transparency in remuneration

8/9/2019 Transparency in Remuneration

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Term Paper

Of

Human Resource Management

OnThe need for maintaining Transparencyin Remuneration to Employees: Areview on the need and effectiveness

Submitted To:

Submitted by:

LOVELY PROFESSIONAL UNIVERSITY


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2008-10

Introduction

The 1980s business culture in the USA and internationally puta considerable emphasis on personal reward on the basis thathighly motivated individuals could transform organisations andsocieties. The extreme example in film was Gordon Gekko inWall Street stating that greed was good. The 90s, however,have seen companies traumatised and bankrupted by theinappropriate use of remuneration as a motivator. Yet majorcorporate successes have been built on reward basedremuneration systems. Phones4U recently and Allied Dunbar inthe financial services market is an earlier example.

The notorious Barings Bank had individual traders on bonusesin the millions yet in the long term these motivated individualswere not fulfilling the companys objectives. Moreover evenwhen an individuals reward system is based on entirelyappropriate performance indicators, resulting in the

organisations success and he or she is rewarded, there maystill be problems arising from the large differential betweensalaries of senior people and those of middle management. Apayment system that depresses or demotivates 10 people foreveryone it motivates may not be the best for the organisation.

Wise organisations are therefore trying to reward and motivateall staff so that staff act energetically to further thecorporations interests both short and long term and feel they

have been treated fairly. However there must be properly inplace the link between the items on which they are beingrewarded and the actions they are able to take to influence thedesired outcome.

A wise organisation accepts that:

It is reasonable for the individual manager to act in his or herown interests.

Managers work for people not organisations and want toplease the superiors closest to them, or failing that, their peer
http://www.articlesworld.com/greed-is-good-remuneration-motivation-and-organisation/http://www.articlesworld.com/greed-is-good-remuneration-motivation-and-organisation/


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group. Managers want to achieve and will be attracted to those tasksat which they know they can succeed, usually favouring theshort term at the expense of the long term.

The clear implication is that an organisation should lay somegroundwork before relying on a remuneration structure tochange performance and behaviour. In other words themanagement and organisation system must be in balance withthe remuneration system.

There are 5 major pre-conditions to the installation of aneffective reward structure.

1. Measurement: If you dont measure it you wont get it.There are various measurement systems of which BalancedScorecard, which sets multiple objectives and is used by Tesco,is perhaps the best known.

2. Monitoring: If the performance measures are not monitoredproperly or only monitored in a review at the year end, it cangive the manager signals that they dont really matter or,worse still, that failure is acceptable providing all the managers

fail together.

3. Control of the tools for the job: The organisation must ensurethat the individual is not over dependent on factors outside hiscontrol to achieve the performance measures set out (this isthe how part of the equation).

4. Consistency: Ensuring that short term organisational factorsdont over-influence managers or drive them from their real

objective. The organisation must also ensure that its owndesign (be it bureaucratic or loose) is appropriate to what isbeing asked of managers.

5. Reward and strategy in line: An organisations achieving aclear strategy is not an event that will take place in the future;it is a journey. A remuneration system can be put into anorganisation even when it has a relatively muddled strategyproviding that organisational and management disputes areresolved by reference to strategy and the balanced score


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card. Only then will there be pressure on the organisation torefine its strategy, structure and remuneration systems.

Based on these 5 pre conditions, there is a checklist of 10

factors that the effective remuneration and reward structuremust achieve:

1. Support the business strategy2. Encourage the desired behaviour3. Reward relevant performance4. Be fair5. Be substantial6. Be tax efficient7. Be timely (The reward must take place close to theachievement)8. Incorporate non financial rewards (Recognition can be asimportant as cash)9. Be firm (A bonus lost through missing target should not berecoverable whereas a salary increase should only be delayeduntil target is reached)10. Be crystal clear or it must maintain transparency.

At first we need to understand that, actually what remuneration

means

Meaning of Remuneration :

Remuneration is the compensation an employee receives in

return for his or her contribution to the organisation.

Remuneration occupies an important place in the life of an

employee. His or her standard of living, status in the society,

motivation, loyalty and productivity depend upon theremuneration he or she receives. For the employer too,

employee remuneration is significant because of its

contribution to the cost of production. Besides, many battles

are fought between the employer and employees on issues

relating to wages or bonus. For HRM too, employee

remuneration is a major function.
http://www.articlesworld.com/greed-is-good-remuneration-motivation-and-organisation/http://www.articlesworld.com/greed-is-good-remuneration-motivation-and-organisation/http://www.articlesworld.com/greed-is-good-remuneration-motivation-and-organisation/http://www.articlesworld.com/greed-is-good-remuneration-motivation-and-organisation/


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Components of Remuneration

Wages and salary : Wages represent hourly rates of pay ,and salary refers to the monthly rate of pay, irrespective

of the number of hours put in by an employee. Theydif`fer from employee to employee, and depend upon thenature of job, seniority and merit.

Incentives : Incentives are paid in addition to wages andsalaries. Incentives depend upon productivity, sales, profitor cost reduction efforts. There are (i) individual incentiveschemes and (ii) group incentive programmes.

Fringe benefits : These include such employee benefits asprovident fund, gratuity, medical care, hospitalization,

accident relief, health and group insurance, canteen,recreation and the like. Perquisites: These are allowed to executives and include

company car, club membership, paid holidays, stockoption plans and the like. Perquistes are offered to retaincompetent executives.

Non monetary Benefits: These include challenging job

responsibilities, recognition ofmerit, growth prospects,competent supervision, job sharing and flexitime.

Effective remuneration

Effective remuneration is a vital element of HR policy in anyorganisation. Effective denotes competitive in relation to otheremployers, cost-effective for organisation and attractive foremployees.


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Salary surveys are reliable source of information aboutremuneration packages offered for comparable jobs. HRK

PARTNERS presents data in relation to the country, regions andsectors. Upon request, we generate special surveys related to

selected, competitive employers groups. We co-operate withTowers Perrin a well-known consulting organisation, therefore,we are able to offer international salary surveys and surveysspecially designed for top management. Our surveys include

data about both base and variable pay as well as fringebenefits. Survey participants have access to computer version

of the report. Therefore, they are able to conduct additionalanalyses and simulation. We ensure data confidentiality. The

method of data presentation guarantees that survey

participants shall remain anonymous.

Pay competitiveness analysis relates pay packages offered fora particular job with the market level of pay. For each analysedjob an adequate comparable sample is selected. The sample

takes into account all relevant for an organisation data such as:a sector, a region, company size, a form of ownership,

demographic data etc.. The analysis shows the competitive paylevel for separate jobs and ensures that the pay remains cost-

effective. It also helps to develop new efficient pay policy.

Developing effective remuneration systems


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Remuneration system should attract, retain and motivateemployees and at the same time support implementation ofcompany's strategic objectives and enforce its organisationalculture. Remuneration systems offered by HRK PARTNERS

include base and variable pay (commission, bonuses, awards)as well as fringe benefits. The starting point for the systemdevelopment is always job evaluation, which helps to identifythe relative importance of particular jobs in an organisation.HRK PARTNERS selects evaluation methods in compliance withrequirements and conditions according to which a givenorganisation operates. Data from salary surveys ensure thatthe level of pay in the systems developed by us are competitiveto the market level of pay

All-round remuneration policy

A fair and transparent remuneration policy makes the employer

attractive to staff who are committed, have an

entrepreneurial mindset, and are able to work on their

own initiative. The fact that we are constantly revising and

updating our all-round remuneration system is a key

factor in the Munich Re Groups successful value-based

management.

A sound basic salary and a variable component are based onthe personal performance of our employees and the success we

jointly achieve. All of our internal remuneration systems haveto be fair, transparent and flexible for, along with other factorsin our HR policy, they are designed to motivate our staff andhelp them identify with the company.

Globalisation fuels worldwide competition among companies forthe best minds and obliges us to observe internationalremuneration trends such as stock options and integratethem in our system.

The need for maintaining transparency inremuneration of employees

If your people are standing around talking about remuneration,you've probably got it wrong. While remuneration is a key part


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of working it really shouldn't become a major talkingpoint.Getting remuneration is an important part of managingpeople but, like issues such as safety and a pleasant workenvironment, it normally only gets attention when its not

working. If these factors are taken care of people can thenconcentrate on the real job.While we would all like more pay,most people are satisfied if they think their pay is fair. Thereare a number of aspects to this and they all need to beaddressed.

Internal RelativitiesPay needs to be perceived as fair relative to others in theorganization. They understand that different jobs get paid

at different levels but they want to see some equity whenit comes to rewarding jobs of similar worth to thebusiness. While some businesses and industries pay morethan others, and people generally accept this, they wantsome sort of consistency within their own organization.

External RelativitiesThis is where people look outside the business andcompare jobs. Again, they recognise that there aredifferences but they will look at what they may be able to

earn in another organization. So while an accountant in anot for profit organization may realise that the oil industryis going to pay more, she may weigh up the demands ofeach job and decide the differential is too much. Having agood knowledge of the market is necessary to establishthe right level for each type of job.

Performance BasedPeople like to be rewarded for their efforts, so giving the

same pay increase for everyone can be very demotivating.The concept of providing an automatic increase everyyear based on the cost of living may be done with goodintentions but if nothing else is done about performanceissues, good and bad, it will quickly lead to a culture ofmediocrity. Your performance management system needsto be carefully linked to your pay system.

Fair and EquitableThe whole process needs to be transparent so peoplerealise it is based on objective decisions. This way,


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although they may want more money they at least acceptthat there is a process and it is not based on favouritismor unreasonable prejudices. Communications to all staff ona regular basis is the key to this especially when there

are salary increases provided. They should know on whatbasis their salary has been increased, or not, as the casemay be.

Consistent AdministrationTo achieve all the above you will need a system that canbe consistently applied. While salary administration is notan exact science, the system should be objective and anydeviation from it should be only for well consideredreasons. Any recommendations for salary changes shouldbe based on a reasoned decision taking into account allthe elements discussed above.Once you have all of this inplace, you can move on to doing what your business doesbest rather than getting into arguments about pay.

Levels of remuneration should be sufficient to attract, retainand motivate directors of the quality required to run thecompany successfully, but a company should avoid payingmore than is necessary for the purpose. A significant proportion

of executive directors remuneration should estructured so asto link rewards to corporate and individual performanceHiggsReview (2003).In recent years investors have becomemoreactive in challengingremuneration packages. 2002 was asignificant year for UK shareholderswho successfullypersuaded majorcompanies such as Vodafone andGlaxoSmithKline to withdraw or amendshare schemeproposals.Directors pay continues to concernshareholders,though a lack oftransparency in remuneration can makeit

difficult for shareholders to holdcompanies accountable. EIRIShasanalysed remuneration disclosure,where disclosure isdefined asdisclosure of the CEOs salary, or thesalaries of alldirectors individually or asa whole. The quality of disclosure,e.g.full details of salary, bonuses and shareoptions is not takeninto account here.Most countries have a relatively highlevel ofdisclosure at this definition. Inmany cases this is because it isrequired by national legislation or stockexchange listingrequirements.Countries without such requirementsperform

noticeably worse. Greece andJapan are clearly the laggardswith58% and 44%disclosure respectively.


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Examining the proposals for remuneration under this principleinvolves two issues. First, how should companies remuneratefairly and responsibly? This is reflected in the five mainrecommendations of the Council. Accordingly, achieving best

practice involves the need to:

Provide disclosure in relation to the companysremuneration policies to enable investors to understand(i) the costs and benefits of those principles and (ii) thelink between remuneration paid to directors and keyexecutives and corporate performance;

Establish a remuneration committee; Clearly distinguish the structure of non-executive

directors remuneration from that of executives; Ensure that payment of equity-based executive

remuneration is made in accordance with thresholds setin plans approved by shareholders; and

Following these recommendations, the second issue focuses ontheir effectiveness.

A Companys remuneration practices may be defined in relationto both their process and outcome. Process involves howremuneration is determined while the outcome is the result ofthis process. The idea of fair and responsible remunerationclosely looks at these two key stages. It essentially aims for anobjective remuneration process which is critical to establishingremuneration amounts that are sufficient and reasonable. Asthe Council suggests, this principle is driven by two keyremuneration policies that companies need to adopt.Fundamentally, these policies should be adequately directed toattracting and retaining talented and motivated individuals whocan successfully manage the company. According to theGreenbury Committee in the UK companies should avoid payingmore than is necessary for this purpose. In addition, theremuneration policies of the company should clearly define therelationship between performance and remuneration. Thisrepresents efforts to align the interests of managers andshareholders by linking pay to performance.

These two policies, articulated by the Council, form the basis

upon which the remuneration process and outcome should beinfluenced. With this in mind, the Council gives support to the


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idea of full disclosure that is consistent with therecommendation of the Greenbury Report. This provides for agreater level of transparency, enabling shareholders toeffectively assess the extent to which the process and outcome

of remuneration conform to the remuneration policies of thecompany. Full disclosure more importantly underlies theoverriding principles of accountability and openness withrespect to directors and executives remuneration. Howeverthe nature of disclosure in this context gives emphasis not onlyto content but also to its form. That is, disclosure that yieldsinformative value.

Review of the Remuneration Structure

(1) Basic Concept and Necessity for ReviewIn private enterprises, a wage system has been establishedwherein limitedpersonnel expenses are allocated appropriately, according toemployees workcontents and achievements. In public service as well, it is

essential to ensureappropriate treatment that corresponds to duties,responsibilities and performance,and to build an effective remuneration system to enableemployees to work withvigor, even with the limited financial resources available. Thereis thus a need toreview the entire system in the following manner.

(i) Conversion to a remuneration system thatemphasizes occupational dutiesand responsibilities and accurately reflects performanceIn the current salary schedules, there is a large overlapbetween grade levels, sincepay steps have been established to enable employees salariesto reach a certain leveleven if they are not promoted to upper grades of duties. It hasbeen pointed out thatthis salary schedule structure, coupled with grade increaseswhich assign importance


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to the recruitment year, is leading to remuneration increasesbased on seniority.It has also been pointed out that most employees receive aRegular Step Increase,

which means that the system operates much like a periodicstep increase. Becausethe appraisal system has not functioned adequately, as well asfor other reasons,Special Step Increases and Diligence Allowances have beengiven in rotation. Thusperformance results are not necessarilysufficiently reflected inremuneration.

Therefore, it is necessary to reduce the overlap between grade

levels and toreview the salary schedule structure, including restructuringgrade levels andflattening the salary curve, so that differences in duties andresponsibilities can bereflected in remuneration. There is also a need to review theremuneration system toensure that it reflects performance more appropriately, byintegrating the Regular

Step Increase and Special Step Increase to form anassessment-based step increase,which would allow the step increase amount to be subtlydifferentiated according toperformance.

(ii) Development of an environment in which anincumbent period can beprolongedIn response to harsh public criticism of the so-called goldenparachute (seniorofficials obtaining executive posts in private corporations aftertheir earlyretirement), which occurs as a result of the practice of earlyretirement by seniorofficials, the government as a whole is striving to correct thepractice of earlyretirement and to prolong the incumbent period.As a part of these efforts, there is a need to consider reviewingthe salary curve in


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order to bring salaries of older officials into line with those ofolder employees in theprivate sector. In addition, it is also necessary to considerdeveloping a framework

for the treatment of staff employees to secure highlyspecialized personnel in thepublic sector, in order to contribute to multiple-track personnelmanagement.

(iii) Realization of proper inter-regional allocation ofremuneration

The current salary schedule level of public employees has beenset based on the

difference in average national remuneration between the publicand private sectors,including the high wages in the private sector found in placessuch as the specialwards of Tokyo. This means that salary schedule levels basedon the nationalaverage are guaranteed even for areas where wages in theprivate sector are low.

This has not only spurred criticism that remuneration of public

employees might behigh, but has also caused the problem of remuneration levels ofpublic employees inurban areas falling below those of employees in the privatesector.Given these circumstances, it is necessary to lower basic salarylevels toaccurately reflect in the remuneration of public employees eachareas wage levels inthe private sector, and to strive to realize proper inter-regionalallocation by payingnewallowances in areas where wages in the private sector arehigh.

(2) Specific Items for ConsiderationBased on the concepts outlined above, the NPA reported on thefollowingchallenges to consider with regard to a basic review of theremuneration structure at


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the time the Remuneration Recommendation for FY2004 wasmade.

1. Lower the overall level of the Salary Schedules and

realize proper remunerationadjustment according to the areaLower the level of the common national Salary Schedule, takinginto account theRemuneration difference between the public and privatesectors in areas where thewages in the private sector are low.

To supplement the salary level and equalize wages in theprivate sector in each area,

an Area Allowance (provisional name), with an upper limit ofapproximately 20%of salaries, etc., will be newly established to replace the currentCity Allowance.

To facilitate transfers, a Transfer Allowance (provisional name)shall be newlyestablished, in which payments will be given to compensate forthe transfereesmental and economic burden.

2. Issues related to salariesIn order to treat specialists as staff employees and to introducemultiple-trackpersonnel management that would allow for the prolongation ofan incumbentperiod, the Specialized Staff Salary Schedule (provisionalname), composed of onlythree or so grades, will be newly established.Restructure grade levels (newly establishand integrate grades)and flatten the salarycurve to ensure that they better reflect duties andresponsibilities.Clarify grade increase and grade decrease standards in view ofthe development of anew appraisal system.In view of the development of a new appraisal system introduceanassessment-based step increase which determines stepincreases based on an


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evaluation of the employees performance every year, in placeof the currentRegular Step Increase and Special Step Increase. In addition,abolish the

outside-step increase.3. Issues related to allowancesEnlarge reflection of performance in the Diligence Allowance inview of thedevelopment of a new appraisal system. In a similar vein, alsoenlarge reflection ofperformance in the End-of-Term Allowance for DesignatedServices.Newly establish the Headquarters Allowance (provisional

name), taking intoaccount the distinctiveness and hardship of duties and theneed for recruitment ofthe headquarters.Change the payment of the ManagerialAllowance to a fixed-amount system to ensure that it clearlyevaluates the degree of difficulty of managerial andsupervisorytasks of managerial employees

SKILL BASED PAY

Skills based pay links remuneration employees to the nature,number and levels of different skills and knowledge employeespossess and/or use.Skill based pay relies on clear definitions of discrete units of

work (competencies). Each distinct competency an employeepossesses adds to their capacity to perform the range of tasksor duties required of them by their employer or to performdifferent or more demanding and responsible roles. Anemployee is remunerated according to one of three mainchoices available in applying skill based pay.

PERFORMANCE BASED PAYPerformance based pay is aligned to outputs and achievementof predetermined outcomes. From a performance point of viewthe key measurement indicators include

(a) Achievementof goals

Financial e.g savings through efficiency in terms of

improved systems and process Physical e.g, achievement ofwork programme objectives


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(b) Effectiveness -

Doing the right things

(c)Efficiency

-Doing things right

(d) Improved productivity-

Doing more with less

(e) Innovation -

Doing new things

A key issue created by this trend is the need to improvemeasurement of skills and performance at both the businessprocess and people levels. There is a clear synergy betweenthe EVA trend and the existing requirement for both skill andperformance based remuneration system(s) to be supported byclear measures of process and skills.

By definition, an organisation is a performance framework. Nonperforming organisations will fail, either financially or, ingovernment and non profit service environments, as a result ofthe choices made. Whatever approach is taken therefore mustrecognise the ultimate truths of economic survival. This meansthat remuneration systems must be linked to the companyscapacity to make and pay for change.

Defining the best approach to remuneration therefore requires

that organisations define their business and its componentsclearly, so as to understand the nature of the work undertakenand the type of measures that best reflect excellentperformance for each component.

Ultimately the best approach is one where;

(a) people are motivated to behave consistently with thevision of the company


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(b) people are rewarded for their achievements andmotivated to improve in the

future, and

(c) value generated by employees outweighs the cost ofemploying them.

The key requirements of any system herefore are:

(a) it must reinforce the desired vision and culture of theorganisation and

(b) differences must be able to be distinguished between

levels of skill and performance, and

(c) business processes can be measured to provideaccurate assessments of added value to the shareholder.

As a general guide consider the following broad options.

Type oforganisa

tion

Functional* Process*

e.g.ministry

Time-based*

e.g.consulting

Network*

e.g. projectwork

Unit ofwork

Position

Task

Mission

Outputs

Role

Outcomes

Charter

Outcomes

TypicalBaseRemuneration

Tight Ranges Fairly tight

Ranges

Wide Ranges

Very wideRanges

TypicalProgress inRange

Based onmarketmovementandsustainedperformance.

Based onachievementof outputsand marketmovement

Based onvalue ofcontributionto value ofoutcomes

Based onvalue ofoutcomes


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%Eligiblefor

Incentives

Few Most

Many

Few

Possiblesystem

Skills basedpay

Performancebased

Performancebased

Performancebased

How is an effective remuneration scheme built?

There are three key steps involved in structuring (orrestructuring) an effective approach to remuneration

1. Analysis

Analyse the business and its key processes. Keyquestions to address at the analytical stage include:

(a) What kind of organisation are you?

- Govt.?

- Private?

(b) What is the orientation of your business(es)?

- Functional?

- Process?

- Time?

- Network?

- Product?

- Service?

(c) What different processes exist within the

business?


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(d) What are the measures of your success, orotherwise?

(e) What issues or constraints impact on your ability

to meet these measures of success?

(f) What is the vision or touchstone you apply tocreate the behaviour and culture necessary required tomeet your definition of success?

(g) What systems are in place to measure yourprogress?

(h) Does your current remuneration system

reinforce the behaviours and outcomes you seek for thebusiness?

(i) Do you have a plan for change?

2. Benchmarking

Having defined the business and its processes, look for

other organisations with comparable structures and/orprocesses. A number of the larger consulting firms nowpromote world wide benchmarking surveys of best practice so

it is now possible to conduct this research without unduedelay. It will not always be possible to find a direct match,however you will find it possible to gain a large number ofuseful ideas without the often prohibitive costs of time,resources, cash and credibility of having to test your ownthinking from scratch. Remember, how remuneration ismanaged is one of the single biggest factors in the satisfactionof employees.

3. Implementation

Installation of a new approach ideally should take place in aclearly defined timeframe. Once again, uncertainty of theprocess by which pay is managed creates unnecessaryuncertainty for employees.


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You probably proclaim that "performance is what reallymatters" or something similar. But do your day to day wordsand actions support your proclamation. Do you overemphasisetrivial detail of the expense of overall performance? Do you find

yourself complaining about "attitude" when you should bedemanding results? Do you openly celebrate achievement,results and performance?

5. Trust Your employees

In a nutshell, you'll get what your employees think you want.Do you encourage them to constantly improve systems andreward them when they do so successfully? Do you authorizethem to act first and seek permission second to fix a pressingproblem that needs prompt action? Do you constantlyemphasise, honestly and sincerely, their commitment andsuccess?

Conclusion

When you've done all these things, have a chat to theemployee in question. You may find that you need his or heradvice more than he or she needs yours. If genuine personal

problems are interfering with their work try to find mutuallyagreeable solutions. But stick to your performance "guns".

You're not a professional counsellor. If the employee needsprofessional help, use a professional.

Always remember: never give an inferior performer preferentialtreatment. If you do you're inviting all his or her colleagues toseek the same reward using the same methods.

EMPLOYEE REMUNERATION OPTIONSPURPOSE:

To define remuneration practices and options applicable toemployees. The intent of thispolicy is to provide transparency in the make-up of existingpackage entitlements and to offer additional choices toemployeesPOLICY FRAMEWORK:PCQ offers a range of non-cash remuneration options. Thispolicy lists which options are


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available and how to determine the cash equivalent. PCQ, insetting the cash equivalent for non-cash remuneration options,ensures that PCQs total costs for each employee remainconstant. The options are provided to employees as non-cash

remuneration may be more attractive to the individualemployee. Certain items are supplied as Corporation facilitiesor equipment to assist in job performance. These are notincorporated as a component of an employees remunerationGenerally, there is an obligation on the employee to reimbursefor any private use of these tools and facilities.APPLICATION:

This policy applies to all Ports Corporation employees whethercovered by the award,

appointed by letter of engagement or by other contractualarrangement.

SALARY OPTIONSAny option taken by an employee, however configured, is not toincrease costs to PCQ. If,on calculation of the costs to PCQ, any election by an employeeunder this section is not costneutral to PCQ, that election option of the employee is not

available or must be restructuredto ensure it will be cost neutral to PCQ. Options are intended toallow employees somescope in improving the value of their package to them. Thisprovides PCQ with the benefitsthat flow from being able to offer attractive packages at noextra cost.

CARSNovated Lease or Other ArrangementPCQ will consider novated lease or other vehicle supplyarrangements for any employee.PCQ will allow more than one vehicle to be supplied to anyemployee. Due to publicperception, PCQ will not enter arrangements for certain typesof vehicles at its discretion.

The CEO will only permit PCQ entering into novated lease oralternate arrangements where


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there is minimal or no liability attaching to PCQ should theemployee terminate employment for whatever reason(including death).Under such arrangements, PCQ would provide the payments

related to leasingarrangements entered into by the employee. Actual lease,petrol and ancillary payments andany fringe benefits tax are to be fully met by reduction in salarypayments.

ENTITLEMENTS NOT CONSIDERED PART OFREMUNERATIONAny contractual arrangements between PCQ and an individual

employee may deal with anyor all of the matters in this section in which case thecontractual arrangements override thepolicy.

FLIGHT CLUB AND FREQUENT FLYER MEMBERSHIPSPCQ will fund flight club and frequent flyer memberships wheresuch membership isapproved by the CEO in accordance with the Travel Policy.

MOBILE PHONESPCQ issues mobile phones for short term or longer use byCorporation employees.Thepurpose is to assist in communication with the employee forbusiness purposes.

CAR PARKINGCertain senior employees have been provided with car parkingspaces in or near PCQspremises at no cost to the employee. It is a condition ofacceptance of a car parking spacethat the employee will not claim from PCQ for business use oftheir own car within the local area (which includes the Brisbaneairport).

The Chief Executive Officer may vary who is entitled to beprovided with a Corporationsupplied parking space. The Chief Executive Officer willdetermine which Senior Executives


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will be provided with a PCQ supplied parking space on the basisof the demonstratedbenefits to PCQ of doing so.

The Chief Executive Officer must give one months notice to

any employee who has beenprovided with a car parking space that the entitlement is to bewithdrawn.

CORPORATE PROGRAMS FOR EMPLOYEES :Theseprograms are available to both award and contract employeesas per the CorporateProgram for Employees policy. These programs are provided asadditional entitlement and

thus are not to be offset from an employees remunerationtotal.

PROFESSIONAL MEMBERSHIPSThere is no substantial benefit for the employee if PCQ providesprofessional membershipsas a salary sacrifice and deducts the FBT, if applicable, from theemployee.

However, where PCQ may benefit from information fromorganisations and a corporatemembership is either not available or uneconomic, the ChiefExecutive Officer may authorisePCQs funding of a personal membership. In thesecircumstances, the value of the paymentwill not be offset against the employees remuneration total,and any information andmaterials supplied become the property of PCQ.

CLUB MEMBERSHIPPCQ may fund club memberships for senior employees wherePCQ perceives value to itsbusiness activities from that employee's ability to utilise thoseclub facilities. Private use ofthe club membership is permitted but will always be treated asthe employee's personalliability and not a corporate liability. PCQ will bear the full costsof membership and a


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contribution related to personal use of the membership will notbe required.

LAPTOP COMPUTERS

Where an employee identifies a personal requirement for use ofa laptop computer, the CEOmay approve the provision of the benefit on a full salarysacrifice basis.

INDEPENDENT ADVICEBefore entering remuneration options,employees are requiredto provide a disclaimer toPCQ that they have taken their own advice in relation to the

financial and other effects of the selected option. As thisapproach expands, the firm must shift the emphasis of itsrecognition programs from individual to team rewards. Evenindividual rewards should acknowledge people who areeffective team players, freely sharing their expertise. Thefairest compensation approach gets away from a star systemthat rewards only the individuals who stand out from the crowd;it also rewards those individuals who help the crowd performbetter. An employee compensation and benefit statement is a

great communication tool that any company can and shoulduse. An effective compensation and benefit statement providesthe employee with timely, important, and relevant information.It can improve employee morale, retain existing employees, aidin recruiting new employees, and it can be a true "value-add"to an organization.

EQUAL PAY FOR EQUAL WORK

Workers with similar qualifications doing similar jobs at a

company should receive equal pay. This seems fair enough. Inthe real world, though, that's not always what happens, whichis why there needs to be a reasonable way for employees toseek redress for pay discrimination. There are a lot of variablesthat go into employees' compensation, including the amount ofresponsibility they have, how hard they work, whether theyinitiate ideas, are team players, are punctual, have specialskills, etc.

E MPLOYEE ASSISTANCE PROGRAMS


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According to Carol Wilson, Senior Vice President, CustomerRelations, for Waukesha-based NEAS Inc., employee assistanceprograms are a good way for employers to bridge that gap. "Ifyou have good employees, you should be investing in them,"

rfays Wilson. "At any given time, it's estimated that 10% ofyour workforce is likely to be distracted by some sort ofpersonal issue." EAPs actually began as informal programswithin the union environment to assist employees dealing withalcoholism and other related issues. By the 1980s, with theimplementation of the federal mandate for drug-freeworkplaces, EAPs became more formal and structured. Now,the range of services provided by EAPs only begins withsubstance abuse. Wilson says that, at least among NEAS's book

of business, substance abuse issues only account for 4% ofcontact, while 37% of employee contacts are for mental healthissues. "It's not that substance abuse issues have decreased,but rather it's that so many other areas are now beingaddressed," she says. "We help employees with financialissues, legal issues, even occupational issues, such as workconflicts." If you don't think your employees can benefit fromsuch services, consider a typical scenario. If an employee isdealing with a serious issue - problems with a truant teen, an

impending foreclosure or even a minor legal problem when isthat employee most likely attempting to solve it? On break,during lunch, or even during the workday while on the clock."These are typically not issues that an employee can try andsolve after work," says Wilson. "Professionals like bankers andlawyers work during the day." And it's rarely a good idea foryou, as the employet, to step in and try to help. We're seeingthis now with the mortgage problem," says Wilson. "Someemployers want to help, but don't know how." But whatemployers can do is provide a means of assistance, which iswhy an EAP might be something to consider for the future ifyou don't offer it now. "EAPs have gone from an era where theywere a nice, fluffy benefit to an evidence-based practice," saysWilson. "There is a definite, quantifiable return on thisinvestment." Employees who have a good work-life balance,who are able to manage stress and conflict and resolve anypersonal issues, also spend less time away from work and lesstime distracted while at work. Not every employee will utilizean EAP; the more important benefit is to know that it isavailable if your employees need it.


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What makes a satisfied employee ?

Employees felt they had an opportunity every day to do whatthey do best.

* They believed their opinion counted.

* They sensed that their co-workers were committed to quality.

* There was a direct connection of their work to the company'smission statement.

Yes, it's true that people need to feel as if they are fairlycompensated; but actually, people want to feel like they are apart of the company, that their ideas and suggestions areimportant, and that they add value and help the company grow .

How To Improve Employee Satisfaction?

1. Measure your staff's level of satisfaction. A simple employeesurvey can provide you with invaluable information. Structurethe survey to be as objective as possible.

Some suggestions for areas to solicit their feedback mightinclude:

Available benefits -- determine if they are aware of the benefitsyou provide and ask them to rank each benefit's value. Don'tspend time and money on benefits that employees perceive ashaving minimal value.

Training programs -- do they feel that the training provided is

adequate and provides them with the proper skills for their jobfunctions and additional opportunities?

Understanding company philosophy -- do they know yourcorporate beliefs and values?

Professional standards -- do they understand what levels ofservice you expect and the behaviors/actions that willaccomplish this?

Likes and dislikes -- give them the opportunity to tell you whatthey like and dislike about your company.


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Motivators -- ask them what would motivate them.

Most employees will give you honest feedback if they believethere will be no backlash or a negative consequence. So allow

them to give you information freely, anonymously. Take thisinformation and use it as a means for improvement.

2. Facilitate a weekly or monthly brainstorming session.Oftentimes the best source for new ideas comes from within.

Your employees see things every day that could be improved,changed or done differently. Let their experiences andobservations become your funnel of knowledge.

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transparency in remuneration

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