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Optimum Remuneration
The optimum remuneration strategy has three elements:
- fixed remuneration (what you are paid to come to work);
- short-term variable remuneration (your profit share, incentives and bonuses); and
- long-term incentives (usually participation in the capital value of the organisation)
Fixed remuneration, or base pay, as it is also known, is commonly defined as the salary or the pay amount given to an employee for performing the daily duties of the defined job.
Short-term incentives – including annual incentives, bonuses, commissions and the like – reward the individual employee for achieving certain goals over a short period. The measurement period for short-term incentives is most often quarterly, semi-annually, or annually. Short-term incentives can be measured based on the individual’s own performance, group or team performance, or the companies overall performance. This depends on the organisation, the incentive plan, and the level of the individual within the organisational hierarchy.
Long-term incentives – including shares, restricted shares, share options, phantom shares, share replicators, participating units, and the like – measure organisation-wide performance, typically over several years. The intent of such plans is to provide incentives for employees to improve the overall performance of the organisation by linking the employees’ long-term rewards to the organisations long-term results.
Remuneration Strategies Group (RSG)
was selected by the Department of Employment and Workplace Relations
(DEWR), to provide models of employee incentive plans, share plans
and financial participation plans suitable for all types of
Australian employers.
RSG’s involvement is complete at this
stage. However, we believe that this initiative is one that will
have a significant impact on the productivity and satisfaction of
Australians at work, and hence on Australia’s international
competitiveness.
We are excited about the potential of
this project because of the support and encouragement it offers all
Australian organisations, particularly small and medium sized ones
who have implemented employee share plans and for those
organisations wishing to introduce employee share plans to their
workforce. This initiative remains important to those organisations,
which have the commitment to employee financial participation in all
its forms.
RSG is looking forward to working with
organisations of all types and sizes to achieve a shared goal of
successfully promoting and assisting them in achieving greater
success through employee financial participation.
“Employee ownership is world
changing. It is the way ahead for the UK in the global economy. It
reflects that human capital is becoming more important than physical
assets. A company is more and more defined by its skills. It relies
more on its creative energies. I am here to celebrate a great
achievement of employee ownership. The global economy will succeed
when employees feel a stake in the business.” Gordon
Brown MP Chancellor of the Exchequer October
2005
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