Managerial Compensation

Sessions 5-6 5-

Prof. Narendra Nath Akhouri 8 7 2011

Feedback

What is the art of giving feedback?

Feedback is an important communication tool that can improve the way we work with each other

Feedback is a 2-way process

We may avoid words, that express judgment (controlling parent) like good, bad, should Or must become prescriptive and not constructive

What would you prefer a feedback to be?

Empowering Descriptive Improve performance Directed at modifiable behaviour Use of I statement Create good feeling Address the issue

Demolishing Prescriptive Destroy performance Settling a personal score Use of You statement Create bad blood Address the personality
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Class Exercise: HUL

Discuss in your Group and prepare for Unilever India (HUL) Exempt Staff a detail Report of your Recommendation: Reward Strategy Reward Policy Pay progression approach Salary Grade range and how many? Vertical grade structure or Broadband? What would be your motivating approach? Critically examine what Compa Ratio % would your recommend? What is the Cultural imperative for operating in India?
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Class Exercise

HUL P&G COKE PEPSI Mercedes BMW

India China US France Germany Japan

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Engagement Strategy Hero Honda Way

Hero Honda believes that the employee life cycle in the organization consists of
Evaluates the job roles, peers, bosses in real time Is underassigned, cant integrate, finds unconducive work env. Tries to see the Bright side of things Tries to change things or seeks change Passively seeks for new jobs

Starts the New job with enthusiasm

Actively seeks new job

Moves to a New Job

ENGAGED
PASSIVE DAMAGE IN THE JOB

DIS ENGAGED

ZONE FORE ENGAGEMENT STRATEGIES

ACTIVE DAMAGE IN THE JOB

MONITORED THROUGH FORMAL (Q12) AND INFORMAL MEANS

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Modified version of, 7 Hidden Reasons why employees leave, Leigh Branh

How to calculate Compa Ratio?

The compa-ratio is the average of the employee's actual pay divided by the pay range midpoint within the job grade Salary ranges provide a minimum and a maximum range for salaries within a specific pay grade

Find the Compa Ratio

Salary Range Grade 1 : $20,000 to $30,000 Grade 2: $30,000 to $40,000 Grade 3: $40,000 to $50,000 You are being asked to find an appropriate salary for someone who is moving from Grade 1 to Grade 2 pay grade. Her current salary is $24,500 What would be her compa ratio %

Implication of the Compa ratio

Most organizations provide a recommended course of action to take if the compa ratio falls within a certain percentile range. For example, if the ratio percentage falls between 0 to 33 percent, the result is a grade demotion. If the ratio falls between 34 and 66 percent, the result is a lateral movement and if it falls between 67 and 100 percent, the action is a promotion. Following this guidance, our example would result in a promotion recommendation.

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Factors affecting International HRM

Culture

Education- Human Captital

Human Resource Management

Economic System

PoliticalLegal System
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Influence of Nations Culture

Prof. Geert Hofstede conducted perhaps the most comprehensive study of how values in the workplace are influenced by culture. culture. He was the HR Director at IBM Geert Hofstede analyzed a large data base of employee values scores collected by IBM between 1967 and 1973 covering more than 70 countries

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Cultural Dimension Scores for 10 Countries

1. 2. 3. 4. 5. PD=Power Distance ID= Individualism MA= Masculinity UA= Uncertainty Avoidance LT= Long Term Orientation H= Top third M= Median third L= Bottom third Sample size = 53 countries / regions for first four Dimensions Sample size = 23 countries / regions for the 5th Dimension

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Cultural Dimension Scores for 10 Countries

PD
US Germany Japan France Netherlands Hon Kong India West Africa Russia China

ID 91 H 67 H 45 M 71 H 80 H 25 L 48 M 20 L 50 M 20 L

MA 62 H 66 H 95 H 43 M 14 L 57 H 56 H 46 M 40 L 50 M

UA 46 L 65 M 92 H 86 H 53 M 29 L 40 L 54 M 90 H 60 M

LT 29 L 31 M 80 H 30 L 44 M 96 H 60 H 16 L 10 L 118 H14

40 L 35 L 54 M 68 H 35 L 68 H 77 H 77 H 95 H 80 H

Top, Median and Bottom third in Cultural Dimension Scores for 10 Countries PD
Top third Russia China India

ID
US Netherlands France Germany Japan Russia India Indonesia China Hong Kong

MA
Japan Germany US India China France Netherlands Russia

UA
Japan Russia France

LT
China Hong Kong Japan India Netherlands Germany Russia US

Median third

Japan

Netherlands China Hong Kong India US

Bottom third

Germany Netherlands US

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Interview Worksheet for International Candidates

Motivation Health Language ability Family consideration Resourcefulness and Initiative Adaptability Career planning Financial consideration

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Effective Cross-Cultural Training CrossVerbal behavior NonNon-verbal behavior Attribution Comprehension Design Motivation

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Basic Process for HR Strategy

Scan the External environment

Identify strategic Business issues

Identify people issues

Develop HR strategy

Communicate the HR strategy

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Hewitts Total Cost to Company Approach

Total Cash
Base Salary Cash Allowances Fixed Bonus Conveyance Housing Retirals Loans Total Fixed Pay Performance Bonus Incentives Commissions Total Cost to Company
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Fixed Pay

Variable Pay

Hero Honda Salary Structure: AGM/DGM

Its given in the excel sheet

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Asia Pacific - Salary Increases 2007 - 2008

16.0 14.0 12.0 10.0 (%) 8.0 6.0
4.1 8.7 8.3 8.6 7.5 6.2 4.6 4.6 3.7 4.2 4.5 2.5 2.8 2.8 6.7 4.8 6.5 6.2 4.2 4.7 5 4.2 4.6 4.7 7.5 5.9 6.3 6.4 14.4 15.1 15.2

8.2 8.4

4.0 2.0 0.0 Australia China

Hong Kong

India

Japan 2006

Korea 2007

Malaysia 2008 (Proj.)

Philippines

Singapore

Taiwan

Thailand

Source : Hewitt's 12th Salary Increase Survey 2007-08 21

Overview f urvey Results

Figures in INR 000's per annum Market Levels Matches Min P25 Median Mean P66

Tot l ost to ompany (TCC)

P75

P90

Max

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 Level 9 Level 10 Level 11

4 10 8 9 10 11 10 11 11 11 11

5748 2742 2477 1716 1367 927 769 515 409 280 237

7071 3996 2677 1912 1610 1157 990 803 638 476 347

7627 4664 3067 2180 1743 1375 1185 866 719 537 383

7313 4523 3280 2328 1892 1458 1202 895 677 531 406

7738 4753 3565 2312 2050 1632 1369 1027 747 615 431

7870 5058 3859 2391 2103 1745 1445 1068 754 635 471

8098 5702 4181 3254 2420 2052 1483 1109 798 647 525

8250 5825 4520 3501 2650 2063 1597 1169 854 682 595

Hewitts recommendation is that pay should be positioned at least at the Median (P50) of the market

Overview of urvey Results

Figures in INR 000's per annum Market Positions Matches Min P25 Median Mean P66 P75

Total Fixed Pay

P90

Max

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 Level 9 Level 10 Level 11

4 10 8 9 10 11 10 11 11 11 11

5403 2570 2124 1389 1268 820 769 515 409 280 237

5538 3314 2333 1812 1497 1055 913 719 596 439 327

5886 3902 2460 1995 1572 1286 1079 825 647 489 348

5871 3747 2757 2060 1684 1295 1087 809 623 489 373

6175 4119 3069 2092 1756 1365 1184 906 682 564 396

6218 4261 3420 2279 1915 1531 1213 942 709 578 437

6274 4565 3508 2723 2118 1692 1369 993 741 602 491

6311 4755 3526 2801 2120 1820 1468 1011 751 627 505

Given that Fortius Motors is a startup and therefore competitiveness on Total Fixed Pay will be key

Remuneration Framework - As Percentage of Total Cost to Company (TCC)

Positions Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 Level 9 Level 10 Level 11 Base alary 27% 28% 26% 29% 30% 30% 31% 33% 34% 34% 35% Cash Emoluments 33% 31% 35% 30% 32% 34% 33% 32% 33% 33% 33% Housing 8% 9% 7% 12% 11% 11% 12% 12% 13% 13% 12% Conveyance 4% 6% 8% 9% 7% 5% 4% 3% 1% 2% 2% Retirals 8% 8% 8% 9% 9% 9% 9% 10% 10% 10% 10% Loans 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Variable Pay 20% 17% 16% 12% 11% 11% 10% 10% 8% 8% 8%

Basic Salary as a % of TCC is typically in the range of 30-35% across industries Variable Pay ranges basis line of sight to business goals

Groups
1 HUL

P&G

3 4 5

COKE PEPSI MECEDES

BMW
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Assignment for Sessions 5-6 on 8th July, 2011

The Chapters on Reward Policies, Factors affecting Pay Levels, Motivation and Reward. Readings: Part 1 & 2, Chapters 6-8, Pages 96-134 of the book. Group COKE Case Study 4: The Importance of Pay in Compulsory Competitive Tendering And Case Study 5: Changing the Reward System at Blane and Rivershire Building Society. Group PEPSI Case Study:Exploring Lawlers new pay theory through the case of Finbanks reward strategy for managers
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Class Exercise: P & G

Discuss in your Group and prepare for P & G China Exempt Staff a detail Report of your Recommendation : Reward Strategy Reward Policy Pay progression approach Salary Grade range and how many? Vertical grade structure or Broadband? What would be your motivating approach? Critically examine what Compa Ratio % would your recommend? What is the Cultural imperative for operating in China?
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Class Exercise COKE

Discuss in your Group and prepare for COKE US Exempt Staff a detail Report of your Recommendation : Reward Strategy Reward Policy Pay progression approach Salary Grade range and how many? Vertical grade structure or Broadband? What would be your motivating approach? Critically examine what Compa Ratio % would your recommend? What is the Cultural imperative for operating in US?
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Class Exercise: PEPSI

Discuss in your Group and prepare for PEPSI France Exempt Staff a detail Report of your Recommendation : Reward Strategy Reward Policy Pay progression approach Salary Grade range and how many? Vertical grade structure or Broadband? What would be your motivating approach? Critically examine what Compa Ratio % would your recommend? What is the Cultural imperative for operating in France?
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Class Exercise: Mercedes

Discuss in your Group and prepare for Mercedes Germany Exempt Staff a detail Report of your Recommendation : Reward Strategy Reward Policy Pay progression approach Salary Grade range and how many? Vertical grade structure or Broadband? What would be your motivating approach? Critically examine what Compa Ratio % would your recommend? What is the Cultural imperative for operating in Germany?
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Class Exercise: BMW

Discuss in your Group and prepare for BMW Japan Exempt Staff a detail Report of your Recommendation : Reward Strategy Reward Policy Pay progression approach Salary Grade range and how many? Vertical grade structure or Broadband? What would be your motivating approach? Critically examine what Compa Ratio % would your recommend? What is the Cultural imperative for operating in Japan?
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Geert Hofstede
Geert Hofstede analyzed a large data base of employee values scores collected by IBM between 1967 and 1973 covering more than 70 countries From this he first used the 40 largest only and afterwards extended the analysis to 50 countries and 3 regions. In the editions of GH's work since 2001, scores are listed for 74 countries and regions, partly based on replications and extensions of the IBM study on different international populations.

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Subsequent studies validating the earlier results have included commercial airline pilots and students in 23 countries, civil service managers in 14 counties, 'up-market' consumers in 15 countries and 'elites' in 19 countries From the initial results, and later additions, Hofstede developed a model that identifies four primary Dimensions to assist in differentiating cultures: Power Distance - PDI, Individualism IDV, Masculinity - MAS, and Uncertainty Avoidance - UAI

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Geert Hofstede added a fifth Dimension after conducting an additional international study with a survey instrument developed with Chinese employees and managers. That Dimension, based on Confucian dynamism, is Long-Term Orientation - LTO and was applied to 23 countries. These five Hofstede Dimensions can also be found to correlate with other country, cultural, and religious paradigms.

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