v

Read the "Henderson Printing" case in the Appendix (page 465). What is your assessment of the compensation system in place? Do you think it meets the criteria for an effective compensation system as set out in Compensation Notebook 1.1? Which criteria does it meet, and which does it violate? COMPENSATION TODAY 1.1 COMPENSATION SUPPORTS STRATEGY: FROM A TOZ Manyorganizationsregardtheircompensationsystemasacosttobeminimized;others,however,believethatcom-pensationcandomuchtohelpthecompanycarryoutitsstrategiesandachieveitsgoals.Herearesomeexamplesthatspanthealphabet(well,noteveryletter-thatwouldmakethechaptertoolong!):-AtAdobeSystemsCanada,amarket-leadingsoftwarefirm,allemployeesparticipateinprofit-sharingandemployeesharepurchaseplans;theyalsoreceivefamily-friendlybenefitssuchasflex-ibleworkinghours,telecommuting,andmaternityleavetop-uppayments.Thepointistorecog-nizethehighdegreeofcommitmentthatAdobeempioyeesdisplay.-AtBoeingCanadasWinnipegDivision,whichproducescomponentsforBoeingsnew787Dreamineraircaft,unionizedemployeespartici-pateinagain-sharingprogram,underwhichtheyshareinanycostsavingstheyhelpgenerate.Theflexibleandcustomer-oriented.Executivesarecompensatedbasedoncustomerandemployeesatisfaction,aswellasontheirfinancialachievements.-AtShellCanadaschemicalplantinSarnia,Ontario,payisbasednotonthespecificjobanemployeedoes,butonthenumberofjobstheworkerisqualifiedtoperform.Thecompanybelievesthatthisradicaldeparturefromtradi-tionhasresultedinamoreflexibleandefficientworkforce.-AtStarbucks,allemployees,includingpart-timebaristas,aregivenstockoptions.Thissupportsthecompanystrategyofcommittedservicefromemployees.Inmostorganizations,stockoptionsarelimitedtoafewtopexecutives.-AtVanderpolsEggsinSurrey,BritishColumbia,managementregardsemployeeshareowner-shipasvitaltoitsmanagerialstrategy.which - At Adobe Systems Canada, a market-leading Ontario, pay is based not on the specific job an -AtAdobeSystemsCanada,amarket-leadingsoftwarefirm,allemployeesparticipateinprofit-employeedoes,butonthenumberofjobstheworkerisqualifiedtoperform.Thecompany sharingandemployeesharepurchaseplans;theyslievesthatthisradicaldeparturefromtradi-borkerisqualifiedtoperform.Thecompany also receive family-friendly benefits such as flex-_ tion has resulted in a more flexible and efficient ible working hours, telecommuting, and maternity workforce. leave top-up payments. The point is to recog- - At Starbucks, all employees, including part-time nize the high degree of commitment that Adobe baristas, are given stock options. This supports employees display. the company strategy of committed service from - At Boeing Canada's Winnipeg Division, which employees. In most organizations, stock options produces components for Boeing's new 787 are limited to a few top executives. Dreamlineraircraft,unionizedemployeespartici-pateinagain-sharingprogram,underwhichtheyshareinanycostsavingstheyhelpgenerate.Thecompanybelievesthatthisprogramcutswasteandboostsproductivity.-AtVanderpolsEggsinSurrey,BritishColumbia,managementregardsemployeeshareowner-shipasvitaltoitsmanagerialstrategy,whichistocreateapartnershipbetweenownersandemployees.Managementbelievesthatemployee- niture, the centrepiece of the compensation strategy spawned a culture that fosters teamwork. isagain-sharingplanunderwhichemployeesshareincompanyproductivitygains.Thisplansup-portsthecompanystrategyofdelegatingahighamountofresponsibilitytoemployees.AtZappos,thehugeonlineretailerofshoesandotherconsumerproducts,thecompanyworkshardtocreateacultureofinvolvementandcommitmentamongits1,500employees.Theextrinsicrewardsarenothigh(exceptforhealth -AtRBCFinancial,managementisintegratingper-formancepayelementsintocompensationpack-extrinsicrewardsarenothigh(exceptforhealthcarebenefits);instead,thecompanyrelies formancepayelementsintocompensationpack-agesforallemployeesinordertosupportthefirmscarebenefits);instead,thecompanyreliesonintrinsicrewardssuchasjobautonomy increased focus on customers and performance. and wide latitude for employees to make job Inthepast,virtuallyallemployeesinthebankingindustrywerepaidfixedsalaries.decisions.Forexample,theamountoftime industry were paid fixed salaries. At the giant retailer Sears, measures of customer tomer call is not monitored, so employees can satisfaction are being factored into all employees' spend as much time as they see fit with each pay in an attempt to make the organization more