5/31/2017 0 Comments Excel Templates For Kpis MeaningPassenger Service Agent (Resort Flight Check-In) - PMI North & South. Learn more than 270 team management skills, and become an exceptionally effective, successful, respected manager at work. What KPIs should we use for the compensation system? In this article, I'd like to review the best practices about using, or not using, reward KPIs by HR unit. You also agree that your personal information may be transferred and processed in the United States, and that you have read and agree to the Terms of Use and the. Senturus' comprehensive library of Cognos and Business Intelligence presentations and information. All of them are free and we add new resources regularly. Control Continuous Improvement Against Predefined KPIs Continuous Improvement (CI or Kaizen) methodology in development industry is based on five Key Performance. Subscribe and get 2 free forms for construction projects and all the epic construction mistakes every friday. 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The SAP Services for Object icon. A saved business transaction creates a unique record in the database, such as a purchase order number or a sales order number. The process owner accesses the transactional record in change mode and then uses Services for Object to create attachments or additional notes. The Services for Object icon becomes available on the top left- hand side of all SAP objects (see Figure 1). Screenshot of a Microsoft Word document available for downloading. Clicking the icon brings up the dropdown list from where the process owner can select the . Later, when the same or another process owner accesses the attachments for the business transaction (the customer payment), click on the . SharePoint User Requirements Analysis is vital; the corner stone in developing, deploying and providing a properly managed SharePoint environment.He is the head of SAP delivery in Abacus. Consulting, where he focuses on logistics and SCM issues. Compensation and Reward HR KPIs Best Practices. This is probably one of the most frequently asked questions: what KPIs should we use for the compensation system? In this article, I’d like to review the best practices about using, or in the most cases not using, reward KPIs. Linking performance to reward is easier for those employees who work in sales. It is a general practice that these employees have a low basic salary, but as a result of profit sharing their earnings are high. There are a lot of working models for this case, still disputable, in this article I’d like to focus on a reward program for employees that are not involved in sales directly. In this article I did a short classification of possible approaches to the reward system. Don’t take these levels as the levels of business maturity. Any business chooses one or another reward model because of the specific business environment and the current business objective. There is no absolute true about which approaches should be used. Why employee need reward. XY Theory. The first question is why do employees need to be rewarded? The reward is supposed to increase the motivation of an employee. Talking about motivation we can use Maslow’s hierarchy of needs (Maslow 1. Herzberg’s motivation- hygiene theory (Herzberg, 2. Mc. Gregor XY Theory . According to Mc. Gregor’s “Theory X” people hate work by their nature and need to be managed with the “carrot and stick.” In contrast, his “Theory Y” recognizes that people are actually motivated by self- esteem, creativity and personal development. In this article I’ll use a simple XY Theory framework, as it describes possible types of employees’ behavior and what is more important, the managers’ attitude in these cases. Level 1. Compensation defined by performance KPIs. The basic idea of linking a compensation plan to KPIs is simple. We want to track the performance of our employees and if they are performing well, we want to give them a bonus because a bonus supposed to motivate them to deliver even better results. This approach is basically wrong for several reasons: It is hard to measure the performance of an employee. What we actually need is not a high performance, but achieving of planned business outcomes. A bonus doesn’t stimulate an employee to deliver better results in a long- term perspective. Common characteristics of this level: Managers follow “Theory X” approach. KPIs measure performance. KPIs have fixed target values. KPIs are assigned to individuals. Reward is paid yearly, quarterly and/or monthly. Level 2. Compensation KPIs are linked to strategic objectives. The better approach will be to use a strategy map, present business objectives with cause- and- effect connections and align a KPI so that top managers could track the impact of each employee on achieving ultimate business objectives, like it was discussed for HR ROI and for Marketing ROI. Still, it is really hard to execute this approach. Check out an article by Stacey Barr where she lists 5 reasons why pay- for- performance can never work. Technically, this approach is better, as now a compensation plan is linked to business objectives. But according to some research , only 3. FTSE 3. 50 companies clearly link bonus KPIs to strategic objectives. Common characteristics of this level: Managers say they follow “Theory Y,” but actually continue to follow the “Theory X” approach. KPIs measure important business outcomes. KPIs have flexible targets. Reward is paid yearly or quarterly. Level 3. Rewards are not paid in cash, but are invested. On this level employees are not compensated with financial bonuses at all. The idea is that why should one be paid twice (first time with a salary and second time with a bonus) for the same job? Jeremy Hope in “How KPIs can help motivate and reward the right behavior” shares an interesting example. The author quoted Herb Kelleher, chairman of Southwest Airlines when he is speaking about employee compensation: “If somebody was working just to be compensated, we probably didn’t want them at Southwest Airlines. We wanted them working in order to do something in an excellent way. And to serve people.”Southwest Airlines has a bonus program, but employees won’t see funds soon as the company invests them in an employee retirement plan. Common characteristics of this level: Managers follow “Theory Y” approach; There are no KPIs for rewards; The whole company is rewarded according to base salary; Rewards are not paid in cash, but are invested into the retirement plan or in purchase of shares; Reward program in Apple. In a previous article I mentioned that Apple can afford to have a higher than industry average turnover rate, and still find and retain the best talents in the industry. What about their reward system? According to information available for the public, Apple suggests its employees stock purchase plan and product discounts. For example, in 2. Apple was giving its employees a good discount on new Mac and i. Pad. Well, this might be considered as a reward as well as an employee engagement program. Apple’s senior executives are in the list of Top 5 best- paid. Besides base salary they were paid compensation in the form of stock. This was done with a specific purpose: “to retain the company’s executive team during the CEO transition.” As for Apple’s CEO Tim Cook the new initiative links Cook’s stock award to the company performance index in the Standard & Poor’s 5. It looks like Apple doesn’t follow advice of Henry Mintberg (see the “Level 4” section) and still have a reward program in the form of stock shares linked to a performance index. Probably they have mastered some new way to spend rewards wisely or simply have enough cash to allow this way of doing business. Level 4. Fair pay, no bonuses. Henry Mintberg, a professor at the Faculty of Management at Mc. Gill University suggests an even more extreme point of view. In his article for The Wall Street Journal he doesn’t suggest any cure to the problem of executive bonuses, he just says that “the problem is that they . As a possible alternative he names paying bonuses to all employees according to their base pay (similar to what was discussed on Level 3), but still sees that there is a possible problem as performance can never be evaluated correctly taking into account a long- term perspective. It is obvious that to be able to operate on this level a company needs to have a strong leadership 1. Theory Y” way of working with employees. Also, the company should have an established brand among potential candidates to be able to afford filtering out employees that are looking for compensation plans. Common characteristics of this level: Leadership according to “Theory Y” approach. There are no reward KPIs. There is no compensation or profit- sharing programs. Employees are paid fairly, no additional bonuses are paid. Where is the Golden Mean? As we can see there are different approaches to compensation programs. There are companies like Apple that follow a traditional model, but there are ones like Southwest Airlines that prefer to focus on retaining people that are not looking for bonuses. The executive compensation practice might be something that doesn’t help or even makes damage (see ideas by Henry Mintberg mentioned on Level 4), but they still are used widely. For now I’d formulate this best practice regarding a reward system: Choose the form of the reward program according to your current business challenges. Don’t link reward programs to an employee’s performance. Link reward programs to business outcomes that are connected to the strategic objectives. Consider the shift from rewarding individuals to rewarding the whole company. Avoid rewards in the form of cash, as stock purchases work better. When possible find talents that are happy to work for a fair salary only. Case study: “New Bonus System” introduced by Man Group. The new incentive plan “New Bonus System” was introduced by Hedge fund Man Group. The new plan replaces all other arrangements for top managers. The awards in the new bonus system are determined against Balanced Scorecard. The assessment will be done during a one year period, and then raised to a two year period and finally to a three year period. It is not reported in details which Balanced Scorecard will be used, the only known thing is that 8. KPIs and 2. 0% is non- financial metrics. Two primary goals of these changes are: Ensure transparency to the bonus system. Align the bonus system with shareholders’ interests. It is a good case- study for other companies to follow. Generally we don’t recommend introducing measures linked to financial awards, but here we see that it was done with full understanding of benefits and limitations of this method: The new incentive plan was introduced to top management only (obviously here we have a lower risk for gaming with indicators)8. KPIs are financial, meaning it is easy to measure values of these KPIs. Although there are no details about these KPIs, it is obvious that this measure reflects the past performance of the company in the best way. Measures are introducedwithtwo clear goals – transparency and aligning with shareholders’ interests. Bonus scorecard with BSC Designer. In BSC Designer software one can use an indicator’s formula to link bonus calculation to the progress and/or the performance of certain indicator. The example below demonstrates how to do this step by step. Prepare indicators. Go to the “KPI” tab and create two indicators: “Project KPI” and “Bonus”We will use the performance or the progress value of “Project KPI” to calculate the value of the bonus. Build a bonus formula. Now, we need to setup formula for the “Bonus” KPI: Go to “KPI” tab, select “Bonus” KPIClick on “KPI Data Source Data” button Choose “Use a formula for the value” and click OKClick “Add item to formula” button. Select “Project KPI”Select in the “Use in formula” group box an appropriate option.
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