kenexa winning in 2012 alternative compensation strategies

Winning in 2013

Alternative Compensation Strategies to Boost Your Competitive Edge

Presented by: Lance Berger

May 16, 2012

Lance Berger

Lance Berger is Managing Partner of Lance A. Berger & Associates, Ltd., a

management consulting firm he founded in 1991. His firm provides advisory

services in the areas of talent management, compensation, and change

management.

Lance has written and edited eight books including The Compensation

Handbook. His work has been selected as one of the top 30 business books

by Executive Book Summaries.

Lance previously held a position at the Hay Group, Inc., where he was

General Partner in charge of the firm’s worldwide compensation business

and coordinator of all strategy for human resources practices.

He has appeared on CNN, been quoted in The Wall Street Journal, and is

listed in several Who's Who publications. He also has been a speaker for

the United Nations, The Conference Board, Human Capital Institute,

American Management Association, Wharton School, WorldatWork®,

Linkage, United States Chamber of Commerce, Society for Human

Resources Management, American Society for Training and Development,

and numerous trade associations.

Lance A. Berger & Associates Ltd. May 16, 2012

Winning in 2013

Alternative Compensation Strategies to Boost Your Competitive Edge

Presented by: Lance Berger

May 16, 2012


Learning Points

Business Strategy

Talent Management

Compensation


Drivers of Business Success

• Growth rate

• Winning Strategies

• Risk profile

• Target culture


Targeted Growth Rates

• Hyper growth

• Fast growth

• Growth

• Moderate growth


Strategic Plan

A plan created today whose outcomes will occur

sometime in the future


Strategies

Current

Products/ Services

New

Products/ Services

New

Markets

Braver

Bolder

Current

Markets

Better

Broader

Winning Strategies

Risk

Risk


Strategies

Current

Products/ Services

New Products/ Services

New

Markets

Architect Braver

Level 2 Risk

Innovator

Bolder

Level 1 Risk

Current

Markets

Engineer Better

Level 4 Risk

Designer Broader

Level 3 Risk

Risk Profile Risk

Risk


Culture

• Unspoken

conventions

• Stated rules

• Observable reality


Target Culture

• Risk craving

• Change driving

• Creative

• Opportunistic

• Venturesome

• Highly adaptive

• Highly participative and collaborative

• Risk seeking

• Change seeking

• Innovative

• Progressive

• Adaptive

• Participative and collaborative

• Risk oriented

• Change responsive

• Pragmatic

• Efficient

• Flexible

• Directive, participative, and collaborative

• Risk accepting

• Change cautious

• Highly pragmatic

• Highly efficient

• Flexible

• Directive, participative, and collaborative

0%

2%

4%

6%

8%

10%

12%

14%

16%

Strategic Orientation

Innovator

Architect

Designer

Engineer


Learning Points

Business Strategy

Talent Management

Compensation


Talent Management

• Creed

• Strategy

• System

0%

5%

10%

15%

20%

25%

30%


Innovator

Architect

Designer

Engineer


Talent Management Strategy

• Innovator

• Architect

• Designer

• Engineer

Key Position Keepers Solid Citizens

Superkeepers

Very High

High Moderate

Investment Within Culture Culture


Training

Termination

Assignments Selection

Compensation

Development

Education

Culture

Talent Management System


Learning Points

Business Strategy

Talent Management

Compensation


Compensation Strategy


Hyper grow

Fast grow

Grow

Moderate Grow

Affordability

Pay Markets

Competitive

Level

Mix

Allocation

by talent

category

Alignment of Compensation Elements


Pay Strategy Components

0

10

20

30

40

50

60

70

80

Hyper

Grow

Fast

Grow

Grow Moderate

Grow

Base

Short Term Incentives

Long Term Incentives

Innovator

Architect Designer Engineer

Bolder

Braver

Broader

Better


Keys to Compensation Strategies

• Affordability

• Annual funding

• Long term

funding

0

10

20

30

40

50

60

70

80

Hyper

Grow

Fast

Grow

Grow Moderate

Grow

Base




Strategic Compensation Transitions

Future

Orientation

Hyper

Grow

Fast & Grow

Moderate Grow

Hyper

Grow

Tweak

Compensation

Strategy

Won’t Work

Fast & Grow

Tweak

Compensation

Strategy

Same Strategy

Tweak

Compensation

Strategy

Moderate Grow

Won’t Work

Tweak

Compensation

Strategy

Same Strategy

Current Orientation

Same Strategy


Variable Pay Top Culture Driving Programs

Culture/ Variable Pay Innovator Architect Designer Engineer

Profit Sharing X X

Group Incentives

X X

Individual

Incentives

X X X X

Long Term X X X

Combination X X X X


Merit Pay

• Purpose

• Performance metrics

• Market driven


Merit Pay: Historical Reality

• Poor performance

standards/system

• Inability to differentiate

performance levels between

people

• Unwillingness/inability of boss

to apply standards

• Low trust in organization and

leadership

• Merit amounts below true

incentive thresholds


Alternative to Merit Pay

• Separate the market pay adjustment

from the performance adjustment

• Introduce achievement awards


Alternative to Merit Pay

• CR <80% =5.0%

• CR>80% & <90%=3.0%

• CR>90% & <100% =2.0%

• CR>100% & <110% =1.0%

• CR>110%=0%

• All fixed salary increases

based on “meeting

expectations”

• Salary progressions based on

range position

• Achievement pool reserved for

“true” top 20%

• Meaningful achievement

increases (10% +)


Recommendations

• Construct a clear compensation strategy based on your business and talent management strategies

• Determine affordability level of fixed base salaries

• Determine the competitive level of base pay in your pay markets you can afford

• Position compa ratios for solid citizen groups 5% below affordable midpoints


Recommendations

• Reward all solid citizens (+) based on compa ratio

• Eliminate fixed merit increases-shift to variable lump sum

• Introduce annual funded incentive or bonus programs

• Introduce funded long term incentives


Wrap-Up

0

10

20

30

40

50

60

70

80

Hyper

Grow

Fast

Grow

Moderate

Grow

Grow

Base



Training

Termination

Assignments Selection

Compensation

Development

Education

Culture

Strategies

Current

Products/ Services

New Products/ Services

New

Markets

Architect

Braver

Level 2 Risk

Innovator Bolder

Level 1 Risk

Current

Markets

Engineer

Better

Level 4 Risk

Designer

Broader

Level 3 Risk

Superkeeper™

Key Position Keepers Solid Citizens


Questions?

Lance A. Berger

Managing Partner

Lance A. Berger & Associates, Ltd.

17 Courtney Circle

Bryn Mawr, Pa. 19010

610-525-5332

[email protected]

www.lanceberger.com
