How To "Sell" The Total Rewards Package Successfully


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How To "Sell" The Total Rewards Package Successfully

  1. 1. Callidus Sales Performance Management Conference San Diego, CA November 13, 2007 Are We Communicating? How To “Sell” The Total Rewards Package… Successfully! John A. Rubino, President Rubino Consulting Services
  2. 2. Global Research Consistently Shows That Most Organizations Do A Poor Job Of Communicating With Their Employees. WHY????
  3. 3. Three Primary (Mega) Objectives Of Managed Communication: Ensure Understanding Get Buy-in/Change Perceptions Motivate The Right Behaviors
  4. 4. Tools And Techniques For Effective, Managed Communication… We can become more effective communicators by observing and learning from the world around us. Who are the most effective communicators in our society…and what can we learn from them?
  5. 5. Communication Methodology A Framework For Effective Communication Step-by-step, managed approach… Analyze The Current Situation • Define The Objectives • Establish The Key Messages • Conduct The Audience Research • Choose The Media • Strategy Implementation • Communication Evaluation •
  6. 6. 1. Analyze The Current Situation Current State Future State
  7. 7. 2. Define The Communication Objectives The “SMAART” Approach Specific Measurable Attainable Audience-specific Relevant Tied to the business
  8. 8. Are These Communication Objectives “SMAART”? Objective 1: “Inform employees of the Company’s philosophy to be competitive in total compensation” Objective 2: “Achieve an acceptance of the new managed health care program by at least 75% of eligible employees”
  9. 9. 3. Establish The Key Messages What Key Messages Should Be Conveyed? (Linking Content To Objectives) Communication Key Messages Objectives (Content)
  10. 10. What Are The Key Messages? Objective: Increase “paid fairly” perceptions from 56% to at least 70% Both employer and employee benefit Company devotes substantial resources to achieve fair pay Fair pay is individually subjective and organizationally objective What is fair depends on your point of view
  11. 11. 4. Conduct The Audience Research Questions To Be Answered During Audience Research: Who are your audiences? What is the current level of understanding? What is the fit to culture and corporate philosophy? How does this project fit with recent or upcoming changes? Are communication messages consistent? Do managers have the necessary “people” skills? Is the performance-to-reward connection clear? How does senior management view communication? What is the employees relations climate? Are global considerations an issue?
  12. 12. 5. Choose The Media Many Choices, Many Combinations Print Internet/Intranet Presentation Software Group Meetings One-On-One Video Interactive PC Software Workshops/Study Groups **Steps 6 and 7 (implementation and evaluation) are explained in the ‘example’ to follow**
  13. 13. Coca-Cola Enterprises, Inc. Total Rewards Statement “Everything of value that comes from the organization to the employees” (personalized) Total payroll costs, and a breakdown of all benefit expenses Your Total Compensation: base, bonus, benefits (coke’s share and your share) Paid time off Retirement benefits, with an interactive ‘calculator’ Wellness programs: descriptions and their value, monetary and non-monetary Disability Insurance (company and individual cost) Life insurance Educational assistance, scholarship programs, adoption assistance, purchase programs, ESSP, etc.
  14. 14. Sun Trust Banks, Inc. Broad-Based Stock Option Program “Think Like An Owner” “How Can Sun Trust Help You?” What is a stock option? Types of stock options (ISOs & NQOs) How you benefit from stock ownership Three ways to exercise your option Know your tax situation (tax implications of stock options, contrasting ISOs and NQOs) Frequently Asked Questions Consult an advisor! Who to contact at Sun Trust
  15. 15. Communication Methodology For The New Total Reward Strategy (‘Example’) Current Situation: The organization is transforming its reward strategy away from a traditional job-based system (merit increases) towards incentive compensation for all employees. This will require significant cultural change as well as the establishment of new behaviors that define success. The ‘entitlement mentality’ will be abolished, and monetary rewards will be variable based on performance — a marked distinction between those who go “above and beyond” and those who do not. Executives and managers will model the new behaviors and establish performance goals that are discernable, valid and measurable.
  16. 16. Communication Methodology For The New Total Reward Strategy Communication Objective: In order to ensure understanding and acceptance by ALL employees of the changes in the organization’s reward strategies, emphasize variability based on performance and de- emphasize the entitlement mentality, in order to align the new desired behaviors with the new organizational values.
  17. 17. Communication Methodology For The New Total Reward Strategy Key Messages: Communicate the new behavioral models that must be demonstrated by all employees. These behaviors are directly aligned with the articulated organizational values and core competencies; Communicate the importance of job ownership and personal responsibility with regard to work performance; Thoroughly explain the new incentive compensation reward mechanisms, emphasizing variability based on performance…
  18. 18. Communication Methodology For the New Total Reward Strategy Audience Research: Because the introduction of the new incentive compensation plan represents significant cultural change, it is imperative that management and employee acceptance and buy- in be accomplished in a complete and systematic manner. The first step to achieve this objective is an audience research approach which “casts a wide net” and will serve both as an information- gathering exercise as well as an educational forum.
  19. 19. Communication Methodology For the New Total Reward Strategy Audience Research (continued): A written questionnaire (paper- and/or intranet-base) distributed to all employees. The survey will capture the degree of understanding and acceptance by the employees of the new behaviors and reward strategies; Using tabulated survey results, focus groups will be formed to delve deeper into topic areas of most concern; Manager and employee study groups will be formed to get “brainstorming” input on the implementation of the new reward strategies.
  20. 20. Communication Methodology For the New Total Reward Strategy Media and Strategy Implementation: To support the new culture, behaviors and reward strategies, the media and implementation approaches must be thorough and “human” oriented.
  21. 21. Communication Methodology For The New Total Reward Strategy Media and Strategy Implementation (continued): A video…recognizing and demonstrating the emotionality of the subject matter; Written materials (plan documents): a detailed explanation, with examples, of the new incentive compensation plan; Face-to-face meetings throughout the organization conducted by well- trained managers and assisted by program designers from human resources. In order to achieve the stated communication objective, all employees will have an opportunity to participate in two-way, “real time” presentations; Working/training/education sessions for all managers and employees to help them establish performance goals and behavioral guidelines under the new reward strategies. Additional information and Q&A follow-up through the intranet (HR website).
  22. 22. Communication Methodology For The New Total Reward Strategy Communication Evaluation: Four to six months after the new incentive compensation plan goes “live”, re-survey the managers and employees and reconvene the focus groups in order to conduct a ‘before’ and ‘after’ comparison. Also, all managers will submit a written assessment to human resources on the degree of success of the communication effort.
  23. 23. Communication Methodology For The New Total Reward Strategy Communication Evaluation (continued): Strategic questions to be answered by citing specific examples… Are employees demonstrating and ‘internalizing’ the new competencies and behaviors? Is the new incentive compensation plan perceived as fair? Are performance goals and criteria being adhered to and, most importantly, accomplished? Are employees taking ownership of their jobs and career development?
  24. 24. The Total Rewards Package… **It All Starts With EFFECTIVE PERFORMANCE MANAGEMENT** **Performance Management Needs To Be At The Core Of Everything That We Do!**
  25. 25. The Goal of Performance Management The ultimate goal of a performance management system is improved organizational performance. Performance management works to achieve consensus, cultivate continuous improvement, support relationships, and ensure that the entire organization is focused on achieving the desired results.
  26. 26. The Rationale for Performance Management Foster cultural change, link pay to performance, identify training needs, empower managers, and motivate the work force. Improve profit, performance, customer service, efficiency, competence and quality.
  27. 27. What Is Successful Performance Management? Performance management is a managerial process that consists of planning, managing, improving, appraising, and rewarding performance. It is a dynamic process that cascades throughout the various levels of the organization, utilizing observation, feedback, development and many other tools and approaches to maximize organizational performance.
  28. 28. What Is Unsuccessful Performance Management? Organizational performance philosophy not ‘determined and articulated’. Performance criteria established in a ‘vacuum’ --- no alignment. Primary concentration on the evaluation ‘form’. No consistency in management ‘thought and application’ throughout the organization. Middle managers not a ‘quality group’.
  29. 29. Performance Management: A Continuous Process Plan – defines what is important to the organization, and what needs to be done. Act – refers to the day-to-day activities and ongoing developmental steps taken to accomplish the plan. Monitor – refers to the responsibility of leaders and managers to track, coach and develop. Review –formal assessment and feedback.
  30. 30. Effective Performance Management: The ‘Cascading’ Approach • Corporate criteria are always quantitative: measures how the organization defines financial/operational success (2 or 3 criteria). • Also, develop “Qualitative” Corporate Goals (QCG’s): organizational- wide business & operational objectives for the upcoming performance period. • QCG’s are used to “cascade” Departmental and Individual/Team Goals. Departmental and Individual/Team Goals should be both quantitative and qualitative: • Criteria must be valid, discernible and measurable and, if applicable, with milestone dates. --- No more than four to six criteria per category. --- Narrative rating scale can be used to assess qualitative criteria.
  31. 31. Total Rewards Objectives: We Want to Create and Support… Employees who are focused on adding value to the business by meeting/exceeding performance expectations. True employee “ownership”. Retention and motivation of productive employees. A good “sell” to top candidates; a compelling reason to join the company. A marked distinction between those who go “above and beyond” and those who do not. An environment that discourages the entitlement mentality. An appropriate mix between base salary, variable opportunities, and all other components of the total rewards strategy.
  32. 32. The Total Rewards Plan “The Ten Criteria For Success”
  33. 33. 1. A Successful Plan Is Aligned With Organizational Culture/Values Culture and values must support a total rewards & incentive framework: instilling a “Sales Mentality” Senior management must allow the program to work Should have “Pay By Example” at the top of the organization
  34. 34. 1. A Successful Plan Is Fair to Employees Must be internally equitable and externally competitive Performance criteria must be discernible, valid and understandable Program must deliver what is promised on time and fairly
  35. 35. 1. A Successful Plan Is Fair to the Organization Should work towards self-funding Organization should be relatively profitable when the program is initiated Plan design should guard against “windfall” payments
  36. 36. 1. A Successful Plan Sets Total Compensation (Total Rewards) Compensation policy must be aligned with total rewards and strategic objectives Variable pay should be directly tied to performance criteria achievement: direct line-of-sight Consider re-defining what is meant by a base salary increase
  37. 37. 1. A Successful Plan Yields Financial Returns to Employees Variable pay opportunities must be perceived as “substantial” enough to motivate performance Timing of variable payments should be as close as possible to the qualifying event If designed properly, payouts to employees will yield “slices from an expanding financial pie”
  38. 38. 6. A Successful Plan Yields Financial Returns to the Company A well-designed and executed total rewards plan can improve the organization’s bottom line. Measurable benefits can include improved: - Morale - On-time Performance - Productivity - Work Methods - Quality - Etc., Etc., Etc. - Customer Service
  39. 39. 7. A Successful Plan Involves Employees And Managers Middle managers will make or break the total rewards plan Must get buy-in from employees Should involve employees and managers in the plan design, including identification of performance criteria Build trust!
  40. 40. 1. A Successful Plan Uses Internal And External Data Collect and analyze accurate and valid competitive data Build the total rewards plan from a “rational” base pay foundation Base salary serves as the anchor in total rewards planning
  41. 41. 9 (a). A Successful Plan Sets Forth Clear Performance Goals Performance criteria in successful programs are: - “cascading” - a combination of quantitative and qualitative measures - simple to understand - supported by valid data - monitored through strong controls
  42. 42. 9 (b). A Successful Plan Sets Forth Clear Performance Goals Aligning rewards to performance requires the following: - a clear (and clearly-perceived) relationship between pay and performance - predictable measures of performance - visible benefits to the employees and the organization - regular formal and informal performance feedback
  43. 43. 1. A Successful Plan Achieves Clarity Through Communication Communication mega-objectives: - to ensure understanding - to change perceptions (get buy-in) - to motivate behavior Even the most elegantly-designed variable program will not achieve the desired results unless employees and managers understand and, ultimately, buy into the program
  44. 44. VARIABLE PLAN ‘FRAMEWORK’ (Can Be Tailored To Your Organization) RANGE: PERFORMANCE TARGET 0 – 150% WEIGHTINGS TIER OPPORT. OF TARGET CORP. DEPT. INDIV. ---------------------------------------------------------------------------------------------------------- 1 – Officers 35.0% 0 – 52.5% 70% 20% 10% 2 – Directors 25.0% 0 – 37.5% 40% 50% 10% 3 – Managers 15.0% 0 – 22.5% 30% 50% 20% 4 – Profess. 10.0% 0 – 15.0% 20% 20% 60% 5 – Support 8.0% 0 – 12.0% 10% 20% 70%
  45. 45. VARIABLE PLAN Performance Criteria (example) Corporate criteria (Quantitative): NET INCOME (% growth over previous year) Criteria Payout MAXIMUM >=17% 150% TARGET 12% 100% THRESHOLD 9% 50% <9% 0 (Interpolate for points in-between)
  46. 46. Seven Steps to a MOTIVATION-FREE Total Reward Package Be sure no one quite knows what his/her job is Keep selection and promotional criteria vague Don’t tie yourself or employees to tangible goals Be vague about who measures performance and how Keep salary ranges, increase percentages, incentive guidelines, and most components of total rewards secret Surprise employees with a bigger paycheck or lump- sum/spot award Be defensive when asked to explain and defend human resources actions