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COLE2877@BELLSOUTH.NET

Total Reward SystemsIdeas for Today and Tomorrow

VitaeCLIFFORD F. COLE

He is the principal in the CLIFF COLE HR ALLIANCE.

It is a team of experienced professionals dedicated to providing high quality HR solutions in compensation and organizational effectiveness through value-added outsourced human resource alternatives!

He is is past Chairman of Food Distribution’s Human Resource Executive committee. He is a former Group Vice President of Human Resources for Sara Lee Corporation and Vice President of Human Resources for PYA/Monarch Food Service Distributors with over 29 years of experience with Sara Lee at the corporate & operating level in food, food distribution, consumer personal apparel, printing and manufacturing.

He has in depth know how and experience in Compensation, Executive Coaching, Organization and Human Development, Succession Planning, Performance Management, Search, Recruitment and Selection, Employee & Labor Relations, Acquisition, Merger, and Start-Up Initiatives.

He is a speaker at management seminars for the food industry, human resource & productivity conferences, along with college & university development programs. He also has served on the Clemson University Board of Continuing Education. He is a former Board Member of the South Carolina Special Olympics.

The team services Fortune 100 companies along with small, medium and large businesses located globally and through out the United States. Representative clients both internally and externally are Frosty Acres, Centennial Foods, PYA/Monarch, Sara Lee, Sky Brothers, Sandler Foods, Coastal Foods, Schloss & Kahn, Capital Foods, Brooks Food Group, Earth Fare, Booth Fisheries, Idaho Frozen Foods, Bali, Hanes, Lexington & Bassett Furniture and Russell Corporation!

CLIFF COLE HR ALLIANCE124 Kingshead RoadTravelers Rest, SC 29690Phone 864.430.0630Email cole2877@bellsouth.netFax 864.836.4935

ALIGNING PEOPLE FOR RESULTS

Have you HUGGED your kid today?

Why not?

How are you spending

your time?

What could be more fun?

The most important Reward component!

COLE2877@BELLSOUTH.NET

Where are we going today?

Due North?

Where are we really going today?

Overview of a Total Reward System

Specifics on:

Building a sound cash compensation program

Focus on cash incentives

Why Do We Reward People?

There are not enough qualified kids!

What works in Reward Systems?

CERTAINLY NOT A PROGRAM OF THE DAY!

X

Rewards for Performance

Total Direct Compensation

Learning and Development Work Environment

Base salaryRewards & RecognitionAnnual bonus

Health & WelfareRetirement - 401(k)

Time off

Business knowledgeCareer developmentLearning experiencesPerformance managementTrainingHigh potential & succession

Organization climateLeadershipTeam spirit

Tools to perform jobWork/life balance

Benefits

Total Direct Compensation

Base Salary

Rewards &

Recognition

Performance-Based

Annual Bonus

Winning team

Focus on long-term strategic member value creation

Market competitive salary level

NeededTo

Play

NeededTo

Win

Incentive to focus on short-term tactical objectives

Immediate, cash / non-cash, on-the-spot recognition

FAB Work Environment

FFighters:

People who commit to a passion for excellence, integrity, trust and a winning culture.

Innovation:

Create our future.

Empowerment:

Provide freedom to take ownership, accountability and behave “FIERCELY” in all you do.

““FIERCE” - FIERCE” - is at the heart of our work environment and our success.

FAB Work Environment

Relationships:

Build relationships that improve the quality of people’s lives and their environment.

Communications:

Develop a fair and equitable culture that respects everyone’s ideas, opinions and experiences.

Education:

Take personal ownership and accountability for building know how, skills and ability.

““FIERCE” - FIERCE” - is at the heart of our work environment and our success.

Learning and Development

People

Equipped with proper tools to develop their leadership potential

Teamwork

Working togetherto achieve common business goals

Company Success+ =

Assessment

High Potential & Succession Planning

Personal Development

Educational Assistance Program

A bit of Rewards History The 40’s/50’s

A hungry worker is the best worker Not much in the way of rewards

The 60’s/70’s $ started to shake loose Benefits too Tricky Dick and Wage/Price controls

The 80’s % increases made for bigger pieces of the pie $ and benefits kept rolling

The 90’s to Tomorrow The $ slowed down Benefit cost shifting in vogue Benefits more costly

A word about Rewards Philosophy!

Total Direct Compensation

Our focus for today’s session!

Benefits

Learning & Development

Work Environment

What do you want and need to be?

Quality of Player

Competitive Market

To find, get and keep players who perform?

Business competitors and cost issues?

So where and how will you spend your money?

What will you get for it?

Cash Compensation Components

Total Cash =

Base +

Variable (Bonus and/or other cash incentives)

How do you build a sound program?

Job Content

Current Pay Practices

Plan Design Compensation Strategy Salary Grades and Ranges Pricing Philosophy Base Salary Annual Incentive Plan Administration

How do you look for example?

XXX’S compensation appears to be:

Base Salaries - Below Market

Annual Incentives - Incentive opportunities calculated as a % of existing

base salary are Below Market

Total Annual Cash Compensation - Below Market

Annual Incentive Payout is High vs. Actual Performance as a company

How do you look for example??

Employees see hurdle rate

Feel it is not attainable!

Thus bonus opportunity does not:

motivate employees

does not help attract or retain

What do you do?

Create new pay policy

Develop strategy for moving to it

Develop strategy for rewarding your:

Stars

High Pots

At risk

What do you do administratively??

Pool for:

Stars

High Potentials

At Risk

Performance Increases

Promotion/Demotion Treatment

KEEPING PLANS SIMPLE

The incentive pool should: Be visible to the employee participants as it

accumulates. Have a corporate performance component Be accumulated based on goals and measures which

best reflect employee influence on results Include a personal performance improvement target for

each employee

KEEPING PLANS SIMPLE

The best plans: Are supported by a flow of relevant management information

in time for corrective action.

Also have a component allowing corporate leaders to

spontaneously issue special recognition of employees in

cash,

KEEPING PLANS SIMPLE

A general rule exists: “when salaries are kept low,

incentives are paid easily and early”.

The higher the salary competitively, the higher the

standards to become eligible for incentives.

Incentive Measures (Major Categories)

Sales Volume Profit Return On Equity or Sales or Investment Products Procurement Distribution

Incentive Measures (Sales) Sales Volume Profit $ and/or % - Gross - Net - Margin Accounts - Target - New Products – Mix – New – Push Volume

Personal Team District Region Department Division Company Customers All - New - Existing

Incentive Measures (Distribution) Performance to Budget Total Operations Department

Dollar performance Through-put performance

inbound / outbound cases per hour or use tonnage per man hour cases unloaded by drivers per delivery hour average cases per outbound load

Total Distribution Center Service Level On time departure On Time delivery

Total Distribution Center Product Damage damage and Loss write off by warehousing damage and loss write off by transportation

Incentive Measures (Procurement)

Performance to Budget Total Department Merchandising allowances

Marketing revenue

Gross Profit $ and/or %

Inventory Turns

Sales Growth

Product cost

Measurement Units

Percent of Quota

Dollar Amount

Number Achieved

Points

Subjective Evaluation

Percent

Incentive Payouts for Performance

Threshold The beginning point, usually at least last years performance

Competent Performer Compensation Amount paid for achieving planned results.

Outstanding Performer Compensation Amount paid for significantly exceeding planned expectations.

Incentive Measures Weights

Communicate to the Person how important each

measure is relative to the total job. Sales Volume: 70% Product Mix: 20% Target Accounts: 10% Total: 100%

Incentive Linkages Internal External Sales Distribution Finance Procurement FAB Member

Have you HUGGED your kid today?

Why not?

How are you spending

your time?

What could be more fun?

The most important Reward component!