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TOPIC 4: Performance management, Popular variable pay rewards:, To make…

- - - - Profitability
        
        to increase shareholder value by creating more profits and wealth
      - Growth
        
        build franchise with revenue from new markets, products and customers
        
        increase sales to existing customers by deepening relationship with them
      - Shareholder value
      - How do we look to shareholders?
    - - the ability of the organization to:
        
        provide quality goods and services
        
        the effectiveness of their delivery
        
        overall customer service and satisfaction
      - customer focus on
        
        time
        
        quality
        
        performance
        
        services
        
        cost
      - How do customers see us?
    - - focus on the internal business results that lead to financial success and satisfied customers
      - What must we excel at?
    - - to support the changes occurred for the customers taste and preferences and also to the internal business processes changes due to technology and so on
      - look at
        
        the ability of the employees
        
        the quality of information systems
        
        the effects of organizational alignment in supporting the accomplishment of organizational goals.
      - Can we continue to improve and create value?
  - - - identify the strategic objectives for each business perspective (financial, customer, internal business and learning and growth)
    - - to outline the specific metrics that will be used to measure success for each strategic goal.
    - - to set the targets that establish the level of performance or rate of improvement required for a measure.
      - It should be set to represent excellent performance.
      - It should create distinctive value for customers and shareholders.
    - - what actions need to take to accomplish the set objective and responsible department.
      - In theory, these are the places where the spending money or putting forth effort to improve the performance
    - - is a diagram that shows the connection or causal relationship between the strategic objectives
  - - - Provides a broad view of how to implement a performance measurement system (use financial and non-financial measurement)
      - the broadens the view of divisional managers as to what represents a good performance away from a solely financially oriented view
  - - - Example:
        
        Financial: profit
        
        Customer: Customer turnover
        
        Internal business process: on time deliveries
        
        Learning and growth: Training hours
  - - - exp: Increase in turnover
    - - Exp:Order execution time
- - - - Monetary (external to the work itself - the management has the ability to control the size and decide whether to give or not the rewards)
        
        Direct compensation
        
        Base pay (fixed) - compulsory for employer to pay to employee (salary/commission
        
        Job focus
        
        Person
        
        Incentive (variable) - predetermine performance goals and must be re-earned each performance period
        
        Short-term - cash and determined as a % of base pay
        
        Long-term\ incentives - cash / paid in equity (stock option)
        
        Bonuses (Variable) -on-off payments that are also subject to individual, gp or organizational performance (given after they evaluate the performance)
        
        Indirect Compensation (Benefits) - non-cash or services that employees receive in exchange from their employment relationship (some benefits are indirectly provided by employer through service providers like insurance companies)
        
        Benefit-in-kind: exp
        
        health insurance
        
        medical coverage
        
        meal vouchers
        
        professional trainings
        
        medical leave
      - Non-monetary (Recognition) - non monetary rewards given to the employees as a formal acknowledgement
        
        length of services
        
        gifts
        
        "thank you notes"
        
        prizes
        
        exemplary (teladan) performance
      - workplace environment and working conditions - physical setting in which employees work
        
        Size of the office
        
        desk space
        
        work machinery
        
        safety programs
        
        additional security
    - - Categories
        
        Sense of meaningfulness (rasa bermakna) - the degree of the purpose an employee is trying to fulfill and significance of the work they are performing
        
        Sense of choice - the positive feelings generated when an employee has the autonomy or discretion (budi bicara) to choose how to accomplish their work
        
        Sense of growth - an employee feel that they can perform their work skillfully and due to their competence and effort is accomplishing something important
        
        Sense of community - the positive feeling of belongingness within a group