Incentivizing staff

Parry Murphy and Associates Cost Reduction Specialists Overview  Create a Vendor Cost Reduction Incentive Program.  Reward the biggest contributors on your staff.  Create a competitive environment – maximize results.  Incentives are funded out of the savings generated.  Ensure results are very measurable. 2

Parry Murphy and Associates Cost Reduction Specialists Creating an Incentive Program  Determine which vendors are to be targeted.  Determine the estimated annual spend per vendor.  Select an internal Champion.  Assign an internal negotiation liaison person per vendor.  Have liaison members develop a strategy for each vendor.  Champion to approve negotiation strategies.  Liaisons to commence negotiation efforts.  Keep track of outcomes.  Allocate a percentage of the first year’s savings into an incentive pool – 10% to 25% recommended. 3

Parry Murphy and Associates Cost Reduction Specialists Creating an Inventive Program (continued)  Once all the first year’s savings have been realized, award the incentive pool to the top performing liaisons, including the champion.  An alternative is to allocate the incentive pool into a general bonus program to benefit all employees.  Establish a panel to manage and monitor the program. 4

Parry Murphy and Associates Cost Reduction Specialists Four Alternative Methods to Implement a Vendor Cost Reduction and Incentive Program 3) Develop, implement and manage a program without Parry, Murphy and Associates (PMA) involvement. 4)Have PMA develop a program for you. 5)Same as 2) above, plus have PMA help you implement and manage your program. 6)Same as 3) above, plus have PMA develop successful strategies and coach your staff throughout the entire process. 5

Michael Parrymwp@parrymurphy.comWeb Address: www.parrymurphy.com 6

Incentivizing staff

by Parry, Murphy and Associates on Jul 07, 2012

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