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Culture &
Compens
ation: SR
F
Limited
Compensa
tion & Rew
ard Manag
ement
1981
Early 1990s
2003-04
Assessed
Potential
SALAR
Y
Outstanding
25%
Good
Marketbased
Componen
t
Average
15%
10%
POSITIVES
Multiple managers rated
each employee
objectivity and
transparency
Employee not penalized for
factors outside their control
Compensation system
benchmarked against
market every 2 years
System aligned well with
TQM-based approach
System aligned with SRFs
Vision and Values
NEGATIVES
Poor financial performance
of company not reflected
in executive employees
compensation
Potential and performance
measured together and
not separately
No short-term rewards
incorporated
lose
employees who are driven
by short-term rewards
SRFS VALUES
SRFS CHALLENGES
CONSULTANTS ADVICE
Changing the compensation system to Variable Pay that is
linked to both the individuals and the companys
performance
RECOMMENDED PLAN
Multiplier
Approach
MULTIPLIER APPROACH
Company Performance (weight 0.5)
Individual
Performanc
e (Weight
0.5)
Outstandi
ng
Excellent
Good
Marginal
Unacceptabl
e
Outstanding
1.00
0.90
0.80
0.70
0.00
Excellent
0.90
0.80
0.70
0.60
0.00
Good
0.80
0.70
0.60
0.50
0.00
0.00 value of
0.00
0.00 award:
0.00
0.00
To Marginal
determine the dollar
each employees
Unacceptabl
0.00
0.00
0.00
0.00or salary0.00
1)
Multiply the employees
annual,
straight-time
wage
times
e
his/her
maximum incentive award
2) Multiply the resultant product by the appropriate percentage figure from
this table.
EQUITY
EXISTING
CONSULTANT
PROPOSED
External
Benchmarked
every 2 years; low
attrition
MODERATE
Variable pay as
other firms
HIGH
Variable pay as
other firms
HIGH
Internal
Job-level
descriptions were
standardized across
business units
HIGH
Depends on the
compensation plan
Holistic review
MODERATE
Individual
Individualized
salaries
HIGH
Individuals
performancebased
HIGH
Individuals
performancebased
HIGH
Fairness of process of
allocating pay rate
Procedura
l
Rating by multiple
managers;
subjectivity
MODERATE
Depends on the
measurement plan
Depends on the
measurement plan
FACTO
R
EXISTING
CONSULTANT
PROPOSED
Lower level
needs better
pay, working
conditions etc.
Hygiene
Employees satisfied
as low attrition
MODERATE
Employees prefer
variable pay
HIGH
Employees prefer
variable pay
HIGH
Higher level
needs
accomplishment,
recognition etc.
Motivat
or
Non-financial
benefits like
representation on
board, management
trainee programs etc
MODERATE
Only monetary
benefits (some
employees had
come back)
LOW
Non-financial
benefits are included
which incentivize
employees
HIGH
Thank You
!