Increasing Employee Productivity through Well Structured Remunerations Packages

Increasing Employee Productivity

Through Well Structured

Remunerations Packages

Presentation for

7th Indonesia Reward SummitDesigning & Managing Compensation & Remuneration in High Economy

Environment

Erwin Muniruzaman2015

Role of Reward

main role of

REWARDis to

Attract,Motivate,

Retain

TOP TALENT

Functions of Reward

REWARDserve as

CORPORATE LANGUAGEto communicate

what company expect from its employee

How to Have Well Structured Remuneration

Linked to Productivity?

Understand

Business Strategy

Understand

Reward Influencing Factor

Create Good

Design

Make Clear & Good

Communicatio

n

Consistent Implementatio

n

1 2 3 4 5

Corporate Vision & Mission

Business Strategy

Business Performance Indicator

Employee Performance Indicator

Performance Based Reward

Understand Business

Strategy

1

Performance Management

How to Have Well Structured Remuneration

Linked to Productivity?

How to Have Well Structured Remuneration

Linked to Productivity?

Understand BUSINESS strategy is essential for designing

good REWARD Policy

Understand Business

Strategy

1

How to Have Well Structured Remuneration

Linked to Productivity?

Total Reward Component

Employee Motivation

External Environment

Capacity to Change

Understand Reward Influencing

Factor

2

How to Have Well Structured Remuneration

Linked to Productivity?

Understand Reward Influencing

Factor

2 Total Reward

Compensation

Fixed Pay

Salary, Allowance

Variable PayIncentives

, Bonus

Benefit

Healthcare, Retirement

Career & Development

Career Path, Performance Mgt,

Training

Total Reward

Component

How to Have Well Structured Remuneration

Linked to Productivity?

Work Motivation & Priorities

by Workforce Generations

Gen Y(18 – 29 thn)

Gen X(30 – 42 thn)Baby Boomers(43 – 60 thn)

1. Career Path

1. Base Salary1. Short Term

Incentives

2. Base Salary

2. Short Term

Incentives2. Base Pay

3. Recognition3. Career

Path3. Retirement

Source: Mercer 2015

Understand Reward Influencing

Factor

2

Employee Motivation

How to Have Well Structured Remuneration

Linked to Productivity?

Money is Dissatisfying Factor if you don’t pay people enough they won’t be motivated.

the best use of money as a motivator is to pay people enough to take the issue of money off the table.

Pay people enough, so they are not thinking about money and they’re thinking about the work.

Dan Pink, author of Drive, The Suprising Truth

About Motivation

Understand Reward Influencing

Factor

2

Employee Motivation

Monetary vs Purpose

Source https://www.youtube.com/watch?v=u6XAPnuFjJc

Understand Reward Influencing

Factor

2

Indonesia Diversity Challenge

Geographical

Economical

Cultural Education

External Environment

Issues:• Tingkat Inflasi (IHK)• Nilai UMK• Kualitas Pendidikan

How to Have Well Structured Remuneration

Linked to Productivity?

How to Have Well Structured Remuneration

Linked to Productivity?

Understand Reward Influencing

Factor

2

Desired culture

Reward Strategy (as tools)

Change Management Process

Culture change• Corporate• Nation/

Local

Capacity to Change

align employee

MOTIVATION

with company culture to create

ENGAGEMENT

and increase

PERFORMANCE

How to Have Well Structured Remuneration

Linked to Productivity?

Understand Reward Influencing

Factor

2

Create Good

Design

3

Setup Reward Strategy

Internal External Equity

Roll Out Strategy &

Plan

Administration Simplicity

Feedback & Review

clear

fair

effectiveefficient

Up to date

How to Have Well Structured Remuneration

Linked to Productivity?

Create Good

Design

3

Setup Reward Strategy

Reward Strategy

Competitive Positioning 75th

50th

25th

Market Positioning

Executive

Fixed – 70%

Variable – 30%Pay Mix

Reward Component

Ince

ntive

Lev

els

Performance Levels

Pay – Performance function

Business Strategy

Fixed – 90%

Variable – 10%

Non-Executive

Components

Base

Allowances

Bonus/Incentive

Benefits

FinancialStrength

FinancialStrength

How to Have Well Structured Remuneration

Linked to Productivity?

Create Good

Design

3

Internal External Equity

Internal equity, Determine the value of the job and/or person based on value added to the company

External equity, Determine the value of the job or person on the basis of the market

Job Evaluation

Market Survey

Tools

Job Grading

Market Position

Output

How to Have Well Structured Remuneration

Linked to Productivity?

Create Good

Design

3

Internal External Equity

How to Have Well Structured Remuneration

Linked to Productivity?

Salary Structure

Issue:- Market positioning- Single vs Multi Structure - Management vs Non Management

Issue:- Clean Wages vs Allowance

Issue:- Paymix By Level (leverage)- Line of Sight

Fix Pay Composition

Pay Mix Reward

Component

Create Good

Design

3

Good reward policy design

ensuring FAIRNESS

How to Have Well Structured Remuneration

Linked to Productivity?

Make Clear & Good

Communication

4

Purpose

•Creates Engagement

Stakeholder

•Employee•Labour Union•Line Management Team•BoD – Top Management•Owner

Time Frame

•Pre-Policy Setup•Roll Out•Feedback•Review

How to Have Well Structured Remuneration

Linked to Productivity?

Communications

is the

KEY Succes Factor of Reward

How to Have Well Structured Remuneration

Linked to Productivity?

Make Clear & Good

Communication

4

Consistent Implementation

5

IMPLEMENTATIONis

UNSPOKEN word of company policy

CREDIBILITY

How to Have Well Structured Remuneration

Linked to Productivity?

Benefit ofWell Structured Remuneration

• Reinforces business strategy

• Promotes repeatable

behaviors• Increase engagement• Improves morale

http://id.linkedin.com/in/erwinmuniruzaman/

http://mewarisgagasan.wordpress.comemuniruzaman

erwin_muniruzaman@transretail.co.ide.muniruzaman@gmail.com

0811 94 28 70

Profile

A seasoned Reward Practitioners in Retail and Banking industries in Indonesia.More than 12 recent years of overall experience in the HR and full scope of Rewards Management (both Policy and Operation), 2 years in HR Operations including centralized payroll and HRIS operations and 3 year in managing Talent Acquisition. During his previous role he is also work in the field of Marketing and Credit Analyst,

He has been actively working closely with senior management in his many previous projects such as Review and Design/re-Design Reward Schemes (Bonus, Sales Incentives, Healthcare, Pension) and HRIS Project, along his regular responsibility for designing Reward Strategy & Policy and Salary Structure.

He is graduates from Astronomy Dept – ITB in 1995, then has his IPGDI (International Post Graduate Diploma in Insurance) in 2004. His Course for Pension Fund Manager from UI is in 2005 prior to his Certified Human Resources Professional (CHRP) from Universitas Atma Jaya in Dec 2011.

Sharing his ideas, opinions and experiences about HR related issues (especially Indonesian cases) in personal blog http://www.mewarisgagasan.wordpress.com