Module 5--Implementation and Evaluation Flashcards
What activities are involved in PLAN IMPLEMENTATION?
Plan Implementation
Implementation should involve these activities:
■ Selecting the implementation team – Select an implementation team to facilitate the process.
■ Developing the communication plan – A communication plan will announce the initial plan
rollout and continually maintain plan visibility.
■ Introducing the plan – How the plan is introduced to management and participants will affect
buy-in and comprehension.
■ Coordinating plan administration – Managers want the plan to require minimal administrative
support on their part. If the plan is too complex or labor intensive, it may threaten the success of
the plan if resources are not available to successfully maintain the plan.
What is the IMPLEMENTATION TEAM?
Selecting the Implementation Team
■ Members with broad-based representation
* Key functional groups
* Senior management sponsor
* Members of the plan design team
■ Define team role and support mechanisms
* Expectations / deliverables
* Resources / budget
* Authority
* Nature of supervision / degree of autonomy
■ Provide training (group effectiveness, project management)
* What to do?
* How to do it?
■ Define role of human resources
* Team member
* Staff support
* Review / audit team recommendations
What is involved in DEVELOPING the COMMUNICATION PLAN?
Developing the Communication Plan
Communication is particularly important in the case of variable pay plans because these plans have
the common goal of driving behavior towards meeting specific objectives. You need to effectively
convey to employees what the objectives are, what they need to do (behaviors) to achieve those
objectives and what the rewards will be if those objectives are met.
■ Determine key points
■ Tailor to audience
■ Choose communication channels – verbal, writing, face-to-face, e-mail, posters, etc.
■ Document the communication plan – includes what is being communicated, when it’s to be
communicated and by whom
■ Determine ongoing communications – how employees will receive updates on progress
and results
What are the Key Points in Communication?
Communication – Key Points
Key communication points should include:
■ Objectives – the desired business results
■ Employees’ role – explains how employees can contribute to achieving the desired
business results
■ Methods – mechanics / measures
* Links between established measures and performance assessment
■ Eligibility – who is participating
■ Feedback – how results are reported / when
■ Rewards – how much is awarded / when
■ Reviews – plan changes / when
■ Impact on compensation – changes to other pay programs
■ More information – where to go (e.g., manager, organizational intranet, reference documents)
Tailor to Audience
The message and means by which the plan is introduced should be tailored to the particular audience.
■ Management – when presenting to management, consider the following:
* Anticipated concerns
* Strengths of the plan
* Obstacles in the way of the plan
* Messages to be communicated
* What will happen and why, and how it will affect people
* Management’s role
* Exercises on ideas for employee engagement
■ Supervisors – in having management present to supervisors, consider the following:
* First-line supervisors are the critical element of success.
* Group meetings and workshops
* Process
– What can be done to improve performance, what’s in it for me? (WIIFM)
– Ensure supervisors understand the plan prior to communicating to employees
– Will need to be able to explain the mechanics of the plan
■ Employees – in the presentation to employees, consider the following:
* Scripted Q&A
* Manage expectations
* What is the aim of the program?
* How it works, policies, procedures
* Specifics on how payouts are determined
What is INVOLVED in CHOOSING THE COMMUNICATION CHANNELS?
Choose Communication Channels
The way a message is communicated can be just as important as the message itself. Each individual
has a preferred method of communication. Organizations usually develop preferred methods as well.
Keep this in mind as you determine which channel or combination of channels to use.
■ Face-to-face – provides a person-to-person verbal connection and often allows instant feedback.
For most plan rollouts, at least one face-to-face communication should occur. Key characteristics
of this channel include:
* Often preferred by recipient / employees
* Provides a personal touch
* Allows for real-time interaction
* Effective for communicating negative information, controversial information and
significant changes
■ Paper-based – provides a physical document for audiences to read and review. Key
characteristics of this channel include:
* Provides a consistent message
* Allows for reader to reference the materials at a later time, if needed
* Effective for communicating technical information and complex information
■ Technology-based – utilizes some form of technology to deliver the message. Key characteristics
of this channel include:
* Typically provides opportunity for keeping information current and timely
* Tools such as an organization’s intranet, webinars and e-mail
* May require users to have access to a computer
How Do you DOCUMENT the COMMUNICATION PLAN?
Document Communication Plan
A well-documented communication plan will facilitate a successful rollout. It should include the
following information:
■ What will be communicated? – such as “president’s announcement” or “third-quarter
progress report”
■ When will it be communicated? – some communications will occur only once, while others may
be repeated or even available continuously
■ What communication channel will be used? – verbal, written, electronic or other
■ Who will deliver the message? – executive management, immediate supervisor, HR
representative, business unit president
Ongoing Communication
Ongoing communication is an important part of a successful variable pay program and should do the
following:
■ Reinforce key objectives of the plan – keep it fresh and prominent
■ Connect to daily work – line of sight; how does one’s daily work affect the organization’s
performance and goals
■ Accompany performance statements
* Performance to target – how you are doing; opportunity to ask questions and get
explanations; what to do to address any problems that come up and take corrective action
■ Include other specific information
* This period’s incentives
* Year-to-date incentives
* Comparison with prior year
■ Orient new participants – ensure that new hires and transfers understand the plan, the
objectives and the performance feedback, as it affects their behavior
* Introduce the program
* Ensure understanding of their role
■ Consider insider information – If the plan for a public company uses financial measures which
are not reported during the quarterly earnings release, sharing periodic results with employees
may constitute insider information. Human resources should discuss this potential issue with the
legal and accounting departments.
Gaining Employee Commitment
Gaining Employee Commitment
Once you design it, how do you gain employee commitment?
■ Keep it simple – Describe it simply and briefly, ensure employees understand the plan and
performance measures.
■ Focus on main elements
* Purpose
* Mechanics and measures
* Participants impact
* Payout opportunity
* Implementation process
■ Use effective communications
* Consistent, ongoing and easily understood
* Begin at the time of concept approval
* Continue as long as the plan / program is in effect
* Many modes (verbal, written, electronic, posting, etc.)
* Timing (critical)
* Top-down process
* Amount and intensity could vary with need
* Tailored to the audience
* Timely feedback
■ Managers communicate to employees – Ideally, management, not human resources, should
communicate the plan. It is more effective to have management make presentations to employees
to show their commitment to the plan and to illustrate clear linkages among plan objectives,
individual jobs and the plan.
Plan Introduction
Now that the communication plan is in place, you’re ready to roll out the variable pay plan itself.
It’s important that you stick to your communication plan in this crucial phase. In general, employees
will form an opinion about a plan very early, and once formed, it can be difficult to change.
Remember, you don’t get a second chance to make a first impression.
■ Using the chain of management – Plans are most likely to be successful if they are introduced
through the organized chain of management.
■ Gaining employee commitment – is a primary desired outcome of the introduction phase
Chain of Management
Using the Chain of Management
While it might be administratively convenient to introduce a plan directly to all employees at the
same time using the same media, the results are usually less than optimal. The preferred method is to
utilize the organization’s chain of management. This accomplishes several objectives:
■ Allows management to be briefed first. This allows them to become familiar with the objectives
and to get on board with the program. This increases management ownership.
■ Managers and supervisors are more familiar with their respective work groups and will
consequently be able to better anticipate questions and concerns.
■ Employees generally pay better attention to information when it comes from their immediate
supervisors than from a general communication from the HR department or corporate.
■ It aligns the performance expectations between employees and management.
Coordinating Plan Administration
Coordinating Plan Administration
If you have properly designed and introduced the plan, then the administration of it should not
produce many surprises. The following are some of the activities that will need ongoing monitoring or
attention.
■ Ongoing performance tracking
* Ensure that tracking of performance is maintained
– Employee updates
– Accounting updates for accrual purposes
■ Calculating payouts
* Compile data and verify accuracy
* Ensure recipients continue to meet eligibility requirements (e.g., currently employed, in
good standing, eligible job)
■ Communicating payouts
* Announce final results and reinforce the performance message
* Review how payouts are calculated, explain final performance measures vs. target and
explain any shortcomings
* Individual payouts should be communicated face to face by the manager. This is an
opportunity to link individual behavior to results and results to the reward.
■ Coordination with other functions – such as payroll, finance / accounting and HRIS
Coordination with Other Functions
Coordination with Other Functions
Close coordination with key functional areas will greatly improve the chances of successful
implementation.
■ Payroll – Payroll needs to be involved early in the design process.
* Create additional fields in the payroll system
* Write new system code for formulas or calculations
* Overtime may also need to be recalculated if payouts are subject to overtime or other
premiums ( FLSA in the United States).
■ Accounting / finance
* Keeping track of the budgeting aspect of the plan
* Making adjustments to their systems also (in addition to payroll, which is often
within finance)
* Auditing financial performance (if applicable) and “certifying” results
* Adjusting accruals for payout as the performance period progresses
■ HRIS (Human Resource Information Systems)
* May have responsibility over certain payroll aspects
■ Savings account administration
* Payouts may be subject to the same withholding amount as company savings plans, [such as
a 401(k) in the United States].
* May wish to remind employees to change withholding percent if they so desire
Evaluation – Plan Assessment
Evaluation – Plan Assessment
Plans that are regularly assessed have greater success than those that are not. Regardless of how
well you think the plan is operating, an assessment can uncover some issues you didn’t know existed.
■ Determining plan effectiveness
■ Why plans fail
■ Potential evaluation outcomes
* Refine plan
* Terminate plan
Plan Effectiveness
Plan Effectiveness
■ When to evaluate – The question of when to evaluate plan effectiveness is critical to determining
if an incentive plan is operating as desired. A new plan may not initially roll out and operate
exactly as intended. Management must be sensitive to the need for formal assessment in order to
determine if an incentive plan is operating as desired.
* After plan rollout – New plans should constantly be monitored to address any
unexpected issues.
* Annual assessment – Plans should be reviewed two months prior to the next plan period to
ensure they are meeting changing business needs.
■ Dual perspective evaluation – An evaluation is conducted from two viewpoints:
* Employer’s perspective, considering:
– Value added and benefits realized as compared to cost
– Cost vs. plan or budget; a financial rationale review
– Desired behaviors – Has the plan aligned employees’ behaviors with strategic objectives?
– Outcomes versus communicated objectives; an evaluation of performance measures;
whether goals were achieved
* Employees’ perspective, considering:
– True pay for performance (that is, top performers are top earners)
– Goal attainment / difficulty
– Total pay levels versus expectations
– Perceived fairness of the payout
■ Plan assessment
* Collect baseline information
* Measure results
* Review anecdotal and survey feedback from plan managers, administrators, supervisors and
participants (e.g., attitude survey, focus groups, face-to-face interviews)
Why Plans Fail
Incentive plans fail for many reasons. The following are five of the most common reasons:
■ Unclear or conflicting objectives – Management may only marginally define and communicate
business objectives the plan must reinforce. Worse, stated objectives may conflict with one
another, or management may not agree on which objectives should take priority.
■ Management inattention – Management inattention may result in failure to assess the ongoing
effectiveness of the incentive plan, missing early opportunities to detect and resolve problems.
■ Ill-conceived incentive plan structure – may not fully consider either objectives or the ability to
contribute to results
■ Insufficient advance modeling – Modeling of the possible effects of the new incentive design
may ignore how a participant’s earnings might be affected or how much company budgets might
be strained.
■ Marginal employee communication – may intensify the problems listed above
Potential Evaluation Outcomes
■ Plan refinement
* Build on progress made
* Tell what happened, what was learned
* Introduce new plan or adjustments to:
– Measures (should reflect changing business objectives)
– Baselines
– Targets (reset targets to achieve continuous improvement)
– Payout rates
– Policies and processes
■ Plan termination
* Business objectives for which plan was created no longer exist
* Employee perception of plan is so negative that it can’t be saved
– Can be re-introduced in future, perhaps with a new name and look (these changes alone
will not change a plan from a failure to a success without other improvements as well)
- Plan implementation usually involves which of the following activities?
A. Determining key points, defining eligibility and choosing communication channels
B. Selecting an implementation team, developing the communication plan, introducing the plan and plan administration
C. Conducting a readiness assessment, obtaining management support, selecting an
implementation team and introducing the plan
B. Selecting an implementation team, developing the communication plan, introducing the plan and plan administration
- In general, what department or group should be responsible for communicating a variable pay plan to employees?
A. Human resources
B. Management
C. Marketing
D. Finance
B. Management
- Which of the following methods is preferred in introducing a plan to an organization?
A. First to shareholders, then to all employees
B. First to management, then to supervisors and finally to employees
C. First to HR, then to supervisors and finally to employees
D. First to shareholders, then to management and finally to employees
B. First to management, then to supervisors and finally to employees
- Plan administration should include which one of the following activities?
A. Calculating payouts
B. Determining thresholds
C. Identifying communication channels
D. Gaining employee commitment
A. Calculating payouts
