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Employee Differentiation In Successful Rewards Management - ABF Compensation and Benefits Seminar
 

Employee Differentiation In Successful Rewards Management - ABF Compensation and Benefits Seminar

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*How to differentiate employees’ using compensation and benefits ...

*How to differentiate employees’ using compensation and benefits
*Performance-based “Rewards and Recognition”
programme
*Living your values and keeping employees’ motivation levels high

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Employee Differentiation In Successful Rewards Management - ABF Compensation and Benefits Seminar Employee Differentiation In Successful Rewards Management - ABF Compensation and Benefits Seminar Presentation Transcript

  • EMPLOYEE DIFFERENTIATION IN SUCCESSFUL REWARDS MANAGEMENT Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com
  • Background & Philosophy The anchor for all decisions www.myCNI.com.my www.OOBEY.com
  • About: CNI
    • 19 years old
    • Core Business: MLM
    • Others: Contract Manufacturing, Export/Trading, eCommerce, F&B Cafés
    • Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan, Oman, United States
    • Staff force: ± 500
    • Distributors: 250,000
    • Products: Consumer Goods and Services
    www.myCNI.com.my www.OOBEY.com
  • Background: The Four Desperates 1. Desperate Competition 2. Desperate Consumer 3. Desperate Achievers 4. Desperate Changes www.myCNI.com.my www.OOBEY.com
  • The 51.28% Theory
    • Resign = Push + Pull > 51.28%
    • If staff is Happy:
      • => 0 + Pull > 51.28%
    www.myCNI.com.my www.OOBEY.com
  • Philosophy Ultimate Objective of Marketing: “ Get more people, to buy more things, more frequently, at higher prices.” Sergio Zyman “ Retention and Loyalty are useless if No Conversion is happening.” www.myCNI.com.my www.OOBEY.com
  • Philosophy “ Retention and Loyalty are useless if No Conversion is happening.” “ Retention and Loyalty are useless if No Performance is happening.” www.myCNI.com.my www.OOBEY.com
  • Philosophy
    • Loyalty is misleading…
    • Heavy Consumption ≠ Loyalty
    • Loyalty ≠ Heavy Consumption
    • Good Performance ≠ Retention
    • Retention ≠ Good Performance
    www.myCNI.com.my www.OOBEY.com
  • A. Background & Philosophy Principles HR Philosophy
    • Equal / Fair
    • Happy / Productive
    • Hire Low, Train High
    • Performance vs Potential
    • Retention / Engagement
    www.myCNI.com.my www.OOBEY.com
  • How “Differentiation” got started Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model
  • Targeting: Identify and Attract
    • Who are your Talents?
     : A Talent for others does not mean a Talent for you www.myCNI.com.my www.OOBEY.com
  • Targeting: Identify and Attract Group I (Talent Pool)
    • Identify
    www.myCNI.com.my www.OOBEY.com 2 3 4 5 PERFORMANCE 2 3 4 5 POTENTIAL
  • Targeting: Identify and Attract Group I (Talent Pool) Group II (  Potential) Group III (  Performance) Group IV (Counseling) 2 3 4 5 2 3 4 5 PERFORMANCE POTENTIAL
    • Identify
    www.myCNI.com.my www.OOBEY.com
  • **Additional Categories
    • Definition of ‘Premium’ staff
    • Specially selected from the TP.
    • They have in addition, the following attributes:
      • High-profile in the field or industry
      • Loyalty proven
      • Proven high work-rate and great attitude
      • Undeniable contribution and efforts
      • Highly looked upon and respected by most staff
      • Ability to multi-task and assist in various areas
      • Key people in CNI’s Succession Plans
    www.myCNI.com.my www.OOBEY.com
  • **Additional Categories
    • Definition of ‘Specialist’ Staff
    • Has competencies (skills & knowledge) in a particular professional field of work.
    • A staff is deemed to be a Specialist when all the following occurs:
      • The particular Competency (Skills or Knowledge or both) is highly required by CNI
      • Supply for the competency in the market is low but demand is high
      • The competency is difficult to learn, transfer and/or duplicate
    www.myCNI.com.my www.OOBEY.com
  • Targeting: Identify and Attract Retention Experience Swing Ex Oppose www.myCNI.com.my www.OOBEY.com
  • Retention 1: Experience
    • Loyalty = Experience vs. Expectations
    Solution Strategy: Talent Management Plan www.myCNI.com.my www.OOBEY.com
  • Loyalty 1: Experience
    • Talent Management Plan
    Philosophy OJT, Mentoring, Big-5, LP, PDP, SDP, Projects, P/P Grid, SP Table, PDP, Premium, Q12, C&B , ACDP, SCL, Transfers, Events, Recognition P/P Grid, Q12, PA, SDP, SP Selection www.myCNI.com.my www.OOBEY.com Development Motivation Evaluation
  • Loyalty 2: Swing
    • Loyalty = Best alternative at the current moment until I find another alternative
    Solution Strategy: Improve your Talent Management Plan, Try Your Best, or Live with It www.myCNI.com.my www.OOBEY.com
  • Loyalty 2: Swing
    • Swing Talents are “loyal” because:
    • Individual Relationships
    • Convenience (at that point in time)
    • Contractually tied-up
    • Direct Incentives*
    • No better alternative
    • Subordinates
    • No known alternative
    • CV friendly
    www.myCNI.com.my www.OOBEY.com
  • Dangers of Direct Incentives
    • lessen internal motivation,
    • switch to mercenary mode,
    • do something and do not do something else,
    • bribe and fraud culture,
    • easier for competitors to recruit,
    • lessen teamwork & helpful culture,
    • less and less impact for same value,
    • mockery of base salary and employment contract,
    • rebellion from non-incentivised staff,
    • end up incentivising everyone for everything?,
    www.myCNI.com.my www.OOBEY.com
  • What drives Reward? The driving force behind compensation and benefits strategies www.myCNI.com.my www.OOBEY.com
  • What drives our Reward? Compensation & Benefits Values Strategy www.myCNI.com.my www.OOBEY.com
  • Alignment & Consistency
    • Mamak stall
    www.myCNI.com.my www.OOBEY.com
  • Alignment & Consistency
    • "Exactly what I need"
    • Customized products
    • Personalized communications
    • "They're very responsive"
    • Preferential service and flexibility
    • Recommends what I need
    • "I'm very loyal to them"
    • Helps us to be a success
    "They are the most innovative" "Constantly renewing and creative" "Always on the leading edge" "A great deal!" Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership "A no-hassles firm" Convenience and speed Reliable product and service Product Leadership Operational Excellence Customer Intimacy www.myCNI.com.my www.OOBEY.com
  • Alignment & Consistency: Market Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
  • The McPlaybook*
    • Make it easy to eat
    • 50% drive-thru
    • Meals held in one hand
    • Make it easy to prepare
    • High Turnover
    • Tasks simple to learn & repeat
    • Make it quick
    • “ Fast Food”
    • Tests new products for Cooking Times
    • Make what customers want
    • Prowls market for new products
    • Monitored field tests
    *Adapted from: Businessweek , Februrary 5 th 2007 www.myCNI.com.my www.OOBEY.com
    • Product Leadership
    • New, state of the art products or services
    • Risk takers
    • Meet volatile customer needs
    • Fast concept-to- counter
    • Never satisfied - obsolete own and competitors' products
    • Learning organization
    Alignment & Consistency: Disciplines, Priorities, and KPIs
    • Operational Excellence
    • Competitive price
    • Error free, reliable
    • Fast (on demand)
    • Simple
    • Responsive
    • Consistent information for all
    • Transactional
    • 'Once and Done'
    • Customer Intimacy
    • Management by Fact
    • Easy to do business with
    • Have it your way (customization)
    • Market segments of one
    • Proactive, flexible
    • Relationship and consultative selling
    • Cross selling
    www.myCNI.com.my www.OOBEY.com
    • Operational Excellence
        • Move know-how from top performing units to others
        • Benchmark against best in class
        • Ensure operations training for all employees
        • Use disciplines like TQM for continuous learning to reduce costs and improve quality
    Alignment & Consistency: Market Disciplines www.myCNI.com.my www.OOBEY.com
  • Alignment & Consistency: Market Disciplines
    • Customer Intimacy
        • Capture knowledge about customers
        • Understand customer needs
        • Empower front line employees
        • Ensure that everyone knows the customer
        • Make company knowledge available to customers
    www.myCNI.com.my www.OOBEY.com
    • Product Leadership
        • Reduce time to market
        • Commercialize new products fast
        • Ensure that ideas flow
        • Reuse what other parts of the company have already learned
        • Ensure there are multiple sources of funding
    Alignment & Consistency: Market Disciplines www.myCNI.com.my www.OOBEY.com
  • Alignment & Consistency: Market Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
  • Alignment & Consistency: Market Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
  • Business Situations vs. HRM and their impact on C&B Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Stack R&D Early wins Slow Down HR Costs Top Talent focus Stack Sales Increase attrition
  • Values Driven C&B
    • Performance
    • Differentiation
    • Teamwork
    • Caring
    www.myCNI.com.my www.OOBEY.com
  • Managing Performance through C&B www.myCNI.com.my www.OOBEY.com
  • Values Driven C&B
    • Performance
    • Differentiation
    • Teamwork
    • Caring
    www.myCNI.com.my www.OOBEY.com
    • Beating a Dead Horse
    www.myCNI.com.my www.OOBEY.com
  • Most Common Desperate Performance Improvement methods
    • Send for more Training
    • Enforce more Incentives (positive/negative)
    www.myCNI.com.my www.OOBEY.com
  • Mager and Pipe
    • Analyzing Performance Discrepancies
    www.myCNI.com.my www.OOBEY.com
  • Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
  • Incentive Problems
    • Problem with C&B in managing performance:
    • Most people are confused or unsure about compensation tools
    • Some people misuse compensation tools
    www.myCNI.com.my www.OOBEY.com
  • What to Pay?
    • Pay for Service
    • Pay for Job
    • Pay for Competency
    • Pay for Performance
    www.myCNI.com.my www.OOBEY.com
  • Pay for Job www.myCNI.com.my www.OOBEY.com
    • Competency
    • - Knowledge
    • - Skills
    • - Experience
    • Problem solving
    • - Complex
    • - Type of problems
    • - Special Problems
    • Responsibility
    • - Authority
    • - Success/Failure
    • - Freedom to act
  • Performance and Incentives
    • Internal Equity
      • Internal Job Rates
      • Performance differentials
    • External Competitiveness
      • External Job Rates - Benchmarking
      • Demand & Supply
    www.myCNI.com.my www.OOBEY.com
  • What’s the Difference?
    • Increment
    • Bonus
    • Promotion
    www.myCNI.com.my www.OOBEY.com
  • Compa Ratio Table
    • Use this if your company:
    • Pays for Performance , and
    • Pays for Job rates
    • Def:
    • Mid-Point = Mid Point of Pay Grade
    Grade E2 Min RM2,000 MID RM2,500 Max RM3,000 www.myCNI.com.my www.OOBEY.com
  • Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 5% 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 1 2 2 3 4 5% 7 9 3 7 4 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 0 0 2 4 1 0 1 2 4 6 2 3 4 5% 7 9 3 3 5 7 9 12 4 7 8 9 12 15 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • Employee Differentiation through Relative Performance and Talent Management www.myCNI.com.my www.OOBEY.com
  • Values Driven C&B
    • Performance
    • Differentiation
    • Teamwork
    • Caring
    www.myCNI.com.my www.OOBEY.com
  • Employee Distinction? www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 1 2 3 4 5 6 2 3 4 5% 6 7 3 4 5 6 7 8 4 5 6 7 8 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • Employee Distinction? www.myCNI.com.my www.OOBEY.com 0 0 0 0 0 1 0 0 1 1 1 2 3 4 5% 7 9 3 3 5 9 12 18 4 5 8 12 15 20 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • Employee Distinction Group I (Talent Pool) Group II (  Potential) Group III (  Performance) Group IV (Counseling) 2 3 4 5 2 3 4 5 PERFORMANCE POTENTIAL
    • Identify
    www.myCNI.com.my www.OOBEY.com
  • SCL: Specialist Career Ladder www.myCNI.com.my www.OOBEY.com Associate Specialist (2) Specialist (4) Consultant (4) Principal Consultant (1)
  • SCL: Specialist Career Ladder
    • General incentives & privileges :
    • a. Extra monetary incentive
    • b. Official Specialist / Consultant job title.
    • c. Higher external training subsidy limit by company.
    • d. Tie-pin or pin
    • e. Certificate
    • f. Additional benefits
    General qualifying/re-qualifying criteria: a. Meet the competency criteria b. Performance min B, PED c. Min. 40 training hr/year d. Physical contribution: i Mentoring ii Write-up iii Speaking iv Multimedia recording v R&D publication / Thesis www.myCNI.com.my www.OOBEY.com
  • Curse of the Bell Curve ‘ A’ Staff ‘ B’ Staff ‘ D’ Staff ‘ E’ Staff ‘ C’ Staff www.myCNI.com.my www.OOBEY.com
  • Swing Loyalty: Try Your Best…
    • Over Promote
    • Loans
    • Spot Bonuses
    • Block recruiters
    • The Spouse
    • Toys
    • Glorified Titles
    • Forced Ambassador
    • “ Position” the competition
    • Sell the Dream
    • Give them a Best Friend
    • Internal Trainer
    www.myCNI.com.my www.OOBEY.com
  • Managing Team performance – collaboration, innovation www.myCNI.com.my www.OOBEY.com
  • Values Driven C&B
    • Performance
    • Differentiation
    • Teamwork
    • Caring
    www.myCNI.com.my www.OOBEY.com
  • Managing TEAMS
    • Identify the right ‘levers’
    • Set KPIs for the right ‘levers’
    • Manage the ‘levers’ through performance systems
    • Balance Individual vs. Team priorities
    • Manage conflicting KPIs, but don’t eliminate them
    www.myCNI.com.my www.OOBEY.com
  • TEAM levers C.O.R.E. ÷ W.L. www.myCNI.com.my www.OOBEY.com
  • Possible TEAM-type KPIs and incentives www.myCNI.com.my www.OOBEY.com
    • Recognition for exceptional success (usually not in cash)
    • Individual role considered in normal merit increase process
    Functional
    • Recognition for exceptional individual or team successes in spot awards or share increases
    • Venture profit sharing
    Network/ Partnerships
    • Recognition for exceptional individual contributions in spot wards or salary increases
    • Project / programme Phantom Stock or Profit Sharing
    Project/ Time-based
    • Team competencies recognised in pay for proficiency approach
    • Gainsharing or operational progress incentives
    Process Possible Incentive Type Team Type
  • Team Incentive Models
    • 1. Fixed Salary Proportion (Fixed Personal, Variable Team)
    Performance Incentive = Fixed Quantum + (Balance Sum In Bonus Pool ÷ Headcount) www.myCNI.com.my www.OOBEY.com
  • Team Incentive Models
    • 2. Two-tier Multiplier (Variable Personal, Variable Team)
    Performance Incentive = Personal Target Achievement + (Personal Target Achievement x Team Performance Multiplier) www.myCNI.com.my www.OOBEY.com
  • Team Incentive Models
    • 3. Team Ratio Plan (Variable Personal, Fixed Team)
    Performance Incentive = Team Ratio x Personal Target Multiplier www.myCNI.com.my www.OOBEY.com
  • Values Driven C&B
    • Performance
    • Differentiation
    • Teamwork
    • Caring
    www.myCNI.com.my www.OOBEY.com
  • What Next? Many things to be improved www.myCNI.com.my www.OOBEY.com
  • The Wish List
    • Health and Wellness
    • Work/Life Balance
    • Mobility
    • Innovation
    www.myCNI.com.my www.OOBEY.com
    • Product Leadership
        • Reduce time to market
        • Commercialize new products fast
        • Ensure that ideas flow
        • Reuse what other parts of the company have already learned
        • Ensure there are multiple sources of funding
    Possible Innovation levers www.myCNI.com.my www.OOBEY.com
  • Innovation Levers?
    • Add 10 value increasing properties to each product or service every 90 days
    • Reduce jointly held inventories and lead time required by 90% in 24 months
    • Reduce new-product/service development cycle time by 75% in next 2 years
    • Copy 10 ideas every 60 days form competitors and noncompetitors
    • Target % Revenue from New Products (previous 24 months ) - start with 50%
    Source: The Innovation Challenge, “ Thriving on Chaos” , by Tom Peters; Alfred A. Knopf Inc. www.myCNI.com.my www.OOBEY.com
  • Start Up & End Notes The end of the Beginning www.myCNI.com.my www.OOBEY.com
  • For Starting Up…
    • Get the Business Strategy right
    • Link C&B to Strategy (e.g. BSC)
    • Clarify the C&B Philosophy
    • Strengthen Performance Management System
    • Redirect Funds ($$)
    • Design simple processes
    • Develop and Reward focused on Talent groups
    • Communicate throughout
    www.myCNI.com.my www.OOBEY.com
  • Problem with C&B…
    • “ Good news for stockholders can be bad news for other stakeholders.”
    • Gregory Miller, Assoc. Prof., Harvard Business School.
    www.myCNI.com.my www.OOBEY.com
  • In the end…
    • Great Wall of China
      • humans are the weakest link
      • bad treatment of staff will lead to weak link i.e. easier to bribe, easier to con, etc;
      • bad treatment examples: insulting, lose face, broken promises, no dignity, public criticism, restructure without communication
    www.myCNI.com.my www.OOBEY.com
  • Other thoughts…
    • Big matters/Small Matters
    • Differentiate of Die
    • Define “Talent”
    • No “Jerk” rule
    • Flat Structure?
    • The Jerk Boss
    • All aspects
    • Hire Strict
  • Summary
    • Segmented & Targeted
    • Attraction, Retention and Succession
    • STARS ™
    www.myCNI.com.my www.OOBEY.com
  • Thank You. soft copy of slides: http://totallyunrelatedrandomanddebatable.blogspot.com/