Linking Rewards to Strategy

1. Linking Rewards to Strategy By R. Henry Migliore

2. Tying Appraisals to Rewards • How we usually reward people • What is wrong with present approach • Poor targets • Emphasis on the form • Too complicated • Lack of training • Understand basics • Potential if done correctly

3. Strategic Planning Process • Define Strategic Plan • Show where the reward fits • Planning must have product and process • Planning must be done right for evaluation, performance appraisal, and rewards to work

4. Strategic Planning Process • Performance appraisal and rewards usually come last • Organization structure impact on success and performance measurement

5. Strategic Long-Range Planning Process

6. Theory Behind Reward Systems • Higher level needs/intrinsic • Pay for performance/extrinsic • Must have both • Emphasis on individual and team • Regular reviews • Athletic Team • Business Team

7. Reward Opportunities

8. Performance Appraisal Form

9. Reward Opportunities • Athletic team • Baseball • win 20 games • Go to World Series • Football • rush 1000 yards • Go to Super Bowl • Business Unit • Sales • Meet marketing objectives and ROI best in last 5 years • Manufacturing • Increase production 15% and ROI best in last 5 years

10. Reward as a team player • Golden handcuffs • Bonus paid over longer term • Share equally? • Boss Evaluation

11. Benefits of Reward Systems • The organization will determine where it is going • It will be able to identify opportunities and risk • All organization members will be forced into a consensus as the direction for the organization is identified • As managers have the opportunity to have input into the planning process, they will experience a surge of excitement

12. Benefits of Reward Systems • Communication in all directions will be instantly improved • Non-productive persons will fall by the wayside • Increases should be expected in all measurable areas – profitability, productivity, and so on • Within a year, a personal training and development plan will evolve for all persons in the organization

13. Rules for Compensation • Salary administration should be centered around accountability, not activity • Write job objectives instead of job descriptions • People who are committed to your organization are worth more than people who are not committed to it • People who feel they are underpaid will behave like unpaid employees

14. Rules for Compensation • People who aren’t meeting all of their regular, ongoing, and recurring responsibilities should not be given merit increases • Bonuses should be paid only for beating an indicator • Fair pay does not motivate, but unfair pay demotivates • The higher the person is in the organization, the more you pay for strategies and creative thinking

15. Opportunities For Any Organization • Strategic Planning emphasis for Consulting Division • Information systems supports planning system • Provides performance appraisal/reward service • Information system supports performance appraisal • Strengthens SERVICE to clients • Cost leadership, focus differentiation

16. Discussion