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