Pay Equity

Pay Equity means compensating employees when they perform the same or similar tasks. So, for example, gender pay equity is about paying men and women in the same way. Pay Equity can consider other variables that can affect the difference, such as experience level, performance, seniority.

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Since its foundation, TMC has developed a solid market research practice. Important and successful products in the Venezuelan market have been configured on the basis of studies of this practice and under the guidance of our consultants.

Whether it is product configuration, segment establishment, econometric models for demand forecasting, brand studies, conjoint analysis or maxdiff scaling, we operate under an evidence-based approach. And even if the methods are complex the results are simple actions focused on the final purpose

The basis for the success of the practice is the combination of various forms of analysis, their robustness and the correct use of techniques for each case and type of conclusion desired. Conclusions focused on obtaining the desired results.

The sales force, no matter how it is configured, is a key element of any organization. However, we have found it is common for incentive plans not be aligned with the business strategy. The above, in many cases, can cause: friction between the sales force and Management, loss of potential sales, neglect of physical or virtual sales territories, penetration of competition, among others.

At Thomas More Management Consulting we have more than 20 years of experience creating successful Sales Compensation plans. The plans, tailored in each case, in multiple countries and sectors, seek to optimize the sales force and boost it to its full potential.

Our DNA of Sales Compensation© works in five blocks the necessary elements to configure the plans with a wide level of detail:

Alignment: this first block seeks a correct adjustment between the business strategy and the plans of the organization. The sales incentive plans must reinforce all behavior in the sense that they indicate, as well as, on the contrary, not do it with those behaviors that do not support them. For that, we examine the strategic and operational plans of the organization and carry out a design in accordance with them. Additionally, we analyze the sales roles: what function each member or groups of members of the sales force fulfill and we draw up plans for those roles. Finally, we select the indicators that are neuralgic correlated with the two previous sections.

Technical Design: once the general design has been verified, the technical design aims to define each element of the plans in a greater level of detail. For this, the payment system is examined, selecting the one that best fits for a correct addressing of the desired results. Pay mix is carefully chosen for each role and position, both horizontally and vertically. The formulas are designed for each case and desired behavior, and finally the sale is defined or when the payment is due

Technical Design-Measures of performance: Verified the general aspects of Technical Design, we enter the configuration of the tables, which pursue the establishment of the correct stimuli to optimize the results, combining the four fundamental measures: threshold, achivement, over-achivement and achivement in advance. For each position and role, specific combinations are selected depending on the case.

External Competitiveness and Internal Equity: these two elements, present in any compensation analysis, are part of the studies for the available information. Thus, for example, in terms of equity, the territories and the possibilities of achieving goals that allow an adequate balance of the sales force are examined, according to the needs of the case. 

Governance: in general, there are two major categories of issues in the incentive plans: the design and government plans of the sales plan. Design issues are those that correspond to the previous sections mentioned. But the ongoing management of sales incentive plans is a vital aspect for the control of the process and its results. Thus, each document-incentive plan includes all the conceptual elements, payment formulas and achievements, tables, indicators with their descriptions, eligible jobs, payment tables, performance measures, general rules of administration and transfer, among others. Thomas More Management Consulting can also participate in quota allocation processes, a topic that is usually key to governments' incentive plans, as well as in the assignment of control indicators for plans that aim at their effectiveness.

The Total Compensation Assessment encompasses a complete review of all aspects that comprise the scope of Compensation of an organization. These are some of the most relevant aspects of this environment:

I. Compensation Policies

It includes the revision and / or modification / creation of the current payment policies, both in positioning at the market level (p50, p75, mix, others) and in temporality (lead-lag 6-6, catch-up 3x) and others. In essence, the policies must be aligned with the strategic and business plan of the organization, sufficiently documented and with adequate follow-up, in such a way that sufficient and reasonable assurance can be offered that these policies, approved by the shareholders, are met. Also, the definition of such policies, in appropriate combination with market information, provides the desired positioning.

II. Internal Equity: Vertical and Horizontal

Internal equity refers to the differences between employees' compensation. Unlike external competitiveness or comparison with the reference market, it is related to comparisons between one employee (s) and another (s). Its basic pillars are the Job valuation and Performance evaluation.

On other hand internal equity has two aspects: vertical and horizontal. Vertical internal equity refers to whether the desired positioning of the high levels of the organization vs the low levels of the same is met, while horizontal equity refers to the differences between the remunerations among employees of the same level of charge assessment, either by performance evaluation and / or other components.

The result is expressed in quantitative indicators of adequate follow-up that allow to verify in time if progress is being made in this matter or if, on the contrary, it is stagnating or falling back.

III. Payment vs Results alignment

Is the level of payment of your organization correlated with the results obtained? To what level? This part of Total Compensation Evaluation has to do with the exploration and review of the incentive plans of the organization and its adequate adjustment to the strategies and policies of the company. As such, it involves in a classic case the revision of all systems of incentive plans (sales, executive, production, services, others) as well as the adjustment of design and governance to organizational requirements.
To obtain an adequate diagnosis, plans alignment to the organization is reviewed, the design of the roles in the corresponding plans, the associated indicators in each of said plans, the design of the pay mix, the type of system used, orientation in the short and medium-long term, performance measures used, among others.

At the government level of the plans, the control and monitoring systems are examined, the documentation and control over the plans and payments, the system of allocation and modification of quotas and goals, the communication of the incentive plans, the level of satisfaction with the same, among others.

At TMC, we provide suggestions for improving the plans in those areas where necessary and contributing to the redesign of the plans.

IV. Total Rewards and management of intangibles

Total Rewards consists not only in considering the tangible / financial compensation (salary, bonuses, benefits), but also in valuing any intangible element such as work-life balance, development and taste for the work that is done, among many others.

Total Reward reviews tend to optimize costs since they detect and contrast the tangible and intangible currently offered by the organization vs. the relative preferences of employees / collaborators or exchange preferences.

Likewise, Total Reward reviews contrast the tools used by the organization vs those that indicate the relative preferences, opening the analysis to the redistribution / optimization of costs with greater satisfaction on the part of the collaborators.

In the section on TOTAL REWARD AND TALENT RETENTION, you can see the pioneering mechanisms of TMC in the measurement of Total Rewards, as well as the adequate use of intangibles.

Since its foundation, at Thomas More Management Consulting (TMC) we have worked on Executive Compensation, serving a diversity of clients in almost all continents. We have drawn up plans for both local companies and organizations with a regional and global presence. In TMC, each case is unique and each design is tailored.

The creation of incentive plans at the executive level, an area in which we have extensive experience, is a diligent process that goes through several stages, some of which we summarize below:

I. Understand the organization, its strategic and operational plan

The first step is to understand the particularities of the organization. What are your goals? What is your strategic plan? What is your operational plan? How is your organization? How is your culture? What experiences have you had with incentive plans? The goals and the way you want to obtain them tend to unique plans. Thus, the subsequent design is, consequently, unique in its concept, design, formulas, performance measures, among others.

II. General design

The second stage has to do with the configuration of the incentive design. As executives are expected to have power in their organization, the combination of certain attributes is essential to configure sustainable plans over time: Short term, medium term or both? Common / non-common objectives and / or common or differentiated weights? Corporate and / or group and / or individual? Goalsharing, gainsharing or both? Which should be the pay mix? The combination of these design aspects gives the plan a unique feature with different impacts on the behavior of the executives and managers of the organization and in general on the eligible population of incentive plans.

III. Performance measures

The third major stage consists of the preparation of the payment tables. This is an aspect that, combined with the results of the previous stages, has important impacts on the behavior of those involved. In general, the incentives are Threshold, Achievement, Over-achievement and achievement in advance. At TMC we work with more than 50 combinations of these four performance measures and select the right for each organization. Each selected combination seeks to optimize performance, which encourages the achievement of superior results, obtainable before the expected time.

IV. Finance and simulations of the plans

One of the most important aspects, from the point of view of alignment, is the multiple simulation of the predesigned plans and their comparison with their funding. At TMC we simulate the payment of incentive plans in different scenarios and compare them with financial results. The models we use allow us to preview the results. The purpose, among others, is to produce the highest degree of "correlation" between the results and the payment granted, and to examine the financial viability of the designed incentives.

V. Governance

An incentive plan has, in general, two sources of success: right design and right governance. Once the design is complete, TMC can help you configure the control structure and follow up plans. This includes the configuration of the documents of these and their corresponding formalization, the mechanism of allocation of goals / quotas, and their possible variations, if applicable, throughout the period of application of the plan, the mechanisms of exception and transition rules, among others.

VI. Communication

Communicating incentive plans is a regular stage of these. As part of the plan's sales process, TMC can configure the appropriate audiences, select the appropriate messages for each of them and the emotional processes involved. Likewise, define media and mechanisms of transmission and consultation, as well as feedback of the plans.