group srs ppt

8/8/2019 Group SRS Ppt

1/34

Page 1

The compensation

strategy formulation

process

The compensation

strategy formulation

process

Formulating the

compensation strategy

Formulating the

compensation strategy

Constraints on

compensation

Constraints on

compensation


2/34

DATE TAKESCENES

7 1

PRODUCTIONOF

CREATED BY

Chapter 8

Group G

17/10/2010


3/34


4/34


5/34


6/34


7/34


8/34


9/34


10/34


11/34

54321


12/34

INTRODUCTION...

1

... The compensation strategy process..

CHAPTER 8

GROUP B


13/34

Constraints on

compensationThe

compensation

strategy

process Reward &compensation

strategyFourKey

understandings

Formulating

the

compensation

strategy

SCENE

1

Formulating the reward & compensation strategy

CHAPTER 8

GROUP B


14/34

Constraints on

compensationThe

compensation

strategy

process Reward &compensation

strategyFourKey

understandings

Formulating

the

compensation

strategy

SCENE

1


CHAPTER 4

GROUP B


15/34

Four Key Understandings

Understanding your organisational context

Understanding your people

Understanding your compensation options

Understanding your compensation constraints

Reward &

compensation

strategy

SCENE

1


CHAPTER 8

GROUP B

The compensation strategy process


16/34

CONSTRAINTSON COMPENSATION

Legislated constraints

Labour market constraints

Product/Service constraints

Financial constraints of the organisation

Reward &

compensation

strategy

SCENE

1Formulating the reward & compensation strategy

CHAPTER 4

GROUP B


17/34

FORMULATING THE COMPENSATIONSTRATEGY

Define the required behaviour

Define t

he role of compensation

Determine the compensation mix

Determine compensation level

Evaluate the proposed strategy

Reward &

compensation

strategy

SCENE

1Formulating the reward & compensation strategy

CHAPTER 8

GROUP B


18/34

CASESTUDY

Southwest Airlines...

2

CHAPTER 8

GROUP B


19/34

CHAPTER 8

GROUP B

Southwest Airlines Co. is an American

low-cost airline

The airline has its headquarters on the

grounds in Dallas, Texas

Southwest is the largest airline in the

world by number of passengers carried

per year.

Southwest maintains the third-largest

passenger fleet of aircraft among all of

the world's commercial airlines

Southwest operates more than 3,200

flights daily

Southwest Airlines has not had any

passenger deaths on any of its planes in

its history, but has had eight incidents/

accidents


20/34

1

SouthwestAirlines Strategic Reward System

Strategic Base Pay

Strategic Benefits

Strategic Incentives

Strategic Recognition Programmes

Im lications for Management

Successful Reward System

2

3

4

5

6

SCENE

2

CHAPTER 8

GROUP B


21/34

Strategic Base Pay

3

CHAPTER 4

GROUP B


22/34

3SCENE

Strategic Base Pay ofSWA

One of the key aspects ofSWAs strategy is to retain valued employees and secure long-termcommitment

These objectives are attained, in part, though seniority and job security clauses in the collective-bargaining agreement.

Negotiated agreements reflect pay levels consistent with or slightly below market wages and

salaries. This helps to keep labour costs in line with the companys low-cost provider strategy. Employees can share in the company success throughvarious contingent compensation

programmes, thereby increasing their overall pay. In fact, many ofSWAs employees aremillionaires, including all of those who started with the company in 1971.

In terms ofexecutive compensation, the CEO is paid at below the median of the market forexecutives in companies of similar size.

Other senior managers are compensated slightly above the market, but they retain a smallerportion of the companys stock.

In this manner, company executives are relatively underpaid in cash compensation, but theyare committed to the companys long-term financial success and growththrough stock ownership

Employees and executives have the same opportunities for stock ownership.


23/34

4

Strategic Benefits

CHAPTER 8

GROUP B


24/34

1

2

3

SWA offers medical

insurance, dental

insurance, vision

coverage, life insurance,

long-term disability

insurance, dependent care,

adoption assistance andmental health assistance,

among others (at no cost

to employees)

Employees and

their family fly

free with SWA and

enjoy discounted

travel with other

carriers.

Employees also

receive

thoughtful gifts

on major life

achievements

and a chance to

celebrate often

Strategic Benefits

It includes both traditional programmes and a few innovative initiatives

Benefits help to reinforce the organisations strategic intent of valuing its employees.

SCENE

4

A tip:

One of the key concepts behind thisarray of benefits is the assurance that

employees matter at SWA and thatthe company will do its utmost to take

care of its most important stakeholder.


25/34

5


CHAPTER 8

GROUP B


26/34

SCENE

5

The profit-sharing program,initiated in 1973, is strategic inthat it encourages employees tokeep costs as low as possible(thus likely higher profits), a keyaspect of company strategy.

Profits are shared equally basedon employee earnings andcompany profits, with those whowork longer hours or fly extratrips receiving a larger portion ofthe profit-sharing payouts.

The programme is composed ofa cash component, as well as adeferral to retirement account;however, as a result of employeerequests, beginning in 1990 the

total payout was made on adeferral basis, therebyincreasing the retirementbenefits of the employees.

In addition to the profit-sharinginvestment options, employeesmay purchase stock from payrolldeductions at a discount throughthe employee stock purchaseplan.

Employees now own about 12%of the company

The pilot contract allows for evengreater investments in thecompany through stock options.

Employees are acutely aware thatthe firms performance is pivotalto their pocketbooks.

The stock price is displayed ineach SWA facility so as to allowthe employees to keep a constanttrack ofSWAs and their owndestiny.

Corporate-wide

profit-sharing

programme

Employee stock

purchase plan

Two main contingent or variable pay systems


CHAPTER 4

GROUP B


27/34

6

Strategic RecognitionProgrammes

CHAPTER 8

GROUP B


28/34

Strategic recognition programmes are at both the corporate and local

unit levels, and reward and celebrate exemplary service and

behaviours, as well as employee

s birt

hdays anniversaries, etc.

They all enjoy the support of top management, with senior executives

including the CEO often gracing the reward ceremonies; they mean

something to employees/winners; and they encourage behaviours

linked to firm strategy

These include the Heroes of the Heart programme, the Presidentsawards, and the Winning Spirit awards. (Behind the scene heroes).

The name of the winning group is painted on one ofSWAs aircraft. An

article is also run in the companys in-flight magazine, as well as itsnewsletter.

There are several other awards/recognition programmes at SWA,

including programs such as TogetherWe Make It Great, Ticket tothe Future, Walk a Mile, Helping Hands, Stuck on Service, and

Go See Do. These exhibit similar characteristics as the above in that

they promote behaviours pivotal in achieving the firms goals and

strategy.

CHAPTER 8

GROUP B


29/34

CHAPTER 8

GROUP B


30/34

7

Implications for

Management

Chapter 8

Group B


31/34

There is no universal right reward strategy

SCENE

7

Implications forManagement

4There must be a supportive organisational culture for

these rewards to be effective.

5There must be a continuous evaluation of the

effectiveness of new reward systems and strategies.

3

These rewards must have meaning and value.

Winners must feel proud about their achievements.

2The planning and delivery of these rewards must explicitly

demonstrate commitment from organisational leaders.

1The reward system must be aligned with organisational

philosophy and strategy.


32/34

THEEND

CHAPTER 8

GROUP B


33/34


34/34

Any Questions?Any Questions?Thank You AllThank You All

group srs ppt

Documents