how do we develop C&B strategy while we have tight budget

1. C&B Strategy
In Tight Budget
Asep Susilo
Chief of Human Capital & Corporate Affairs
PT Suntory Garuda Beverage

2. We face some challenges

3. Why Budget is tight?
1 Business Challenges : Turnaround, downturn, negative
profit (loss), re-structuring, even startup business
2 External Environment challenges : High minimum wages increase, tighter
business competition to increase operating cost
3 Share-holder challenges: to get more profitable, shifting focus and
priorities on investment i.e. automation, IOT etc. which can reduce
labor cost
4 HR System challenges : ratio between fixed vs variable compensation,
no measurement on employee productivity

4. Some common Pragmatic actions during tight budget
Freeze/minimum Salary Increase
Freeze/minimum Training budget
Freeze hiring/HC reduction/no HC replacement/
add more responsibilities to the same person
Freeze/minimum business trip
Reduce overtime/freeze employee promotion
No employee benefit improvement/
No or minimum BONUS And Many more Actions …

5. What The Impacts to Employee?
Employee Motivation
Overall employee and organization engagement
High Attrition/ turnover
TRUST on Leadership/ Management
Overall Company Performance

6. Challenge for HR:
Accommodate Management vs Employee Aspiration

7. Find the opportunities
and RIGHT proposal

8. Rewards strategy:
RISKs vs REWARD
encourage
Performance based
It’s not all about
FINANCIAL Reward but
Also Think
about NON-FINANCIAL

9. FINANCIAL REWARD
NON-FINANCIAL
REWARD
• Annual Salary Review Strategy
• Variable Compensation/ Bonus vs Performance
• Minimum Wages Adjustment Strategy
• Talent/ Critical Position Retention Strategy
• Specific Performance based Incentive: Sales
Incentive, Special Project incentive etc.
• LTI & Stock Option Strategy
• Regular variable allowances strategy
• Employee Benefit Review: Health, Car, Flexy-
benefit, other Perks
• Company Regulation/ CLA review *) for further
renewal
• THANKS-Card to recognize employee
achievement
• Celebration Lunch/Dinner for team
achievement
• Coffee Morning: Sharing success/
achievement story
• Recognition on Breakthru idea for
improvement
• Flexy hours, additional days off i.e. happy
Friday: to leave office earlier on Friday
• Give more EXPOSURE for top performer or
project achievement
IMPORTANT: COMPANY Has to communicate Openly and in regular basis about
Company Strategy and Direction, as well as progress of business performance

10. Possible Applicable
Rewards Strategy & Actions

11. Finding the Opportunities
Salary Structure
Review
Opportunities Possible C&B Strategy
• Use a multiple salary structure based
on functions
• Differentiate salary structure between Core
functions and non-Core (supporting) functions.
• With such approach, the company will be able
to focus & contain the premium pay for
required functions only.
• Salary structure differentiation must be based
on a reliable salary survey result, accurate peer
selection, and proper core & non-core functions
identification.
• Note: Core functions may differ between
different industry sectors.
Example:
• Challenge: Budget is very limited or ZERO
• Market price for some functions – particularly at core
business – increasing rapidly.
• Need to attract & retain the core functions to ensure
business growth.
• Have Salary Survey Result as reference is advantage

12. Finding the Opportunities
Annual Salary
Review
• Challenge: Budget is very limited or ZERO
• Yet we need to consider retaining Key TALENTS and
Critical Position in the company
• Employees thru UNION asks for a decent salary increase
and by law to comply with minimum wages regulation
• Having a Salary Survey Result as reference is an advantage
Opportunities Possible C&B Strategy
• Determine the right approach for
Annual Salary Increase
• Use criteria of Performance, Salary Position (C/R)
and or Potential/Talent Rating *)
• Give ZERO increase or lumpsum for employees
with salary above the max range.
• Use a staggering increase mechanism, based on
company business performance. e.g. 4% in H1
and another 5% in H2.
• Set the Compression Wage Increase (Upah
Sundulan) due to Min. Wages increase as low as
possible – need to convince Union & keep
maintain the harmonious industrial relations.
Note: Strategy might be different in case company is planning
to close-down the business, restructuring
+ additional
%age for
Key Talent
Example:
As Budget

13. Finding The Opportunities
Retaining Key
Talents/ Critical
Position
• Budget is limited or ZERO
• No/Freeze hiring even for HC replacement
• But we need to consider to retain Key TALENT and
Critical Position in the company
Opportunities Possible C&B Strategy
• Identification of Key Talents & Critical
Position to be retained
• Develop Retention Program i.e. financial
retention incentive which relate with Individual
and company performance i.e. 2-3 years period
• Along with the plan to develop non-financial
retention program i.e. career development,
overseas assignment, training or scholarship with
bonding
• In case the organization apply: role
extension and No promotion policy
• People will have additional responsibilities
(double-hat) or doing higher responsibilities
(Acting) – develop double-hat & acting allowance
policy (temporary i.e. max 12 months)

14. Finding the Opportunities
Minimum Wages
Pressure
• Minimum Wages Increase as per regulation is much
higher than Budget
• To maintain the distance of MW (Unionized) employee
vs Non-MW (Non-Unionized) employee salary
100
Grade-1 Grade-2 Grade-3 Grade-4 Grade-5 Grade-6 Grade-7 Grade-8 Grade-9
MW-Employee Non-MW Employee
110
500
550
550
ML
MB
HL
HB=?
ML : Old min wages HL: Old highest salary
MB : New min wages HB : new highest salary to be set
GM: Gap new MW vs Old MW X = Set new highest salary (gap)
HOW to Determine the NEW Salary due to Min WAGES Increase?
• Normally Union will ask to give GAP of Min Wages increase for everyone
• OR ask same %age of Min. Wages increase
Simple Formula to determine
New Salary due to Min. Wages Increase (Sundulan)
Due to budget,
need to cap the increase
at a certain amount
Note:
Discussion and agreement with UNION (if any)
is key for this implementation
Lowest Increase = HB-HL
Highest Increase = MB-ML
The principle:
Lower salary increase for
those with higher salary

15. Finding The Opportunities
Performance
Based
Compensation
• Spirit to achieve better performance level
• Company to reward extra-ordinary performer
• Distinction between Revenue Generator
(Sales/Marketing/Biz Dev) vs Supporting Function
Opportunities Possible C&B Strategy
• To encourage people in the
organization to achieve company
and individual performance target
thru Annual Bonus/ VC
• Develop or revisit Bonus System with clear segregation
of each level on 1) Company Collective Objectives and 2)
Individual Objectives
• In case company in very though situation: Company
Collective Objectives is KEY to be achieved with HIGHER
Ratio vs Individual Objective
• Set Threshold/Gate-Opener/Trigger is KEY i.e. if only
Profit achieves 90% of Target then Bonus will be given
• Prioritization of focus and KPIs might revised from time
to time as per company strategy
Company Collective Objectives normally consist of:
1. Revenue/ Sales Volume/NSV 2. Profit (OPI) 3. OFCF 4. ROI

16. Finding The Opportunities
Performance
Based
Compensation
• Spirit to achieve better performance level
• Company to reward extra-ordinary performer
• Distinction between Revenue Generator
(Sales/Marketing/Biz Dev) vs Supporting Function
Opportunities Possible C&B Strategy
• To encourage and motivate Front
Liner/ Revenue Generator Team
to achieve extra-ordinary
performance result
• Develop or revisit Sales Incentive Program, Production
incentive or Special Project Incentive
• Clear Segregation on KPIs : Volume, Profit and Process
Sustainability (non-volume related KPIs)
Company Collective Objectives normally consist of:
1. Revenue/ Sales Volume/NSV 2. Profit (OPI) 3. OFCF 4. ROI

17. Finding The Opportunities
LTI : Stock
Options
• Leverage sense of belonging and awareness
• Could be minimum 2-3 years program while company
couldn’t give Bonus or other variable compensation
due to tight budget constrain
• As retention tools: Employee to stay
Opportunities Possible C&B Strategy
• Leverage ownership and sense of
belonging of employee
• Develop Stock Options Program:
1. Might start from certain level of employee
2. Link between company performance and individual
performance during SO period

18. Finding The Opportunities
Review Regular
Allowances &
Employee benefit
• Identify which allowances and benefit that need to
keep (no changes) during tight situation
• Prepare strategy include for CLA or PP/ Company
Regulation renewal
Opportunities Possible C&B Strategy
• To Manage labor cost due to
benefit and allowance given to
employee
• Prioritization of Benefit Review – not every year need to
be reviewed or adjusted
• Review employee benefit vendor regularly i.e. health
insurance provider to get potential cost saving with
competitive services without sacrificing the quality
• Explore Flexible Benefit program that can generate cost-
saving or neutral cost impact

19. Satisfaction is not always about money
Find Opportunities on Non-Financial
REWARD

20. Finding The Opportunities
NON-FINANCIAL
REWARD
• As part reward to recognize performance or certain
achievement even small achievement to motivate
employee
• Not require high budget to apply Non-Financial
Reward
Thank You Card, given by Management to the
employee for some contribution, project completion,
accomplishment, etc.
Exposure: sharing success story to others about
contribution or achievement

21. Finding The Opportunities
NON-FINANCIAL
REWARD
• As part reward to recognize performance or certain
achievement even small achievement to motivate
employee
• Not require high budget to apply Non-Financial
Reward
Celebration Dinner: given for Team accomplishment
or contribution to the business strategic actions
Recognition to the Breakthru or Continuous
Improvement Ideas i.e. Kaizen Forum, SGA etc.
Special Moment: Breakfast with CEO/Top
Management to recognize contribution and give
opportunity to share directly with the management
team

22. Finding The Opportunities
NON-FINANCIAL
REWARD
• As part reward to recognize performance or certain
achievement even small achievement to motivate
employee
• Not require high budget to apply Non-Financial
Reward
Flexi-hours, working from any WHERE and any WEAR
Additional Days-Off, Holiday, Annual leave and other
Paid leaves i.e. Maternity, Paternity
Especially for MNC: Maximize the opportunity for
overseas assignment as part of career development