1 © The Delos Partnership 2004 Rewards and recognition Making sure that people are accountable for the measures

1 © The Delos Partnership 2004

Rewards and recognitionRewards and recognition

Making sure that people are accountable for the measures


Changing BehavioursChanging Behaviours

CULTURE/BEHAVIOUR

TECHNO

LOG

YWAYS O

F

WO

RKING

Use theseTo Measurethese

To Change this


CultureCulture

CULTURE/BEHAVIOUR

TECHNO

LOG

YWAYS O

F

WO

RKING

Use theseTo Measurethese

To Change this


Today’s MeasuresToday’s Measures

• Accountancy based• Backward looking• Focus on Efficiency• Encourage Functional behaviour• Inventory treated as an asset• Purchase Price Variance hurts manufacturing• Measures people causing fear and blame


Tomorrow’s MeasuresTomorrow’s Measures

• Less financially based• Forward looking - targets,milestones• Focus on Effectiveness• Encourage process improvement• Inventory treated as a liability• Total Purchase Cost not Purchase Price

Variance• Measures process not people removing

blame


Intent of New Performance Intent of New Performance MeasuresMeasures

Designed to:– Create value from strategy– Motivate, energise and align efforts– Enable

Focused on:– The future - “How can we improve?”– Behaviours, actions, decisions– Customers, Stakeholders & Shareholders– Opportunities– Causes or drivers of success

Feels:– Active– Supportive– Positive– Warm


Today’s RewardsToday’s Rewards

• How does your company reward behaviour today?

• How does your company appraise performance ?

• How does your company encourage improvement?


Today’s Appraisal ProcessToday’s Appraisal Process

• Annual appraisal process

• Not a favoured activity

• Objectives individually based

• Does not easily allow for job moves



• Based on profit– Allocated after overheads– Inventory regarded as asset– Accrual accounting etc

• Actual versus Budget• Overhead recovery• Earnings Per Share• One person’s career move is

another’s political disaster



• Managing Director gets bonus if budget profit exceeded

• Marketing Director gets promoted if he beats profit target and budget

• Manufacturing Director gets paid if overheads recovered

• Technical Director gets delighted if complexity achieved

• Finance Director becomes Group FD if inventory reduced


Tomorrow’s RewardsTomorrow’s Rewards

• Based on targets and milestones

• Based on forward looking objectives

• Based on constant appraisal

• Based on throughput not output

• Need to recognise value of teams

• Recognises inventory as a liability


Suggested Rewards if ...Suggested Rewards if ...

• Managing Director reaches long term throughput ratio

• Marketing Director achieves improvement in Forecast accuracy

• Manufacturing Director achieves improvement in flexibility through increased velocity

• Technical Director delivers new products on time


Appraisal ProcessAppraisal Process

• Continual through the S & OP process• Should involve 180˚ appraisal and appraisal

of peers through honest feedback• Requires enhanced people and team skills• Give and receive constructive review• Requires removal of blame culture• Reduced need for the cult of the hero


Link the Appraisal Process Link the Appraisal Process to the Strategyto the Strategy

StrategyStrategy Grow BusinessGrow Business Increase Market ShareIncrease Market Share

MeasuresMeasures

StrategyStrategy Grow BusinessGrow Business Increase Market ShareIncrease Market Share

MeasuresMeasures

Sales ManagerSales Manager … ….. … ….... … …......

Sales ManagerSales Manager … ….. … ….... … …......

Planning ManagerPlanning Manager … ….. … ….... … …......

Planning ManagerPlanning Manager … ….. … ….... … …......

R & D ManagerR & D Manager … ….. … ….... … …......

R & D ManagerR & D Manager … ….. … ….... … …......

New Product DirectorNew Product Director … ….. … ….... … …......

New Product DirectorNew Product Director … ….. … ….... … …......

Customer DirectorCustomer Director … ….. … ….... … …......

Customer DirectorCustomer Director … ….. … ….... … …......

Supply DirectorSupply Director … ….. … ….... … …......

Supply DirectorSupply Director … ….. … ….... … …......


Goal DeploymentGoal Deployment

EmployeesOwner

Supply ChainOwner

InnovationOwner

CommunityOwner

CustomerOwner

ShareholderOwner

TARGETSSenior Management

Business Support

Supply Management

Demand Management

New Activity Management

PERSPECTIVE

Process Owners

GOALS

Objectives

PROCESS


Business Excellence Business Excellence Performance MeasurementPerformance Measurement• Needs new ways to account for value• Needs new basis for rewarding

managers and people• Needs recognition of teams• Needs an effective and constant

appraisal process• Needs to change corporate culture

Documents

1 © The Delos Partnership 2004 Rewards and recognition Making sure that people are accountable for the measures