Author: Site Staff

Dear Shoestrings:



Both the “base plus bonus” and commission approaches have their uses. Generally, an organization’s sales cycle, size, and business model will affect the selection of commission vs. bonus. The following are some of the key differences between the two plan approaches.

In transactional selling environments with shorter sales cycles, where new business development is the priority, commission plans prevail. A commission plan in its simplest form is a rate of pay linked to a sales result, such as two percent of revenue or $200 per unit sold. Commissions provide clear line-of-sight to the sales person because the reward for the sales result is direct. Most companies in early stages of development use commission plans because they are simple to administer and drive new business. To ease cash flow for the rep, these early stage companies may also use a “draw” (basically, an advance) against commissions or a modest base salary.

As companies grow, this simple commission approach tends to break down. This is because sales strategies become more complex, new sales roles are introduced, and recurring customer revenue grows. In these environments, straight commission plans tend to overpay for the existing base of customer revenue, because they use the same rate for a large recurring revenue stream as for incremental new business. Commission plans also break down as territories vary in size because an individual’s earning opportunity is directly tied to territory size. The organization then begins the futile game of cutting and pasting territories to create a more equitable situation for all sales reps. The commission rate, used over time, becomes sacred and immovable. Changing the rate, to provide the necessary sales management flexibility, is typically viewed negatively. The organization becomes hamstrung by the commission plan and the sales management process starts to work backwards: companies make job and territory decisions to meet the needs of the commission plan.

At this point, many companies move to a base-plus-bonus plan. This structure allows the organization to vary the pay mix (the ratio of base salary to target incentive) according to the roles of each job. For example, account managers with a large base of existing business will have a less aggressive mix — perhaps 80 percent salary and 20 percent target incentive — than new business developers, who may have a mix of 40 percent salary and 60 percent target incentive. As this mix varies and a job carries more incentive pay at risk, as either commission or bonus, the accepted practice is to provide greater upside earning opportunity for performance above quota.

As a rule, for every dollar of incentive pay that would be earned at quota, a well-designed plan will provide the opportunity to earn one to two dollars in additional incentive pay at the excellence level of performance. So, for example, a plan that pays $20,000 at quota could provide an opportunity to earn an additional $20,000 for the top 5 percent to 10 percent of performers in the organization. The base-plus-bonus approach simply provides more flexibility to design a plan that fits each job role.

If the sales job in question is focused primarily on new business development and follows a transactional sales cycle of moderate length, a commission plan may be the way to go. To make the change from a base-plus-bonus to straight commission, you will need to consider cash flow for the rep. You may gradually lower the base or use a declining draw to smooth the transition. Also, if you add more risk to the plan by reducing the base salary, you should provide an appropriate level of new upside opportunity for the rep. You want to make the change motivational. After all, your objective with the plan should be to clearly communicate your sales priorities and to fully inspire the rep to work toward those priorities.

SOURCE: Mark A. Donnolo, consultant, Sibson Consulting, Atlanta, Georgia, Jan. 23, 2003.

LEARN MORE: ReadHow to structure sales commission targets and goals.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

A Dear Thirsty:

Competencies are behaviors, skills, knowledge, and abilities needed to achieve organizational goals that can be applied to all employees across an organization–from the administrative assistant to the executive vice president. They are excellent management tools that allow you to:

• Define, refine, and communicate company values
  
• Reward and value individuals
  
• Attract and identify qualified potential employees
  
• Identify deficits in expectations and employee performance.
  

Since these are broad-based behaviors, skills, etc., they may not be unique to the beverage industry. A quick review of some of the more well-known beverage companies’ Web sites like Coca-Cola, Pepsi Co., and Snapple (a subsidiary of Cadbury Schweppes) reveals buzzwords–or competencies–such as creativity, enthusiasm, respect, teamwork, being results-oriented, willing to learn, having an ability to innovate, dedication, and sense of excitement. What makes these terms unique to the beverage industry, and a beverage company, is how they might be applied within that company.

Usually there are no more than 10 competencies for an organization. Some companies have defined specific competency levels based on the job grade or job band within an organization.

Your best bet is to:

• First, articulate current and future strategic objectives for success and competitive strength.
  
• Second, define the broad activities necessary to achieve these objectives.
  
• Next, define the behaviors, skills, knowledge, and/or abilities necessary to perform those activities.
  

And remember, competencies should demonstrate a “deliverable,” or outcome. They are not assessments of behavior or skill level. You can also do some research on your competition and see what they are doing.

Start small with three to five competencies, and grow to 10 over time. Competencies are a fairly sophisticated management tool, so there may be quite a bit of management education to incorporate them into the framework of your organization. Don’t be surprised if you choose competencies like knowledge, teamwork, quality, creativity, and leadership. Then, it’s just a matter of defining how they apply to your company in a way that support your overall goals and define your culture.

SOURCE: Don Gaile, principal, DMG Consulting Co., New York City, New York, Jan. 10, 2003.

LEARN MORE: Read a previous Dear Workforce article onHow to Develop Competency Models.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

For businesses with a decentralized workforce, creating a united company culture and communicating with employees can be a challenge. Add to that continual government reporting obligations such as equal employment opportunity (EEO) reports, and it’s a recipe for potential communications havoc.

    So when The Paradies Shops, the country’s leading airport retailer with 330 stores throughout the United States and Canada, began searching for a new system that would ease regulatory compliance, reduce expenditures, and complement its employee-focused company culture, it found UltiPro, Ultimate Software’s Web-based payroll and workforce management solution. With UltiPro, The Paradies Shops discovered a way to speak to all its audiences–employees, managers, and the government–using one in-house system that provided a secure, central Web site and robust business intelligence tools.

    “Because The Paradies Shops is a decentralized retail chain with locations throughout the United States, we needed a Web-based HR/payroll solution to bridge the gap of distance, yet still be able to save us time and money. UltiPro’s incredible functionality and flexibility have been wonderful additions to our company and will yield us a cost savings of almost $100,000 per year,” said Lauren Gabbidon, compensation and benefits manager for The Paradies Shops.

    Once the company implemented UltiPro’s workforce portal in April 2000, after an on-budget, 10-week implementation, it immediately began encouraging managers to check the Web for information regarding their employees. As that became a popular feature, The Paradies Shops took the next step and gave employees the opportunity to view their own data online. Now they can make changes to their important documents, benefits information, and pay stubs at their convenience, at a place of their choosing.

    “UltiPro’s Web self-service is one of the largest benefits of the system for us,” said Gabbidon. “It allows us to maintain contact with our expansive workforce and provide our employees with instant access to their employment information. As an employee-centric organization, we believe that the UltiPro portal aligns well with The Paradies Shops’ desire to maintain a positive, fulfilling work environment for all of our employees.”

    Another benefit The Paradies Shops has realized since switching to UltiPro is a time savings for the payroll and benefits team of a minimum of 260 hours per year (13 percent of the time it used to spend) on reporting alone. Because The Paradies Shops is located in airports, the company is required to provide EEO reports for each location every month to six months, depending on the state. Prior to UltiPro, The Paradies Shops struggled to remain compliant and meet the government deadlines. In addition, there are other compliance guidelines the company must follow, and the airport retailer relies on UltiPro to help it fulfill regulatory requirements for all of its locations. Nearly 100 percent of the compliance reports required by The Paradies Shops are delivered standard with UltiPro.

    The Paradies Shops states confidently that these powerful and flexible business reporting tools, coupled with UltiPro’s functionality and ease of use, have made Ultimate Software’s workforce management solution a communications dream for both the company and its workforce.

Workforce Management, December 2003, p. 59 — Subscribe Now!

Good dental health is an important part of overall wellness. For some people, it is also important to their careers.

    The Screen Actors Guild, a labor union representing more than 90,000 actors, recognizes the value of dental care and makes comprehensive dental coverage available to its members. “Dental benefits are a critical part of a health care package, especially for actors, whose appearance can be almost as important to their careers as their health,” explains Bruce Dow, chief executive officer of the Screen Actors Guild Health Plan.

    With members in all 50 states, the Screen Actors Guild needed a nationwide dental plan administrator with a strong presence in California, where half of its members reside. Finding a carrier that could serve members equally well in all states was a challenge, according to Dow. The Guild also required a dental carrier with a strong national dentist network and stellar reputation for quality.

    The Guild chose DeltaPreferred Option USA through DeltaUSA, the national accounts program for Delta Dental Plans Association.

    “Quality was a critical component for us. We chose Delta Dental because they are a very visible, high-quality system with a high level of acceptance that can deliver in all 50 states,” Dow said.

    Delta Dental–which contracts with 92 percent of the dentists in California and nearly 75 percent of dentists across the United States–was a perfect match for the Screen Actors Guild. Delta Dental’s dentist network in New York, another key area for the Guild, exceeds 6,000 dentists.

    Nationwide, DeltaUSA contracts with dentists at more than 137,000 practice locations. The DeltaPreferred Option USA program has more than 11,000 practice locations in California and more than 62,000 dentists nationwide.

    The Screen Actors Guild also wanted an economical dental insurance program. “Costs were lower than projected for claims paid during the first few years of the contract,” said Scott Syring of Delta Dental of California, which employs DeltaUSA to administer the DeltaPreferred Option USA national dental benefits program for Guild members nationwide.

    “DeltaUSA provides convenience and access to quality dental care across the country, and that’s what promoting oral health from a benefits standpoint is all about,” Syring said.

    “We like that our participants don’t have to fill out claim forms or pay out-of-pocket for the covered portion of services while they wait to be reimbursed,” Dow said. “And Delta Dental has a really good web site, which makes it easy for our members to find and do research on dentists before selecting one.”

    Yet another reason DeltaUSA has been able to serve the Screen Actors Guild so well is the strong relationships between Delta Dental of California and the Screen Actors Guild Health Plan representatives.

    “We’re on the same wavelength and really understand each other. That means we can give them superior service,” said Syring.

    DeltaUSA is a separately incorporated affiliate of Delta Dental Plans Association that enables Delta Dental Plans to administer and deliver its national dental program. Based in Oak Brook, IL, Delta Dental Plans Association is a national network of independently operated not-for-profit dental service corporations specializing in providing dental benefits programs to 43 million Americans in more than 75,000 employer groups throughout the country.

Workforce Management, December 2003, p. 65 — Subscribe Now!

Opportunity. Creativity. Innovation. These concepts combine to embody what’s best about successful workforce management–an unstoppable attitude that won’t let obstacles get in the way of excellence. In the following pages you’ll read four such success stories.

    It wasn’t always easy. Each company faced their own unique hurdles and challenges. But collectively they identified their needs, investigated their options and considered the outcome of each decision. Ultimately, a choice was made and a strategy was developed. Even though each company was dealing with separate issues, they all came to the same conclusion–to enlist the help of a partner who understands their business needs.

    All of these firms found solutions with vendor companies that understand there’s more to business than selling a product or marketing a service. Their results are tangible and measurable. In striving for excellence, these 4 organizations have found ways to work better, smarter and faster. They made a commitment and worked towards achieving excellence.

Workforce Management, December 2003, p. 58 — Subscribe Now!

Grappling with Wi-Fi security isn’t just an IT issue; individual employees have the power to use wireless wisely in the office, at home or on the road–or not. Here are some pointers for making every Wi-Fi-enabled worker a guardian of your company’s vital assets:

• Implement a wireless communications policy that makes employees personally responsible for Wi-Fi security. Back it up with severe penalties for violations, and statements from senior management emphasizing the importance of safeguarding company data.

  
  

• Train remote Wi-Fi users in the fundamentals of cautious computing–coining complex passwords, updating anti-virus software regularly and encrypting e-mails and file transfers. Take into account your company’s culture and the target audience’s level of computer knowledge in arranging either formal classes or online tutorials.

  
  

• Forbid under any circumstances unauthorized access points–Wi-Fi routers, in tech parlance. Make it known that somebody in IT will scan the network regularly for rogue routers (using software that “sniffs” out Wi-Fi transmissions), and remove them immediately.

  
  

• Require home-office workers to shield their Wi-Fi networks with a firewall gateway system. This piece of hardware sits between the router and the wired Internet, making it tougher for a hacker to break into a connected desktop or notebook PC.

  
  

• Insist that employees actually turn on their data encryption software, whatever it is. Wired Equivalent Privacy (WEP) is fatally flawed, but it does provide protection against casual hackers. Newer standards such as Wi-Fi Protected Access (WPA) and Protected Extensible Authentication Protocol (PEAP) are considered more secure, while a virtual private network (VPN) offers the ultimate protection against hack attacks.

  
  

• Encourage employees to report security problems. A log-in glitch, compromised password, or lost network adapter (the card that allows computers to receive wireless signals) can open a gaping hole in your company’s Wi-Fi defenses.

  
  

This policy was reprinted with permission of Stephen Northcutt, The SANS Institute.

1.0 Purpose
    This policy prohibits access to networks via unsecured wireless communication mechanisms. Only wireless systems that meet the criteria of this policy or have been granted an exclusive waiver by InfoSec are approved for connectivity to ‘s networks.

2.0 Scope
    This policy covers all wireless data communication devices (e.g., personal computers, cellular phones, PDAs, etc.) connected to any of ‘s internal networks. This includes any form of wireless communication device capable of transmitting packet data. Wireless devices and/or networks without any connectivity to ’s networks do not fall under the purview of this policy.

3.0 Policy

3.1 Register Access Points and Cards
    All wireless Access Points / Base Stations connected to the corporate network must be registered and approved by InfoSec. These Access Points / Base Stations are subject to periodic penetration tests and audits. All wireless Network Interface Cards (i.e., PC cards) used in corporate laptop or desktop computers must be registered with InfoSec

3.2 Approved Technology
    All wireless LAN access must use corporate-approved vendor products and security configurations.

3.3 VPN Encryption and Authentication
    All computers with wireless LAN devices must utilize a corporate-approved Virtual Private Network (VPN) configured to drop all unauthenticated and unencrypted traffic. To comply with this policy, wireless implementations must maintain point to point hardware encryption of at least 56 bits. All implementations must support a hardware address that can be registered and tracked, i.e., a MAC address. All implementations must support and employ strong user authentication which checks against an external database such as TACACS+, RADIUS or something similar.

3.4 Setting the SSID
    The SSID shall be configured so that it does not contain any identifying information about the organization, such as the company name, division title, employee name, or product identifier.

4.0 Enforcement
    Any employee found to have violated this policy may be subject to disciplinary action, up to and including termination of employment.

5.0 Definitions Terms 
    User Authentication: A method by which the user of a wireless system can be verified as a legitimate user independent of the computer or operating system being used.

Benefits and Employer Characteristics Important to Working Retirees
    When asked to rate the extent to which a variety of job attributes are important to them in their work, approximately half of working retirees indicate that the following attributes are “very important:”

• working in an environment where employee opinions are valued

• being able to take time off to care for relatives

• working for a company that lets its older employees remain employed for as long as they wish to work

    Other attributes considered “very important” or “somewhat important” by at least two in three respondents include having new experiences, being able to learn new skills, and being able to set your own hours.

    The degree of importance attached to the above attributes varies among the following groups of working retirees:

• Women are more likely than men to desire the ability to set their own hours.

• Working retirees aged 55 to 59 are more likely than their older counterparts to attach importance to good employer-provided health benefits.

• Compared to those with a post-graduate degree, those with less education are more likely to value health benefits for retirees, the ability to take time off to care for relatives and the ability to set their own hours.

• Compared to married individuals, those who are divorced, separated or widowed are more likely to desire employer-provided health benefits.

• Self-employed individuals are more likely than working retirees who are working for someone else to value the ability to set their own hours, work from home and work for themselves. In contrast, those who are not self-employed are more likely to value good health benefits and pension plans, as well as employers who value employee opinions and who let older employees remain employed for as long as they wish to work.

From Staying Ahead of the Curve 2003: The AARP Working in Retirement Study.

Dear In a Quandary:



HR plays a vital role in any organization’s ethics program. In an organization where management and employees view the ethics program as unimportant, the role of HR becomes even more critical.

The question I would first ask: why is the program viewed as unimportant? Since events of the past 18 months have shown that ethics is an area of strategic importance to every organization, the lack of regard for the program is a function of the program and its support, not the issue of ethics itself.

In many organizations, ethics is a buzzword with as much impact as a mission statement that serves only to cover a hole in the lobby wall. Organizations that have successfully demonstrated the importance of ethics have linked ethics to real business issues and actual processes.

Ethics relates to how small or large a gap exists between actual corporate culture and the behaviors a company must demonstrate to meet compliance requirements and preserve its reputation in the marketplace.

Success in closing this behavior-standards gap depends on actions, not empty words. In this regard, HR plays an important role by responding to the behaviors that underlie the strategic goals of integrity.

HR professionals see the inefficiencies when employees are conflicted about the company’s culture and the values that are actually demonstrated, versus those that are preached. HR professionals see the cost of turnover based on basic lack of respect for individuals, as well as the cost of dealing with complaints and charges ranging from retribution to harassment and discrimination. HR can see whether people are promoted and rewarded for behavior that is contrary to the company’s values, and whether people who seek to do the right thing are protected or victimized.

The successes in these areas should be presented to the workforce and to management as critical factors in whether the company reaches its corporate responsibility objectives.

By addressing these kinds of issues in the context of their relation to ethics, the human resources department can demonstrate the practical benefits of a company’s ethics program. It is how HR handles these issues that often will determine whether a company’s ethics program is taken seriously or not.

HR can take an active role in boosting an ethics program by linking its own programs and initiatives to issues raised in the ethics program or the code of conduct. For example, HR campaigns that encourage diversity of opinion or enable decisions to be challenged should be directly linked to compliance topics and corporate values–as well as corporate governance and the possible risk to a company’s reputation. In this way, the annual calendar of HR programs can be used to implement strategic initiatives such as corporate governance and responsibility.

SOURCE: David Gebler, president, The Working Values Group, Boston, Massachusetts, Jan. 16, 2003.

LEARN MORE: Read Nine Steps to Make Values Matter.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.