Bridge Knowle - Salary and Reward Structures (Training and Workshop)

COMPETENCY-BASED
SALARY + REWARD
STRUCTURE
Training Session and Workshop

Kenny Ong

http://totallyunrelatedrandomanddebatable.blogspot.com/

Intro

• Day Care Center


Part A
HRM STRATEGY AND
REWARD STRATEGY


The McPlaybook*

Make it easy to eat Make it easy to prepare
• 50% drive-thru • High Turnover
• Meals held in one • Tasks simple to learn
hand & repeat

Make it quick Make what customers want
• “Fast Food” • Prowls market for new
• Tests new products products
for Cooking Times • Monitored field tests
*Adapted from: Businessweek , Februrary 5th 2007


Phases of Organisation
Development
Growth Current Next Phase Future
Exploring and role Managing growth Managing Efficiency and
Phase Reengineering
definition

Organisation Entrepreneurial Professional Organisation Efficiency
features Phase Development Phase Phase
• Results orientation • New relationship building
People • Innovation • Teamwork & Cooperation
• Enthusiastic • Open to change
characteristics • Concern for order & quality
• Efficiency & productivity oriented

• High standards
Organisation • Flexibility
• Excellence
• Responsibility
• Quick decision making • Participatory
climate • Commitment

• Pace setting and • Systems thinking • Coaching & counseling
Management authoritative
• Coaching & developmental • Authoritative
style
• Attract capable individuals • Reward results achieved • Cost efficiency
• Flexibility • Retain & motivate • Consistency
• Equity
• Variable base salary & • High to medium base salary
Objectives of effectiveness related & longer term performance • Medium base salary and
performance rewards related rewards efficiency performance rewards
HR policies

The Changing Business Environment
Pre-merdeka1945- Post Merdeka1957- Industrialization Development of the knowledge
1956 1969 period1970-1995 based economy1996 and on
going

Era • Post war • Post colonial • Industrial • Free market, customer
• Reconstruction administration development centered organization
• National
development
Government • Establishing control • Establishing • Leading economic • Recognizing global forces
objectives over natural government control change • Preparing a resilient and just
resources • Protecting free • Creation of society
• Establishing enterprise conditions for • Searching for a new
administration • Domestic economic regional and relationship model with
systems in the development international industry
interest of the British recognition
empire

Corporate • Production for the • Import substitution • Production capacity • Innovation
culture colonial empire • Domestic market utilization • Global standards on
needs • International efficiency

Corporate • BOD led by “home • Autocratic •
market
Authoritative
•
• Professional management
Participative
Leadership office” • BOD led by • BOD led by • BOD of professionals, team
representative individualistic style charismatic decision making directed at
• Home office personalities achievement of targeted
standards • Largely local results
principles on BOD • International standards on
conduct corporate governance.
Pay • Pay practice • Pay for loyalty – • Flexible pay • Attract, retain and motivate
Philosophy “enough” years of service competent professionals

Budgeting vs. Priorities

Example: Business Situation vs. R&D Priorities
Upturn Flat Downturn
Fight Complacency Innovation Sales
Sharpen Edge Acquire Cash Flow
Keep Momentum Profits
Conquer Build momentum
NPD Cycle Time Focused on
Improve Top 15%
‘Breakthrough’
Improve Edge revenue-generating
JV, In-source, Out- products
Extensions source
Counter Competitor Eliminate bottom 20%
↓ R&D, ↑Sales

Business Situations vs. HRM

Upturn Flat Downturn
Conquer Build momentum

‘Change’ mgmt Talent Mgmt Top Talent focus
Reduce Fat Innovation/R&D Sales, Sales, Sales
Continuity Early wins Increase attrition
Everyone Happy Slow Down HR Costs Motivation


Business Situations vs. HRM

Upturn
•Projects Flat Downturn
•Job Ads
•Communication
•F/L Manager Com.
•Middle Management
Conquer
•Involvement (survey, momentum
Build

suggestions)
‘Change’ mgmt Talent Mgmt Top Talent focus
•Realistic Goals
Reduce Fat Stack R&D Stack Sales
•Controllable KPIs (customer
Continuity Early wins Increase attrition
satisfaction, production)
Everyone Happy Slow Down HR Costs Motivation


Staff Attraction & Retention
THE BATTLE FOR TALENT


Intro:

“Cow don’t drink water cannot
push cow head down”


Question: Talent
Management for Who?
Excellent

Very Good

Average

Not Good

Commit Suicide


Before we start…

1. Who designs your Talent
Management programs?
2. Are you in the Talent Pool?
3. Do you qualify?
4. “It takes a crook to catch a crook”


Talent Segmentation

• Who are your Talents?

: A Talent for others does not
mean a Talent for you


Talent Segment Targeting

• Unwanted by big MNCs
• Small companies
• Boring Environment
• No Growth/Learning
• No MBA
• Passion, Values, IQ (streetsmart)
• Appreciate Chaos
• Multitask
• Passion to Learn


Talent Segmentation

• Identify POTENTIAL
2 3 4 5
PERFORMANCE
5

Group I
(Talent Pool)
4
3
2


Talent Segmentation

2 3 4 5
PERFORMANCE

Group II Group I
5

( Potential) (Talent Pool)
4

Group IV Group III
3

(Counseling) ( Performance)
2


Selection and
Identification
1. Results PERFORMANCE
APPRAISAL

2. Values

3. Special
Contributions

Selection and
Identification
POTENTIAL 1. Capacity
EVALUATION

2. Competencies

3. Culture


Selection and
Identification

POTENTIAL
EVALUATION
1. Capacity

Learn Ambition

Next Level

Selection and
Identification

POTENTIAL
EVALUATION
2. Competencies

Competent Pressure

Reliable/Consistent

Selection and
Identification

POTENTIAL
EVALUATION
3. Culture

Demonstrate Influence

Improve

Exercise

Define ‘Performance’ Define ‘Potential’


Exercise

• Exercise:
1. Factors for Performance Appraisal
2. Factors for Potential Appraisal


Talent Scarcity and Brain-
Drain Problem
1. Change your Business
2. Change your Business Model
3. Re-locate
4. In-Source
5. JV or Partnership or Swap
6. Create micro Business Units
7. Over Promote
8. Over Pay
9. Contractual tie-up
10.Hire Low, Train High

SALARY & BENEFITS: HOW IT
FITS INTO THE BIGGER
SCHEME OF THINGS


Brand Execution: Aligning
the 4-Wheels

Brand
Resources
Structure Position
Segmentation
& Targeting
Philosophies
Leadership

Person


Brand Alignment: Talent
Segment Philosophies

Principles HR Philosophy

1. Equal / Fair
2. Happy / Productive
3. Hire Low, Train High
4. Performance vs Potential
5. SP drives TM
6. Talent Pool owned by the company
7. Retention / Engagement

Brand Alignment: Demographics
Segment Philosophies?



Alignment: Framework

• Org Structure
Structure • Job Design
• C&B
• Policies & procedures
• Decision making
• Job fit
• Management Systems
• BSC and KPIs
• Decentralized vs. Centralized
• Control vs. Empower

Strategy: Framework

• Tools
Resources • Physical facilities
• Peer support
• Information
• T&D Programs
• Mentors
• Guides
• ICT
• OJT

Strategy: Framework

Leadership • Role modeling
• Vision/Mission/Philosophy
• Leadership Style
• Delegation & Empowerment
• C&B
• Promotions
• Transition development


Strategy: Framework

• Recognition
Person • Recruitment
• Training
• Values
• Motivation
• Self Efficacy
• Awareness
• Useful Competencies
• Career aspirations
• Attribution (control)

Alignment: 4-Wheels Model

Brand
Resources
Structure Position
Segmentation
& Targeting
Philosophies
Leadership

Person


• Exercise: Use the 4-wheels to determine
corporate alignment needs


Consulting Process and
Deliverables
Step 3: Step 4:
Step 1: Data Step 2: Analysis
Recommendations Tools/Resources

Turnover history & Exit Changes to HRM policies Interview Formats and
Turnover Analysis
Interviews (inc. C&B) Questions for Recruitment

Work Culture Employee Satisfaction
Training Program input Work Culture analysis
enhancements Survey

Employee Satisfaction Leadership and staff Q12 Staff Engagement
Leadership analysis
Survey relationship mgmt Tools

Q12 Staff Engagement Compensation & Benefits Performance management
Benefits Survey format
Survey analysis system

Stay Survey HRM policies analysis Staff Motivation

Compensation & Benefits

39

Part B
SALARY & BENEFITS


OPTIMIZING COMPENSATION
& BENEFITS


Background: The Four
Desperates

1. Desperate 2. Desperate
Competition Consumer

3. Desperate 4. Desperate
Achievers Changes
Refer: Analysis of Retention – Example and Exercise


• Exercise: Define your Talent issues, limited to
the most critical 4 aspects.


Principles and Objectives

Principles Company’s Needs

1. Succession Planning of Key Leaders –
Founding Directors (perpetual business theory)
2. Retention of Key Staff – especially younger
ones
3. Transform into a Performance-based
organization


Principles and Objectives


1. Equal / Fair
2. Happy / Productive
3. Hire Low, Train High
4. Performance vs Potential
5. Retention / Engagement


• Exercise: Define your Company-HRM Objectives
and HRM Philosophies.


What drives our Reward?

Strategy Values

Compensation &
Benefits


Before we proceed…

Reality #1

Cash is King



Reality #2
Tangible C&B

Attraction



Reality #3
In-Tangible C&B

Retention



Reality #4
In-Tangible C&B

Tipping Point for
Attraction/Retention


The 51.28% Theory

• Resign = Push + Pull > 51.28%
• If staff is Happy:
=> 0 + Pull > 51.28%


• Exercise: What “Values” drive your Talent
Management strategies?

• How will these Values impact your HR and C&B
policies?


Branding and Positioning:

“You don’t attract who you want.
You attract who you are”
John Maxwell


What to Pay?

• Pay for Service
• Pay for Job
• Pay for Competency
• Pay for Performance


Performance and Incentives

1. Internal Equity
1. Internal Job Rates
2. Performance differentials

2. External Competitiveness
1. External Job Rates - Benchmarking
2. Demand & Supply


What’s the Difference?

• Increment

• Bonus

• Promotion

Exercise: How does your company
define the difference?


How to choose a durian


How to choose a durian

Durian

Compare
Each
Other

Other
stall

How do we compare?

• Skills / • Problems
Knowledge

• Responsibility


Pay for Job

• Competency • Problem solving
- Knowledge - Complex
- Skills - Type of problems
- Experience - Special Problems

• Responsibility
- Authority
- Success/Failure
- Freedom to act

Equity
Job

Compare
Others

•Job Size
Outside


What to Pay?

• Pay for Service
• Pay for Job
• Pay for Competency
• Pay for Performance

Exercise: Which ones does your
company use for Pay?


Pay For SERVICE


“He has 20 years experience:
1 year of bad experience
repeated 20 times”


Pay for SERVICE
• Loyalty (relevant years of service)
This consideration may be rewarded in the following manner :-
Descriptions of performance Years in Compa Ratio
Position

Consistently 10 years of competent performance in the 10 1.43-1.50
position

position

position

position

position

position

position

Pay for SERVICE

• Seniority (career level on the professional career level)

We do not recommend that years of service(Seniority) in the
organization be rewarded directly. Years of service must contribute to
performance improvement or must lead to structural and content
change of the position.

In both cases the recognition can be systematically rewarded as
explained earlier.


Pay For JOB


Documentation
JOB DESIGN


District Engineer, TNB

Duties and If stated as Accountabilities then the job
Responsibilities must produce :

Control, operate and Ensure uninterrupted supply to
maintain the District consumers in the district by operating
Distribution System the District Distribution System.
Ensure availability of adequate supply for
Plan and design the High future needs of industries in the district by
voltage system planning and designing the High voltage
System
Manage major supply Ensure satisfaction of the major customers
projects to customers in in the district by managing supply and
the district. Distribution.

Ensure high performance and Productivity
Supervise all technical of technical staff by adopting proper human
staff in the district. resource management methods on
selection, training, coaching, counselling
and motivation.

Results Driven

Activity vs.
Accountability


Exercise: Results
Description

Key Key Activities KPIs
Result
1. 1.
1. 2. 2.
3. 3.
4. 4.
1. 1.
2. 2. 2.
3. 3.
4. 4.
1. 1.
3. 2. 2.
3. 3.
4. 4.
1. 1.
4. 2. 2.
3. 3.
4. 4.


General Manager, Manufacturing
Key Results Major Supporting Actions Performance
Indicators

1. Ensure •By monitoring production performance and •Timely production
achievement taking corrective actions targets
of targeted •By analysing production downtime and •Productivity ratios
production introducing improvements •Downtime
volume •By thorough preparation for introduction and •Implementation
implementation of new models and variants schedule
•

2. Ensure •By reviewing quality performance results and •Quality index
achievement identifying non conformance and undertaking •Defect occurrence
of product corrective actions •Non-conformance
quality targets •By analysing customer feedback and taking to established
corrective actions standards
•By undertaking on-line and off-line •Demerit points
continuous quality improvement programs
and activities
•By undertaking education and re-education
programs


Indicators

3. Ensure safe •By incorporating safety and health features •Accident rate
and healthy into infrastructure design and development •Health standards
operating •By creating awareness of safety and health •Operation audit
among employees through programs and findings
environment
campaigns
•By constant monitoring of safety and health
standards through working committees
•By developing and implementing
occupational health programs

4. Ensure •By developing and implementing on-the-job •Productivity ratios
competent, training •Turnover rate
motivated and •By developing and promoting effective •Employee morale
productive communication with employees and union •Team activities
manufacturin •By ensuring continuous development and •Strikes /
g workforce upgrading of skills disciplinary actions
•By providing appropriate recognition and
rewards for high performance
•By promoting teamwork through QCC and 5s
activities

Indicators

5. Enhance •By ensuring effective and efficient •Operating efficiency
operating maintenance of plant, machinery and standards
efficiency and resources •Cost per unit
productivity •By reducing wastage and eliminating •Wastages and
pilferage losses
•By reducing and managing indirect overtime
•By managing utilisation of consumables and
materials

6. Timely •By undertaking effective planning and •Timely completion
execution of provision of resources of projects within
projects •By monitoring implementation and progress cost allocation
of projects
•By managing project costs
•By developing effective project teams


Salary Practice Analysis of
Executive Director Positions
Market Base Salary Practice of Executive Directors
120,000

100,000
Q3
Monthly Base Salary (RM)

80,000
Median
60,000 Q1
y = 7333.3x - 53742
40,000

20,000

0
8 9 10 11 12 13 14 15 16 17
Market Reference Job Grade


What is Market Reference Job Grade?
Market Reference Job Grade is an observed cluster of similar size jobs.

Why Market Reference Job Grade is Needed?
Job comparison using job titles would be too rudimentary.
Directors are rewarded for responsibilities and accountabilities,
therefore remuneration system must be closely linked to job size which
reflects the level of responsibilities and accountabilities.


Determination of Market Salary Practice

Market Salary
14000 Practice
Monthly Base Salary(RM)

Line
12000

10000

8000

6000

4000

2000

0
Market Reference Job Grade
Job Point Range

How Market Reference Job Grade is Determined ?

Job Descriptions Organisation Structure

Current Company Job Business
Grading Structure evaluation Complexity

Revenue/Capital
Financial Indicators
Employed
(Company Size)
(Company Size)


How job evaluation is conducted

Competency

Results Problem Solving
Creation


The ranking method
• Jobs are considered as a whole
• Reporting relationships or nature of functions or some
discernible factors are applied

Chief Executive

Sales Production Finance Manager
Manager Manager

Sales Production Accountants
Executive Executive


The job classification method
Whole jobs are grouped together on the basis that they
seem to be equivalent in size.

Chief Executive

Sales Production Finance Manager
Manager Manager

North Production Mgr X Planning, budgeting
and project finance
South Production Mgr Y
Centre Production Mgr Z Management
accounting

The factor comparison method
What are relevant factors?

• Know-how • Problem solving
- Skills - Job complexity
- Experience - Freedom to think
- Managerial skills-expertise - Nature of problems
- Qualification - Job challenges
• Responsibility
- Accountability
- Freedom to act
- Limits of authority
- Size of operation


The factor comparison method - continued
Factors are measured by comparing one against the other.

Knowledge Responsibility Complexity

10 A B
9 A
8
7 B A
6
5 B
4
3 C C
2
1 C
A = 10 + 9 + 7 = 26
B = 7 + 5 + 10 = 22
C = 3+1+3 = 7

The point factor method

• For each factor a scale is developed.
• The factors chosen are tested for reliability and validity.

The fundamental job factors are :-
–Know-how
–Problem solving Competency
–Accountability (for results Results
creation) Creation Problem
Solving


Point Factor Method -
Job Evaluation
• Job Evaluation is a system for rating jobs logically and
fairly
• Weber’s Law states that job measurement can be
achieved up to an accuracy level of 15%
• The number pattern used for measurement of jobs is a
15% gap scale, i.e.

57 66 76 87 100 115 132 152 175 200

Most Consultants use these universally
accepted job measurement principles

Job Factor : Competencies

• Competency includes every kind of capability, skill and
ability that is necessary to produce the key results of the job
at an acceptable level.

• It does not matter whether the competency is acquired by
formal training in an institute of higher learning or by working
on the job and becoming capable through experience

• Competencies can be expressed either by
depth(specialization) or breadth(generalization)


Levels of Competency
2112 Level Exceptional Mastery
1840 11 Unique mastery in a scientific discipline or professional mastery of organisational and institutional systems.
1600
1400 Level Recognised Authority
1216 10 Professional Mastery
1056 Recognised authority outside one’s organisation in a particular field or mastery of integrative mechanism in a broad area.
920 Level Professional Mastery / Specialist
800 9 Know-how at a high level
700 An authoritative source of knowledge within the organisation. These jobs require accumulated know-how through extensive experience in
a particular field of study. Alternatively, these jobs require broad practical knowledge of a variety of concepts and models necessary to
engage in goal directed effort involving complex problem situations.
608 Level Seasoned Professional level of know-how
528 8 Jobs requiring specialist know-how that can be obtained only by years of experience in the relevant field of knowledge. These jobs
460 require extensive experience in having used concepts covering a broad area of knowledge in order to resolve problems.
400 Level Senior Professional level of know-how
350 7 At this level jobs require extensive knowledge covering multiple levels of principles and theoretical models in a particular field or functional
304 areas..
264 Level Professional level of know-how
230 6 This category of know-how ranges from knowledge of principles and concepts to operational knowledge of application of principles and
200 concepts.
175 Level Basic Principles and Theoretical Models (Junior Professional)
152 5 Jobs at this level require knowledge of basic principles and theoretical model that is normally gained through formal study.
132
115 Level Sub-Professional know-how
100 4 This is the know-how level of sub-professionals. Usually 2 - 3 years of study beyond basic schooling is necessary to acquire the
87 competencies involving the required concepts and theoretical principles. Alternatively this level is characterised by several years of working
experience to resolve problems
76 Level Vocational Skills
66 3 This category of know-how is usually referred to as vocational skills. Jobs at this level require procedural knowledge which is provided by
57 either job experience or through vocational training.
50 Level Procedures
43 2 Jobs at this level require knowledge of work routine and experience in using simple tools, equipment and machines.
38
33 Level http://totallyunrelatedrandomanddebatable.blogspot.com/
Basic Education
29 1 The lowest level of know-how which is largely basic education and on the job instruction of work routines.
25

Job Factor : Problem Solving Explanation
Problem solving is the application of knowledge required to identify and
resolve problems.

There are essentially two dimensions to problem situations :-

1. the extent to which the problem situation is covered by set
procedures, established standards, company policies and principles and
more generally by guidelines and goals orientation.

2. the extent to which the job encounters similar problem situation,
differing situations or situations requiring constructive thinking,
evaluative judgement or situations requiring the development of new
concepts and generalisation.


Levels of Problem Solving

528 Strategic Direction
460 Level 9 This is the highest level where the job holder is free to engage in any form of problem solving constrained only by the rules of
general
400 conduct, cultural norms and business philosophy . Jobs of this nature are usually engaged in adaptive thinking of a very high leve
and in applyingnew and imaginative approaches .
350 Broad Policy Development
304 Level 8 This level of jobs engage in problem solving situations with the aim of achieving ultimate goals. The holders are concerned about
job
264 achieving goal direction, and they areguided by the operating philosophy . A large part of these jobs involve adaptive thinking of a
high order.
230 Broad Policy Implementation
200 Level 7 These jobs are guided by broad policies . However, the problem solving is directed at achieving specific objectives by adaptive thinkin
175 The “What” and “ How” i.e. problem definition has to be worked out.
152 Defined Policy
132 Level 6 This level of jobs are guided in problem solving by clearly defined principles and available policies . The nature of problems
115 encountered are such that the “what is” is clear, and a certain degree of adaptive thinking is required to determine solutions.
100 Principles
87 Level 5 These jobs engage in problem solving based largely onstandards available or principles set . Where procedures are available, they are
76 usually unspecified allowing discretion. The nature of the problems encountered are usually resolved by applying learned solutions
re
very little deductive and extrapolate thinking is required.
66 Process / Standards
57 procedures and precedents . The nature of the problem presents issues that require on
Level 4 These jobs solve problems by the application of
50 to search for the answer from among several known alternatives.
43 Strict Standards
33 procedures and precedents . The nature of the problem is specific and one has to choo
Level 3 These jobs solve problems by the application of
29 between defined solution alternatives.
25 Procedures
22 Level 2 This level of jobs are usually “ how to solve their problems and they resolve problem situations working with standard instruction
told”
19
16 Routines
14 Level 1 These jobs followdetailed instructions and strict rules of conduct . The job holder is likely to be resolving problems engaged in
12 repetitive reaction to problem situations where one has to choose from a given set of solutions.


Job Factor : Results
Creation Explanation

This is the element of the job that can be best described as “the
accountability for actions and for the consequence of actions taken”.

The more freedom there is in the job to take actions and the more impact
the job has on end results the greater the Results creation element.

For example, the job of a General Manager of a business unit can be
considered as having more impact on end results than the job of a
Department Manager of the business unit.


Levels of Results Creation
1056 Strategic Direction
920 Level 9 Visionary.
800
700 Broad Policy Development
608 Level 8 Very general guidance from the highest level of the enterprise or organisation. These jobs have a hig
528 impact on end results.
460 Broad Policy Implementation
400 Level 7 These jobs are subjectbroad policies and there are
to general guidelines from the highest vel of the
le
350 enterprise or organisation
304 Defined Policy
264 functional policies and goals.
Level 6 At this level of Freedom to act, the jobs are subject to
230
200 Principles
175 Level 5 specific policies and theyare also subject to general practice of the
This level of jobs are subject to
152 functional area.
132 Process / Standards
115 Level 4 These jobs are subject to well defined policies and procedures . Results produced are subject to
100 review by Superior.
87 Strict Standards
76 Level 3 These jobs are subject standardised work practices and procedures . Generally supervision over
to
66 performance is by close review of progress and results.
57 Procedures
50 Level 2 instruction and prescription of work routine.
These jobs are supervised closely by
43
38 Routines
33 detailed work routines and there is little or no room for change.
Level 1 This level of jobs are subject to
29

Job Evaluation Results
The positions of Executive Chairman and Executive Directors were evaluated based
on the Role and Accountabilities as designed by Consultants

No Job Title Results Problem Competency Total Job
Creation Solving Job Grade
Points
Level Points Level Points Level Points

1 Executive 9+ 920 10 700 9 920 2540 14
Chairman

2 Executive 8 608 8+ 350 8 528 1486 12
Directors


Job Evaluation Results
Problem
Competency Result Creation
Solving Total Mkt. Ref
No. Positions/Company Grade
Leve Points Grade
Points Level Points Level Points
l
1. Executive Chairman 9+ 920 10 700 9 920 2540 14

2. Executive Director 8 528 8+ 350 8 608 1486 12

3 Executive Director 8 528 8+ 350 8 608 1486 12

4 Non Executive Directors 8 528 8 304 7+ 460 1292 11
5 GM, Asia Pacific Centre Sdn Bhd 7 350 7+ 230 6 264 844 9
6 GM, Marketing 7 350 7+ 230 6 264 844 9
7 GM, Technical & Quality Assurance 7 350 7+ 230 6 264 844 9
8 GM, (Sepang) Sdn Bhd 7 350 7+ 230 6 264 844 9
9 GM, (Niaga) Sdn Bhd 7 350 7+ 230 6 264 844 9
10 GM, Security Services 7- 304 7 200 6 264 768 8
11 GM, General Ops 7- 304 7 200 6 264 768 8
12 GM, Corporate Communications 7- 304 7 200 6 264 768 8

13 GM, (Technologies) Sdn Bhd 7- 304 7 200 6 264 768 8

GM, Agriculture-Horticulture Sdn
14 7- 304 7 200 6 264 768 8
Bhd
15 GM, Human Resource 7- 304 7 200 6 264 768 8
GM, Sports UnitSdn
16 7- 304 7 200 6 264 768 8
Bhd
GM, Mgmt & Technical
17 7- 304 7 200 6 264 768 8
Services Sdn Bhd
18 GM, Public Relations 7- 304 7 200 6 264 768 8

Market Salary Scale
Job Mkt General Market
Points
Ref General Problem Freedom to
Grade
Competencies Solving Act for Q1 Med Q3
Results
o Ultimate integration Philosophical and Achievement of 62,100 69,200 88,600
4201- through the provision of strategic integration of enterprise philosophy
16
above enterprise philosophies very large multibusiness objectives
global enterprise

3301- o Business integration of Guiding strategic Achievement of 50,600 56,600 71,900
4200 15 global enterprise integration of very large enterprise goals and
multibusiness global philosophy objectives
enterprise
14 o Business integration of Guiding strategic Achievement of 41,300 46,200 58,400
2501-
very large multibusiness integration of complex enterprise objectives
3300 enterprise very large multibusiness and goals
group

1801- 13 o Enterprise integration Guiding strategic Achievement of 33,600 37,800 47,400
2500 and multibusiness sector integration of complex enterprise business
leadership issues large objectives and
multibusiness unit(s) business goals

1481- 12 o Strategic integration of Managing strategic Achievement of 27,400 30,900 38,500
1800 the enterprise integration issues of large longer term enterprise
business unit(s) goals
11 o Strategic integration of Resolving strategic Achievement of 22,400 25,200 31,300
1181- the operations of large integration issues and business objectives
1480 business unit of several units creating conditions for cross and strategies
functional cooperation.
JJob subject to broad goals &
10 broad policies Involved in Strategic business Management of 18,200 20,600 25,400
941 determining key results to be management capability or conceptual direction and
- achieved by the organization comprehensive integration achievement of goals and
1180 both long term and strategic of large but relatively business objectives within
results homogenous business units very broad guidelines and
resource constraints

Results Creation (Freedom to Act)
Grade Problem Solving
Competency
Head of Business Area
22 528 350 608
21 460 304 528
400 264 460
20

350 230 400
19 304 200 350

Sr. Mgr. 264 175 304
Sr. Mgr. Customer
18 Sales Serv. &
Quality
Sr. Mgr. Sr. Mgr.
HR & Sr. Mgr. 230 152 264
17 Service Product
Admin
A

Snr. Mgr. 200 132 230
Sr. Mgr,
16 Training Dist.

Job grade as it should be Evaluated new grade

Alternative to Job Evaluation

1. Obtain Consultant’s report
2. Match internal jobs (+salaries, between 2-5 yrs
in the job) to Consultant Report’s Grades and
Points System using Mid-Point salary as the
reference point
1. E.g.: Admin Executive, RM2,300 -> Grade 3, Mid-
Point (450 points); assign 450 points
2. Benchmark about 20%-30% of the jobs
3. Cluster or Slot remaining 70% of jobs according
to Grading Scale based roughly on 3 factors:
1. Competency, Problem Solving, Results Creation

Pay For PERFORMANCE


Which system should we
use?
Trait-based
Behavior-based Refer: Which
Performance
Management System
Knowledge/Skill based should we use?

Activity based

Results-based

Managing Performance = Managing Expectations
What’s YOUR expectation?

Compa Ratio Table

Use this if your company:
• Pays for Performance, and
• Pays for Job rates

Def:
Mid-Point = Mid Point of Pay Grade

Grade E2
Min MID Max
RM2,000 RM2,500 RM3,000


Compa Ratio Analysis – An
Indicator of Salary Position
Compa Ratio (CR) =
Actual Salary ÷ Mid-Point Salary of the Salary Range

75th Percentile
Salary (RM)

CR = 1.30

CR = 1.00

CR = 0.70

Job Points

Incumbents’ Salary Analysis

Incumbents’ monthly base salaries compared with mid-point salary of the
recommended salary range :-

Incumbent Mkt Reference Mid Point Salary Current Compa
Job Grade for the Market Job Monthly Ratio
Grade Base Salary
ABC 2 RM RM 1.00
2,6000 2,600

Hj XYZ 2 RM RM 1.05
2,600 2,750

GHI 2 RM RM 0.75
2,600 2,400

This job grade represents the measured “job size”
based on current job accountabilities

Compa Ratio Table

< 0.7 ≥0.7 - >0.9 - ≥1.1 - > 1.3
≤0.9 <1.1 ≤1.3
5

4

3

2

1


Compa Ratio Table

< 0.7 ≥0.7 - >0.9 - ≥1.1 - > 1.3
≤0.9 <1.1 ≤1.3
5

4

3 5%

2

1


Compa Ratio Table

< 0.7 ≥0.7 - >0.9 - ≥1.1 - > 1.3
≤0.9 <1.1 ≤1.3
5 9

4 7

3 9 7 5% 4 3

2 2

1 0


Compa Ratio Table

< 0.7 ≥0.7 - >0.9 - ≥1.1 - > 1.3
≤0.9 <1.1 ≤1.3
5 15 12 9 8 7

4 12 9 7 5 3

3 9 7 5% 4 3

2 6 4 2 1 0

1 4 2 0 0 0


• Exercise:
• Determine your pay grades and salary points
(internal or external benchmark?)
• Draw your Compa Ratio Table


Employee Distinction?

< 0.7 ≥0.7 - >0.9 - ≥1.1 - > 1.3
≤0.9 <1.1 ≤1.3
5 9 8 7 6 5

4 8 7 6 5 4

3 7 6 5% 4 3

2 6 5 4 3 2

1 5 4 3 2 1


Employee Distinction?

< 0.7 ≥0.7 - >0.9 - ≥1.1 - > 1.3
≤0.9 <1.1 ≤1.3
5 20 15 12 8 5

4 18 12 9 5 3

3 9 7 5% 4 3

2 1 1 1 0 0

1 0 0 0 0 0


Employee Distinction

Average Rating Multiply Example Example
Rating Factor Rating Increme
nt
> 4.1 5 2 4.2 8.4%

> 3.3 – 4.1 4 1.2 3.5 4.2%

> 2.3 – 3.3 3 0.75 2.8 2.1%

> 1.3 – 2.3 2 0.5 1.8 0.9%

≤ 1.3 1 0 1.0 0%


Job Holder’s Salary
Determination Model
Step 1 Step 2 Step 3
Performance Rating Descriptions of Years in Salary Personal Rating Recognit
Rating performance Position Range Contribution ion (%
Descriptions Consistently 8 years of 8 32,756 – Level increme
competent performance 33,740 nt)
Distinguished 5
in the position Unique 3 10%
Commendable 4 Authority
Consistently 7 years of 7 31,801 –
competent performance 32,755 The individual is
Competent 3 in the position a recognised
industry leader
Adequate 2 Consistently 6 years of 6 30,876 – in the field.
Entry zone / 1 competent performance 31,800
unsatisfactory in the position
Significant 2 5%
Consistently 5 years of 5 29,976 –
The individual
competent performance 30,875
brings market-
in the position
recognised
Consistently 4 years of 4 29,101 – characteristics
competent performance 29,975 to the job.
in the position
Consistently 3 years of 3 26,000 – Insignificant 1 0%
competent performance 29,100
in the position


Job Holder’s Salary
Determination
The significant compensable elements of the three incumbents are linked below
showing the related salary decision :-
Step 1 Step 2 Step 3

Incumbent Mkt Current Mid Incumbent’s Loyalty Personal
New New
Ref. Monthly Point Performance Characteristics
Job Base Salary Salary Compa
Current Yrs in Min Sal. %
Grade Salary Rating Sal. CR Level Increase Ratio
Pst’n Level (RM)
ABC 11 RM RM
3 1.05 3 26,000 – 1 0% 27,500 1.05
27,500 26,000
29,100 (current
salary already within
the range)

XYZ 11 RM RM
3 1.05 3 26,000 – 2 5% 28,875 1.11
27,500 26,000
29,100 (current
the range)

DEF 11 RM RM
3 1.05 3 1 0% 27,500 1.05
27,500 26,000 26,000 –
29,100 (current
the range)


Employee Distinction

2 3 4 5
PERFORMANCE

Group II Group I
5

( Potential) (Talent Pool)
4

Group IV Group III
3

(Counseling) ( Performance)
2


Curse of the Bell Curve

‘A’ ‘B’ ‘C’ ‘D’ ‘E’
Staff Staff Staff Staff Staff


Pay For COMPETENCIES


Position: Secretary
Responsibilities + Personal Competencies Differentiating
Tasks + Activities Competencies
•Typing •Pleasant •Proactive
•Manages •Accurate •Initiative
communications •Is able to take notes •Independent
•Keeps short-hand on shorthand and •Integrity (trust)
notes typing memo effectively •Creative
•Makes •Presentable •Resourcefulness
•Appearance •Always excel
appointments
•Behaviours •Unwavering
•Uses the computer •Good manners dedication and
•Filing •Courteous commitment
•Takes minutes •Diligent •Ability to make simple
•Follow-up decisions
•Makes coffee •Sensitive to people
•Keeps secrets •Positive attitude
•Drafts letter
•Screens calls

The Job Person Characteristics The Superior Performer

Competencies


The appointment of a Senior
Manager - an illustration
Selection criteria of the Present Selection Selection Criteria for the
past Criteria Future

MBA Knowledge MBA MBA

10 yrs work experience 10 yrs work experience Less than10 yrs work
Skills
experience
I am able to help others I can get others to agree
I am an expert Self Concept in doing things right on what is right

I have to gain I enjoy contributing as a I enjoy having to get
Social Role team player to what is
respect of others others to determine
right
what is right
Aggressive or Positive and Positive, enthusiastic
submissive Traits proactive and proactive

•Achievement & Resourceful power
• Personal social power
Aggrandizement (persuasion,
Motive •Use of technical influencing,
• Excessive use of knowledge & reasoning, concern
position power power of for personal
(status & authority) persuasion
impact)

This model provides clarity on job related competencies.

Job vs Person Match:
District Engineer
Mr. A Ms. B
M.Eng.10 years as M.Eng.10 years as an
an engineer in engineer in Tech.jobs
Tech.Jobs.
Skills &
Knowledge
I like to help my I’ll help if I am
team achieve.
Social Role asked

I like to learn new I am an
Self Concept
things expert

Proactive Traits Aggressive

I told them what is
I want to do better Motive right


Job vs Person Match:
Room Sales person
Ms. A Ms. B
Diploma in Social Diploma in Social Sc.
Sc. 5 years as an 5 years as as waitress
Admin.clerk
Skills &
in a hotel
Knowledge
I like to meet
Social Role I don’t like
new people
injustice
I like to learn new Self Concept I am always
things unlucky

Assertive Traits Aggressive

I want to do better Motive I told them
what is - right

Superstar Competency
Model

• Exercise: Develop Your Own “Superstar”
Competency Model


Competency Target Setting

1. Initiative
2. Teamwork
3. Problem Solving
4. Leadership
5. Integrity

What’s the problem here?


Competency Target Setting

Initiative
1. Minimize problems quickly without needing to
be asked
2. Seeks personal growth and professional self-
development
3. Doing more than is required/expected in a job
4. Seeks new and improved solutions and
approaches to completing assignments
5. Looks for opportunities to help others and team


• Exercise: Competency Dictionary

• (Refer to Workbook for examples)


Competency Standards

3 Meets behavioral standards consistently. Is a
good role model for others.

2 Meets behavioral standards some of the
time. Needs improvement.

1 Does not meet behavioral standards.
Require counseling or disciplinary actions.


Exercise: Competency
Standards


• The Specialist Career Ladder


Career Management
A professional of the past The new career professional

Where is my job
I need an
GM interesting career
Seasoned
Manager Manager Professional
Senior Professional
Asst Mgr Asst Mgr
Developing
Professional
Executiv Developmental
e Executive


SCL: Specialist Career
Ladder

Principal Consultant (1)

Consultant (4)

Specialist (4)

Associate Specialist (2)


SCL: Specialist Career Ladder

•Telco,
Principal Consultant (1) •Outsourcing,
•Aerospace,
Consultant (4)
•Biotech,
Specialist (4) •Digital media,
•Animation,
•M&A
Associate Specialist (2)
•Financial forensics


SCL: Specialist Career
Ladder
General incentives & General qualifying/re-
privileges: qualifying criteria:
a. Extra monetary incentive a. Meet the competency
criteria
b. Official Specialist /
b. Performance min B, PED
Consultant job title.
c. Min. 40 training hr/year
c. Higher external training
d. Physical contribution:
subsidy limit by company.
i Mentoring
d. Tie-pin or pin
ii Write-up
e. Certificate iii Speaking
f. Additional benefits iv Multimedia recording
v R&D publication / Thesis


Part B-2
SALARY STRUCTURES AND
SALARY SURVEYS


• Refer to Benchmarking and Surveys (Workbook)


Options to Develop Salary
Structure
1. Self – using JE System
1. -> match Job Points ranges to Consultant’s scale
2. Better internal equity, not externally competitive

2. Adopt Consultant’s structure
1. -> match internal jobs to new structure
2. Bad internal equity, externally competitive


Salary Structures

1. Narrow Band – 40%-60% between min/max
2. Broad Band– 100%-200% between min/max
3. Specialist Ladder


Broad Band
Pros Cons
1. Streamlines Hierarchy 1. No Awareness of
2. Facilitates Internal External Market Rates
Movement 2. May Lead to Inequities
3. Managers have greater 3. Lack of Cost Controls
latitude to pay what they 4. Severe reduction in
want to an employee opportunities for
promotions


Part B-3
VARIABLE AND INCENTIVE
SCHEMES


Incentive Scheme Design

Agenda
1. Objective
2. Situation Analysis
3. Target Areas to be improved
4. Current Incentive
5. Recommended KPIs
6. Proposed Incentive Scheme
7. Improving Performance


Objective?

1. What are you trying to achieve?
2. How to measure?
3. What is the Gap?


Target group?
The following positions are eligible to participate in this
scheme:


Situation Analysis?

1. Retention?
2. Working environment?
3. The current basic pay?
4. Teamwork?
5. Supervision/Leadership style?
6. Attitude?
7. Turnover issues?
8. Absenteeism?


Target areas to be improved?

1. Increase/Decrease the basic pay?
2. Fixed costs?
3. Incentives tied to… ??
4. Absenteeism?
5. Quality improvement?
6. Easily understood by employee?


Current incentives?


Recommended KPIs to be
incentivised
Output Skill (Proficiency) Behavioural
(Attitude)
•Manpower productivity •Job Specific Skills •Punctuality
•Operational Cost •Absenteeism/Attenda
•Safety and nce
Environment •Teamwork
•Quality (e.g. •Turnover
Defect/unit)
•Volume


Proposed incentive scheme
1. Fixed Salary Proportion (Fixed Personal
Income, Variable Team Bonus)

Total Payout
= Fixed Quantum + Team Based Bonus


1. Fixed Salary Proportion (Fixed Personal Income, Variable
Team Bonus)

Example:
1. Budgeted incentive = 5.8 months of basic payroll
2. Fixed Quantum = 0.4 months (for example) [4.8 mths ÷12]
3. Monthly Total Payout = Basic Pay + Fixed Quantum
= RM500 + 0.4 months
= RM500 + RM200
= RM700
4. Amount available for bonus = 5.8 months - 4.8 months
= 1.0 month


1. Fixed Salary Proportion (Fixed Personal Income, Variable
Team Bonus)

Annual Bonus Incentive Matrix

Production Operator Team Leader Group Leader
Team
Performance
Rating Annual Bonus Annual Bonus Annual Bonus

5 1.50 months 2.00 months 2.50 months





2. Two-tier Multiplier (Variable Personal Income,
Variable Team Bonus)
Total Payout =
Basic Pay + Monthly Personal Target Achievement + (Personal
Target Achievement x Team Performance Multiplier)

Monthly Incentive Payout Matrix

Personal Rating Monthly Incentive

5 1.2 months

4 1.0 months

3 0.8 months

2 0.5 months

1 0.0 months


Example: Production Operator

Monthly Basic Pay (RM)
Personal
Performance
Rating 500 550 600 650 700 750 800

5 1,100 1,210 1,320 1,430 1,540 1,650 1,760

4 1,000 1,100 1,200 1,300 1,400 1,500 1,600

3 900 990 1,080 1,170 1,260 1,350 1,440

2 750 825 900 975 1,050 1,125 1,200

1 500 550 600 650 700 750 800



Production Operator Team Leader Group Leader

Personal
Rating Monthly Incentive Monthly Incentive Monthly Incentive





2. Two-tier Multiplier (Variable Personal Income, Variable Team Bonus)

(in months)

Team Performance
5 4 3 2 1
Personal Performance

5 2.4 1.8 1.2 0.6 0

4 2 1.5 1 0.5 0

3 1.6 1.2 0.8 0.4 0

2 1 0.75 0.5 0.25 0

1 0 0 0 0 0


3. Team Ratio Plan (Team-based Income, No Annual Bonus)

Total Payout =
Basic Pay + Monthly Incentive Payout (No Annual Bonus)

Monthly Incentive Payout Matrix
Production Staff Team Leader Group Leader
Team Rating Monthly Incentive Monthly Incentive Monthly Incentive







3. Team Ratio Plan (Team-based Income, No Annual Bonus)

Example: Production Operator

Monthly Basic Pay (RM)
Team
Performance
Rating 500 550 600 650 700 750 800

5 1,500 1,650 1,800 1,950 2,100 2,250 2,400

4 1,250 1,375 1,500 1,625 1,750 1,875 2,000

3 1,100 1,210 1,320 1,430 1,540 1,650 1,760

2 875 963 1,050 1,138 1,225 1,313 1,400

1 500 550 600 650 700 750 800

Improving Performance
Performance Intervention Methods Effectiveness of
Improvement Area Direct Incentive
Measures
Skill Deficiency •Off site Training Yes
•Job redesign
•On-the-job training
•Process Redesign

Performance Punishing •Review performance management No
processes
•Study on supervision style of Team
Leader
•Remove punishment
Non-performance •Proper performance monitoring No
rewarding process
•Arrange positive consequence

Coordination & •Communication of clear direction Partly
Teamwork and goals
•Shared Accountabilities
•Focus on Team Competencies

Behavioural •Communication of clear behavioural Partly
indicators
•Focus on Behavioural
•Coaching and Counselling
Supervision Style •Leadership styles of team leaders Yes but not for team
•Regular tracking on morale of team members
members

• Refer Sales incentive design examples


Dangers of Direct Incentives

1. lessen internal motivation,
2. switch to mercenary mode,
3. do something and do not do something else,
4. bribe and fraud culture,
5. easier for competitors to recruit,
6. lessen teamwork & helpful culture,
7. less and less impact for same value,
8. mockery of base salary and employment
contract,
9. rebellion from non-incentivised staff,
10. end up incentivising everyone for everything?,

Non-Monetary Rewards
and Benefits


Reminder…

Reality #1

Cash is King


Reminder …

Reality #2
Tangible C&B

Attraction


Reminder …

Reality #3
In-Tangible C&B

Retention


Reminder …

Reality #4
In-Tangible C&B

Tipping Point for
Attraction/Retention


Benefits Analysis and Comparison


Bridge Knowle - Salary and Reward Structures (Training and Workshop)

Bridge Knowle - Salary and Reward Structures (Training and Workshop)

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