Aligning Pay and Results: Compensation Strategies That Work from the Boardroom to the Shop Floor

629 Pages·1999·3.14 MB·English

by  Howard Risher

Aligning Pay and Results : Compensation
title: Strategies That Work From the Boardroom
to the Shop Floor
author: Risher, Howard W.
publisher: AMACOM Books
isbn10 | asin: 0814404588
print isbn13: 9780814404584
ebook isbn13: 9780814424001
language: English
Compensation management, Wages and
subject labor productivity, Wage payment systems,
Executives--Salaries, etc.
publication date: 1999
lcc: HF5549.5.C67A355 1999eb
ddc: 658.3/22
Compensation management, Wages and
subject: labor productivity, Wage payment systems,
Executives--Salaries, etc.
Page iii
Aligning Pay and Results
Compensation Strategies That Work from the Boardroom
to the Shop Floor
Howard Risher, Editor
Senior Fellow, Center for Human Resources, Wharton School
Page iv
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Library of Congress Cataloging-in-Publication Data
Aligning pay and results : compensation strategies that work from the
boardroom to the shop floor / Howard Risher, editor.
p. cm.
Includes bibliographical references and index.
ISBN 0-8144-0458-8
1. Compensation management. 2. Wages and labor productivity.
3. Wage payment systems. 4. ExecutivesSalaries, etc. I. Risher,
Howard. II. American Management Association.
HF5549.5.C67A355 1999
658.3'22dc21 99-25896
CIP
© 1999 AMACOM, an imprint of AMA Publications, a division of
American Management Association.
All rights reserved.
Printed in the United States of America.
Published in cooperation with American Compensation Association.
This publication may not be reproduced, stored in a retrieval system,
or transmitted in whole or in part, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise,
without the prior written permission of AMACOM, an imprint of AMA
Publications, a division of American Management Association, 1601
Broadway, New York, NY 10019.
Printing number
10 9 8 7 6 5 4 3 2 1
Page v
CONTENTS
Preface vii
Chapter 1 1
Aligning Pay and Results
Howard Risher
Chapter 2 21
Moving to a Pay-for-Performance Strategy: Lessons From
the Trenches
Edward Sullivan
Section ILinking Executive Pay to Performance 39
Chapter 3 43
Aligning Executive Pay and Company Performance
Richard J. Barrister, Jr. and William Gentry
Chapter 4 80
Aligning Executive Pay and the Creation of Economic
Value
Jude T. Rich
Chapter 5 101
Aligning Compensation and Stock Ownership
Eric P. Marquardt
Chapter 6 119
Aligning Directors' Compensation With Company
Performance
Pearl Meyer

Page vi
Section IIAligning Base Pay and Employee Capabilities 141
Chapter 7 145
Paying for Competencies: Rewarding Knowledge, Skills,
and Behaviors
James T. Kochanski and Howard Risher
Chapter 8 172
Paying Employees to Develop New Skills
N. Fredric Crandall and Marc J. Wallace, Jr.
Section IIIAligning Pay and Group Results 207
Chapter 9 211
Aligning Pay to Group Results
Thomas B. Wilson
Chapter 10 236
Aligning Pay to Team Results
Steven E. Gross
Chapter 11 259
Global Pay and Results
Neil K. Coleman
Chapter 12 274
Communicating Pay: Using Marketing Principles to Sell
Compensation
Richard J. Anthony, Sr.
Section IVConclusion 293
Chapter 13 295
Using Pay as a Tool to Achieve Organizational Goals
Howard Risher
About the Contributors 313
Index 319
Page vii
PREFACE
This book brings together a group of prominent consultants to focus
on one of the most important trends in the management of people: the
use of compensation as a reward for achieving organizational goals.
The phrase linking pay to performance is widely used in discussing
compensation programs where payouts are contingent on reaching
specific performance goals. Contingent compensation has been
common, if not universal, for executives and managers, but it has been
rare below the management level until the past few years.
The traditional compensation model has its origins in the owner-
management thinking that dominated the first half of the twentieth
century. That model reserved the rewards of business success for the
owners. Over the last half of the century, the group of participating
executives was gradually expanded, but below the executive level,
incentive plans (other than sales commission plans) were rare. That is
now changing rapidly.
In the emerging compensation model, incentives are an integral
component, reflecting the belief that every employee can and should
be expected to contribute to the company's success. The new pay
systems are often referred to as gain-sharing plans, although other
phrasesgoal sharing, success sharing, and achievement sharing are
examplesreadily communicate the intent of these plans. Incentive
plans are now being designed for all job levels and occupations. In
hospitals, for example, it is common to find group incentives where
patient satisfaction is one of the criteria used to determine payouts.
Gain-sharing plans have also surfaced in government.
The new incentive plans reflect the heightened interest and new
thinking in measuring performance. Performance measurement has