Managers’ Remuneration Systems (2 of 2)

published in: Educational articles

04 Oct
2010

Managers’ Remuneration Systems usually have more complex structure than workers’.

Managers’ motivation is short-term and long-term.  The short term is expressed as individual prizes for successful fulfilment of a project, task, or participation in profit sharing. In the last case it does not count personal merit, but the entire department or company merits.  A disadvantage of the profit sharing incentives is that the bonus does not always correspond to the real contribution due to the fact that often the current year profit depends on the efforts during previous years. remuneration system, managers Short-term incentives are crucial to attracting the best qualified employees, where individual performance is tolerated.
 
Unlike short-term, long-term incentives are team orientedThey have less influence on attracting and motivating employees, due to the longer period they apply to.
 
Due to the complexity and multi-variability of the most common three systems:
  • Hey’s system;
  • System “Life”;
  • Assessment system for employees and managers with blocked carrier opportunities;
in this article, we’ll focus only on the last one.  This system is widely underestimated.
 
Employees and managers with blocked carrier opportunities, have 15-20 years work experience. We say they have reached carrier plateau. In order to be able to influence any situation we need to know the causes behind its occurrence.  The three main reasons for reaching a carrier plateau are:
  • There aren’t any free positions in the company organizational structure (structural plateau)
  • Thanks to their long experience, the managers know their work in details and they face no challenges. Thus they meet demotivation (knowledge plateau)
  • The managers are completely dedicated to their work, it is the most important part of their lives. However, when promotions stop they became unhappy and demotivated.
Since these are professionals, a need to establish an approriate incentive system for arises.  Such system would include the following techniques:
  • Manager at “the plateau” are assigned specific tasks and projects that require great experience. Involve them in group management decisions within the sphere of their expertise.
  • Move them to another managerial position at the same hierarchy level (rotation).
  • Involve them in programs for self-development and teaching newcomers, but make it clear that this is not the road to a promotion.
  • Assign them representative functions, put them at the spotlights.
Regardless of the incentive system you use the most important is the differentiation between different categories of managers.  Differentiation is stimulating act when people with a greater contribution receive greater benefits.  Differentiation is demotivating when those with smaller contribution receive the greatest rewards.  Another rule of differentiation is that any manager must get at least 10% more than his/her best paid subordinate.
 

Inspect your remuneration system critically once a yeary, consult with colleagues in similar industries, use consultants and you will surely have a better system than the current one.

 

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