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12 Case Studies of Companies that Revised How They Compensate Employees
S HRM has partnered with ChiefExecutive.net to bring you relevant articles on key HR topics and strategies.
Higher compensation is part of the ransom for dealing with the pandemic for most American companies and industries. So salaries, wages, benefits and perks will cost them more—perhaps a lot more—in the year ahead.
The way CEOs and CHROs can make sure the Great Raise works to their companies' advantage is to be proactive, creative and equitable about it. Yet they also must weigh strategically the demands of the moment with their long-term compensation strategy.
"This is a time for real balance when it comes to how you deal with retention and attraction," said Paul Knopp, chair and CEO of KPMG US. "We all have to make sure we meet the market when it comes to base compensation, but the market has changed in a way that you also have to look at those benefits that are most attractive to employees for their careers."
While median full-time earnings of $1,001 per week in the third quarter of 2021 were nearly 9% higher than two years earlier, according to the Labor Department, expectations for 2022 remain frothy given the tight market for talent, the free-agent ethos encouraged by remote work, the geographic reshuffling of workers and decades-high inflation. U.S. wages will increase by 3.9 percent in 2022, according to the Conference Board, the highest rate since 2008.
The compensation surge is occurring at the high end, at a low end that's getting higher and everywhere in between. Goldman Sachs, for example, is offering paid leave for pregnancy loss and expanding the amount of time employees can take for bereavement leave while also boosting its retirement-fund matching contributions for U.S. employees to 6% of total compensation, or 8% for those making $125,000 a year or less.
Meanwhile, at Tyson Foods' chicken-processing plant in New Holland, Pa., the company has started offering a three-day workweek, plus pay for a fourth day that retains employees' status as full-time workers. Just for good measure, Tyson has created a $3,000 sign-on bonus for new hires.
"We're in a bidding war for talent that will go on for a long time," said Alan Beaulieu, president of ITR Economics.
For CEOs and CHROs, several new factors demand their attention along with the overall spike in compensation. They include:
- The end of retention. The "idea of a long-term commitment to one employer has been dead for a while, but it's really dead now," said Dave Roberson, CEO of the RoseRyan financial consulting firm. "You must have a stream of people. Assume you're going to be replacing people. So how do you keep the people you have, if you can, but also bring the next group in?"
- High-balling. A deal to recruit someone may not really be a deal these days. "You've made an offer and you think you've got a hire, and then they're asking for $5,000 or $10,000 more," said David Lewis, CEO of OperationsInc, an HR consulting firm. "Now you have to ask yourself what makes more sense strategically: say no and hold the line and lose the candidate and restart the process, not knowing how that will work out? Blow up your compensation structure? Or as a Band-Aid, give that person a sign-on bonus in hopes that the package will get them in the door?"
- Need for equalization. Recruiting with higher compensation also requires boosting pay and benefits for retention. "You need to be mindful of what you're paying others in the organization and understand the detrimental impact it will have when you bring someone in alongside a tenured employee," Lewis said. "Operate on the idea that everyone's salary is basically posted on the pantry door in your office."
- A focus on mental health. The pandemic, anti-contagion measures and the takeover of remote work has left many Americans isolated, confused, lonely—or at least disjointed. And they expect their employers to help them cope and adjust.
"Mental health is a real thing, regardless of how [a previous generation of leaders] feel and what we did," said Jeffrey Immelt, former CEO of General Electric. "Particularly post-Covid, it's something worth your time to try to understand."
Many Fortune 500 companies already offered mental-health benefits, but by now "mental health is just a place setter: You've got to have it in place to be competitive in the market today, across the board," said Richard Chaifetz, founder and CEO of ComPsych, a large provider of employee-assistance programs. "Companies understand the importance of keeping their people functioning at the highest level."
Codility, for example, has begun supplying all employees with 27 days of paid time off per year plus four mental-health days, which don't have to be approved. "We're offering these days in addition to personal-time-off days to recognize and bring to light the importance of mental health," said Natalia Panowicz, CEO of the platform that evaluates the skills of software engineers, with its U.S. hub in San Francisco.
CHRO360.com asked a dozen CEOs, CHROs and other top executives about their compensation strategies and practices for 2022. Here are some of their ideas:
Let Them Name Their Salary
Chris kovalik, ceo, rushdown revolt, a video-game maker in new york city.
We started as 12 part-timers, mostly people who were giving me their moonlight hours. That's not a lot different from now, except now we have 75 people. The magic of what we do is that we don't recruit anybody. We're just a magnet. We let people come to us.
When it comes to compensation, some say they wanted to volunteer, that they weren't expecting compensation. But we never, ever allow people to volunteer their time for us. So we say our company minimum wage is $15 an hour, and if you insist, we can pay you that per hour.
But generally people come to us with an expectation of compensation because they see that we're making money. When compensation came up, we'd say, "I don't know what your skill set is. I've never hired you before. How much do you think you're worth, and how much do you need?"
If every hour we're compensating them for the amount of money they want and need, if someone is part-time and only giving me 10 hours a week, I'd argue that they're giving me their best 10 hours. Because they're getting paid what they want and doing things that they want to be attached to and be part of.
There's no pattern to the compensation requests. If their number is too low, we'll say, "Are you sure? Are you just giving me a low-ball number I'll say yes to?" If it's high, I don't talk them down, but I ask them to justify it, and if the justification isn't adequate, what I say is, "How long do you think you'll need to prove that justification? Two to three weeks? Then let's pay you two-third to three-quarters of what you asked, and if you prove it, we'll go up to whatever you said."
Tailor Package for Youth Appeal
Ronald hall jr., ceo, bridgewater interiors, an auto-seat maker in detroit.
We enjoyed very low turnover pre-Covid, but during the last two years we have had to replace probably one-third of our workforce at our largest facility, about the same number from termination as voluntary. So we've had to work harder than ever to recruit.
Our most-tenured employees, who are the most highly trained, have had to pick up the slack, working record amounts of overtime and less-predictable production schedules.
In our upcoming negotiations with the United Auto Workers, we're trying to emphasize short-term bonuses rather than wage increases that get baked into our costs. But we have continued health insurance through the pandemic as well as our tuition-reimbursement program, and many employees have thanked me for that.
What I am hearing from new employees is that they're not as interested in benefits but rather in higher cash wages. We've long touted benefits like our generous 401(k) matching and better medical coverage versus our peers, but we're finding that doesn't resonate as readily now as it did a decade ago. So I've asked my team: Should we be looking at some kind of hybrid model of offering higher wages to people who want those and move those dollars from the benefits side to the wages side?
We've also looked at providing childcare in a partnering arrangement where there could be a center developed near our facilities, and we would arrange for some sort of company subsidy or guarantee some level of attendance. The challenge with that is the auto industry runs around the clock, and you'd need a daycare provider who'd be committed to opening around the clock and provide legal, regulated, benchmark-standard levels of care to all those children in the off hours.
Equalize as You Acquire
Diane dooley, chro, world insurance, a business and personal insurer in tinton falls, n.j..
We onboarded about 800 employees in 2021 through acquisitions of small agencies and organic growth, but there had been no compensation modeling. Now we're building out our compensation philosophy with commission plans, incentives and bonuses, centralizing components and ensuring we have the right framework.
When we do an acquisition, we might retain their compensation model for a year or two years then slowly migrate, but make sure employees aren't taking a cut in pay. We are also capitalizing commissions into base compensation—identifying what commissions would have been and what they will be, and recognizing roles that are moving away from a commission base.
Some agencies we acquire are smaller and may be below-market for total compensation. Now we're addressing those concerns. They need to be more front and center. We must do everything to retain our employee population. If they're woefully underpaid, or not at market, we risk losing people, and we don't want to do that.
Educating the owners of some of the agencies [we acquire] is a piece of this. As we partner with them, we are evaluating them and asking, "Did you give people an increase this year?" We're not telling them what to do but providing guidance about what to do.
We're also modifying and increasing our benefits, such as giving employees pet insurance. And making counteroffers is a critical piece today, usually for high-end employees. They work better than they used to because not a lot of people really want to make a move in this environment.
Innovate for the New World
Jason medley, chief people officer, codility, a provider of skill-evaluation software in london.
We really have to step back and be innovative and force ourselves to change. The companies that are going to win are going to be more progressive early and not fighting what's happening.
One thing we've done is change our outdated compensation models that give higher pay to employees living in tech hubs like San Francisco and New York and lower compensation for areas inside the coasts. Now, we've created a United States-wide salary band, so no matter where you live, the compensation is based on the role, not the location. You can go live and work wherever you want to.
We decided to approach compensation through a very human lens. People have seasonality in life, and maybe they are caregivers at different moments and want to live in different places. We want to be as flexible as possible, and this country band gives us that flexibility.
We are starting to see the same thing in Europe, where we have our headquarters in London and offices in Berlin and Warsaw, and employees all over, especially in Poland. People are wanting to live in the countryside of Spain but demanding a London salary. So we are transitioning to one European Union band and saying, "Here is your rate—live where you want to."
We are also seeing that with global warming, it's harder to get work done for people on the west coast of the U.S. and in Europe, because they didn't build homes with air conditioning. If you're sitting in a house at 90 degrees with no air conditioning, there's no way your performance is the same as someone with AC. Supplementing air conditioning isn't something we thought about before, but now we're very much having to look at those things.
Stay Ahead of Expectations
Traci tapani, ceo, wyoming machine, a sheet-metal fabricator in stacy, minn..
Our wages have gone up by about 20% for the typical worker. When I found people I could hire, I knew they were being brought in at an hourly rate that was too high for what I was paying my incumbent workers.
My strategy has been to be proactive about that and not wait for [existing] employees to say something about it or give them a reason to look for another job. We're proactively making wage adjustments to make sure our incumbent workers are in line.
Employees will leave for more money, so they're very appreciative of it. But in my shop, I also know that people like working here, and I know they don't want to leave. I don't want to give them a reason. If they can get an increase in pay that's substantial, I know that I can cut them off at the pass. Retaining my workforce is my No. 1 strategy. They're already here, and I'm going to do everything I can to keep them.
For that reason, we've also been more generous as time has gone on with paid time off, offering it sooner than we once would have, especially for new workers. We recognize that it's healthy for people to be away from work and also, in the pandemic, people need to be away from work. Knowing they have some paid time off makes it easier for them.
Leverage Benefits for DE&I
Mark newman, ceo, chemours, a chemical manufacturer in wilmington, del..
In general our company hasn't seen the Great Resignation. And in fact, we continue to believe our focus on being a great place to work is serving us well, along with appropriate benchmarking on compensation issues.
Chemours is a great place to work. We survey our employees every year, to improve our working environment from a compensation and benefits perspective. Also, from the [diversity, equity and inclusion] perspective, we're trying to make sure we tap into the full breadth of talent in our industry.
That means, for instance, we are helping people more with college loans. We are offering same-sex [marriage] benefits. We are providing more family leave for people who have kids. There is clearly an aspect of our benefits package that is evolving to be consistent with our strategy of making Chemours a great place to work.
Overall, we view compensation as something where we want to be either in the median or upper quartile. It's something we're very focused on from both a wage as well as benefit level. From Covid, there's been no fundamental change as it relates to us wanting to be in the median to top quartile.
We've had to make some local adjustments where the labor market is more super-charged. For example, we see a lot of that in the Gulf Coast region, especially with oil prices coming back, and petrochemicals and refining. But it's very much a regional factor. So if industries are moving to a certain region, like the South, you have to make sure you stay current with local benchmarks.
Offer Skin in the Game
Cesar herrera, ceo, yuvo health, a healthcare administrator in new york city.
We're a year-old company that provides tech-enabled administrative solutions for community health centers across the U.S. that are specifically focused on providing primary-care services for low-income individuals. We have a team of about 10 people right now, and we have a number of open roles and positions where we're likely going to be tripling the size of our team in 2022.
Google can compensate well above the market rate. We don't have that since we're an early-stage organization. What we do have as levers aren't up-front financial compensation but equity, support in your role and a relatively flat organization where you can have significant autonomy.
A lot of individuals are going to be driven by the mission; that's the case with the entire founding team. We've made sacrifices to create this organization. So you can come in at a meaningful position with a lot of decision-making.
But one of the biggest carrots we can give is, if you accept the lower pay and the risk that comes with an early-stage organization, you can have meaningful equity in the company. We have an options pool which is not to exceed 10% ownership of the organization, and as we grow and scale, we increase that options pool. For senior-level leaders, we do expect to be able to distribute up to 10% of the company to them.
Pay Extra for Continuity
Corey stowell, vice president of human resources, webasto americas, a maker of automotive sunroofs in auburn hills, mich..
We had to recruit for several hundred new openings at a brand-new facility right at the beginning of the pandemic. So we instituted an attendance bonus. For those who worked all their hours in a week, we paid an additional $3 an hour. We really had to keep it short-term, so we paid it weekly. If you wanted to pay it every month, you couldn't do it, because people needed that instant gratification.
Otherwise they could get it on unemployment. With our pay rate, they could earn more to stay at home and collect unemployment, a significant amount more than they could earn than working for us. So we also had to increase our wages, and we increased them by more than 20% in some classifications [in the summer of 2020].
We've filled all of our positions, but it's still a challenging market. We've had to increase all our wages, with the lowest for a position being $17 an hour, on up to $30 an hour.
We also have offered stay bonuses of $500 a month for three consecutive months, up to $1,500. And for hourly employees we've instituted a different attendance policy, where they can earn two hours of paid personal time for so many hours that they work consecutively with no attendance issues.
The key is the schedule—we can prepare and get someone to cover. That's easier to do than just managing whoever's going to come in today. In this environment, that really has changed with our workforce, and it's tough to rely on our current workforce.
Give Them the Keys
Elliott rodgers, chief people officer, project44, a freight-tracking software provider in chicago.
We have equipped and subsidized a van that we call Romeo, which employees can use to combine work with personal uses like family road trips. We cover the cost of the rental. It's a luxury van that comes equipped with a bed, a toilet and shower, Wi-Fi, device charging and a desktop workspace. And it's pet friendly.
We started it as a pilot project and reservations were full within 10 minutes of when we posted it internally. Then we extended it into 2022. By the end of 2021, more than 20 unique team members completed or nearly completed reservations. They've ventured out to places spanning Mount Rushmore and the Badlands; Rocky Mountain National Park; Salem, Mass.; and Pennsylvania. A pretty broad number of places.
It's something we're really proud of. It allows our team members the opportunity to work in a lot of different places while still being connected to us. And they've appreciated the opportunities to stay connected, but also be connected in other ways with nature and other places in the world. They can maintain their perspective while also continuing to contribute to their role in a productive way.
When you place a team member at the center of what they'd want in an experience like that, the value of it answers itself. It creates a comfort level where it provides the necessities for you to be able to continue to work, and you can work from anywhere. It's the best of both worlds. It's one thing to find that on your own but another to have that accessible to you via work, but done in a way that caters to you.
Help Them Come, Go—and Stay
Aamir paul, country president - u.s., schneider electric, a maker of electrical distribution and control products in andover, mass..
With our knowledge workforce, it's been about intentional flexibility. So, for instance, we launched a "returnship" program for women who'd left the workforce but might want to come back even at reduced hours. That means 20, 30, up to 40 hours a week, and we're finding some incredibly talented people who haven't been in the workforce.
This program is available to men as well. If there's a field engineer who's been in the electrical industry for 35 years and he's now retiring, but he's five years from getting his medical benefits, we say: Don't retire. Go on the program. Work 20 hours a week. Work from home. We'll reduce your pay proportionally, but we will couple you with three university hires, and they will call you on Microsoft Teams and show you what's happening on the job site, and you're going to walk them through it. Work just three days a week. We'll cover your benefits.
We've also expanded the parental leave policy, which already was one of the best in the industrial sector. And we created a way for people to buy more time off without having to leave their positions. They apply for more unpaid time off and we allow them to retain their position and seniority and allow them to work through whatever life event it is.
We landed on six weeks for the maximum. In the most intense industries—such as a fighter pilot or a surgeon—they've found that six weeks of being out of the rotation allows them to re-set. So that's what we did. Before, the limit was two weeks.
Give Sway to Local Management
Tom salmon, ceo, berry global, a maker of plastic packaging in evansville, ind..
We've got to be competitive in all the geographies we serve. We have 295 sites around the world and manage our employees in those sites geographically. Every geography will be a different labor environment. There are different criteria that employees are looking for. It's not just about wages but taking everything into consideration.
We let local management handle things with their insight about wages and competition. They're hearing directly from employees about what they like and don't like, what they want more of and less of. It's a site-by-site discussion.
For example, at some sites, it may be important for employees to be able to access the internet at lunch; at other sites, they may not value that as much. Some want a more advanced locker facility, with different shower facilities. That includes the southwestern United States, where the temperatures are warmer; but in New England, some might not want that.
In any event, if you treat these things locally, you're going to be able to affect that local population and address the need of that geography. If you blanket something across our entire plant population, you may provide something that's not desired or needed.
We depend on our local management to respond to the different demands in terms of compensation and benefits at their sites. The better the front-line leadership is, and the more satisfied their team is, the higher our retention rate and productivity and safety performance. So these leaders participate in profit-sharing plans for those respective sites, because they have a great influence on the success of a given facility.
Focus Benefits on Flexibility
Paul knopp, chair and ceo, kpmg us, a financial consulting firm in new york.
We announced a new package of enhancements to our benefits and compensation, tied to mental, physical, social and financial well-being. These increases are the biggest in the history of the company. You have to make sure your base compensation meets the market, but you also must have attractive benefits.
For example, we cut healthcare premiums by 10% for 2022 with no change in benefit levels, and we introduced healthcare advocacy services. We are replacing our current 401(k) match and pension programs with a single, automatic company-funded contribution within the plan that's equal to 6% to 8% of eligible pay.
As part of this, we're focusing on the crucial element of ensuring that employees know you're watching out for them. They also are looking for flexibility—you don't want to under-index on how important that is. So we also are providing up to three weeks additional caregiver leave, separate and apart from PTO. And all parents will receive 12 weeks of paid parental leave, in addition to disability leave for employees who give birth, allowing some up to 22 weeks of paid leave. We also have expanded our holiday calendar to now include Juneteenth.
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other business publications. He lives in Michigan.
This article is adapted from www.ChiefExecutive.net with permission from Chief Executive. C 2022. All rights reserved.
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Case studies: FedEx and HSBC's revamped performance management approaches
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Eric Tan, Managing Director, FedEx Singapore, and Vishesh Dimri, Lead - HR Consulting, HSBC, both place importance on trust, honesty, transparency, and ownership in their approaches, as we find out in these interviews.
Fedex singapore’s new management system drives trust & transparency.
Eric Tan, Managing Director, FedEx Singapore, shares insights into this performance review approach — from its inception, to what it entails, along with what employers could consider in the intended shift to such a model.
Delivery service provider FedEx Singapore (FedEx) is a keen advocate of a culture of continued engagement and transparency at its workplace, one where open communication and trust thrive amongst its over 1,000 employees.
This is done through a series of engagement initiatives such as its ‘Open Door Policy’ and ‘Survey Feedback Action’ (SFA), says Eric Tan, Managing Director, FedEx Singapore (pictured above, left) . “This allows our employees to understand the big picture and the part they play in the success of the organisation. FedEx lives up to our corporate philosophy of ‘people-service-profit’: By taking care of our people, they will provide outstanding service for our customers, which enables business growth, and we reinvest this revenue back into our people. All programmes and policies, at every organisational level, synchronise with this philosophy,” he affirms.
One way the company has been driving this is through a change in its performance management system — from a conventional performance appraisal system that utilised a comparative 10-point rating scale leveraging the bell curve methodology, to an enhanced performance review structure, which focuses on the work that employees accomplish (goals), and how it is accomplished (competencies).
Tan explains: “As a ‘people’ company, FedEx strives to continuously improve its performance management processes to drive individual, team, and organisational performance. To achieve this, we assume a holistic approach towards performance management and the employee experience. With a continuous improvement mindset, FedEx across Asia Pacific proactively anticipates process and technological enhancements so as to enable us to successfully transition into a new performance management process.
"These are all part of our concerted efforts to sustain a workplace culture where our people stand at the centre of our corporate philosophy."
What this enhanced performance review structure entails
According to Tan, this enhanced structure is designed to provide an in-depth understanding of what success looks like for the employee. It adopts an absolute rating scale to evaluate employee performance, based on the ratings of “Exceeded Expectations”, “Met Expectations”, and “Did Not Meet Expectations”.
Competencies refer to observable behaviours that an employee exhibits in their role when applying their knowledge, skills and abilities. To ensure these competencies are applicable to employees’ job roles, varying competency models for frontline employees, professionals and managers have been built for their individual application. To illustrate:
- Frontline employees are customer-centric and team-focused. Hence, the focus for them is to adapt to changes and communicate well to both internal and external customers.
- For professionals, having a business thinking mindset is imperative, so they need to build on their analytical skills and make timely decisions and recommendations.
- As for managers, it is critical for them to be equipped with the ability to lead, influence, inspire, and serve, as well as to cultivate exceptional team performance while ensuring their team members are valued and empowered in their day-to-day responsibilities.
No doubt, this change involved several key considerations, with the most impactful one being to instil a growth mindset that encourages employees to focus on future performance as opposed to reflecting on past performance.
It also came with its own set of challenges, with the main one being to manage this change as well as facilitate it. To address this, the HR team developed a collective approach to help prepare and support all employees through the transformation, ensuring a seamless process from start to end.
The employees responded “very well”, as a result. Tan notes: "We focused on employee engagement and concentrated our efforts on fostering genuine commitment between the manager and employee as we recognise the value in supporting our employees in their learning journeys as they develop and grow professionally. We believe this will, in turn, result in higher levels of productivity by our team members."
Overall, this new system goes hand-in-hand both with FedEx’s rewards framework, and career development framework. Tan highlights: “Building a performance-based work culture not only serves to boost employee morale, productivity, and performance, but also prepares the company for strategic workforce planning. It is especially pivotal for us as industry leaders to look at a blend of individual and organisational components to instil a growth culture for our people to be successful.
"Every employee is given the chance to pursue their dream in FedEx, and support is always readily available to help maximise their potential, through training and development platforms accessible to all."
Words of advice
Like Tan and his team, more leaders are shifting away from “quantitative” rating scales, to a more “qualitative” approach to appraisals. Yet, there are still leaders who prefer the former approach. And as Tan points out, there is no perfect structure to follow, as every approach comes with its unique pros and cons.
Thus, he says, it is more important to look at the direction the organisation is headed and adapt a model that works best for both the employees and the organisation at each stage. "The goal is to move all stakeholders, including employees, in a concerted manner toward our collective goal that serves people growth and business profitability."
At FedEx, this also means that apart from working closely with key stakeholders including but not limited to HR and senior management teams, the management is well supported in performance, development, and management skillsets through avid training programmes.
This encompasses effecting a mindset change by shifting from system-related work to providing resources and tools, to empower managers to conduct effective and meaningful performance & development conversations, build manager-employee relationships, and consistently engage their team members by leveraging coaching and feedback skillsets.
Reflecting on the company’s experience, Tan shares his words of encouragement for employers intending to improve their own performance management processes. "Performance is an ongoing journey, and we need to recognise the importance of continuously looking at improving the overarching employee experience by encouraging ongoing learning and communication rigorously and regularly. In any scenario – whether personal or professional – one should not stop learning, developing and upskilling to make the most of their talents and grow on the right trajectory, thereby bringing value to their teams and peers.
"Human performance is the function of many influences: accountability, feedback, motivation, skills and knowledge, rewards and recognition. These influences are interdependent and ultimately result in the desired performance."
HSBC drives manager-employee ownership of performance & development
Vishesh Dimri, Lead - HR Consulting, HSBC, shares how a focus on digital enablement, process effectiveness, and people manager capabilities helps drive open and honest conversations during feedback, foster stronger relationships, and more.
Banking and financial services firm HSBC focuses on three key pillars in driving the new way of work — digital enablement, process effectiveness, and people manager capabilities.
These pillars are what help ensure a holistic approach towards performance management and enablement for both its employees and managers, Vishesh Dimri, Lead - HR Consulting, HSBC (pictured above, right) shares.
First, as part of digital enablement, HSBC has in place an HR mobile application that allows an "easy and simple" adoption of everyday performance on a real-time basis, where employees and managers are able to capture achievements and share regular, two-way feedback via the use of technology. More than an app, it is "a demonstration of flexible and remote working, without compromising on outcomes or comfort", Dimri highlights.
With this app, employees are able to access an HR to-do list, their everyday performance & development plans, online learning resources (Learning On-the-Go), manage personal and employment information, as well as view real-time people manager dashboards, HSBC connections, and the organisation chart.
Additionally, managers are empowered to handle key approvals on-the-go, as well as manage the personal and job details for direct functional reports.
Next, process effectiveness involves the use of everyday performance principles including goal setting and regular check-ins to facilitate the achievement of career aspirations as well as maintain productivity.
"It fosters stronger relationships between managers and colleagues. Managers can support their team members in the right ways and, at the right times, towards a meaningful year-end assessment," Dimri explains.
Finally, the third pillar of people manager capability is enhanced through constant engagement, coaching, and providing content support such as training and briefings, support resources, and guides.
One of the key elements of HSBC's year-end assessment is the 'Fairness Review', which has in place the following governance processes to ensure it remains unbiased:
- seeking risk stewards’ inputs relating to non-financial performance,
- senior management reporting,
- audit checks, and
- evidence of all Fairness Review meeting discussions.
Dimri and his team also make it a point to support people managers in carrying out these reviews, through scenarios-based, bite-sized videos available via e-learning; briefing sessions; by refining the HSBC values to align with its behaviour rating scale to reflect the focus on Fairness Review, as well as via a continuous feedback tool.
Elaborating on this tool, Dimri shares that the feedback functionality enables employees to give, request and receive feedback. This can be done on a continuous basis — for example, when an employee has completed a key meeting or project milestone — or he/she can request feedback on a specific activity.
"We believe that by receiving feedback from their people manager, team members or colleagues can help each employee to better understand how he/she is progressing against his/her goals and what he/she may need to do differently to be successful in the future."
The process also helps to present evidence of employees' performance & development outcomes for their year-end assessment, wherein f eedback employees receive can flow into their year-end review forms.
"With this tool, feedback can be requested and sent to multiple colleagues at the same time across a wider network. This supports teamwork, collaboration, and agile ways of working," Dimri notes.
Top tips for employers
Having benefitted from this revised performance management process, the leader shares his learnings and words of advice to employers looking to improve their own processes in this area.
First, he shares, managers must focus on everyday performance & development by having simple conversations throughout the year supporting performance, development, and wellbeing.
"A two-way open and honest conversation is the key to successful performance management, developing trusting relationships, and supporting career aspirations."
Next, he notes the importance of recognition in driving successful performance management. "Recognising our people not only for a job well done, but also for effort and even for taking up a challenging or difficult task. In HSBC Singapore, we have 'At Our Best Recognition', an online tool for employees to celebrate colleagues who bring HSBC values to life. The programme helps to promote a better understanding of values in everyday practice and enables a consistent and equal way of recognising people globally."
Last, he also adds that having enabling tools to help support the performance & development conversation is critical. At HSBC Singapore, this involves a continuous performance tool that helps employees to stay connected with their manager and colleagues, anytime, and anywhere, playing an even more critical role with the "majority of the workforce working from home.
This tool lets employees take ownership by:
- Creating and tracking key activities, including regular conversations with managers, at their convenience; and sharing daily key activities with managers and documenting progress.
- Facilitating regular feedback such as conversations that can be initiated by the employee, manager, or colleague to request, give, or receive feedback to recognise positive performance and behaviour or support future improvements.
- Raising a topic for discussion — for example: discuss the strengths & development plan and focus on wellbeing development.
- Capturing achievements — celebrate success and share experiences.
4 key steps to implement a performance management strategy that supports your business objectives
From the Human Capital Implementation Toolkit , we share a snapshot on how employers can work towards a performance management strategy that cultivates the right environment that connects employees with the organisation and motivates them to excel.
Step 1: Set a strategic performance management philosophy
HR plays a strategic role in ensuring that company goals can be met through Human Capital programmes.
- Establish strategic organisational goals with senior leadership, detailing the key thrusts, KPIs and targets needed in the short, medium and long term to support their vision.
Step 2: Cascade and communicate goals
Provide a clear line of sight to create a more engaged and motivated workforce.
- Cascade corporate goals through business units down to individual employees, enabling them to understand how their actions influence the success of the organisation.
- Communicate strategic objectives and how each performance measure supports those objectives.
- Develop training/development plans for employees to achieve the capabilities to reach these goals.
Step 3: Manage performance
Supporting managers as the main link between employee performance and business outcomes.
Differentiate rewards
- Cultivate a strong pay-for-performance culture.
- Communicate the wage structure so employees understand how it impacts them and how to change their behaviours.
- Design discretionary monetary or non-monetary recognition schemes.
Empower managers
- Empower managers to recognise and reward beyond targets and goals.
Reinforce desired behaviours
- Address the past year’s performance gaps and set new goals for the next year.
- Reinforce desired behaviours by recognising, rewarding and cultivating them. Identify role models within the organisation to be champions of certain desired behaviours.
Step 4: Evaluate and reward performance
Managers’ ability to evaluate and reward performance, and optimise touchpoints for growth and learning will be key to the success of this step.
Track performance
- Track performance against targets and schedule periodic performance reviews.
- Seek timely and multiple sources of performance feedback, e.g., managers, peers, customers, etc. to provide a fair and holistic assessment.
Equip and train managers to
- Drive and evaluate performance.
- Coach poor performers.
- Conduct performance conversations.
Conduct performance conversations regularly at meaningful points
- These allow managers to manage employee expectations, identify performance gaps, address performance concerns, discuss future growth plans, and enable employees to voice their opinions.
While systems and practices are essential, a key differentiator for an effective performance management practice is the alignment between culture, values and systems. This involves establishing an organisational culture that provides steadfast support to employees in their personal learning and development that views every touchpoint as a growth opportunity.
The performance management process should not be solely centred on employees’ past contributions but perform as future-focused stay conversations that support and engage employees in ways to grow, learn and improve.
FedEx Singapore and HSBC are Human Capital Partners in the Human Capital Partnership Programme .
The Human Capital Partnership (HCP) Programme is a tripartite initiative that brings together a community of exemplary employers in Singapore who have progressive employment practices in their organisations and are committed to developing their human capital.
Photos: Provided (L-R Eric Tan, MD, FedEx Singapore, and Vishesh Dimri, Lead - HR Consulting, HSBC)
Follow us on Telegram and on Instagram @humanresourcesonline for all the latest HR and manpower news from around the region!
Follow us on Telegram and on Instagram @humanresourcesonline for all the latest HR and manpower news from around the region!
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Rethinking Rewards
- Bennett Stewart,
- Eileen Appelbaum,
- Andrew M. Lebby,
- Teresa M. Amabile,
- Jerry McAdams,
- L. Dennis Kozlowski,
- George P. Baker III,
- Donita S. Wolters,
- Michael Beer
What role—if any—should incentives play in the workplace?
It is difficult to overstate the extent to which most managers—and the people who advise them—believe in the redemptive power of rewards, Alfie Kohn argues in “Why Incentive Plans Cannot Work” (September–October 1993). Certainly, the vast majority of U.S. corporations use some sort of program intended to motivate employees by tying compensation to one index of performance or another. But more striking is the rarely examined belief that people will do a better job if they have been promised some sort of incentive.
- BS Bennett Stewart is founding partner of Stern Stewart & Co. and CEO of EVA Dimensions. He is the author of The Quest for Value , which is regarded as the definitive guide to the EVA (“economic value added”) financial management and incentive compensation framework now employed at over 350 companies worldwide.
- EA Eileen Appelbaum is Associate Research Director, Economic Policy Institute, Washington, D.C.
- AL Andrew M. Lebby is Senior Partner, The Performance Group, Washington, D.C.
- TA Teresa M. Amabile is a Baker Foundation Professor at Harvard Business School and a coauthor of The Progress Principle . Her current research investigates how life inside organizations can influence people and their performance, as well as how people approach and experience the transition to retirement.
- JM Jerry McAdams is Vice President, Performance Improvement Resources, Maritz Inc.; and Director, Consortium for Alternative Reward Strategies Research, St. Louis, Missouri.
- LK L. Dennis Kozlowski is Chairman and CEO, Tyco Laboratories, Inc., Exeter, New Hampshire.
- GI George P. Baker III is Associate Professor, Harvard Business School, Boston, Massachusetts.
- DW Donita S. Wolters is Manager of Human Resources, JMM Operational Services, Inc., Denver, Colorado.
- MB Michael Beer is the Cahners-Rabb Professor of Business Administration, Emeritus, at Harvard Business School, a cofounder of TruePoint Partners, and author or coauthor of 12 books. His most recent book is Fit to Compete: Why Honest Conversations About Your Company’s Capabilities Are the Key to a Winning Strategy (Harvard Business Review Press, 2020).
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Performance Management Case Studies: Revolutionaries and Trail Blazers
Five companies that have led the way in setting new performance management trends
Note: This blog post was updated in July 2019 for accuracy.
Performance management is an ever-evolving field. The more we learn, the better we can adapt our performance management systems to make our companies healthier, more motivational places to work. This is why it is so important to keep up with the latest performance management trends . Companies who fall behind lose out to their competitors. They also run the risk of losing their best performers along the way.
Since 2012 , companies all over the world have been moving away from old-fashioned annual appraisals and towards continuous performance management . More than ever before, human resources executives and line managers alike understand the human need for regular feedback, effective coaching and human interaction.
A number of revolutionary companies have led the way in dramatic changes to how organisations — both Fortune 500 multinationals and SMEs — conduct their performance reviews and motivate their employees. In their wake, companies the world over are adapting their performance management practices and readjusting their once-firmly held beliefs regarding performance ratings and annual performance appraisals. Here at Clear Review, we have helped over 200 organisations effortlessly shift away from traditional annual appraisals.
Below, we have collated five notable performance management case studies. These organisations have shaken up their existing processes and have reaped significant benefits in terms of productivity, employee engagement, morale and performance.
1 . Adobe Introduced Continuous performance Management in Place of Performance Appraisals
Adobe was the forerunner of change when they abandoned annual performance appraisals back in 2012 . They felt that while they were forging ahead and evolving as a company, their performance management system was archaic and ineffective. It was a waste of time and had, ultimately become a box-ticking exercise. Adobe estimated annual appraisals consumed 80 , 000 management hours each year . This was the equivalent of nearly forty full-time employees working year-round. Clearly, a change was needed.
Adobe replaced annual appraisals with regular one-on-one check-ins , supported by frequent feedback — both positive and constructive. There are no performance ratings or rankings and they allow different parts of the organisation to determine how frequently they should hold check-in conversations, based on their work cycles. Now that forced ranking has been abolished, employees at Adobe are assessed based on how well they meet their goals . Managers are also trained on the nuances of giving and receiving feedback.
The result has been a marked increase in employee engagement, with voluntary turnover decreasing by 30 % since check-ins were introduced. This makes Adobe a performance management case study we should all be aware of.
Take a Tour of Our Continuous Performance Management Software .
2 . Deloitte Saved 2 Million Working Hours per Year with Weekly Employee Check-Ins
In 2015 , Deloitte was the first big name to announce it was scrapping once-a-year performance reviews, 360 -degree feedback and objective cascading. This change occurred after the company calculated these processes were consuming a remarkable two million hours a year across the organisation.
Deloitte’s new performance management process requires every team leader to check in with each team member once a week to discuss near-term SMART goals and priorities, comment on recent work and provide coaching. The check-ins are initiated by the team members, rather than the team leaders to ensure these check-ins take place frequently. This also serves to give employees a sense of ownership over their work, role and time.
These weekly employee check-ins are supported by quarterly reviews when team leaders are asked to respond to four future-focused statements about each team member. Rather than asking team leaders what they think of the team member — which is what traditional performance ratings do — they ask what the team leader would do with the team member.
3 . General Electric ( GE ) Put an End toForced Ranking performance Management
Under the reign of its former CEO , Jack Welsh, General Electric was the most well-known proponent of annual performance ratings and forced distribution curves.
For decades, GE operated a “ rank and yank ” system, whereby employees were appraised and rated once a year. Afterwards, the bottom 10 % were fired. Not exactly a recipe for employee engagement! Such an environment is a breeding ground for unhealthy competition, reduced teamwork and employee burnout.
In 2015 , under CEO Jeff Immelt, GE announced it was replacing this approach with frequent feedback and regular conversations called” touchpoints ” to review progress against agreed near-term goals. This new approach was supported by an online and mobile app, similar to our own Clear Review performance management tool , which enables employees to capture progress against their goals, give their peers feedback and also request feedback.
Managers will still have an annual summary with employees, looking back at the year and setting goals. But this conversation is more about standing back and discussing achievements and learnings, and much less fraught than annual reviews.
4 . Accenture Abandoned Ratings for performance Development
As of September 2015 , Accenture, one of the largest companies in the world, disbanded its former ranking and once-a-year evaluation process . Like GE , Accenture has decided to put frequent feedback and conversations at the heart of its new process and focus on performance development, rather than performance rating.
As Accenture’s CEO , Pierre Nanterme, stated at the time “ It’s huge, we’re going to get rid of probably 90 per cent of what we did in the past.”
As Ellyn Shook, Chief HR Officer at Accenture , stated:“Rather than taking a retrospective view, our people will engage in future-focused conversations about their aspirations, leading to actions to help them grow and progress their careers.”
5 . Cargill Introduced Coaching Conversations in Place of Annual Appraisals
Like Adobe, Cargill, the US food producer and distributor, started to transform its traditional performance management processes back in 2012 , when it introduced “ Everyday Performance Management ”.
Cargill removed performance ratings and annual review forms and instead focused on managers having frequent, on-the-job conversations and giving regular, constructive feedback. They have made this work by:
- Regularly rewarding and recognising managers who demonstrate good day-to-day performance management practices.
- Sharing the experiences and tips of their successful managers.
- Holding teams accountable for practising day-to-day performance management.
- Building the skills needed to succeed at Everyday Performance Management, including effective two-way communication, giving feedback, and coaching.
The outcome has been impressive, with 70 % of Cargill employees now saying they feel valued as a result of their ongoing performance discussions with their manager.
Performance Management Lessons to Be Learned from These Performance Management Case Studies
When we look at what these five organisations have implemented, we can see some evident trends emerging, which are likely to form the basis of performance management for the years to come. These trends are:
- Regular one-to-one performance conversations, or “ check-ins ”, initiated by the employee.
- Frequent, in-the-moment, positive and constructive feedback from peers and managers Near-term objectives rather than annual objectives. Setting and reviewing objectives regularly, rather than once a year.
- Forward-looking performance reviews, focusing more on development and coaching and less on assessment.
- Dropping performance ratings .
- Performance processes supported by mobile-friendly, online performance management software .
Move away from annual appraisals to continuous performance management
Find out how our simple, effective performance management software can help you move away from annual performance appraisals towards a more agile, intuitive performance management system. Book a free demo of Clear Review where our expert team will take you through the platform.
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5 great examples of agile organisations, why is performance management important.
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- E-reward Research
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- Case Studies
We examine the experiences of six diverse organisations and discover how they are wrestling with issues concerning the review, measurement and evaluation of reward systems. The case studies all share a belief in the importance of assessing the effectiveness of their reward practices and all have initiated and now operate some kind of process.
What’s clear from our research is that effective reward management has to be evidence-based. Broadly speaking, the aim of evidence-based reward management is to improve the reward strategy formulation and implementation process, to ensure that rewards more effectively support the achievement of organisation goals and to provide for employee needs to be met. The process recognises that reward systems exist to add value but often don’t, and that it is essential to assemble and analyse the evidence available on how well they are functioning so that improvements can be made where necessary.
Evidence-based reward management gathers internal data on the impact and effectiveness of reward strategies and practices. This involves research, analysis, measurement, evaluation and, importantly, seeking the views of stakeholders. Externally , it carries out systematic benchmarking of good reward practices and analyses and makes use of the practical outcomes of reward research projects. Evidence-based reward management provides the information and impetus which makes an integrated approach to reward management effective.
Our report starts with an overview of the organisations we interviewed (section1), and continues with some of the direct pieces of practical advice provided by interviewees on how to avoid some of the stumbling blocks along the way (section 2). We then offer an analysis of ome of the broad themes to emerge from our discussions with the six HR and reward professionals (section 3). The case studies then follow.
Click here to download the contents and introductory pages in PDF format.
REPORT CONTENTS
INTRODUCTION What is evidence-based reward management? Contents of this case-study report
SECTION 1: PROFILE OF CASE STUDIES Who we interviewed Six diverse organisations
Box 1.1: E-reward case studies – organisational profiles
SECTION 2: PRACTICAL ADVICE To react or not to react? Timing and choice of “battles” Role of senior managers Role of line managers Most crucial factor is context Checklist 1: Practical advice to others from case-study organisations
SECTION 3: ANALYSIS Different starting points Evidence-based reward in practice Setting a foundation for information collection Measuring reward effectiveness “Non-core” reward measures Solutions and evidence of success Barriers to progress Questions of cause and effect A final word
Box 3.1: Commonly-used reward measures Box 3.2: Distinctive reward and evaluation measures Box 3.3: Evidence of success Box 3.4: Barriers to progress Box 3.5: Thoughts on cause and effect
CASE STUDY 1: FINSERV A financial services organisation currently going through a merger.
CASE STUDY 2: SM&D Co. A firm involved in the sales, manufacture and distribution of office products.
CASE STUDY 3: ENFORCECORP Police authority operating across a number of counties.
CASE STUDY 4: ENGINEQUIP A high-precision engineering manufacturer with half of its operations the result of acquisitions.
CASE STUDY 5: REGCOM An independent non-governmental regulatory body with a growing workforce.
CASE STUDY 6: HOTELCO A privately-owned hotel group with operations largely in the UK.
Changing Reward Systems
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The most difficult topic we tackled during the time frame of the case study were the reward systems. This chapter starts with discussing what rewards actually are and goes on describing our understanding of who should get rewarded in which way by whom. While we tried some very innovative approaches there, we could not avoid the question of salary systems. We describe our journey, successes and failures around this topic and how we finally solved it for us.
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Maximini, D. (2022). Changing Reward Systems. In: Agile Leadership in Practice. Future of Business and Finance. Springer, Cham. https://doi.org/10.1007/978-3-031-15022-7_7
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Case studies
Real life stories of how reward and benefits professionals have tackled challenges or launched new strategies are invaluable. Watch, listen or read to what REBA members have implemented at their organisations.
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Encouraging feedback is key to creating a health and wellbeing strategy that continues to engage and retain employees, says Head of Group Benefits
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Case i: chemco case.
- ChemCo is a quality leader in the U.K. car batteries market.
- Customer battery purchases in the automobile market are highly seasonal.
- The fork-lift business was added to utilize idle capacity during periods of inactivity.
- This is a low-growth industry (1% annual growth over the last two years)
- Large customers are sophisticated and buy based on price and quality. Smaller customers buy solely on price.
- There is a Spanish competitor in the market who offers low priced batteries of inferior quality.
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- Established player in car batteries
- Losing heavily in fork-lift truck batteries
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- High quality product, but low end customers care more about price than quality
- Mismanaged product diversification in a price sensitive market
- Alternative 1: Establish an Off-Brand for the fork-lift business
- Alternative 2: Educate the customer market about product quality
- Alternative 3: Exit the fork-lift battery business
- Establishing the firm's quality image
- Increase in market share
- Increase in sales
- Cost of the product
- Protect firm's quality image in the automobile industry
- Redesigned product to reduce the cost of manufacture
- Low price to enable it to compete with Spanish producer
- Make use of the quality leadership in car batteries market
- Offer reliability testing, extended warranties etc. to promote quality image
- Set higher prices to extract surplus from these advantages
- A passive strategy, not proactive
- Recommendations: Alternative 1 is recommended in this case. Since the firm operates in an industry which has low growth, hence it can expand market share and sales only by taking the customers from other players. Hence, it needs to tackle the Spanish competitor head-on by aggressively pricing its product. At the same time, launching a low-priced product under the same brand name erodes the high quality image in the car batteries market. Hence, the best option is to go for an off-brand to target the fork-lift customers who are increasingly becoming price sensitive. This will enable the company to ward off the threat in short-term and build its position strongly in the long-term.
Case II: NAKAMURA LACQUER COMPANY
- The Nakamura Lacquer Company: The Nakamura Lacquer Company based in Kyoto, Japan was one of the many small handicraft shops making lacquerware for the daily table use of the Japanese people.
- Mr. Nakamura- the personality: In 1948, a young Mr. Nakamura took over his family business. He saw an opportunity to cater to a new market of America, i.e. GI's of the Occupation Army who had begun to buy lacquer ware as souvenirs. However, he realized that the traditional handicraft methods were inadequate. He was an innovator and introduced simple methods of processing and inspection using machines. Four years later, when the Occupation Army left in 1952, Nakamura employed several thousand men, and produced 500,000 pieces of lacquers tableware each year for the Japanese mass consumer market. The profit from operations was $250,000.
- The Brand: Nakamura named his brand “Chrysanthemum” after the national flower of Japan, which showed his patriotic fervor. The brand became Japan's best known and best selling brand, being synonymous with good quality, middle class and dependability.
- The Market: The market for lacquerware in Japan seems to have matured, with the production steady at 500,000 pieces a year. Nakamura did practically no business outside of Japan. However, early in 1960, when the American interest in Japanese products began to grow, Nakamura received two offers
- The Rose and Crown offer: The first offer was from Mr. Phil Rose, V.P Marketing at the National China Company. They were the largest manufacturer of good quality dinnerware in the U.S., with their “Rose and Crown” brand accounting for almost 30% of total sales. They were willing to give a firm order for three eyes for annual purchases of 400,000 sets of lacquer dinnerware, delivered in Japan and at 5% more than what the Japanese jobbers paid. However, Nakamura would have to forego the Chrysanthemum trademark to “Rose and Crown” and also undertaken to sell lacquer ware to anyone else the U.S. The offer promised returns of $720,000 over three years (with net returns of $83,000), but with little potential for the U.S. market on the Chrysanthemum brand beyond that period.
- The Semmelback offer: The second offer was from Mr. Walter Sammelback of Sammelback, Sammelback and Whittacker, Chicago, the largest supplier of hotel and restaurant supplies in the U.S. They perceived a U.S. market of 600,000 sets a year, expecting it to go up to 2 million in around 5 years. Since the Japanese government did not allow overseas investment, Sammelback was willing to budget $1.5 million. Although the offer implied negative returns of $467,000 over the first five years, the offer had the potential to give a $1 million profit if sales picked up as anticipated.
- Meeting the order: To meet the numbers requirement of the orders, Nakamura would either have to expand capacity or cut down on the domestic market. If he chose to expand capacity, the danger was of idle capacity in case the U.S. market did not respond. If he cut down on the domestic market, the danger was of losing out on a well-established market. Nakamura could also source part of the supply from other vendors. However, this option would not find favor with either of the American buyers since they had approached only Nakamura, realizing that he was the best person to meet the order.
- Decision problem: Whether to accept any of the two offers and if yes, which one of the two and under what terms of conditions?
- To expand into the U.S. market.
- To maintain and build upon their reputation of the “Chrysanthemum” brand
- To increase profit volumes by tapping the U.S. market and as a result, increasing scale of operations.
- To increase its share in the U.S. lacquerware market.
- Profit Maximization criterion: The most important criterion in the long run is profit maximization.
- Risk criterion: Since the demand in the U.S. market is not as much as in Japan.
- Brand identity criterion: Nakamura has painstakingly built up a brand name in Japan. It is desirable for him to compete in the U.S. market under the same brand name
- Flexibility criterion: The chosen option should offer Nakamura flexibility in maneuvering the terms and conditions to his advantage. Additionally, Nakamura should have bargaining power at the time of renewal of the contract.
- Short term returns: Nakamura should receive some returns on the investment he makes on the new offers. However, this criterion may be compromised in favor of profit maximization in the long run.?
- Reject both: React both the offers and concentrate on the domestic market
- Accept RC offer: Accept the Rose and Crown offer and supply the offer by cutting down on supplies to the domestic market or through capacity expansion or both
- Accept SSW: offer; accept the SSW offer and meet it through cutting down on supply to the domestic market or through capacity expansion or both. Negotiate term of supply.
- Reject both: This option would not meet the primary criterion of profit maximization. Further, the objective of growth would also not be met. Hence, this option is rejected.
- Accept RC offer: The RC offer would assure net returns of $283,000 over the next three yeas. It also assures regular returns of $240,000 per year. However, Nakamura would have no presence in the U.S. with its Chrysanthemum brand name The RC offer would entail capacity expansion, as it would not be possible to siphon of 275,000 pieces from the domestic market over three years without adversely affecting operations there. At the end of three years, Nakamura would have little bargaining power with RC as it would have an excess capacity of 275,000 pieces and excess labor which it would want to utilize. In this sense the offer is risky. Further, the offer is not flexible. Long-term profit maximization is uncertain in this case a condition that can be controlled in the SSW offer. Hence, this offer is rejected.
- Accept SSW offer: The SSW offer does not assure a firm order or any returns for the period of contract. Although, in its present form the offer is risky if the market in the U.S. does not pick up as expected, the offer is flexible. If Nakamura were to exhibit caution initially by supplying only 300,000 instead of the anticipated 600,000 pieces, it could siphon off the 175,000 required from the domestic market. If demand exists in the U.S., the capacity can be expanded. With this offer, risk is minimized. Further, it would be competing on its own brand name. Distribution would be taken care of and long-term profit maximization criterion would be satisfied as this option has the potential of $1 million in profits per year. At the time of renewal of the contract, Nakamura would have immense bargaining power.
- Negotiate terms of offer with SSW: The terms would be that NLC would supply 300,000 pieces in the first year. If market demand exists, NLC should expand capacity to provide the expected demand.
- Action Plan: In the first phase, NLC would supply SSW with 300,000 pieces. 125,000 of these would be obtained by utilizing excess capacity, while the remaining would be obtained from the domestic market. If the expected demand for lacquer ware exists in the U.S., NLC would expand capacity to meet the expected demand. The debt incurred would be paid off by the fifth year.
- Contingency Plan: In case the demand is not as expected in the first year, NLC should not service the U.S. market and instead concentrate on increasing penetration in the domestic market.
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Evidence-based reward management: Case studies. We examine the experiences of six diverse organisations and discover how they are wrestling with issues concerning the review, measurement and evaluation of reward systems. The case studies all share a belief in the importance of assessing the effectiveness of their reward practices and all have initiated and now operate some kind of process.
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Michael Armstrong is the corresponding author and can be contacted at: [email protected] Duncan Brown is Director of Reward Services at the Institute for Employment Studies. He has more than 20 years experience in reward consulting and research with firms including PricewaterhouseCoopers and Towers Perrin.
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The value of Adjusted r2=.564 which indicates 56.4% of variance in employee performance is explained by the variables pay/salary, benefit, promotion, working condition, responsibility and recognition. It supported the hypothesis that the reward practices have a significant influence on employee performance.
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