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Equitable Financial Reward Planning Method

IP.com Disclosure Number: IPCOM000126491D
Original Publication Date: 2005-Jul-21
Included in the Prior Art Database: 2005-Jul-21
Document File: 3 page(s) / 74K

Publishing Venue

IBM

Abstract

Current methods for financial reward planning use career manager groupings to allocate the total budget across the organisation, and base the amount of spend on the headcount and current salaries of the individuals who make up the group. Career manager groups are however not all made up of the same mix of people. Some groups will contain larger numbers of people who are of greater value to the organisation as a whole and for whom the organisation might want to give greater reward. This new process allocates the spend according to the whole organisation's values rather than according to any accident of current career manager grouping (e.g. Geography). In this way financial reward can be allocated consistently across an organisation and used to increase motivation and reward (and hence reduce attrition) amongst those people who are most important to the business.

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Equitable Financial Reward Planning Method

The Equitable Financial Reward Planning Method:

    - enables a business to decide what behaviours or skills it wants to reward within its population (reward criteria)

    - calculates a recommended reward by individual based on those criteria against a pre-determined overall budget

    - recommends whether an individual employee should be included in the reward programme or not

    This ensures that an employee that is of higher value to the overall organisation will receive a larger share of any available budget than another employeeof lower value, regardless of how the business is organised. At the same time it ensures that the selection criteria for receipt of financial recompense are consistent across the organisation. This is of benefit to the employee and business alike; the business workforce strategy is supported, the attrition rate of valued employees should reduceand employees are encouraged to demonstrate the behaviours and skills that are valued by the business.

The flexibility of this method to allow businesses to incorporate their own specific reward criteria ensures that it is transferable across industry. It is applicable to a variety of financial rewards, common examples being salary increases and performance bonus programmes.

    A Salary Increase Programme example is used to show how this method can be used.

    In this example an organisation has been given a salary increase budget of 8% of their salary bill and a directive that only 60% of the population are to receive a salary increase. The organisation has two career manager groups and a total salary bill of £250,000. How should they allocate the budget to get the best value for the business?

    Historically each manager would have been given 8% of his salary bill and told to reward 60% of his people. Using the Equitable Financial Reward Planning Method this budget would be allocated differently.

    Firstly the business has to decide upon the criteria that they want to reward. Each criteria needs to be assigned a weighting dependent upon its importance within the group. The higher the weighting the more of the overall budget will be allocated.

Reward Criteria Score

Identified as Top Talent 5

Performance Rating 1 3
Performance Rating 2+ 2
Performance Rating 2 1
Promotion plan 2
Key Skills 3
Professional Accreditation 1

    The data relating to each criteria for each employee must then be captured in a spreadsheet. The total score for each individual can then be calculated.

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 Mgr Group

Perform Rating

 Top Talent

Perform Rating

Score

Emp

Promo Plan

Key Skills

Prof.

Accred

Score

A

Mgr 1

2+

0

2

0

3

0

B

Mgr 1

3

0

0

0

0

0

C

Mgr 1

2+

0

2

2

0

0

D

Mgr 1

3

0

0

0

0

0

E

Mgr 1

2

0

1

0

0

1

F

Mgr 2

2+

0

2

0

3

0

G

Mgr 2

1

5

3

0

0

0

H

Mgr 2

2+

0

2

2

0

0

I

Mgr 2

1

5

3

0

0

0

J

Mgr 2

2

0

1

0

0

1

5

0

4

0

2

5

8

4

8

2

TOTALS

    So for example, employee A achieved a performance rating of 2+ and possesses key skills that are at a premium in the marketplace therefore will...