Bonus Pay??

Do you know the difference between bonus pay and variable pay? Chances are your bonus pay program is truly a variable pay program. Why does it matter? Variable pay that consistently falls short of the target is another way to tell you that you are being underpaid for your position.

A bonus is something paid to you that isn't part of your regular salary. It is an extra form of compensation (an addition to your regular salary).

Variable pay IS part of your regular salary. It is the portion of your regular salary that is "at risk" every year and often dependent on company and/or employee performance during the plan year. Of course your employer won't tell you that you have pay at risk. Instead they will often disguise this portion of your salary as a target in a bonus, incentive, or performance pay plan. Bonus, incentive, profit sharing, and performance pay programs are all just other names for a variable pay program.

To illustrate, company XYZ is creating a new position for a Director of Finance. The HR department at XYZ will determine how the new position fits within the company's pay structure. They then will recruit and hire for this position offering the new employee a compensation package and within that package will be a base pay component and a variable pay component.

Let's assume that the HR department at XYZ values the new Director of Finance position at $120,000 a year. Of the $120,000, the company will pay $100,000 as the base salary and the other $20,000 will be a "target" in a variable pay program. If the employee in the position averages $10,000 a year over a five year period in variable pay, then the employee is being underpaid by $10,000 a year.

It is important to know your compensation structure or the worth of your job in the open market. Consistently being underpaid is a bad career choice and a lost opportunity. If the company you work for makes it difficult to earn your pay at risk, then you are being underpaid for your position. Goals to make the variable portion of your pay need to be obtainable. Unfortunately, many companies do the opposite and put stretch goals in place for employees just to earn the variable portion of their pay. This allows them to underpay their employees year over year.

To learn a little more on compensation or how getting that little extra a year will increase your overall wealth, visit http://www.givemebigmoney.com/base_pay.html
and
http://www.givemebigmoney.com/pay.html

Goodyear

As a follow up to a previous post - http://givemebigmoney.blogspot.com/2007/03/guerilla-recruiting-goodyear.html

Here is an excellent example of a company who puts the shareholder above the employee. Of course, the president owns quite a few shares so the decisions made by the Board that he is on impacts him in a positive way. To top it all off, Goodyear is on Fortune's "Most Admired Companies" list. Their industry rank for people management is 2nd! After reading this story, you decide if they really are doing a good job for their employees or a better job at brainwashing the public.

Goodyear Tire & Rubber Co. (GT) Chairman and Chief Executive Robert J.
Keegan received executive compensation valued at $11.7 million during 2006 even though the company lost $330 million last year. Yes, a 3-month strike contributed to this loss, BUT when a company decides to do away with their pension and make retiree health care more expensive, do you think a CEO deserves $11.7 million?

Keegan received a base salary of $1.13 million, a bonus of $2.24 million (for losing $330 million), equity awards valued at $220,800 (nice bump in net worth from cutting benefits for the employees) , and $8 million through Goodyear's executive performance plan ($8 million on a performance pay plan.....for what?) for the period Jan. 1, 2004, through Dec. 31, 2006.

When the company loses a good portion of their talent pool and doesn't perform as Wall Street expects, what's next? A big fat severance package? And how will they pay for that?

He also received other compensation worth $93,377. This includes $32,760 for a
home security system installation and monitoring expenses, as well as the cost
of an annual physical exam, personal use of company aircraft and annual dues
for club memberships. Again, Goodyear did away with their pension plan for non-union employees and increased the cost of retiree health care. Perhaps the CEO could have taken a cut in pay and eliminated some of his fringes to save the company some money rather than shoving all the costs to the employees. What kind of message does this send to his current and former employees?

Here is what the company is changing for the employees. Make sure you read the quote below about retaining talent.

 Benefit plan changes effective Jan. 1, 2008, include:

-- Increasing the amounts that current and future salaried retirees
contribute toward the cost of their medical benefits,
-- Redesigning retiree medical benefit plans to minimize cost impact on
premiums,
-- Closing the company's Medicare supplement plan to new entrants and
-- Discontinuing company-paid life insurance for salaried retirees.

The   pension changes include:

-- Freezing the current salaried defined benefit pension plans as of Dec.
31, 2008,
-- Replacing the defined benefit pension plans with enhanced 401(k)
savings accounts with varying levels of company contributions for
current associates beginning Jan. 1, 2009 and
-- Introducing company-matching contributions for the salaried 401(k)
savings plan at 50 percent of the first 4 percent of annual pay
beginning Jan. 1, 2009.

"These changes allow us to continue to provide the kind of compensation packages that are competitive and will attract and retain talented associates," said Kathleen T. Geier, senior vice president of human resources.

Really? So the company is going to reduce the compensation and benefit packages to save $90 million a year and they expect to attract and retain talent. Wow! What part of this math equation adds up to more for the employee that will make them want to stay? As far as attracting employees, if a company is "struggling", why would someone want a job at Goodyear? When they fail to please Wall Street, what will they cut next?

Brainwashing or looking out for their employees? You decide.

Floor Burns

What are floor burns? Watch a college basketball tournament game and you will see players willingly suffer floor burns diving for loose balls. This is maximum effort.

Are your employees willing to suffer floor burns for the success of your company?

The competition for top notch talent is fierce. You need to go above and beyond as an employer if you want employees to do the same. So what can you do to get maximum effort from your employees?

Here are a few tips:

1. Recognize them for what they do. A simple thank you goes a long way.
2. Reward them with little extras. A gift card, a luncheon, or anything that simply says thank you is a very small investment. Don't bombard them with these types of extras or they will be viewed as an entitlement rather than something a little special.
3. Ask them, rather than directing them to do something for you. This style of delivery will earn you their respect. Employees want to do things for their boss. By asking them, they feel valued. Telling them what to do because you're "the boss" does not have the same touch.
4. Be upfront and honest. Your trust and credibility is at stake. People work harder for someone they trust.
5. Support and encourage their career development. The more people that get promoted from your team, the better you will be viewed as a manager.

As a leader, you have the opportunity to maximize what you can get out of your workforce.

These five little tips will have your employee's willingly diving on the floor for loose balls and suffering floor burns all for the success of the company.

Guerilla Recruiter

Many recruiters are uncomfortable with Guerilla Recruiting. Why? They feel it is crossing the ethical boundaries of fair play. As a recruiter, you can' t think this way. To be a great recruiter, you need to be a Guerilla Recruiter.

Guerilla Recruiting is simply about taking talent from your competitor. Would you hesitate to take a big customer from a competitor? Why would you hesitate taking talent from them?

To survive and prosper in the business world it takes shareholders, customers, and talent. If you lack talent, you will lack customers and shareholders.

To illustrate my point, take a look at the baseball world. What team over the course of baseball history has the most championships? What team draws the most fans (customers)? Even if you are not a baseball fan you should know the answer is the Yankees. How can a team continue to excel year after year? What can a company learn by looking at the Yankee business model?

For starters, the Yankees pay their employees well and know how to hold on to their key players. They are a classic example of how an organization can utilize their pay programs to attract the best talent. If they want a player, they have the compensation plan to attract them. They offer players the opportunity to win a championship by employing a talented workforce around them. Add one of the best managers (strong leadership) in baseball and a great customer base (the fans) and you have an organization everyone is trying to catch up to. This is Guerilla Recruiting in the baseball world.

So what does it take to employ Guerilla Recruiting at your company? First and foremost you need to have great leadership. The leadership must have a strong commitment to make your place of business the best place to work at. Employees must have opportunities for advancement. You need a great compensation plan that includes lucrative bonuses for hitting realistic goals. Tack on superior benefits and you have all the tools necessary to attract the best talent.

Don't be afraid to employ Guerilla Recruiting. Business is about building a strong winning team and whipping your competition. Get the right players on your team and you will be the team to beat. You will reap the rewards by gaining market share and increasing your bottom line. Customers and shareholders will follow and want to be associated with your winning team.

Going back to the baseball analogy, who do you think draws more fans to the ballpark? The Yankees or the Royals? How do you turnaround a losing team into a winning team. Ask the Tigers. They hired a great manager and they aggressively recruited and paid for talent. The result was a winning team. Do you think their attendance increased any? You bet it did! The Tigers experienced a 27% increase in customers (attendance). What changed? They put a better team on the field. Winning starts with TALENT.

Talent = Winning = Customers = Shareholders. Notice what comes first in the equation.

Unfortunately many companies think it starts with the shareholders. They end up in a constant cost cutting mode to improve their bottom line. Eventually the team is depleted of their talent pool and the company ends up being a losing team that loses customers and shareholders.

Be bold and be different. This will set you apart from your competition. Be a Guerilla Recruiter and put your team on the path to winning.

Guerilla Recruiting - Goodyear

Guerilla Recruiting is all about opportunity. Knowing where and when to cultivate your talent is the key to your success.

Here is a solid opportunity that a good recruiter will seize.

Goodyear decided to do away with the pension plan for their salaried workforce. That was great news for shareholders as it will save the company somewhere in the neighborhood of $90 million a year. BUT....how do you think the workforce is feeling? Tack on the news that they will have to pay more for retiree health care and you have a bunch of disgruntled workers looking to get out.

If you are a competitor of Goodyear, you have just been given a terrific opportunity to recruit talent away from them. Employees who have benefits reduced or taken away from them are prime candidates for the Guerilla Recruiter. Top notch employees with strong marketable skills will be available for the taking. Why? It is basic human emotion. No employee wants to feel under appreciated.

Need some ammo to fire up a recruit? Show them the Goodyear 2006 proxy and point out the current president has beneficial ownership of about 650,000 shares and he just increased his net worth by $1.6 MILLION in the last couple days by taking away the employee's benefits. Play this card to your advantage! The president and the Board get richer off the backs of their employees. Nothing will fire a recruit up more than that.

Stealing talent from a competitor offers three huge advantages over "regular" recruiting. You gain experienced talent in your industry, Goodyear loses it. You gain market share, Goodyear loses it. Finally, you gain a highly motivated employee who wants to crush one of your main competitors (Goodyear).

As companies continue to cut costs, opportunities to recruit top talent from your competitors will remain bountiful. Stay tuned.

Greenspan & The Economy

On Thursday, March 1,2007; Alan Greenspan was quoted as saying that a recession in the U.S. economy is possible, but not probable. Way to take a stand Mr. Greenspan! Nice to see he hasn't lost his touch. So which is it?

It is inevitable that the U.S. will go into recession. The question is how deep into recession will it go and when will it happen?

The Federal Reserve has taken an aggressive approach on interest rates. History shows that rarely do they ever achieve a soft landing. At some point the multitude of variables that make up the U.S. economy will hit a rough patch and the economy will dip into recession.

So when will it happen? Greenspan has covered his bases well, but does offer some advice on where the US economy is headed. Reading between the lines, he is cautious on his outlook for the U.S. economy in 2007. The recent sell-off in the world markets is also flashing caution.

Will this be the year the economy finally goes into recession? It is possible...