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Review Overall Business Strategy and Key Business Drivers

The document discusses redesigning incentive and stock option programs to better align with a company's business needs. It recommends assessing where the organization's strengths and weaknesses lie, identifying key success factors, and understanding what drives desired performance. It also suggests examining the total rewards framework, including foundation programs for all employees as well as performance-based programs. The framework can help organize programs and identify changes needed to support the company's mission, strategy, and culture. Implementing changes and communicating them effectively is also important.

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sadir16
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54 views

Review Overall Business Strategy and Key Business Drivers

The document discusses redesigning incentive and stock option programs to better align with a company's business needs. It recommends assessing where the organization's strengths and weaknesses lie, identifying key success factors, and understanding what drives desired performance. It also suggests examining the total rewards framework, including foundation programs for all employees as well as performance-based programs. The framework can help organize programs and identify changes needed to support the company's mission, strategy, and culture. Implementing changes and communicating them effectively is also important.

Uploaded by

sadir16
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Review overall business strategy and key business drivers.

Its primary objective as a company is to grow shareowner value. To do so, it operates


in accordance with three guiding objectives. First, it works to fuel growth within the
industry, increasing overall demand for beverage products. Second, it focuses on
innovation in every area of the business, including marketing, packaging, and people
management. Third, it manages for the long-term, making investments today that will pay
off in the future.
As key business drivers the company is managed from an economic value added (EVA)
and economic profit viewpoint. EVA and economic profit are closely linked and serve as
decision making tools that allow all associates to ensure they are creating shareowner
value with every decision they make and every action they take.

Assess alignment of current incentive and stock option programs with those
drivers.

Annual incentive program


The performance of each division is assessed versus its objectives for the year relative to
a funding matrix. The matrix weights volume and profit equally. If divisions meet their
objectives exactly, then incentives are funded at 100% of target. If they exceed
objectives, they are funded at greater than 100%, and if they fall short, they are funded at
less than 100%. The targeted pool itself is simply the total amount required to award each
participant in the plan their exact target, which is expressed as a percent of base salary
(e.g., 10%, 15%) based on job grade level.
Stock option program
Option pools are funded based on performance against unit case sales and economic
profit objectives, and individual option grants are determined based on specific
contribution to those objectives. Stock option awards are considered annually and fall
within a minimum to maximum of a specified range, which varies by grade level and is
driven by targeted total compensation levels versus the marketplace.

Redesign incentive and stock option programs to more closely match business
needs.

What I give this compensation programs link to overall compensation management that
we learnt in course. When we design compensation program, we look at two important
components that are,
o Asses and design incentive framework

Use right strategy for organization

Assess and design incentive framework


- Analyze where are your organizations primary strengths and most serious weaknesses?
- We should have a strong strategic plan, value proposition, clear roles and operating
procedures strategy so all we need to know is what creates the greatest value for our
customers and shareholders. These key success factors provide the desired focus for
making decisions and taking actions that produce desired results.
- We are able to attract, develop and retain these individuals capabilities so all we need
to know is what your people need to do differently. This should enable our organization
to fully utilize the key competencies it needs now and in the future to succeed.
- We need to know is what needs to be improved. This should provide your organization
with the ability to understand, display and discuss the critical drivers of desired
performance.
- We should have highly competitive compensation plans, high impact cash incentive
plans and equity participation, creative and exciting recognition programs. We also
provide many opportunities for people to be challenged in their job, grow and develop,
and see the organization as a place to invest ones career rewards so all we need to
know is what needs to be improved. Our organization needs the systems and practices to
encourage and reinforce the desired actions necessary for our success.

Use Right Strategy for Organization:


When we work with a company to develop their total reward strategy, we first seek to
understand its business model, vision and strategy, as well as, its critical success factors.
We understand how the organization operates, the accountabilities of key roles and the
principles reflected in the design of the organization. Further, we work to identify their
true marketplace for talent external labor and talent markets and internal movements
through promotions and career paths. We then summarize this background information
and translate it into the key requirements for each program that constitute their
compensation and rewards.
As stated above, rewards include those programs, services and experiences that impact
the commitment and actions of people. Some are available to virtually everyone because
they are employed by the organization (or for a specific level or group within the
organization) these are foundation type programs. In addition, there are programs
and rewards individuals receive because of their performance or the performance of the
group to which they belong. In these type of reward programs not everyone receives
them, and the amount depends on many factors related to the performance of the
individual or group.
Finally, there are programs that are clearly compensation based (e.g., salaries, variable
cash compensation, equity based plans, etc.), and there are those that are non-

compensation and are part of the opportunities within the workplace (e.g., employee
benefits, services, recognition award programs, promotions, career opportunities, training
and development). The combination of reward programs and practices define the nature
of the relationship between the individual and the company.
This framework can help the company organize and examine the programs it uses and
determine where changes should be made. This framework is depicted in the figure
below:

Workplace

Total Compensation

Salary & Wages

Cash & Equity based

* Job/market based pay

variable pay

* competency based pay

* Indvl/team variable pay

* Broad bands

* company profit sharing

* Geographic differentials

* Stock options

* Merit/market increases

* Long term cash plans

Emp benefits & Serv

Develop & Recog

* Health & Life insurance

* Public/private recog

* Retirement & Investment

* Verbal/informal recog

* Training & Development

* Personal rewards

* Company events
* Employee services

* Promotions
* Professional Dev

This simple framework as extremely helpful in identifying the similarities and differences
between their reward programs. We find that the real value of this framework lies in
answering several important questions:
1. Which of these programs (or categories) does the organization currently use?
Which ones are most important to the overall organization and why?
2. Which of these programs are the most important to specific groups of employees
and why?
3. Where (among the types of programs or services) does the organization spend the
most money? Where does it spend the most time and effort?
4. Which of these programs are the most and least effective in supporting the
mission, strategy and culture of the organization? Where does the application of
one program compliment, conflict, or off-set the inherent weaknesses of another
reward program?
5. What are the common themes that should exist across all these programs? What
are the purpose and objectives of specific programs for the organization?

Implement and communicate the changes.

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