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Pay & Incentives
Properly designed pay and incentive programs increase company performance and
provide organizations with an advantage vital in today’s competitive marketplace.
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Evaluating Pay Program Effectiveness
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While the majority of managers admit the need for systematic analysis of their pay programs, these evaluations are often
informal. Organizations on Fortune’s “Most Admired” list were found to be more disciplined and rigorous in their assessment of pay program
effectiveness than organizations not earning this designation. A systematic process for monitoring the effectiveness of pay programs is outlined in
detail.
Evaluating Pay Program Effectiveness: A National Survey of Compensation Professionals
(New)
Published in WorldatWork Journal – by Dow Scott, Ph.D.,
Tom McMullen, and Richard Sperling
Evaluating Pay Program Effectiveness
(Companion Article)
Published in WorldatWork Journal – by Dow Scott, Ph.D.,
Dennis Morajda, and Tom McMullen
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Are Your Pay and Incentive Programs Correctly Aligned with Company Goals and Employee Needs?
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Employee pay is a major cost of doing business. PDII can help you determine if your
pay dollars are being invested wisely by answering the following questions;
- Are pay programs helping attract and retain the best employees?
- Do employees feel that they are fairly paid?
- Are the highest performing employees getting the highest merit increases and bonuses?
- Are incentive pay programs rewarding the performance that gives your organization a competitive advantage?
- Are benefit dollars being spent effectively?
- Are all employees receiving fair and equal pay including minorities, older workers, and women?
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Do You Need Help in Designing and Implementing Customized Pay Systems That Meet Your Needs?
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Numerous competing pay philosophies and pay programs exist. At PDII we specialize in
the custom-designed pay programs that help support your organization’s goals and
strategies such as:
- Traditional job evaluation and market based programs
- Market pricing
- Broad-banding
- Pay for skills or knowledge
- Incentive pay programs such as merit pay, individual or team bonuses, Scanlon Plan or gain-sharing, and sales incentives
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Expert Solutions Focused on Your Specific Needs
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PDII President, Dr. Dow Scott is a prolific writer on the design
and evaluation of compensation and incentive programs as
demonstrated by the 30 publications authored on the subject.
He has extensive experience working with organizations that include
Xaloy, AT&T, Sara Lee, Grand Rapids Transit Authority,
Scanlon Leadership Network, Hazelton Laboratories, Hollingsworth
and Vose, U.S. Department of Transportation – Urban Mass Transit,
and has presented numerous seminars on the topic.
To learn more about PDII’s approach to the design and evaluation
of pay and incentive programs, consult the following publications
by Dr. Dow Scott and Dennis Morajda.
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The Fiscal Management of Compensation Programs
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Published in the WorldatWork Journal
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Employee compensation is a major expenditure that represents anywhere from 20-30 percent
of revenues in manufacturing; and 80% of revenues in the service industries (Henderson,
2006). Senior management endeavors to determine how these dollars are spent and if
pay is contributing to firm competitiveness. A survey queried more than 600
compensation professionals on:
- Their role in the compensation fiscal management process
- How compensation expenses are budgeted
- Which fiscal management tools are in place to control this expense
- Which pay and performance linkages are used to distribute pay
- Effectiveness of the fiscal management policies and practices currently in place.
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Increasing Company Competitiveness: “Tuning-up” Your Pay System
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Published in the WorldatWork Journal
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Numerous economic and company changes in the last decade
have triggered a variety of new pay programs and have
distorted many current pay plans. This article provides
a framework for examining and readjusting you pay plan to
better meet company goals, employee needs, and labor
market realities.
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Building a Company Culture that Drives Performance: A Case Study
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Published in the WorldatWork Journal
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Based on extensive quality and productivity problems, Atlantic Automotive management
team realized it needed to create a new organizational structure, reward system,
and culture to survive. After an intensive search, the Scanlon Principles and
Processes were identified as the means for building a highly competitive company.
Management attributes increased company performance, employee involvement, and
employee competence to this plan. On average, each employee has received $1,000
as their share of the performance improvement and company owners have received a
better return of investment.
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Linking Compensation Policies and Programs to Organizational Effectiveness
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Published in the WorldatWork Journal
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This study examines the relationship of compensation policies, programs and practices
with organizational effectiveness. More than 1,200 compensation managers responded
to a survey, which asked them to identify the pay policies and programs used by their
organizations and rate the effectiveness of those practices. Pay practices were
found to be more traditional then the literature might lead one to believe.
Furthermore, highly effective organizations were found to be more likely to use
certain pay policies and programs then their less effective peers were.
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In the Hands of Employees
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Published in the WorkSpan
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With the recent controversy surrounding employee ownership,
one company has held fast to same rule for nearly 50 years: Keep it
simple, and keep it in the employee’s hands. This employee ownership
program has resulted in big payoffs for company owners and employees.
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Annual Cash Incentives for Managerial and Professional Employees
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Published in WorldatWork Journal
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In recent years, management’s mantra has been to increase the use and “leverage” of
variable pay to better align managers and professionals with the business, to
encourage outstanding performance, to share the risk of business success, and to
more fairly reward those employees who make the largest contributions. In this
study, 900 compensation managers, identify the most common design features of
annual cash variable pay programs and determine if certain designs and methods
of administration are more effective than others in driving organizational performance.
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An Inside Look At Compensation Committees
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Published in WorldatWork Journal
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This paper investigates how 21 compensation committee members who serve on 51 boards
feel about the increased scrutiny and proposed changes to the executive compensation
process. Most committee members agreed that it is still common practice for the CEO
to be heavily involved in the selection of new board and compensation committee
members. Although some compensation committee members would like to make changes
in how the committee operates, they are unwilling to take a strong stand on these
issues and risk being ostracized by other board members. Other than increasing
the time spent on board member duties, committee members feel that governance
initiatives like compensation committee charters have not impacted how the
process really works.
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Taking Control of Your Counter-Offer Environment
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Published in WorldatWork Journal
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Although it is not uncommon for companies to make counter-offers to employees who are
in critical positions or who are identified as high performers, few companies have
a formal policy and most managers do not understand what that policy or the current
practice is. These findings from a national survey report how managers respond to
employees who receive job offers from other companies. Based on these findings, a
counter-offer strategy is proposed for retaining top talent in high impact positions.
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Other Articles Written by Dr. Scott and Dennis Morajda include
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The Future of Compensation Professionals: According to Your Colleagues (New)
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Published in WorldatWork Journal
We recently conducted a survey of compensation professionals to capture their
opinions on what the future holds for their profession. The survey indicated
that compensation professionals believe they will have greater involvement across
the board in terms of providing design, administration and control of wage and
incentive programs. Compensation professionals are continuing their transition
as “compensation cops” to being seen as a major business partner and contributor
to the company’s success.
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Employee Contests Increase Plant Productivity
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Published in Personnel Journal
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