Winning in 2013Alternative Compensation Strategies to Boost Your Competitive Edge                    Presented by: Lance B...
Lance BergerLance Berger is Managing Partner of Lance A. Berger & Associates, Ltd., amanagement consulting firm he founded...
Winning in 2013Alternative Compensation Strategies to Boost Your Competitive Edge                      Presented by: Lance...
Learning Points        Business Strategy        Talent Management        CompensationLance A. Berger & Associates Ltd. May...
Drivers of Business Success•   Growth rate•   Winning Strategies•   Risk profile•   Target culture             Lance A. Be...
Targeted Growth Rates•   Hyper growth•   Fast growth•   Growth•   Moderate growth              Lance A. Berger & Associate...
Strategic PlanA plan created today whose outcomes will occursometime in the future         Lance A. Berger & Associates Lt...
Winning Strategies                               Risk                            Current                  New       Strate...
Risk Profile                                  Risk                            Current                   New       Strategi...
Culture• Unspoken  conventions• Stated rules• Observable reality             Lance A. Berger & Associates Ltd. May 16, 2012
Target Culture                                                             •    Risk craving                              ...
Learning Points        Business Strategy        Talent Management        CompensationLance A. Berger & Associates Ltd. May...
Talent Management30%      Innovator25%                                                           • Creed           Archite...
Talent Management Strategy       Investment Within Culture                                              Culture           ...
Talent Management System                       Education     Training                               Development           ...
Learning Points        Business Strategy        Talent Management        CompensationLance A. Berger & Associates Ltd. May...
Compensation Strategy                Alignment of Compensation ElementsAffordabilityPay Markets                           ...
Pay Strategy Components80                                                   Better70                                Broade...
Keys to Compensation Strategies                           80• Affordability            70• Annual funding           60• Lo...
Strategic Compensation Transitions   Future                    Hyper               Fast &            Moderate   Orientatio...
Variable Pay                   Top Culture Driving ProgramsCulture/ Variable Pay                        Innovator         ...
Merit Pay                              • Purpose                              • Performance metrics                       ...
Merit Pay: Historical Reality                                   • Poor performance                                     sta...
Alternative to Merit Pay• Separate the market pay adjustment  from the performance adjustment• Introduce achievement award...
Alternative to Merit Pay                                                • All fixed salary increases                      ...
Recommendations• Construct a clear compensation strategy based on your  business and talent management strategies• Determi...
Recommendations•   Reward all solid citizens (+) based on compa ratio•   Eliminate fixed merit increases-shift to variable...
Wrap-Up                                                                                         80                        ...
Questions?Lance A. BergerManaging PartnerLance A. Berger & Associates, Ltd.17 Courtney CircleBryn Mawr, Pa. 19010610-525-5...
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Kenexa winning in 2012 alternative compensation strategies

  1. 1. Winning in 2013Alternative Compensation Strategies to Boost Your Competitive Edge Presented by: Lance Berger May 16, 2012
  2. 2. Lance BergerLance Berger is Managing Partner of Lance A. Berger & Associates, Ltd., amanagement consulting firm he founded in 1991. His firm provides advisoryservices in the areas of talent management, compensation, and changemanagement.Lance has written and edited eight books including The CompensationHandbook. His work has been selected as one of the top 30 business booksby Executive Book Summaries.Lance previously held a position at the Hay Group, Inc., where he wasGeneral Partner in charge of the firm’s worldwide compensation businessand coordinator of all strategy for human resources practices.He has appeared on CNN, been quoted in The Wall Street Journal, and islisted in several Whos Who publications. He also has been a speaker forthe United Nations, The Conference Board, Human Capital Institute,American Management Association, Wharton School, WorldatWork®,Linkage, United States Chamber of Commerce, Society for HumanResources Management, American Society for Training and Development,and numerous trade associations. Lance A. Berger & Associates Ltd. May 16, 2012
  3. 3. Winning in 2013Alternative Compensation Strategies to Boost Your Competitive Edge Presented by: Lance Berger May 16, 2012 Lance A. Berger & Associates Ltd. May 16, 2012
  4. 4. Learning Points Business Strategy Talent Management CompensationLance A. Berger & Associates Ltd. May 16, 2012
  5. 5. Drivers of Business Success• Growth rate• Winning Strategies• Risk profile• Target culture Lance A. Berger & Associates Ltd. May 16, 2012
  6. 6. Targeted Growth Rates• Hyper growth• Fast growth• Growth• Moderate growth Lance A. Berger & Associates Ltd. May 16, 2012
  7. 7. Strategic PlanA plan created today whose outcomes will occursometime in the future Lance A. Berger & Associates Ltd. May 16, 2012
  8. 8. Winning Strategies Risk Current New Strategies Products/ Products/ Services ServicesRisk New Braver Bolder Markets Current Better Broader Markets Lance A. Berger & Associates Ltd. May 16, 2012
  9. 9. Risk Profile Risk Current New Strategies Products/ Products/ Services ServicesRisk New Architect Innovator Markets Braver Bolder Level 2 Risk Level 1 Risk Current Engineer Designer Markets Better Broader Level 4 Risk Level 3 Risk Lance A. Berger & Associates Ltd. May 16, 2012
  10. 10. Culture• Unspoken conventions• Stated rules• Observable reality Lance A. Berger & Associates Ltd. May 16, 2012
  11. 11. Target Culture • Risk craving • Change driving16% • Creative Innovator • Opportunistic • Venturesome14% • Highly adaptive • Highly participative and collaborative12% • Risk seeking • Change seeking10% Architect • Innovative • Progressive8% • Adaptive • Participative and collaborative6% • Risk oriented Designer • Change responsive4% • Pragmatic • Efficient •2% • Flexible Directive, participative, and collaborative Engineer0% • Risk accepting • Change cautious Strategic Orientation • Highly pragmatic • Highly efficient • Flexible • Directive, participative, and collaborative Lance A. Berger & Associates Ltd. May 16, 2012
  12. 12. Learning Points Business Strategy Talent Management CompensationLance A. Berger & Associates Ltd. May 16, 2012
  13. 13. Talent Management30% Innovator25% • Creed Architect20% • Strategy15% Designer • System10% Engineer5%0% Strategic Orientation Lance A. Berger & Associates Ltd. May 16, 2012
  14. 14. Talent Management Strategy Investment Within Culture Culture Superkeepers • Innovator • Very High Architect • Designer Moderate High • EngineerSolid Citizens Key Position Keepers Lance A. Berger & Associates Ltd. May 16, 2012
  15. 15. Talent Management System Education Training Development CultureTermination Compensation Assignments Selection Lance A. Berger & Associates Ltd. May 16, 2012
  16. 16. Learning Points Business Strategy Talent Management CompensationLance A. Berger & Associates Ltd. May 16, 2012
  17. 17. Compensation Strategy Alignment of Compensation ElementsAffordabilityPay Markets Hyper grow Fast grow Competitive Level Grow Moderate Grow MixAllocationby talentcategory Strategic Orientation Lance A. Berger & Associates Ltd. May 16, 2012
  18. 18. Pay Strategy Components80 Better70 Broader60 Braver50 Base Bolder40 Short Term Incentives30 Long Term Incentives20100 Hyper Fast Grow Moderate Grow Grow Grow Innovator Architect Designer Engineer Lance A. Berger & Associates Ltd. May 16, 2012
  19. 19. Keys to Compensation Strategies 80• Affordability 70• Annual funding 60• Long term 50 Base funding 40 Short Term Incentives 30 Long Term Incentives 20 10 0 Hyper Fast Grow Moderate Grow Grow Grow Lance A. Berger & Associates Ltd. May 16, 2012
  20. 20. Strategic Compensation Transitions Future Hyper Fast & Moderate Orientation Current Grow Grow Grow Orientation Tweak Hyper Compensation Same Strategy Strategy Won’t Work Grow Tweak Tweak Fast & Compensation Same Strategy Compensation Strategy Strategy Grow Tweak Compensation Moderate Won’t Work Same Strategy Strategy Grow Lance A. Berger & Associates Ltd. May 16, 2012
  21. 21. Variable Pay Top Culture Driving ProgramsCulture/ Variable Pay Innovator Architect Designer EngineerProfit Sharing X XGroup X XIncentivesIndividual X X X XIncentivesLong Term X X XCombination X X X X Lance A. Berger & Associates Ltd. May 16, 2012
  22. 22. Merit Pay • Purpose • Performance metrics • Market drivenLance A. Berger & Associates Ltd. May 16, 2012
  23. 23. Merit Pay: Historical Reality • Poor performance standards/system • Inability to differentiate performance levels between people • Unwillingness/inability of boss to apply standards • Low trust in organization and leadership • Merit amounts below true incentive thresholds Lance A. Berger & Associates Ltd. May 16, 2012
  24. 24. Alternative to Merit Pay• Separate the market pay adjustment from the performance adjustment• Introduce achievement awards Lance A. Berger & Associates Ltd. May 16, 2012
  25. 25. Alternative to Merit Pay • All fixed salary increases based on “meeting• CR <80% =5.0% expectations”• CR>80% & <90%=3.0% • Salary progressions based on• CR>90% & <100% =2.0% range position• CR>100% & <110% =1.0% • Achievement pool reserved for• CR>110%=0% “true” top 20% • Meaningful achievement increases (10% +) Lance A. Berger & Associates Ltd. May 16, 2012
  26. 26. Recommendations• Construct a clear compensation strategy based on your business and talent management strategies• Determine affordability level of fixed base salaries• Determine the competitive level of base pay in your pay markets you can afford• Position compa ratios for solid citizen groups 5% below affordable midpoints Lance A. Berger & Associates Ltd. May 16, 2012
  27. 27. Recommendations• Reward all solid citizens (+) based on compa ratio• Eliminate fixed merit increases-shift to variable lump sum• Introduce annual funded incentive or bonus programs• Introduce funded long term incentives Lance A. Berger & Associates Ltd. May 16, 2012
  28. 28. Wrap-Up 80 70 Current New Products/ 60Strategies Products/ Services Services 50 Base 40 Short Term Incentives New Architect Innovator Bolder 30 Long Term IncentivesMarkets Braver Level 1 Risk 20 Level 2 Risk 10 0 Hyper Fast Moderate GrowCurrent Engineer Designer Grow Grow GrowMarkets Better Broader Level 4 Risk Level 3 Risk Education Training Development Culture Superkeeper™ Termination Compensation Assignments Selection Solid Citizens Key Position Keepers Lance A. Berger & Associates Ltd. May 16, 2012
  29. 29. Questions?Lance A. BergerManaging PartnerLance A. Berger & Associates, Ltd.17 Courtney CircleBryn Mawr, Pa. 19010610-525-5332lberger@voicenet.comwww.lanceberger.com Lance A. Berger & Associates Ltd. May 16, 2012

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