FastCat Corporation

Final Group Group Project Project Report Report

Name of Group:
Name Name Name Name Name Name of of of of of of Group Group Group Group Group Group Member Member Member Member Member Member A B C D E F

TABLE OF CONTENTS
EXECUTIVE SUMMARY
I.

Background Business Reality & Business Strategy

II. Total Reward Systems a. Reward Objectives & Strategies b. Linkage with FastCat Business Objectives III. Internal Alignment a. Organization Structure and Job Families b. Job Evaluation Methodology selection and rationale c. Recommended Internal Job Structure d. Process & Administration IV. External Competitiveness a. Total Reward Survey b. Recommended Competitive Policy Line (s) c. Integration of Internal Job Structure with competitive pay policy V. Pay For Performance Implementation & Execution a. Adjustment of selected Individual Pay Package with Pay Policy b. Merit Pay Design Merit Matrix c. Organizational Performance Bonus Balanced Scorecard d. Final Integration of Individual with Pay Policy VI. Execution & Implementation a. Training Program b. Communication Plan

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VII. Appendices

Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix 10.Appendix 11. Appendix 12. Appendix 13. Appendix 14. Appendix 15. Appendix 16. Appendix 17. Appendix 18. Appendix 19. Appendix 20. Appendix
1. 2. 3. 4. 5. 6. 7. 8. 9.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20.and so on if applicable

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Memo
To: FastCat CEO and Executive Committee From: Name of Team (Names of Members) Date: January 12, 2009 Re: Total Reward System for FastCat

Executive Summary
[Approach to this Report Assume that you and your Group are Management Consultants proposing a comprehensive Reward Solution to the Senior Management of FastCat] [The length of the Executive Summary should be around one to two pages and include information on: Background FastCats business situation and your Groups role in this study Your Groups understanding of FastCats Business Objectives, Core Values & Business Strategies Main Objective(s) of the study What was done the 3 Phases Internal Alignment, External Competitiveness & Implementation. In each Phase: Why such actions were taken Expected benefits of such actions What were considered but rejected The reason why there were rejected Key Recommendations Total Reward System Connections between Recommendations and FastCats business objectives]

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I. Background - FastCat History, Business Realities, Strategies & Core Values

[Refer to FastCat case pages 2 -6 with summary information on: 1. History your Groups understand of FastCats business, development time-line, strength & weakness, new CEO appointment and business outlook Business Reality Employee strength in engineering staff talent, ideal employees behavioral attributes, employees attitudes Business Reality Customer Customers view on FastCat products, customer service and quality, etc. Business Strategies (refer to FastCat case pages 6 7) Core Values e.g. a) Commitment to Customer Success; b) Provide Customers with innovative and high quality solutions and c) Commitment to employees (elaborate each point by 4 -5 bullets)

2.

3.

4. 5.

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II Total Reward System

FastCats Reward Objective & Strategies
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Objectives

Support business strategy Attract & retain talent Minimize increase in fixed costs Treat all employees fairly

Alignment

Flexible, agile design Egalitarian, de -emphasize differences among jobs Support career growth

Competitive position Performance Execution

Level: Match competitors on base Mix: Emphasize work/life components, e.g. flexi time, good benefits

Individual performance (merit) Share team success (Bonus & Stock)

People have choices Open communication

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Note This is just an example for illustration purpose ONLY! DO NOT COPY

FastCat Strategic Map

Dimension Objectives
Support business strategy Attract & retain talent Minimize increase in fixed costs Treat all employees fairly

x x x x x x x x x x x x x

Alignment
Flexible, agile design Egalitarian, de-emphasize differences among jobs Support career growth

Competitive Position
Match competitors on base Work / Life Balance

Performance
Individual performance (merit) Share team success (Bonus & Stock)

Execution
People have choices (Flexible Benefits) Open communication

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II Analysis & Evaluation

a. Reward Objective & Strategies
[Use this page to describe your Groups proposed Reward Objective and Strategies in more details. Write a small paragraph on each point of your Reward Objective and Reward Strategies and their connections to FastCats Business Objectives]

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b. Linkage with FastCat objectives & Strategies

(SAMPLE ONLY) Reward Objectives

Support Business Strategy Expansion to Financial Service Attract & Retain Talent Minimize increase in fixed costs Treat all employees fairly

Competitive Position Policy

Include Financial Services Co. in Comparator Group Attain Competitive Total Compensation position at 75 Percentile (Q3) Contain staff cost by limiting Base Salary to Market Media only Adopt fair, equitable and transparent Performance Appraisal System

(SAMPLE ONLY) Reward Strategies Competitive Position Policy

Hierarchical Structure to allow for Grading Structure to allow progression & promotion career progression Egalitarian Share Team Success Flexible Benefits Open Communication Single Policy Line for all Job Families Bonus & Options award according to Group Performance Build Flexi-Benefits System Mass Communication to all staff on Compensation Policy

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II. Internal Alignment a. Organization Structure and Job Families

[Use this space to describe the process where you and your team went through in analyzing the job responsibilities and how your team came up with the Job Families classification. Quote some of the challenges or difficulties your group encountered during the discussion and what were the learning points gained through this analysis]

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II. Internal Alignment b. Job Evaluation Methodology selection and rationale Job Evaluation
[Use this space and next page to describe the process where you and your team went through the exercise of: Reviewing and describe the various Job Evaluation Approaches available and their relevance to FastCat Describe the approach(s) your team decided to adopt (write a bit more on the features of your approach, e.g. what Compensable Factors, why they were selected, Scale, weighting, etc) and the rationale of your decision Describe the approach(s) your team decided NOT to adopt and the rationale of your decision Ensure there are connections between your Job Evaluation approach(s) and FastCats Reward Objective & Strategies]]

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II. Internal Alignment (SAMPLE ONLY) c. Recommended Internal Job Structure

Gr. 1 2 3 4 5 6 7 8 9 10 JE Min 100 171 242 313 384 455 526 597 668 740 JE Max 170 241 312 383 454 525 596 667 739 809

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II. Internal Alignment d. Process & Administration

[Use this page to describe the administrative process where your Group recommended regarding: Job Evaluation Process The composition of Job Evaluation Committee, Benchmark Jobs Definition, role of the HR Department, ways and manners where Job Evaluations are conducted, approval process and endorsement by CEO, etc. Evaluation of Non-Benchmark Jobs Role of HR Department, slot-in process and validation, approval process and endorsement by CEO, etc. Periodic Review Process Timing and schedule of meeting for Job Evaluation Committee and off-cycle evaluation mechanism, etc Communication Plan Outline the recommended Communication Plan to employees on how Job Evaluation was conducted and what were the process for review and appeal to evaluated scores, etc]

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III. External Competitiveness

a. Total Reward Survey (Benchmark Jobs, Job Matching & Comparator Companies, Competitive Metrics, Market Data Analysis and Regression Analysis (this section should take 2-3 pages)) [Use this page to describe the process where your Group conducted the competitive survey: Selection of Benchmark Jobs What were selected and why (give some example); what were not selected and why (List Benchmark Jobs in Appendix) Job Matching List out all Market Benchmark Jobs selected, why were they selected (based on what criteria?) and matched with FastCat (Use a table) Comparator Companies What were selected (list) and why. What were considered but not selected (list) and why (List Companies in Appendix) Aging of data what percentage was used and why Competitive Metrics which Metrics (measurements) were adopted and why (e.g. Median for Base Salary and 75% for Total Compensation) You must give reasons for why did your group chose these approaches and were they in line with the Reward Objectives? Regression Analysis Show your regression graph

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III. External Competitiveness b. Recommended Competitive Policy Line (s)

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III. External Competitiveness c. Integration of Internal Job Structure with competitive pay policy
Briefly describe the integration of grading structure (JE points) and salary structure. Also explain the relationship between min and max of salary structure and the mid point progression. Remember to state that this salary structure is competitive with the market.

FastCat Salary Structure

Gr . 1 2 3 4 5 6 7 8 9 1 0 JE Min 100 171 242 313 384 455 526 597 668 740 JE Max 170 241 312 383 454 525 596 667 739 809 Min 11,50 0 14,41 0 18,01 0 22,51 0 26,20 0 32,75 0 40,94 0 51,18 0 63,97 0 79,97 0 Mid 15,33 0 19,16 0 23,95 0 29,94 0 37,43 0 46,79 0 58,49 0 73,11 0 91,39 0 114,24 0 Max 19,16 0 23,95 0 29,94 0 37,43 0 48,66 0 60,83 0 76,04 0 95,04 0 118,81 0 148,51 0 Min-Max Mid Pro 67% 66% 66% 66% 86% 86% 86% 86% 86% 86% 25% 25% 25% 25% 25% 25% 25% 25% 25%

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V. Pay for Performance Implementation & Execution

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a. Adjustment of selected Individual Pay Package with Pay Policy

Briefly describe the review of the 25 employees current salary and list out all exceptional cases Red Circle Cases (Salary exceeding Grade Maximum) and Green Circle Cases (Salary under Grade Minimum). Describe your Groups intended actions towards these exceptional cases. (for example no adjustment for now but will adjust in final stage, etc.)

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V. Pay for Performance Implementation & Execution b. Merit Pay Design Merit Matrix

Briefly describe the rationale behind the design of the Merit Grid to reflect: Differentiation in Merit percentages for a) Top Performers, b) Above Average Performers, c) Average Performers and d) Below Average Performers Rationale for different Merit % for staff with same Performance Rating but whose salaries are in different quartile. Outline your recommendation to those whose salaries already exceeded grade maximum

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V. Pay for Performance Implementation & Execution c. Organizational Performance Bonus Balanced Scorecard

Outline the various components in measurement of Company Performance and the Performance Bonus Scheme: Objectives and design of Corporate Performance Bonus Scheme o Retain and motivate talent o Pay for Performance philosophy o Differentiation between the Better Performers and the Average Performers Evaluate corporate performance using Balanced Scorecard o Why Balanced Scorecard? o Linkage between FastCat business objectives and Performance Metrics o Rationale for selection of Metrics Administration Criteria for eligibility for Bonus; Distribution of Bonus and rationale

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V. Pay for Performance Implementation & Execution d. Final Integration of Individual with Pay Policy
Outline the various other Performance Based Incentive Schemes and the implementation plans: Group Performance Bonus Scheme Stock Option Plan Stock Purchase Plan Long Term Cash Incentive Final Integration / Adjustment If you have made adjustment to the compensation package to any of the 25 employees up to this stage, describe your Groups recommended actions towards these exceptional cases.

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VI. Execution & Implementation a. Training Program

Outline the various Training programs designed for different Stake Holders: Member of Compensation Committee (Department Heads & Staff Representatives) training on their role to evaluate and approve future proposals on Compensation & Benefits programs Training of Managers objective measurement of employee performance through Performance Appraisal System and training in Coaching for Better Performance Training for Employees in developing Performance Objectives based on Company Balanced Scorecard Metrics

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VI. Execution & Implementation b. Communication Plan

Outline the key elements of Mass Communication Plan on launching the Total Reward System: Rationale for the new plan Features of the plan Intended benefits for employees Future staff involvement via Compensation Committee On-going evaluation of Total Reward Plan

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Recommendation
Based on the foregoing analysis and evaluation, the Group would like to seek management approval to the proposed Total Reward System that includes: 1. Job Family & Job Evaluation of Benchmark Positions 2. Internal Grading Structure 3. Salary Structure 4. Merit Scheme 5. Bonus Scheme 6. Other related Performance Bonus Plans (if applicable) 7. Adjustment of individual employees compensation package (If applicable)

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Note This is just an example for illustration purpose ONLY! DO NOT COPY APPENDIX 1: DEFINING AND SCALING COMPENSABLE FACTORS
Defining Compensable Factors 1. Customer Orientation: Identifying, anticipating and satisfying customer needs and desires through the highest level of customer service. By always focusing on the customers needs from R&D through implementation, the company will create a competitive advantage and higher profits. 2. Team orientation: Promote collaboration across divisions to achieve value-added results for the company and its clients by taking account of the interests of all parties involved. 3. Technical Knowledge: Specific accumulated knowledge and skills that are associated with particular markets, industries, functions and customer needs. Ability to analyze data and apply critical thinking to facilitate problem solving. 4. Innovation/Initiative: Provide creative solutions and improve processes through imagination, independent thinking, autonomy, careful analysis, and positive risk-taking. 5. Leadership: Degree to which the position oversees or influences other employees. 6. Decision Making: Degree to which judgment is required to address typical problems associated with the position, and the impact that these decisions will have on the business. 7. Education & Experience: Identifies and measures the minimum level of education and/or job-related experience needed to fulfill the requirements of the position. Scaling Compensable Factors Compensable Factor 1. Customer Focus 2. Team Orientation 3. Technical Knowledge 4. Innovation/Initiative 5. Leadership 6. Decision Making 7. Education & Experience Weighting (Point value) 20 percent [32 points] 20 percent [32 points] 20 percent [32 points] 10 percent [16 points] 10 percent [16 points] 10 percent [16 points] 10 percent [16 points] Range of Degree 1-5 1-5 1-5 1-5 1-5 1-5 1-5

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Note This is just an example for illustration purpose ONLY! Do NOT Copy APPENDIX 2: DESCRIPTION OF COMPENSABLE FACTOR DEGREES
Customer Orientation (20%): Identifying, anticipating and satisfying customer needs and desires through the highest level of customer service. By always focusing on the customers needs from R&D through implementation, the company will create a competitive advantage and higher profits. Degree 1 2 Point Value 32 32 Total Point 32 64 Description of Characteristics Has very little or no direct contact with outside customers. Works with appropriate internal customers Interacts with customer when managing calls and mail for manager. Can appropriately handle confidential information. Conducts job responsibilities with understanding that customer service and an external customer-focused orientation is important Improve customer awareness of market trends and product innovation. Communicates with clients regarding contract concerns, fulfills customer client software satisfaction, and maintains relationship through excellent services knowledge with the client. Does not make independent client decisions, and addresses technical problems by routing customer to correct staff member Communicates and responds to changes in customer needs, reviews plans with client. Responsible for all interactions between customer and field support, and develops procedures for handling customer complaints. Focus on development, usability, and interaction from the end-users perspective Produces business plans that target client needs. Directs product direction. Analyzes new markets to pursue and attracts new clients. Strong interpersonal, written, and presentation skills. Ability to develop trustworthy relationships. Able to define key customer needs, and deliver top quality product in a timely, reliable fashion. Manages client relationships and software implementation

32

96

32

128

32

160

NOTE Prepare Similar Charts for all of you Compensable Factors / Competencies or Skill Categories

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Note This is just an example for illustration purpose ONLY! Do NOT Copy APPENDIX 3: JOB EVALUATION BY JOB FAMILY [Use a table to list out all positions by Job Family, listing the Compensable Factors, Scale, Points and total Points scored.] Factor A (40%) 64 5 / 320 3 / 192 1 / 64 Factor B (30%) 48 5 / 240 3 / 144 1 / 48 Factor C (20%) 32 5 / 160 3 / 96 1 / 32 Factor D (10%) 16 5 / 80 3 / 48 1 / 16 Total (100%) 160 800 480 160

Weighting Point Value Marketing Dept. Position 1 Position 2 Position 3

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Note This is just an example for illustration purpose ONLY! Do NOT Copy APPENDIX 4: COMPANY-WIDE JOB MAP [Use a table to list out all positions by order of points scored, (Highest first in descending order) listing the Compensable Factors, Scale, Points and total Points scored.] Factor A (40%) 64 5 / 320 3 / 192 1 / 64 Factor B (30%) 48 5 / 240 3 / 144 1 / 48 Factor C (20%) 32 5 / 160 3 / 96 1 / 32 Factor D (10%) 16 5 / 80 3 / 48 1 / 16 Total (100%) 160 800 480 160

Weighting Point Value All Positions Position 1 Position 2 Position 3

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Note This is just an example for illustration purpose ONLY! Do NOT Copy APPENDIX 5: SAMPLE WORK EVALUATION FORM

Compensable Factor Customer Focus Technical Knowledge Team Orientation Innovation Leadership Decision Making Education & Experience

Weight % 20% 20% 20% 10% 10% 10% 10% 100%

Degree 2 3 4

5 X

Point Value 32 32 32 16 16 16 16

Total Points 160 160 160 80 80 80 80 800

Total Points

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Note This is just an example for illustration purpose ONLY! Do NOT Copy APPENDIX 6: WORK EVALUATION PROCESS AND EVALUATION COMMITTEE INVOLVEMENT

Step in Work Evaluation

Step 1: Conduct job analysis i) Choose a representative sample of benchmark jobs ii) Use the content of these jobs as basis for compensable factors Step 2: Determine compensable factors i) Consider business strategy and values ii) Consider the work itself iii) Narrow the list iv) Refine definitions of compensable factors Step 3: Scale the compensable factors i) Use specific job examples as anchors for developing continuum Step 4: Weight the factors i) Weight factors based on their relative importance to business strategy Step 5: Apply the plan to non-benchmark jobs i) Determine the jobs rating on each compensable factor scale ii) Obtain weighted total points using defined factor weights iii) Approve evaluation results

Evaluation Committee Involvement

Job incumbents work with functional heads to formulate/update job descriptions job sample Evaluation Committee to propose compensable factors based on considerations of business strategy and job sample Evaluation Committee to finalize compensable factors and their definitions proposed by employee team Evaluation Committee to develop scales for compensable factors Evaluation Committee to determine factor weightings CEO approval of the final plan is required to finalize Functional heads work with HR to determine ratings of a particular job HR in charge of calculating total points and determining internal structure Approval of final evaluation results is required from the following groups to take effect: o Top management e.g. CEO o Evaluation Committee Evaluation Committee to determine representative

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Note This is just an example for illustration purpose ONLY! Do NOT Copy APPENDIX 7: COMMUNICATION PLAN Step in Communication Cycle
Step 1: Define objectives of communication program

Employees Involvement

Define program objectives as the following: Ensure employees fully understand the link between their pay and the new business strategy Change expectations about pay differentials among functions (esp. Engineering and Marketing) Step 2: Obtain information Obtain information about current perceptions about compensation through: Opinion surveys on compensation Focus groups Step 3: Develop the communication strategy Develop a communication strategy based on employee attitudes to accomplish communication objective. At this point, a communication approach which provides technical specifics about the pay structure seemed most appropriate.

HR and senior management to determine objectives of compensation communication program

HR to administer census opinion surveys, analyze data, and share results with work group managers and employees Each focus group should comprise of crossFunctional employees, led by a member of the compensation committee and a senior executive HR to develop communication strategy based on survey and focus group data HR work with functional managers to communicate and explain specifics about the following: o Work evaluation process o Compensable factors, scales, and weights o Link between pay determinants & business strategy o Range of incumbents present job and for all the jobs in a career path to which employees can logically aspire

Step 4: Determine the media Determine the most effective media to communicate: General meetings / Departmental meetings / Electronic newsletters / Letters sent to home address

HR, with the help of Public Relations, to determine appropriate media

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Note This is just an example for illustration purpose ONLY! Do NOT Copy APPENDIX 7: COMMUNICATION PLAN Step in Communication Cycle
Step 5: Conduct sessions Level of detail and emphasis of the message should vary depending upon the audience: Executives: emphasis on strategic implications Managers: emphasis on both pay components and motivational effect Employees: emphasis on both details of pay components and procedural justice Step 6: Evaluate program Evaluate success of communication program based on objectives of clarifying link between pay and business strategy and changing expectations. Possible tools for evaluating program include: Post-communication attitude survey Focus groups HR to administer post-communication attitude survey, analyze data, and share results with senior management, work group managers, and employees Focus groups should comprise of cross-functional employees and led by members of Evaluation Committee, HR, and senior management

Employees Involvement

Communication sessions should be led by HR and functional managers, with significant visibility of top management

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Note This is just an example for illustration purpose ONLY! Do NOT Copy Please add all relevant appendixes from Phase II and Phase III

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