netrashetty
Netra Shetty
Washburn Guitars is an American guitar manufacturer. It was established in 1883 in Chicago, Illinois. Washburn is a part of U.S. Music Corporation.
Employees compensation
A properly designed and managed incentive compensation system can be a vehicle for management communication, although communication of the plan, its policies and what is expected of the employee is as critical as the underlying message it is trying to reinforce. The stimulus for desired behavioural change reflected by performance can also be achieved through a properly designed incentive compensation plan, supported by core management processes. Finally, the basis of rewards must understood by employees for the effective accomplishment of tasks and results. This is a direct relationship between communications, culture, performance and, ultimately, rewards.
An open system of communication, which can include sharing the organization’s overall incentive philosophy, tends to encourage people to ask questions, share data, and ultimately be involved in decisions. Conversely, a secret compensation system that prohibits employees to talk about their rewards and provides minimal information on how rewards are allocated tends to put people in more dependent positions and concentrate power at the top. A company’s compensation philosophy can be developed from the business vision and mission that must support the business strategy. Thus, with the proper infrastructure in place, incentive compensation programmes can be extremely valuable in supporting the way management wants to drive the company.
Organizations that are serious about performance, and which often see performance management as the core business process for achieving their strategy, are putting much effort into taking different views of performance from all of the “stakeholders” involved to ensure success. To support and expand further on this issue, it is necessary to enumerate certain conditions, which must be present for rewards to elicit desired performance: -
Ø Important rewards can be given and tied to performance.
Ø Information can be made public about how rewards are given.
Ø Superiors are willing to explain and support the reward system in discussions with their subordinates.
Ø Rewards can vary widely, depending on the individual’s current performance.
Ø Performance can be objectively and inclusively measured.
Ø Meaningful performance appraisal sessions can take place.
Ø High levels of trust exist or can be developed between superiors and subordinates.
Ø The reward systems must be clearly communicated, well understood by those affected and accepted as relevant.
Ø Finally, it is emphasized that all employees should be included in the reward opportunities.
Article No. 2
The Executive Compensation
Today’s world is characterized by global competition, industry consolidation, escalating technology, capital needs, and corporate restructuring. All these are meshed with expanding constituencies, such as investors, employees, management, customers, suppliers, the community, the government, and a worldwide society at large. Thus the development of the compensation programs and especially those for executives requires a broad prospective to ensure consistency with the company’s real world. These programs must take into account:
Ø Tying cost to productivity improvement and building real organizational value.
Ø Minimizing expenses and making sure that they are necessary.
Ø Keeping staff both lean and knowledgeable about the business.
Ø Promptly responding to tactical urgencies.
Ø Building and maintaining credibility with owners and stakeholders.
Reaching these goals successfully calls for maximizing internal resources in a complex environment and delivering effective compensation programs while reducing the costs of operation. Such programs, to be effective, must have following guiding principal.
Ø Do what is right for the business
Ø Develop a programme that has credibility and provides ownership
Ø Assess the programme against what is happening in the labour force marketplace
Constructing Executive Compensation Programmes
Indeed all compensation programmes, is both an art and science. The objective is to optimize a system of fully integrated plans, developed in accordance with the principles just expressed, and within the bounds of affordable cost. In the final analysis, what the company can afford to do will dictate the financial levels produced by the programme. The trick lies in spending money wisely and getting full value for the expenditure.
The costs of the programme are what is paid out as compensation plus the expenses in connection with its development and administration. If the programme is well constructed, the cost of what is paid out is matched or exceeded by the return received. Thus the real “cost” is in development and administration – costs that are controllable. Besides, if the development work is done well, administration is not a major burden.
The Six Steps in Developing and Maintaining any Compensation Programme
Step 1: Information gathering:
Within the company, through document review and interviews with key executives (and members of the board of directors for executive compensation programmes) to gain insight into strategic business and organizational direction, management processes, financial and operational information availability and validity, and current programme effectiveness and efficiency of administration.
Outside the company, through information available to the consultants supplemented by surveys, visits to other companies to observe best practices, and to acquire competitive data and investment community perspectives.
Employees compensation
A properly designed and managed incentive compensation system can be a vehicle for management communication, although communication of the plan, its policies and what is expected of the employee is as critical as the underlying message it is trying to reinforce. The stimulus for desired behavioural change reflected by performance can also be achieved through a properly designed incentive compensation plan, supported by core management processes. Finally, the basis of rewards must understood by employees for the effective accomplishment of tasks and results. This is a direct relationship between communications, culture, performance and, ultimately, rewards.
An open system of communication, which can include sharing the organization’s overall incentive philosophy, tends to encourage people to ask questions, share data, and ultimately be involved in decisions. Conversely, a secret compensation system that prohibits employees to talk about their rewards and provides minimal information on how rewards are allocated tends to put people in more dependent positions and concentrate power at the top. A company’s compensation philosophy can be developed from the business vision and mission that must support the business strategy. Thus, with the proper infrastructure in place, incentive compensation programmes can be extremely valuable in supporting the way management wants to drive the company.
Organizations that are serious about performance, and which often see performance management as the core business process for achieving their strategy, are putting much effort into taking different views of performance from all of the “stakeholders” involved to ensure success. To support and expand further on this issue, it is necessary to enumerate certain conditions, which must be present for rewards to elicit desired performance: -
Ø Important rewards can be given and tied to performance.
Ø Information can be made public about how rewards are given.
Ø Superiors are willing to explain and support the reward system in discussions with their subordinates.
Ø Rewards can vary widely, depending on the individual’s current performance.
Ø Performance can be objectively and inclusively measured.
Ø Meaningful performance appraisal sessions can take place.
Ø High levels of trust exist or can be developed between superiors and subordinates.
Ø The reward systems must be clearly communicated, well understood by those affected and accepted as relevant.
Ø Finally, it is emphasized that all employees should be included in the reward opportunities.
Article No. 2
The Executive Compensation
Today’s world is characterized by global competition, industry consolidation, escalating technology, capital needs, and corporate restructuring. All these are meshed with expanding constituencies, such as investors, employees, management, customers, suppliers, the community, the government, and a worldwide society at large. Thus the development of the compensation programs and especially those for executives requires a broad prospective to ensure consistency with the company’s real world. These programs must take into account:
Ø Tying cost to productivity improvement and building real organizational value.
Ø Minimizing expenses and making sure that they are necessary.
Ø Keeping staff both lean and knowledgeable about the business.
Ø Promptly responding to tactical urgencies.
Ø Building and maintaining credibility with owners and stakeholders.
Reaching these goals successfully calls for maximizing internal resources in a complex environment and delivering effective compensation programs while reducing the costs of operation. Such programs, to be effective, must have following guiding principal.
Ø Do what is right for the business
Ø Develop a programme that has credibility and provides ownership
Ø Assess the programme against what is happening in the labour force marketplace
Constructing Executive Compensation Programmes
Indeed all compensation programmes, is both an art and science. The objective is to optimize a system of fully integrated plans, developed in accordance with the principles just expressed, and within the bounds of affordable cost. In the final analysis, what the company can afford to do will dictate the financial levels produced by the programme. The trick lies in spending money wisely and getting full value for the expenditure.
The costs of the programme are what is paid out as compensation plus the expenses in connection with its development and administration. If the programme is well constructed, the cost of what is paid out is matched or exceeded by the return received. Thus the real “cost” is in development and administration – costs that are controllable. Besides, if the development work is done well, administration is not a major burden.
The Six Steps in Developing and Maintaining any Compensation Programme
Step 1: Information gathering:
Within the company, through document review and interviews with key executives (and members of the board of directors for executive compensation programmes) to gain insight into strategic business and organizational direction, management processes, financial and operational information availability and validity, and current programme effectiveness and efficiency of administration.
Outside the company, through information available to the consultants supplemented by surveys, visits to other companies to observe best practices, and to acquire competitive data and investment community perspectives.
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