Linking Rewards to Strategy By R. Henry Migliore

Tying Appraisals to Rewards How we usually reward people What is wrong with present approach Poor targets Emphasis on the form Too complicated Lack of training Understand basics Potential if done correctly

Strategic Planning Process Define Strategic Plan Show where the reward fits Planning must have product and process Planning must be done right for evaluation, performance appraisal, and rewards to work

Strategic Planning Process Performance appraisal and rewards usually come last Organization structure impact on success and performance measurement

Strategic Long-Range Planning Process

Theory Behind Reward Systems Higher level needs/intrinsic Pay for performance/extrinsic Must have both Emphasis on individual and team Regular reviews Athletic Team Business Team

Reward Opportunities

Performance Appraisal Form

Reward Opportunities Athletic team Business Unit Baseball Football win 20 games Go to World Series Football rush 1000 yards Go to Super Bowl Business Unit Sales Meet marketing objectives and ROI best in last 5 years Manufacturing Increase production 15% and ROI best in last 5 years

Reward as a team player Golden handcuffs Bonus paid over longer term Share equally? Boss Evaluation

Benefits of Reward Systems The organization will determine where it is going It will be able to identify opportunities and risk All organization members will be forced into a consensus as the direction for the organization is identified As managers have the opportunity to have input into the planning process, they will experience a surge of excitement

Benefits of Reward Systems Communication in all directions will be instantly improved Non-productive persons will fall by the wayside Increases should be expected in all measurable areas – profitability, productivity, and so on Within a year, a personal training and development plan will evolve for all persons in the organization

Rules for Compensation Salary administration should be centered around accountability, not activity Write job objectives instead of job descriptions People who are committed to your organization are worth more than people who are not committed to it People who feel they are underpaid will behave like unpaid employees

Rules for Compensation People who aren’t meeting all of their regular, ongoing, and recurring responsibilities should not be given merit increases Bonuses should be paid only for beating an indicator Fair pay does not motivate, but unfair pay demotivates The higher the person is in the organization, the more you pay for strategies and creative thinking

Opportunities For Any Organization Strategic Planning emphasis for Consulting Division Information systems supports planning system Provides performance appraisal/reward service Information system supports performance appraisal Strengthens SERVICE to clients Cost leadership, focus differentiation

Discussion