Client Compensation Realignment Project. Compensation Project Client History This client had grown from 30 employees to over 100 in just 18 months and.

Client Compensation Realignment Project

Compensation Project

Client History

This client had grown from 30 employees to over 100 in just 18 months and had salaries all over the board. Some employees had large base salaries and low bonuses and others had just the opposite. Some employees, doing the same job, were being paid differently for slight differences in background based upon when they were hired and by whom they were hired. The CEO wanted to make sure he was paying the appropriate salaries, move the company to a performance based system that would level out total cash compensation and provide additional reward to employees for setting and meeting goals.

Compensation Project

Project Goals

This compensation project consisted of accomplishing the following goals:

• Conduct a job analysis of all employees

• Obtain current base, bonus, and total cash compensation data for comparable companies.

• Realign salaries to fair and consistent standards.

• Develop Performance based compensation plan (PBCP) with all associated forms, overheads, training manuals, and materials.

• Leverage materials for an annual employee review process.

Compensation Project

Project ComponentsJob Analysis

• It was decided to use AON Consulting's Radford data for survey purposes

• Each employee’s position was analyzed, compared, and matched to a corresponding Radford job description and code.

• Positions were “leveled” according to the characteristics of the position and the level of responsibility.

Compensation Project

Project ComponentsSurvey data

• With the client, we determined a list of comparable companies and decided on a compensation payment philosophy – (X%ile for base, bonus and total cash compensation).

• Next, we pulled the appropriate Radford data.

• Charts were developed comparing existing salary data and compared to Radford data.

• Compensation data was then individually adjusted (where appropriate) and realigned to appropriate levels taking into account job differences and background.

Compensation Analysis

Last Name

First

Name Title Dept

Radford

Code Survey Title Annual Salary Bonus

Company

Total Cash

Radford 50%

base salary

Radford 60%

base salary

Radford 75%

base salary

Radford 50%

total cash

Radford 60%

total cash

Radford 75%

total cash

Avg.

Radford

Bonus

Avg. Company

Bonus %

Name2 First2 VP, Mfg Ops Operations 410 Manfacturing Exec $142,000 $30,000 $172,000 $154,504 $165,783 $183,128 $214,000 $229,622 $238,066 $59,496 17%

Name3 First3 VP, Prod Dev Prod Dev 410Product Develop/ Eng Executive $150,000 $50,000 $200,000 $164,504 $176,513 $183,128 $214,000 $229,622 $238,066 $49,496 25%

Name4 First4 Chief Tech Officer R&D 430CTO/Chief Technology Officer $142,000 $30,000 $172,000 $162,000 $173,826 $181,000 $210,565 $225,936 $233,123 $48,565 17%

Name5 First5 VP, Sales Sales/Mrkt 610Domestic/Americs Sales Exec $150,000 $65,000 $215,000 $150,000 $160,950 $173,000 $225,000 $241,425 $259,500 $75,000 30%

Name6 First6Inside Sales

Associate Sales/Mrkt 762InsideSales--intermediate $58,000 $10,000 $68,000 $63,500 $ 68,136 $72,088 $60,950 $65,399 $82,901 -$2,550 15%

Name7 First7 Operations Mgr Operations 1003MANUFACTURING MGMT 3 $97,000 $25,500 $122,500 $73,320 $75,781 $80,776 $76,958 $80,760 $87,881 $3,638 21%

Name8 First8Production

Manager Operations 1203

PRODUCTION CONTROL MGMT 3 $75,000 $15,000 $90,000 $85,388 $88,582 $96,337 $88,953 $94,487 $101,124 $3,565 17%

Name9 First9 Materials Eng Operations 1403MATERIALS MGMT 3 $85,000 $25,000 $110,000 $81,238 $83,921 $89,122 $86,093 $89,244 $95,000 $4,855 23%

Name10 First10 NPI Manager Operations 1754PRODUCT ENGRG MGMT (MFG) 4 $105,000 $20,000 $125,000 $112,023 $116,237 $122,989 $120,000 $123,780 $134,888 $7,977 16%

Name11 First11Dir, Procss

Engineering Operations 2044RELIABILITY ENGRG MGMT 4 $129,000 $12,000 $141,000 $116,210 $121,877 $128,773 $123,957 $132,400 $136,912 $7,747 9%

Name12 First12 Dir, ASICs Prod Dev 2055ASIC DESIGN ENGRG MGMT 5 $121,167 $20,000 $141,167 $141,580 $148,530 $156,921 $150,958 $155,975 $171,250 $9,378 14%

Name13 First13 Chief Architect Prod Dev 2065Electronic Design Engrg Mgmt 5 $130,000 $30,000 $160,000 $146,150 $150,511 $156,490 $172,443 $181,624 $194,037 $26,293 19%

Name14 First14Dir., Opto-

Mechanical Prod Dev 2065Electronic Design Engrg Mgmt 5 $135,000 $25,000 $160,000 $146,150 $150,511 $156,490 $172,443 $181,624 $194,037 $26,293 16%

Name15 First15 Doc Control Operations 2333DOCUMENT CONTROL MGMT 3 $72,000 $15,000 $87,000 $79,500 $83,427 $88,000 $83,000 $85,534 $90,893 $3,500 17%

Compensation Analysis

Last Name

First

Name

Avg.

Radford

Bonus

Avg. Company

Bonus %

Avg. Radford

PFP %

Bonus (-) From

Radford

Company TC

to Mkt 50th%

tile

Company TC

to Mkt 60th%

tile

Company TC

to Mkt 75th%

tile Comments

Action

Needed?

Name2 First2 $59,496 17% 30% 13% 80% N/A 72%Below market; base to 150K; PFP to 30% Yes

Name3 First3 $49,496 25% 30% 5% 93% N/A 84%Below market; raise PFP to 30% Yes

Name4 First4 $48,565 17% 30% 13% 82% N/A 74%Below market; raise PFP to 25% Yes

Name5 First5 $75,000 30% 50% 20% 96% N/A 83%Base okay; PFP is below market Yes

Name6 First6 -$2,550 15% -4% -19% 112% 104% 82% Okay; new to job No

Name7 First7 $3,638 21% 5% -16% 159% 152% 139%Lock pay; decrease bonus to 15% Your call

Name8 First8 $3,565 17% 4% -12% 101% 95% 89% waiting for data No

Name9 First9 $4,855 23% 6% -17% 128% 123% 116%Ok; low base to others; high PFP; leave No

Name10 First10 $7,977 16% 7% -9% 104% 101% 93% waiting for data No

Name11 First11 $7,747 9% 7% -2% 114% 106% 103%Lock pay; base is high; bonus n/c to 60th Your call

Name12 First12 $9,378 14% 7% -8% 94% 91% 82%Adjust pay by 10K; leave PFP to 60th Yes

Name13 First13 $26,293 19% 18% -1% 93% 88% 82%Okay; within range of 60th percentile No

Name14 First14 $26,293 16% 18% 2% 93% 88% 82%Okay; within range of 60th percentile No

Name15 First15 $3,500 17% 4% -13% 105% 102% 96% waiting for data No

Compensation Project

Project ComponentsPBCP

• Working with the CEO and CFO, we determined a performance objective philosophy that led to a Performance Based Compensation Plan (PBCP).

• Next was developed an easy to use and track tool - Quarterly Performance Score Card.

• Next we developed an employee and manager handbook.

• Lastly, an overhead presentation was developed to explain the program to employees and managers.

• The following selected pages are from the overhead presentation.

Performance Based Compensation Plan (PBCP)

COMPANY’s Compensation Philosophy

COMPANY’s compensation philosophy is to pay employees at the most competitive market rates. Your compensation consists of:

• Base salary

• Performance based compensation plan (PBCP)

• Benefits (medical, dental, vision, disability insurances, etc.)

• Employee perks (health club, meals, sports, etc.)

• Company stock options

PBCPThe philosophy of the PBCP Plan

It allows individual achievement to be rewarded consistent with one’s performance contribution. The company believes that your success can be achieved by balancing at least 3 factors:

•Commitment and execution to your quarterly Individual Objectives

•Commitment to your own personal growth and development (Training Objective)

•Commitment and execution of our Company Values and your Department Goals

 The first of these is the most important. We want you to deliver what you say you will do.

PBCP

PBCP Setting Objectives 

Individual Objectives - are to be within your ability to influence the resources necessary to accomplish, and are to be realistic, measurable, and achievable.

Training Objectives- aid in your growth within your position or the company.

“Stretch” (BHAG) goal - is a goal that is most likely out of your complete control, but is within your ability to influence the outcome, which when achieved is beyond you and your supervisor’s expectations.

Department Goals and Corporate Values - aid in the growth of your department and our company.

PBCP Tracking Tool - Front

PBCP Tracking Tool - Back

PBCP

Determining and calculating the amount of the quarterly PBCP

You will receive the percentage of your PBCP equal to the number of points received (100 points equal 100% of your PBCP). The majority of the actual incentive you receive is based on how you perform on your Individual Objectives along with some element of Training Objectives and support of our Company Values and your Department Goals. Your Individual and Training Objectives add up to 100 points.

PBCP

Determining and calculating the amount 

Your supervisor may award you 100%, 50% or 0% of the points for each Individual and Training Objective.

Example - You fully accomplish two out of your three objectives and those two total 70 points, and then you would receive 70 points of your PBCP. If you accomplish some of a third objective worth 20 points, your manager can award you 50% of the points or 10 points. That would bring your total to 80 points.

PBCP

Determining and calculating the amount 

If you contribute to the Department Goals and Corporate Values, you will receive additional points.

More than 100% - If you accomplish all of your Individual & Training Objectives and contribute to Department Objectives and Corporate Values you can receive in excess of 100 points but not more than 125 points.

The maximum points and maximum amount of your PBCP is 125%.

PBCP

Issues 

You’re Responsible - Should issues arise that affect your ability to accomplish your objectives, it is your responsibility to meet and discuss these with your supervisor. They will determine what steps or adjustments to the objective are necessary. If this is determined, a revision will be made to the Quarterly Performance Score Card.

Lastly, in order to be eligible for a quarterly bonus, you must be employed by COMPANY on the day following the end of the quarter.

PBCPConclusion

Our objective to reward employees who contribute to the growth and success of COMPANY.

The PBCP plan is designed to motivate and compensate you based on your specific contributions to COMPANY’s overall success.

This plan allows you to be in control over this portion of your compensation.

 If you have any questions regarding the PBCP

plan, please speak to your supervisor or Human Resources.

Employee Communication Piece

Supervisor’s Guide (partial)

Contact AchieveOne for help with your next compensation project925-803-1080