5, 4, 3, 2, 1: The Code to Better Compensation Planning

©2013 Performensation 1

“Someone is sitting in the shade today because someone planted a tree a long time ago.”― Warren Buffett

3,2,1, Compensation! A Countdown to Annual Planning

Dan Walter, CEPSam Reeve, CCP, GRP

DAN WALTER

DAN WALTER, CEPPresident and CEOTF 1 877 803 9255 ext 700Office 1 415 625 3406Mobile 1 917 734 [email protected] Skype: PerformensationTwitter: Performensation

Performensation was founded by Dan Walter, CEP as a response to regular requests for better expertise in the area of Equity Compensation Design and Administration. Dan has more than a decade of experience in the industry. His work includes both executive and broad-based programs. He has provided end-to-end solutions for private and public companies both within the United States and abroad.

Dan has worked extensively in both the Silicon Valley and New York. His work with young entrepreneurial companies and established Fortune 100 companies provides his clients with an unique perspective on compensation issues. His focus is on effective, and at times innovative, company-specific solutions. He also provides post-consultation support to help ensure programs are working as designed.

Dan is also a highly sought after speaker on a broad range of topics. He is board member for the National Center for Employee Ownership and the Institute for Human Resources, an award winning member of the National Association of Stock Plan Professionals and an active member of World at Work, Global Equity Organization and the Society for Certified Equity Professionals.

mailto:[email protected]


SAM REEVE

SAM REEVE, CCP, GRPExecutive Vice President TF 1 877 803 9255 ext 702Office 1 415 625 3088Mobile 1 970 403 [email protected] Skype: SamReeveTwitter: @SamReeve3

Sam Reeve is a global certified compensation consultant (CCP, GRP) with 15 years of experience in Total Reward Strategies. He is an expert in broad-based compensation and focuses his talents on enhancing performance through the effective use of incentive and recognition programs.Prior to joining the firm, Sam has worked in the corporate compensation functions of notable firms such as BlackRock, McKesson and Automatic Data Processing (ADP).

Sam currently lives in Colorado and aside from his professional life, enjoys numerous outdoor activities with his 4 children and wife, Jessica.Sam has a degree in Finance and Economics from California State University, Sacramento.


Key Concepts• Compensation Planning is about far more than your annual increase percentage

and executive compensation updates• When should you train yourself? When should you train your staff and

stakeholders?• You can structure performance appraisals to be more effective with less work• Variable pay planning requires data analysis and an understanding of business

strategy and goals that starts long before you start talking about dollars a cents • Smooth out your work flow through efficient scheduling to reduce spikes in work• Use “slow times” to advance your cause. You can only gain ground when the

avalanche chasing you is at its slowest• Seasonal vs. Calendar Schedules. Using off-cycle planning to help reduce overlap,

overwork and errors


Combination Code

to Compensation Planning

5D-4W-3M-2Q-1Y

Top Down and

Bottom Up Planning


Compensation Planning is all about the numbers

1 Year: Planning for Annual Events

2 Quarters: Process Reviews, Major Projects

3 Months: 10Qs, Performance Reviews etc.

4 Weeks: Monthly closes, Commission Cycles etc.

5 Days: Weekly processes, checks and balances

6 Hours: Maximum amount of scheduled time in a day


1 Year =245 work days (including 3 weeks of vacation)11,205 work hours (45 hr/week)25,757 emails (avg*)

*Source: Email Statistics Report 2011-2015, The Radaciti Group


1Typical Annual Compensation Committee Schedule

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Executive and CEO Market Pay Analysis

• Review market trends in pay, short & long-term grants

• Prepare and review tally sheets for a full view of executive total

rewards

Year-End Preparation• Set goals/targets for next year’s short

& long-term awards• Evaluate CEO performance

• Prepare preliminary current year incentive calculations

Incentive Payments • Calculate and deliver actual prior year short & long-term

award payments

Plan Review

• Test effectiveness against company strategy

• Review pay and performance linkage

Compensation Education & Trends

• Update to remain in line with continuing

educational requirements

Fiscal Year End

Implementation Support • Answer feature questions and

provide guidance during implementation with service

provider

Issue Support• Availability during non-

standard events• Support regarding questions

on plan features

1 Year


1Comp Committee Vs Comp Department


Executive and CEO Market Pay Analysis

• Review market trends in pay, short & long-term grants

• Prepare and review tally sheets for a full view of executive total

rewards

Year-End Preparation• Set goals/targets for next year’s short

& long-term awards• Evaluate CEO performance

• Prepare preliminary current year incentive calculations

Incentive Payments • Calculate and deliver actual prior year short & long-term

award payments

Plan Review

• Test effectiveness against company strategy

• Review pay and performance linkage

Compensation Education & Trends

• Update to remain in line with continuing

educational requirements

Fiscal Year End

Implementation Support • Answer feature questions and

provide guidance during implementation with service

provider

Issue Support• Availability during non-

standard events• Support regarding questions

on plan features

1 Year


Year End Performance Reviews

Pay for Performance• Determine Merit, Market and Incentive

pay decisions

Communicate Sales Plans

• Calculate and deliver actual prior year short &

long-term award payments Mid Year Performance

Reviews

• Check in with team on status of annual objectives

Market Benchmarking

•Review benchmark job matches and participant

in surveys

Fiscal Year End

Goal and Objective Setting• Company goals cascaded to

departments•Comp Tem goal setting to align

to the company goals

Pay Competitive Assessment

• Review market data

•Identify market pay concerns


1Typical Annual Compensation Department Schedule


Year End Performance Reviews

Pay for Performance• Determine Merit, Market and Incentive

pay decisions

Communicate Sales Plans

• Calculate and deliver actual prior year short &

long-term award payments Mid Year Performance

Reviews

• Check in with team on status of annual objectives

Market Benchmarking

•Review benchmark job matches and participant

in surveys

Fiscal Year End

Goal and Objective Setting• Company goals cascaded to

departments•Comp Tem goal setting to align

to the company goals

Pay Competitive Assessment

• Review market data

•Identify market pay concerns

1 Year


1One Year - Planning for Annual Events

Factors that are common to all planning are centered around resources and expectation setting.

Resources include:• People on your comp team• Resources from other departments• Software and external services• and of course, time and money

Expectation Setting includes:• What you expect from your Team Members• What your Team Members can expect from the Year

"Execution is the ability to mesh strategy with reality, align people with goals, and achieve the promised results."— Larry Bossidy


It takes 6 months to build a Rolls Royce and 13 hours to build a Toyota.

Source: UberFacts


2Two Quarters - Planning for 6 Month Cycles

Thinking Strategically – Planning to Plan …every 6 months

1st Strategic Planning SessionBest time…early in the yearObjective:

• Review Overall Company Goals and Realign Comp Team Objectives

• Revisit successes and failures of the last cycle

2nd Strategic Planning SessionBest time…second half of the year during your slowest

monthObjective:

• Long Term Planning – at least a year and a half ahead• Revisit successes and failures of the last cycle• Prepare for the year end process


The S&P 500 has projected it will have cumulative QUARTERLY earnings of $6.42 Billon (as of 1/24/2013 )

Source: Standard and Poors

©2013 Performensation 17Quarterly Considerations

3Performance

Metric Tracking

10Q

Bonus Approval

Review Comp Committee Charter

Financial ReportingCommunications

Review Plan Effectiveness

Reconciliation

STI Goals

Stakeholder Reviews3 Months


3Three Months - Planning by Quarter

Public Firms

Public companies are driven by financial performance and shareholder disclosurePrivate companies are driven by internal metrics and projects

Week 1 Answer questions about last quarter and clean upWeeks 2 - 3Finalize plans for all deliverables this quarterWeeks 4 – 7Focus on internal Compensation Department deliverablesWeeks 8 – 10Focus on deliverables with and for stakeholdersWeeks 11 and 12Finalize results and reportingGather quarterly performance numbers for STI and Commissions

©2013 Performensation 19Source: http://www.stevespanglerscience.com/experiment/using-oreo-cookies-to-learn-about-the-phases-of-the-moon

There are between 28 and 31 days in a month, but only 8 Oreo cookies in this picture

Phases of the moon


4Monthly processes are the shortest segment of time that allow preplanning

Monthly closes, Commission Cycles etc.

T O O B U S Y

T O O B U S Y

P R I M E T I M E

4 Weeks


4Four Weeks - Planning by Month

Months and quarters are related…

The first and last week of the month are often the busiest

When planning cross functional meetings consider their business cycle• Deadlines often loom at the end of each month• Critical reports are often generated the first week of each

month

Schedule important cross functional meetings in the middleLeverage the 2nd and 3rd week for the greatest productivity• Strategic and creative thinking occur when people are

engaged in the discussion• Meeting participants are more engaged when they are free

from other stresses in their work duties


Nearly half (48 percent) of executives surveyed recently said employees hit peak performance on Tuesdays. Not

surprisingly, Fridays were viewed as the least productive day of the week.

*Source: AccountTemps 2012


55 Days (not 7) in a work week. How can you optimize this time? (#1: no more Monday meetings)

Monday

Execute your plan from Friday Strategy Meetings

Check relevant industry news and inform network on findings

Complete deliverables for Tuesday Tactical Meetings

Tuesday

Tactical Meetings

Invest in yourself – Webinars and Training

Wednesday

Check on your deliverables for the week. Are you on track?

Thursday

Keep a few hours free on your schedule to complete tasks that have taken longer than anticipated.

Friday

Strategy Meetings

Deliverables to other departments

Plan, prioritize and schedule work time for next week

How are you tracking to your goals and objectives?

Clean off your desk and remove work troubles from your mind. The weekend is YOURS!


5Tactical Tuesdays and Strategic FridaysKnow how to leverage your week

The Unproductive Days - Monday and FridaySchedule the bulk of your work time on Tuesday and

Wednesday• Monday – tough mental day• Friday – Is it over yet?

Tactical Tuesdays – The Most Productive DayMeet with others and focus on completing the ground level actions that gets things done.

Strategic Fridays – Make this Day Your OwnIt is important to take some time to reflect on what occurred during the week and to plan for the week ahead• How are you tracking towards your goals and objectives?

• Your performance appraisal• Plan, prioritize and schedule work time for next week

Five Days - Planning the Week


“6 hours is only 25% of a full day, but it is 100% of your productively scheduled time.”

*Source: This presentation, Dan Walter, Sam Reeve


6How should you plan your day?6 Hours

9 AM

10 AM

11 AM

12 PM

1 PM

2 PM

3 PM

4 PM

5 PM

Catch up on Emails

3,2,1 Compensation Planning Webinar

Meeting that other department that needs something by tomorrow

Lunch (not at my desk today)

Finish that project up for tomorrow’s meeting


6Six Hours- Planning a Day?

How many hours in a day do you actually own?6 hours? What happened to the other 2?

Plan for Fire Drills!An inherent part of the Compensation environment

A Calendar is not just for MeetingsSchedule your work time or someone will steal it from you

Schedule Time Wasters – Email and Social NetworkingCalendar time to check in on communication

• FOCUS – Multi-tasking is a myth• Categorize what is important (Now and Later)

• Head of HR, CEO = Now!• Colleague, Aunt Beth = Later…

The Last Half Hour of the DayPlan the Perfect Day called “Tomorrow”

• First 3 things to do tomorrow


Conclusions6 Hours: Less than half of your days is owned by you. Block that time out and

give it the same respect you would if it was carved out for your CEO5 Days: Schedule your week to be productive when others aren’t. Focus

strategy meetings on Friday and key tactical meetings on Tuesdays. Saturdays and Sundays are not work days

4 Weeks: Schedule your important meetings for the middle of the month. Stakeholders will be less distracted and you will be able to do immediate follow up to gauge success of any new ideas.

3 Months: Look at each quarter like a hill. Do most of the work in the middle month so the final month is a downhill coast, with the except of external stakeholders

2 Quarters: Seasonal cycles will focus critical work away from calendar cycles.

1 Year: Break your year down into smaller, schedule bites. “What gets planned, simply gets put on a list”. Things that get scheduled, get done.


Where to find Performensation

www.performensation.com

Twitter: www.twitter.com/performensation

Compensation Café (blog): www.compensationcafe.com

LinkedIn: http://www.linkedin.com/company/performensation

Facebook: https://www.facebook.com/pages/Performensation-Consulting/371636619516008?fref=ts

Slideshare (presentations and documents): http://www.slideshare.net/performensation

Quora (Q&A): http://www.quora.com/Dan-Walter

514 Precita Ave, Suite 100, San Francisco, CA 94110877-803-9255 (toll free) ext. 701

[email protected]

http://www.performensation.com/

http://www.twitter.com/performensation

http://www.compensationcafe.com/

http://www.linkedin.com/company/performensation

http://www.linkedin.com/company/performensation

https://www.facebook.com/pages/Performensation-Consulting/371636619516008?fref=ts

https://www.facebook.com/pages/Performensation-Consulting/371636619516008?fref=ts

http://www.slideshare.net/performensation



http://www.quora.com/Dan-Walter

http://www.quora.com/Dan-Walter



Performensation was founded in 2006 in response to the demand for more strategic and effective compensation programs.

Successful compensation requires four key elements. Each component must be carefully crafted to your unique goals and culture.

Vision: We understand where you are headed and have the skills to get you there. We are respected throughout the industry for our forward-thinking perspective and our ability to execute on it.

Foundation: Long-term solutions are based on evidence, not founded on gimmicks or fads. They are built to allow for adjustments to organizational and market conditions. Your program’s foundation must reflect your company and the goals it is designed to support.

Design: A great program combines creativity with practicality. We utilize our broad and deep understanding of rules, regulations, processes and providers to ensure your program delivers high- performance results. Our designs are easy to understand, compliant and effective.

Communication: Participants only value what they understand. Communication must be built in to every step of the process. We ensure that all program elements are relevant and make sense to your targeted audience.


We would like to thank Peter Djokovich, of Certain Strategy, for his contribution to this planning structure. http://certainstrategy.com/

http://certainstrategy.com/

http://certainstrategy.com/

5, 4, 3, 2, 1: The Code to Better Compensation Planning

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