturity Leveling margins mkt share volumes competitors prod capacity mkt fragment costs adjacent product design prod. Costs markets internal strategic controls controls single/ dominant dominant /strongly related spread deeper Take Off Decline Costs margins
Relatedness single of businesses
related dominant diversified strongly unrelated-SBU related spread Marketing finance accounting planning deeper Accounting finance sales
Centre of Gravity
unique
deeper
Career paths entrepreneur to top mgt
Product devel. Manuf. Functional Sales manager accounting Functional managers
Leadership Source
CEO
Culture Portfolio CEO organizational corporate plans direction executive performance executive
6-65
Lifecycle Summary
Intro Priorities Product/ market match
Take Off Organization stability cash flow market growth internal
Leveling Product mix markets dynamics internal /external
Maturity
Decline
Production Production market share costs
Strategic Focus
external
internal /external
internal
6-66
Project Profiles Along the Lifecycle

Growth Phase Projects Supports strategy/implementation Higher success rate (>50%) Delivery focus: suppliers/channels Functional based (marketing, logistics, etc) Longer duration (6-18 months) Payoff spread out in time People/asset centred Focus outside company Internally funded Niche Cost Focus Mature Phase Projects Supports implementation Medium success rate (10-30%) Alliances focus: M&A, joint ventures Inter-company based Longer duration (2-3 years) Payoff only end of project Asset centered (people problems) Focus both on company and target Internally/ investor funded Cost Leadership
Startup Projects Supports strategy Low success rate (1-10%) Product focus Portfolio based (R&D motivated) Short duration (3-12 months) High immediate payoff People centred Company based Outside funded (venture capital) Product Differentiation Focus
6-67

Part6 Strategy

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Part6 Strategy

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Strategy Implementation

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Each with its own focus

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Strategic Alternative Status Quo

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Strategy Implementation Variables

IM and Decision Making Process

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Implementation Design Guide

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Low Low Relative Market Share

Culture/Leadership Follows Strategy

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Decision Style Model

Analytic (Achievement) Dell

Conceptual (Recognition) Stentor

Directive (Power) Gp Schneider

Behavioral (Affiliation) Giant Tiger

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Theory X - Control Theory Y - Incentives Theory Z - Paternalistic

Change hygiene factors

(Japanese) hierarchy, rigidity Theory J - X + Y Theory E - Opportunistic

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Technical Social Organizational Culture Efficiency = differentiation

Importance of Cultural Fit to Strategic Change

Importance of Elements in Culture

Compatibility of Elements with Proposed Strategy

Staffing Follows Strategy

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Information/Decision Making Follows Strategy

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Impact of Information Needs on Structure

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Incentives Follows Strategy

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Why bonus pay?

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Basic requirements (SMART)

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Organizational hygiene factors

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Design Criteria for Good Incentive Measures

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Key Aspects of Incentive Compensation

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Key Aspects of Incentive Compensation

Risk Aversion vs. risk taking

Current bonus awards, in cash or stock, can reinforce risktaking behaviour

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Key Aspects of Incentive Compensation

Size and Frequency Of Awards

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Key Aspects of Incentive Compensation