Performance and Management Essay Example for Free

Performance and Management Essay Performance and Management A. Policy For Recognizing Employee Contributions The purpose of this report is to use the compensation system we previously developed in Phases I and II to pay people, develop plans that reward performance, add benefits into the mix, and evaluate these results. First we will look at performance-based-pay as a policy for recognizing employee contributions. Performance-based-pay is a pay plan that varies with some measure of individual or organizational performance, such as merit pay, lump-sum bonus plans, skill-based pay, incentive plans, variable pay plans, risk sharing, and success sharing. It is basically a pay plan that moves away from the traditional base pay and across-the-board increases, and focuses more on factors of performance that can increase overall productivity for a company. Performance-based-pay plans can be very effective in creating a positive impact in performance of both employees and a company as a whole, but only is the plan is designed well. In order to be successful, it is crucial that the performance-pay plan be designed to support FastCat’s business strategy and compensation objectives. To design this pay-for-performance plan, we will recommend a specific policy plan that is tailored to FastCat’s goals towards success. We will compare different performance-based plans, which include individual vs. group incentives and merit vs. incentive pay, to see which combinations will help FastCat compete more effectively. a. Emphasis on Individual vs. Group Incentives Two strategies to consider with performance-based-pay plans are providing individual incentives, group incentives, or both. Individual incentive plans involve incentive compensation that is tied directly to objective measures of individual production. On the other hand, group incentive plans are incentive plans that are based on some measure of group performance rather than individual performance. Taking data on a past year as a base, group incentive plans may focus on cost savings or on profit increases as the standard for distributing a portion of the accrued funds among relevant employees. We recommend a mixture of both individual incentive and group incentive pay plans. How the individual incentive plan will work is there will be a year-end bonus pool as function of company performance. The employee’s share in the pool will be based on three factors: (1) employee’s grade, (2) employees personal performance analysis, (3) employee’s tenure at the company. This plan will go hand-in-hand with the group incentive plan we recommend, which will be a profit-sharing plan. A profit-sharing plan is a plan that focuses on profitability as the standard for group incentive. This group incentive plan will encourage employees to work hard as a team to create better company performance overall. We used the balanced scorecard approach to measure the company’s performance. A balanced scorecard approach is a way to look at what contributes value in an organization. It is a corporate-wide overall performance measure typically incorporating financial results, process improvements, customer service, and innovation. We determined that there are eight main elements that must be measured to determine good company performance. These metrics, which are weighted differently based on importance to FastCat’s business strategy, are as follows: (1) revenue growth, (2) labor costs, (3) innovation, (4) customers see FastCat representatives as responsive and knowledgeable, (5) customers value FastCat solutions, (6) employees take pride in working for FastCat, (7) employees have the tools and support to do their jobs, (8) employees understand how to make teams successful. In essence, the individual incentive plan and the group incentive plan work together to increase both individual performance and company performance. The better the company performs based on the balanced scorecard approach, the more money there is for the bonus pool in the individual incentive plan. b. Emphasis on Merit vs. Variable Pay All the pieces of this compensation system fit together Add justification on why this matches FastCat’s business and compensation objectives from problems B. Implementation a. Matching FastCat Jobs With Benchmark Survey Jobs When matching FastCat jobs with benchmark survey jobs we first had to separate the jobs at FastCat into four different job families: engineering, technical, marketing, and administration. We started off with sixteen FastCat positions of the various job families and matched them with the benchmark jobs based on the responsibilities of the job as well as the experience and competencies required to hold the position. For example, take the engineering family. For the Engineer 1 of the benchmark survey job, it is described by the following statements: â€Å"Participates in development, testing and documentation of software programs. Performs design and analysis tasks as a project team member. Typical minimum requirements are a Bachelor’s degree in a scientific field or the equivalent and up to two years of experience. † We compared that to the Usability Engineer in our own organization. Some responsibilities of the Usability Engineer are as follows: â€Å"Contributes to the development and implementation of FastCat web applications,† â€Å"work with FastCat quality assurance to ensure integrity of FastCat software; test, debug, and fix data,† and â€Å"design appropriate software testing strategies. † The position requires a B. S. egree in Computer Science or related field plus at least two years of experience. A competency required of the position is to communicate with team members, support team decisions, and work effectively as part of a team. As the numbers within the families of the benchmark jobs increase (Engineer 2, Engineer 3) the responsibilities, experience, and competencies required of the position also increase. For example, Senior Fellow, the position we assigned the most JE points in the organization to, was matched with Engineer 5, the highest position in the benchmark engineer family. . Determining Relevant Market(s) When selecting market competitors to establish our suggested pay policy line for FastCat our team tried a few different markets before deciding on the one we felt most reflected the values of the company. The first market group we chose to try was all the surveyed industries provided to us by FastCat. This line fit well with our benchmark jobs being fairly close to the line on both the high and low end. The second fit we looked into was just using the data regarding Software companies, this line seemed to fit slightly better than the previous with jobs on both the high and low end of the JE scale being fairly evenly distributed above and below the line. The final fit we tried was software companies with the exception of company 15 because we found that their compensation data created a huge outlier from the average of the other companies. We decided to go with the final fit of only software companies excluding company 15 because we felt this line best reflected our views on which jobs were most important. c. Adjusting our Data for More Desirable Regression Results Our team was rather flexible when making decisions about possible adjustments to our data during and after making our regression results. At first when our team was benchmarking the FastCat jobs against other companies, we felt that a couple FastCat jobs were very similar. We matched two of them with the same survey job titles. The first match was Software Developer and Implementation Consultant, which were both matched with â€Å"Engineer 2†. The second match was with Administrative Assistant II and the Administrative Aide, which were both matched with â€Å"Office Support 2†. When we were entering the data into the software to create a regression analysis, we realized that we would only be able to create this analysis on fourteen jobs, instead of the sixteen that was expected. We initially decided that moving some of our matches around and entering full data for all sixteen jobs would be the proper route to take. Our R? number was not where we wanted it to be after doing this; coming in at less than . 70, and this was probably because it was a bit forced and unnatural for us to change the jobs around just to get the full amount of jobs. Going back to our original benchmarking brought our R? up considerably. When we looked at the new data we saw that there was one major outlier and it was the Senior Quality Assurance Technician. Our team had marked this position at a â€Å"Technician 4† originally, but we all took a look at the FastCat information again and reached an agreement that we had made a mistake in benchmarking the position. What threw us off at first was the statement that the Senior Quality Assurance Technician was, â€Å"at the direction of the Implementation Consultant, which had a rather low amount of Job Evaluation points. We decided to move the position from a â€Å"Technician 4† to a â€Å"Technician 5†. This is the last change we made, and it gave us our final R? of . 882. d. Different Grades and Ranges Regarding grades of pay and the range of pay within those grades we chose to go with 4 grades of 100 JE points each. We found this to be a satisfactory suggestion as the jobs falling within these ranges have a relatively similar importance to the company and should be compensated in a way that demonstrates this. We used 15% as our selected range for all grades, meaning that the amount paid in each grade would range from 15% below to 15% above the midpoint of our pay policy line within that grade. With the results from the selected grades and ranges we had one difficulty; the difference in pay from grade 1 to grade 2 was nearly $10,000. To fix this discrepancy and encourage our lower level employees to stay with the company we chose to use an above market policy of 15% for this grade to close the gap. After completing these steps we had a pay policy that we felt was right to suggest to the FastCat Company for their base wage policy.