do-dont in CRM

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    Dos & Do Nots

    Compensation & Reward Management

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    DO:

    Educate employees on goals of company and reward them onaccomplishment of those goals.

    Integrate corporate business strategy and compensation policies to create a compensation system.

    Allow corporate business strategy to be the force that guides pay policy formation and administration.

    Permit new compensation strategy to set the stage for decidingwhich pay system to be included or excluded.

    General Points

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    Ignore integrating other business systems such as laws and

    regulations, structure, business process, and culture of organization when creating a compensation system

    Create a stand-alone pay system without a concretefoundation in the business plan.

    D o Not

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    DO:

    T ailor-make compensation systems to the needs of the business.

    D evelop a unique approach to the organizations product or servicethat competitors have a difficult time imitating.

    Align strategic plans at the business unit with strategic plans at thecorporate level prior to the development of a new compensation plan.

    Consider pay philosophy, pay assessment, pay form, pay delivery,and pay plan design when developing compensation strategy.

    C orporate Business Strategies and C ompensation

    Strategies

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    DO

    Evaluate both human capital and job characteristics todetermine value that a person makes to the organization.

    Clearly articulate and address importance of seniority versus performance trade-off in the compensation strategy.

    Emphasise significance of education so that employees have

    the breadth of knowledge needed to add value to the firm :

    M ove toward variable pay system so that cost incurs only if the business prospers.

    C orporate Business Strategies and C ompensation

    Strategies

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    Assume that organizations have perfect market informationwhen following an external equity pay strategy.

    Ignore importance of employee performance as part of companys compensation strategy.

    Change compensation system unless significant businesschanges have occurred.

    Use business strategy independent of other contingencyfactors when developing a compensation strategy formulation.

    Do Not

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    DO :

    M ake competencies specific to the business strategy of theorganization.

    Consider all three layers of job analysis:

    person, job, andcontext.

    Assure that qualifications and competencies that define the person for the job be both very precise and related to the businessstrategy of the organization.

    Account for context in which work takes place when makingcompensation decisions by looking at environment, work flow

    process, and network analysis.

    Job Analysis

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    DO

    Consider both top-down and bottom-up perspectives to gainan accurate portrayal of a job.

    Use multiple data collection methods to reduce samplingand measurement error.

    DONT :

    D epend on job titles alone to make sound compensation

    decisions.

    Eliminate job descriptions in human resources decisionsespecially when it comes to compensation decisions.

    Job Analysis

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    DO:

    B ase job evaluation method upon compensation and businessstrategy.

    Select enough compensation factors to encompass all-important

    aspects of the business and compensation strategies.

    Always weight compensation factors depending upon mostimportant portion of business strategy.

    Custom develop competencies specific to the specific strategyof the organization.

    M easure competencies at different levels of the organizationand consider the level of the competency needed.

    Job Evaluation

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    DONT:

    Assume that job evaluations are anachronistic andunnecessary.

    Reject job evaluation systems due to legal and employeerelations reasons related to organizational effectiveness.

    Job Evaluation

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    DO:

    T ake great care in the external market survey process tominimize sampling error and measurement error.

    Consider business and compensation strategies and the jobanalysis the guiding lights in the market survey process.

    Conduct organizational surveys in the same industry for

    higher-level jobs and in multiple industries for lower-level jobs.

    Consider benchmark jobs that are well known, employeelarge numbers of people, and have stable job contents.

    M arket Survey

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    DONT:

    Assume that market survey data is free of bias when relyingon an external equity pay philosophy.

    T reat the salary midpoint and averages in a synonymousfashion when analyzing compensation data.

    M arket Survey

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    DO:

    Adhere to the pay structure in the organization because itsupports the aims of the business and compensation strategies of the organization.

    Utilize pay ranges in all compensation systems other thancost business strategies to increase flexibility.

    Pay Structure

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    DO:

    Clearly define performance of the employee so that theemployee is motivated to deliver the level of performance desired

    by the organization.Align goals of individual employees to goals of the

    organization.D evelop performance standards that are based on the businessand compensation strategies of the organization.

    Pay attention to business and compensation strategies whendeciding which parties should be part of the performance

    evaluation process.Utilize both the business and compensation strategies of theorganization in weighting the final assessment of the performancestandards.

    Align types of awards given to the type of business strategy of

    the organization.

    Individual Reward

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    DONT:

    Use traits as an absolute performance standard regardless of business strategy.

    Fail to gather feedback from customers as part of the performance evaluation process if customer service is trulyimportant.

    Underestimate the value of money to motivate employee performance.

    Individual Reward

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    DO :

    Consider team pay if teams demonstrably add value to theorganization in ways not compensated for by base pay, individual

    rewards, or organizational awards.

    Link the standard of performance, the evaluators, andweighting steps to the business and compensation strategies.

    D efine contributions in terms of what they accomplish andhow they accomplish results.

    T eam Reward

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    DO:

    Utilize economic value-added formulas to link operationalstandards to financial standards.

    Combine performance standard measures to overcome the problems associated with organizational reward plans.

    Include the controller as an evaluator in makingorganizational reward decisions regardless of business strategy.

    O rganizational Rewards

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    DO:

    Utilize business and compensation strategies to guide thedesign process in establishing base pay and reward systems.

    Allow strategies to be interpreted by those who develop thestrategy and by those who are affected by the strategy in order for pay plan objectives to be consistent with business direction.

    Utilize corporate business and compensation strategies tdetermine eligibility for participation in the pay plan.

    Assure that pay plan objectives spell out what types of payare to be used and who is eligible for each type of pay plan.

    Strategic Pay D esign

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    DONT:

    Exclude first-line supervisors from the compensation plan

    process.

    Fail to include the union in the design stage of pay plans in aunionized organization.

    Strategic Pay D esign

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    DO :

    Assure that compensation plan fits and is consistent with thecorporate business strategies, compensation strategies, and other human resources policies.

    Achieve alignment in compensation plans by providingtraining and communication regarding the pay plan and byrewarding employees.

    Achieve integration in compensation plans by linking the planto staffing, development, human resources information systems,and payroll policies.

    Strategic Pay Implementation

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    DO

    Show managers how each factor in the job evaluationsystem relates back to corporate business objectives.

    T rain employees on how they can best impact the measuresthat will help them maintain or improve upon their pay status.

    Align the payouts of compensation plans with the businesscycle of the organization.

    Strategic Pay Implementation

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    DO

    Realize the critical step of the valuation of compensation

    systems in pay system administration.

    Carefully chose evaluation criteria to show the effectivenessof the compensation plan.

    Strategic Pay Evaluation