Term Paper

Of
Human Resource Management
On
The need for maintaining Transparency
in Remuneration to Employees: A
review on the need and effectiveness

Submitted To:
Submitted by:

LOVELY PROFESSIONAL UNIVERSITY

 2008-10

Introduction

The 1980’s business culture in the USA and internationally put

a considerable emphasis on personal reward on the basis that
highly motivated individuals could transform organisations and
societies. The extreme example in film was Gordon Gekko in
Wall Street stating that greed was good. The 90’s, however,
have seen companies traumatised and bankrupted by the
inappropriate use of remuneration as a motivator. Yet major
corporate successes have been built on reward based
remuneration systems. Phones4U recently and Allied Dunbar in
the financial services market is an earlier example.

The notorious Barings Bank had individual traders on bonuses

in the millions yet in the long term these motivated individuals
were not fulfilling the company’s objectives. Moreover even
when an individual’s reward system is based on entirely
appropriate performance indicators, resulting in the
organisation’s success and he or she is rewarded, there may
still be problems arising from the large differential between
salaries of senior people and those of middle management. A
payment system that depresses or demotivates 10 people for
everyone it motivates may not be the best for the organisation.

Wise organisations are therefore trying to reward and motivate

all staff so that staff act energetically to further the
corporation’s interests both short and long term and feel they
have been treated fairly. However there must be properly in
place the link between the items on which they are being
rewarded and the actions they are able to take to influence the
desired outcome.

A wise organisation accepts that:

• It is reasonable for the individual manager to act in his or her

own interests.
• Managers work for people not organisations and want to
please the superiors closest to them, or failing that, their peer
group.
• Managers want to achieve and will be attracted to those tasks
at which they know they can succeed, usually favouring the
short term at the expense of the long term.

The clear implication is that an organisation should lay some

groundwork before relying on a remuneration structure to
change performance and behaviour. In other words the
management and organisation system must be in balance with
the remuneration system.

There are 5 major pre-conditions to the installation of an

effective reward structure.

1. Measurement: “If you don’t measure it you won’t get it”.

There are various measurement systems of which Balanced
Scorecard, which sets multiple objectives and is used by Tesco,
is perhaps the best known.

2. Monitoring: If the performance measures are not monitored

properly or only monitored in a review at the year end, it can
give the manager signals that they don’t really matter or,
worse still, that failure is acceptable providing all the managers
fail together.

3. Control of the tools for the job: The organisation must ensure
that the individual is not over dependent on factors outside his
control to achieve the performance measures set out (this is
the ‘how’ part of the equation).

4. Consistency: Ensuring that short term organisational factors

don’t over-influence managers or drive them from their real
objective. The organisation must also ensure that its own
design (be it bureaucratic or loose) is appropriate to what is
being asked of managers.

5. Reward and strategy in line: An organisation’s achieving a

clear strategy is not an event that will take place in the future;
it is a journey. A remuneration system can be put into an
organisation even when it has a relatively muddled strategy
providing that organisational and management disputes are
resolved by reference to strategy and the “balanced score
card”. Only then will there be pressure on the organisation to
refine its strategy, structure and remuneration systems.

Based on these 5 pre conditions, there is a checklist of 10

factors that the effective remuneration and reward structure
must achieve:

1. Support the business strategy

2. Encourage the desired behaviour
3. Reward relevant performance
4. Be fair
5. Be substantial
6. Be tax efficient
7. Be timely (The reward must take place close to the
achievement)
8. Incorporate non financial rewards (Recognition can be as
important as cash)
9. Be firm (A bonus lost through missing target should not be
recoverable whereas a salary increase should only be delayed
until target is reached)
10. Be crystal clear or it must maintain transparency.

At first we need to understand that, actually what remuneration

means

Meaning of Remuneration :
Remuneration is the compensation an employee receives in
return for his or her contribution to the organisation.
Remuneration occupies an important place in the life of an
employee. His or her standard of living, status in the society,
motivation, loyalty and productivity depend upon the
remuneration he or she receives. For the employer too,
employee remuneration is significant because of its
contribution to the cost of production. Besides, many battles
are fought between the employer and employees on issues
relating to wages or bonus. For HRM too, employee
remuneration is a major function.
Components of Remuneration
 Wages and salary : Wages represent hourly rates of pay ,
and salary refers to the monthly rate of pay, irrespective
of the number of hours put in by an employee. They
dif`fer from employee to employee, and depend upon the
nature of job, seniority and merit.
 Incentives : Incentives are paid in addition to wages and
salaries. Incentives depend upon productivity, sales, profit
or cost reduction efforts. There are (i) individual incentive
schemes and (ii) group incentive programmes.
 Fringe benefits : These include such employee benefits as
provident fund, gratuity, medical care, hospitalization,
accident relief, health and group insurance, canteen,
recreation and the like.
 Perquisites: These are allowed to executives and include
company car, club membership, paid holidays, stock
option plans and the like. Perquistes are offered to retain
competent executives.
 Non monetary Benefits: These include challenging job
responsibilities, recognition of merit, growth prospects,
competent supervision, job sharing and flexitime.

Effective remuneration
Effective remuneration is a vital element of HR policy in any
organisation. Effective denotes competitive in relation to other
employers, cost-effective for organisation and attractive for
employees.
 Salary surveys are reliable source of information about
remuneration packages offered for comparable jobs. HRK
PARTNERS presents data in relation to the country, regions and
sectors. Upon request, we generate special surveys related to
selected, competitive employers groups. We co-operate with
Towers Perrin a well-known consulting organisation, therefore,
we are able to offer international salary surveys and surveys
specially designed for top management. Our surveys include
data about both base and variable pay as well as fringe
benefits. Survey participants have access to computer version
of the report. Therefore, they are able to conduct additional
analyses and simulation. We ensure data confidentiality. The
method of data presentation guarantees that survey
participants shall remain anonymous.

Pay competitiveness analysis relates pay packages offered for

a particular job with the market level of pay. For each analysed
job an adequate comparable sample is selected. The sample
takes into account all relevant for an organisation data such as:
a sector, a region, company size, a form of ownership,
demographic data etc.. The analysis shows the competitive pay
level for separate jobs and ensures that the pay remains cost-
effective. It also helps to develop new efficient pay policy.

Developing effective remuneration systems

 Remuneration system should attract, retain and motivate
employees and at the same time support implementation of
company's strategic objectives and enforce its organisational
culture. Remuneration systems offered by HRK PARTNERS
include base and variable pay (commission, bonuses, awards)
as well as fringe benefits. The starting point for the system
development is always job evaluation, which helps to identify
the relative importance of particular jobs in an organisation.
HRK PARTNERS selects evaluation methods in compliance with
requirements and conditions according to which a given
organisation operates. Data from salary surveys ensure that
the level of pay in the systems developed by us are competitive
to the market level of pay

All-round remuneration policy

A fair and transparent remuneration policy makes the employer

attractive to staff who are committed, have an
entrepreneurial mindset, and are able to work on their
own initiative. The fact that we are constantly revising and
updating our all-round remuneration system is a key
factor in the Munich Re Group’s successful value-based
management.

A sound basic salary and a variable component are based on

the personal performance of our employees and the success we
jointly achieve. All of our internal remuneration systems have
to be fair, transparent and flexible for, along with other factors
in our HR policy, they are designed to motivate our staff and
help them identify with the company.

Globalisation fuels worldwide competition among companies for

the best minds and obliges us to observe international
remuneration trends – such as stock options – and integrate
them in our system.

The need for maintaining transparency in

remuneration of employees
If your people are standing around talking about remuneration,
you've probably got it wrong. While remuneration is a key part
of working it really shouldn't become a major talking
point.Getting remuneration is an important part of managing
people but, like issues such as safety and a pleasant work
environment, it normally only gets attention when its not
working. If these factors are taken care of people can then
concentrate on the real job.While we would all like more pay,
most people are satisfied if they think their pay is fair. There
are a number of aspects to this and they all need to be
addressed.

 Internal Relativities
Pay needs to be perceived as fair relative to others in the
organization. They understand that different jobs get paid
at different levels but they want to see some equity when
it comes to rewarding jobs of similar worth to the
business. While some businesses and industries pay more
than others, and people generally accept this, they want
some sort of consistency within their own organization.
 External Relativities
This is where people look outside the business and
compare jobs. Again, they recognise that there are
differences but they will look at what they may be able to
earn in another organization. So while an accountant in a
not for profit organization may realise that the oil industry
is going to pay more, she may weigh up the demands of
each job and decide the differential is too much. Having a
good knowledge of the market is necessary to establish
the right level for each type of job.
 Performance Based
People like to be rewarded for their efforts, so giving the
same pay increase for everyone can be very demotivating.
The concept of providing an automatic increase every
year based on the cost of living may be done with good
intentions but if nothing else is done about performance
issues, good and bad, it will quickly lead to a culture of
mediocrity. Your performance management system needs
to be carefully linked to your pay system.
 Fair and Equitable
The whole process needs to be transparent so people
realise it is based on objective decisions. This way,
 although they may want more money they at least accept
that there is a process and it is not based on favouritism
or unreasonable prejudices. Communications to all staff on
a regular basis is the key to this – especially when there
are salary increases provided. They should know on what
basis their salary has been increased, or not, as the case
may be.
 Consistent Administration
To achieve all the above you will need a system that can
be consistently applied. While salary administration is not
an exact science, the system should be objective and any
deviation from it should be only for well considered
reasons. Any recommendations for salary changes should
be based on a reasoned decision taking into account all
the elements discussed above.Once you have all of this in
place, you can move on to doing what your business does
best rather than getting into arguments about pay.

“Levels of remuneration should be sufficient to attract, retain

and motivate directors of the quality required to run the
company successfully, but a company should avoid paying
more than is necessary for the purpose. A significant proportion
of executive directors’ remuneration should estructured so as
to link rewards to corporate and individual performance”Higgs
Review (2003).In recent years investors have become more
active in challenging remuneration packages. 2002 was a
significant year for UK shareholders who successfully
persuaded major companies such as Vodafone and
GlaxoSmithKline to withdraw or amend share scheme
proposals.Directors’ pay continues to concern shareholders,
though a lack of transparency in remuneration can make it
difficult for shareholders to hold companies accountable. EIRIS
has analysed remuneration disclosure, where disclosure is
defined as disclosure of the CEO’s salary, or the salaries of all
directors individually or as a whole. The quality of disclosure,
e.g.full details of salary, bonuses and share options is not taken
into account here. Most countries have a relatively high level of
disclosure at this definition. In many cases this is because it is
required by national legislation or stock exchange listing
requirements. Countries without such requirements perform
noticeably worse. Greece and Japan are clearly the laggards
with 58% and 44% disclosure respectively.
Examining the proposals for remuneration under this principle
involves two issues. First, how should companies remunerate
‘fairly and responsibly’? This is reflected in the five main
recommendations of the Council. Accordingly, achieving best
practice involves the need to:

• Provide disclosure in relation to the company’s

remuneration policies to enable investors to understand
(i) the costs and benefits of those principles and (ii) the
link between remuneration paid to directors and key
executives and corporate performance;
• Establish a remuneration committee;
• Clearly distinguish the structure of non-executive
directors’ remuneration from that of executives;
• Ensure that payment of equity-based executive
remuneration is made in accordance with thresholds set
in plans approved by shareholders; and

Following these recommendations, the second issue focuses on

their effectiveness.

A Company’s remuneration practices may be defined in relation

to both their process and outcome. ‘Process’ involves how
remuneration is determined while the ‘outcome’ is the result of
this process. The idea of ‘fair and responsible’ remuneration
closely looks at these two key stages. It essentially aims for an
objective remuneration process which is critical to establishing
remuneration amounts that are sufficient and reasonable. As
the Council suggests, this principle is driven by two key
remuneration policies that companies need to adopt.
Fundamentally, these policies should be adequately directed to
attracting and retaining talented and motivated individuals who
can successfully manage the company. According to the
Greenbury Committee in the UK companies should avoid paying
more than is necessary for this purpose. In addition, the
remuneration policies of the company should clearly define the
relationship between performance and remuneration. This
represents efforts to align the interests of managers and
shareholders by linking pay to performance.

These two policies, articulated by the Council, form the basis

upon which the remuneration process and outcome should be
influenced. With this in mind, the Council gives support to the
idea of ‘full disclosure’ that is consistent with the
recommendation of the Greenbury Report. This provides for a
greater level of transparency, enabling shareholders to
effectively assess the extent to which the process and outcome
of remuneration conform to the remuneration policies of the
company. Full disclosure more importantly underlies the
overriding principles of accountability and openness with
respect to directors’ and executives’ remuneration. However
the nature of disclosure in this context gives emphasis not only
to content but also to its form. That is, disclosure that yields
informative value.

Review of the Remuneration Structure

(1) Basic Concept and Necessity for Review

In private enterprises, a wage system has been established
wherein limited
personnel expenses are allocated appropriately, according to
employees’ work
contents and achievements. In public service as well, it is
essential to ensure
appropriate treatment that corresponds to duties,
responsibilities and performance,
and to build an effective remuneration system to enable
employees to work with
vigor, even with the limited financial resources available. There
is thus a need to
review the entire system in the following manner.

(i) Conversion to a remuneration system that

emphasizes occupational duties
and responsibilities and accurately reflects performance
In the current salary schedules, there is a large overlap
between grade levels, since
pay steps have been established to enable employees’ salaries
to reach a certain level
even if they are not promoted to upper grades of duties. It has
been pointed out that
this salary schedule structure, coupled with grade increases
which assign importance
to the recruitment year, is leading to remuneration increases
based on seniority.
It has also been pointed out that most employees receive a
Regular Step Increase,
which means that the system operates much like a periodic
step increase. Because
the appraisal system has not functioned adequately, as well as
for other reasons,
Special Step Increases and Diligence Allowances have been
given in rotation. Thus
performance results are not necessarilysufficiently reflected in
remuneration.
Therefore, it is necessary to reduce the overlap between grade
levels and to
review the salary schedule structure, including restructuring
grade levels and
flattening the salary curve, so that differences in duties and
responsibilities can be
reflected in remuneration. There is also a need to review the
remuneration system to
ensure that it reflects performance more appropriately, by
integrating the Regular
Step Increase and Special Step Increase to form an
assessment-based step increase,
which would allow the step increase amount to be subtly
differentiated according to
performance.

(ii) Development of an environment in which an

incumbent period can be
prolonged
In response to harsh public criticism of the so-called “golden
parachute” (senior
officials obtaining executive posts in private corporations after
their early
retirement), which occurs as a result of the practice of early
retirement by senior
officials, the government as a whole is striving to correct the
practice of early
retirement and to prolong the incumbent period.
As a part of these efforts, there is a need to consider reviewing
the salary curve in
order to bring salaries of older officials into line with those of
older employees in the
private sector. In addition, it is also necessary to consider
developing a framework
for the treatment of staff employees to secure highly
specialized personnel in the
public sector, in order to contribute to multiple-track personnel
management.

(iii) Realization of proper inter-regional allocation of

remuneration
The current salary schedule level of public employees has been
set based on the
difference in average national remuneration between the public
and private sectors,
including the high wages in the private sector found in places
such as the special
wards of Tokyo. This means that salary schedule levels based
on the national
average are guaranteed even for areas where wages in the
private sector are low.
This has not only spurred criticism that remuneration of public
employees might be
high, but has also caused the problem of remuneration levels of
public employees in
urban areas falling below those of employees in the private
sector.
Given these circumstances, it is necessary to lower basic salary
levels to
accurately reflect in the remuneration of public employees each
area’s wage levels in
the private sector, and to strive to realize proper inter-regional
allocation by paying
newallowances in areas where wages in the private sector are
high.

(2) Specific Items for Consideration

Based on the concepts outlined above, the NPA reported on the
following
challenges to consider with regard to a basic review of the
remuneration structure at
the time the Remuneration Recommendation for FY2004 was
made.

1. Lower the overall level of the Salary Schedules and

realize proper remuneration
adjustment according to the area
Lower the level of the common national Salary Schedule, taking
into account the
Remuneration difference between the public and private
sectors in areas where the
wages in the private sector are low.
To supplement the salary level and equalize wages in the
private sector in each area,
an Area Allowance (provisional name), with an upper limit of
approximately 20%
of salaries, etc., will be newly established to replace the current
City Allowance.
To facilitate transfers, a Transfer Allowance (provisional name)
shall be newly
established, in which payments will be given to compensate for
the transferee’s
mental and economic burden.
2. Issues related to salaries
In order to treat specialists as staff employees and to introduce
multiple-track
personnel management that would allow for the prolongation of
an incumbent
period, the Specialized Staff Salary Schedule (provisional
name), composed of only
three or so grades, will be newly established.
Restructure grade levels (newly establishand integrate grades)
and flatten the salary
curve to ensure that they better reflect duties and
responsibilities.
Clarify grade increase and grade decrease standards in view of
the development of a
new appraisal system.
In view of the development of a new appraisal system introduce
an
assessment-based step increase which determines step
increases based on an
evaluation of the employee’s performance every year, in place
of the current
Regular Step Increase and Special Step Increase. In addition,
abolish the
outside-step increase.
3. Issues related to allowances
Enlarge reflection of performance in the Diligence Allowance in
view of the
development of a new appraisal system. In a similar vein, also
enlarge reflection of
performance in the End-of-Term Allowance for Designated
Services.
Newly establish the Headquarters Allowance (provisional
name), taking into
account the distinctiveness and hardship of duties and the
need for recruitment of
the headquarters.Change the payment of the Managerial
Allowance to a fixed-amount system to ensure that it clearly
evaluates the degree of difficulty of managerial and
supervisorytasks of managerial employees

SKILL BASED PAY

Skills based pay links remuneration employees to the nature,
number and levels of different skills and knowledge employees
possess and/or use.
Skill based pay relies on clear definitions of discrete units of
work (‘competencies’). Each distinct competency an employee
possesses adds to their capacity to perform the range of tasks
or duties required of them by their employer or to perform
different or more demanding and responsible roles. An
employee is remunerated according to one of three main
choices available in applying skill based pay.

PERFORMANCE BASED PAY

Performance based pay is aligned to outputs and achievement
of predetermined outcomes. From a performance point of view
the key measurement indicators include

(a) Achievement of goals

Financial e.g savings through efficiency in terms of

improved systems and process Physical e.g, achievement of
work programme objectives
 (b) Effectiveness -

Doing the right things

(c) Efficiency -

Doing things right

(d) Improved productivity -

Doing more with less

(e) Innovation -

Doing new things

A key issue created by this trend is the need to improve

measurement of skills and performance at both the business
process and people levels. There is a clear synergy between
the EVA trend and the existing requirement for both skill and
performance based remuneration system(s) to be supported by
clear measures of process and skills.

By definition, an organisation is a performance framework. Non

performing organisations will fail, either financially or, in
government and non profit service environments, as a result of
the choices made. Whatever approach is taken therefore must
recognise the ultimate truths of economic survival. This means
that remuneration systems must be linked to the company’s
capacity to make and pay for change.

Defining the best approach to remuneration therefore requires

that organisations define their business and its components
clearly, so as to understand the nature of the work undertaken
and the type of measures that best reflect excellent
performance for each component.

Ultimately the best approach is one where;

(a) people are motivated to behave consistently with the

vision of the company
 (b) people are rewarded for their achievements and
motivated to improve in the

future, and

(c) value generated by employees outweighs the cost of

employing them.

The key requirements of any system herefore are:

(a) it must reinforce the desired vision and culture of the

organisation and

(b) differences must be able to be distinguished between

levels of skill and performance, and

(c) business processes can be measured to provide

accurate assessments of added value to the shareholder.

As a general guide consider the following broad options.

Type of Functional* Process* Time-based* Network*

organisa
tion e.g. e.g. e.g. project
ministry consulting work
Unit of • Position • Mission • Role • Charter
work
• Task • Outputs • Outcome • Outcome
s s

Typical Tight Ranges Fairly tight Wide Ranges Very wide

Base Ranges Ranges
Remune
ration

Typical Based on Based on Based on Based on

Progres market achievement value of value of
s in movement of outputs contribution outcomes
Range and and market to value of
sustained movement outcomes
performance.
%
Eligible Few Most Many Few
for

Incentiv
es
Performance
Possible Skills based Performance Performance based
system pay based based

How is an effective remuneration scheme built?

There are three key steps involved in structuring (or
restructuring) an effective approach to remuneration

1. Analysis

Analyse the business and its key processes. Key

questions to address at the analytical stage include:

(a) What kind of organisation are you?

- Govt.?

- Private?

(b) What is the orientation of your business(es)?

- Functional?

- Process?

- Time?

- Network?

- Product?

- Service?

(c) What different processes exist within the

business?
 (d) What are the measures of your success, or
otherwise?

(e) What issues or constraints impact on your ability

to meet these measures of success?

(f) What is the vision or touchstone you apply to

create the behaviour and culture necessary required to
meet your definition of success?

(g) What systems are in place to measure your

progress?

(h) Does your current remuneration system

reinforce the behaviours and outcomes you seek for the
business?

(i) Do you have a plan for change?

2. Benchmarking

Having defined the business and its processes, look for

other organisations with comparable structures and/or
processes. A number of the larger consulting firms now
promote world wide benchmarking surveys of best practice so
it is now possible to conduct this research without undue
delay. It will not always be possible to find a direct match,
however you will find it possible to gain a large number of
useful ideas without the often prohibitive costs of time,
resources, cash and credibility of having to test your own
thinking from scratch. Remember, how remuneration is
managed is one of the single biggest factors in the satisfaction
of employees.

3. Implementation

Installation of a new approach ideally should take place in a

clearly defined timeframe. Once again, uncertainty of the
process by which pay is managed creates unnecessary
uncertainty for employees.
Social benefits – Expression of a corporate culture
marked by respect

The social benefits we offer have a monetary value and make

up part of employees’ individual overall remuneration. They are
a solid and important component of our remuneration system
that motivates our employees and reflects a corporate culture
characterised by partnership and sustainability.

Small Business - 5 Steps to Fix Poor Staff Performance Without

Counseling Or Training

1. Reconsider Expectations

What do you expect of the employee? Have you explained your

expectations clearly and concisely? Does the employee know
exactly what you expect? How can you be sure? Has technical,
organizational or structural change altered your expectations?
Is the employee aware of your revised expectations? What does
the employee expect from you?

2. Review Your Systems

Remember, the key to successful people management is to put

systems in place that make it impossible for employees to fail.
Do your systems meet this standard? When did you last review
and revise your systems to reflect current performance
standards and market conditions? Do you demand rigid
adherence to processes and procedures that impair the
effectiveness of your systems?

3. Examine Remuneration and Bonuses

Do you reward outstanding performance so that the best

performers get the most reward? Are your remuneration and
bonuses transparent or secretive? Can "clever" employees
"fudge" your reward systems to gain bonuses that rightfully
belong to their colleagues. Do "support staff" participate in
bonus and incentive schemes?

4. Check Performance Emphasis

You probably proclaim that "performance is what really
matters" or something similar. But do your day to day words
and actions support your proclamation. Do you overemphasise
trivial detail of the expense of overall performance? Do you find
yourself complaining about "attitude" when you should be
demanding results? Do you openly celebrate achievement,
results and performance?

5. Trust Your employees

In a nutshell, you'll get what your employees think you want.

Do you encourage them to constantly improve systems and
reward them when they do so successfully? Do you authorize
them to act first and seek permission second to fix a pressing
problem that needs prompt action? Do you constantly
emphasise, honestly and sincerely, their commitment and
success?

Conclusion

When you've done all these things, have a chat to the

employee in question. You may find that you need his or her
advice more than he or she needs yours. If genuine personal
problems are interfering with their work try to find mutually
agreeable solutions. But stick to your performance "guns".
You're not a professional counsellor. If the employee needs
professional help, use a professional.

Always remember: never give an inferior performer preferential

treatment. If you do you're inviting all his or her colleagues to
seek the same reward using the same methods.

EMPLOYEE REMUNERATION OPTIONS

PURPOSE:
To define remuneration practices and options applicable to
employees. The intent of this
policy is to provide transparency in the make-up of existing
package entitlements and to offer additional choices to
employees
POLICY FRAMEWORK:
PCQ offers a range of non-cash remuneration options. This
policy lists which options are
available and how to determine the cash equivalent. PCQ, in
setting the cash equivalent for non-cash remuneration options,
ensures that PCQ’s total costs for each employee remain
constant. The options are provided to employees as non-cash
remuneration may be more attractive to the individual
employee. Certain items are supplied as Corporation facilities
or equipment to assist in job performance. These are not
incorporated as a component of an employee’s remuneration
Generally, there is an obligation on the employee to reimburse
for any private use of these tools and facilities.
APPLICATION:
This policy applies to all Ports Corporation employees whether
covered by the award,
appointed by letter of engagement or by other contractual
arrangement.

SALARY OPTIONS
Any option taken by an employee, however configured, is not to
increase costs to PCQ. If,
on calculation of the costs to PCQ, any election by an employee
under this section is not cost
neutral to PCQ, that election option of the employee is not
available or must be restructured
to ensure it will be cost neutral to PCQ. Options are intended to
allow employees some
scope in improving the value of their package to them. This
provides PCQ with the benefits
that flow from being able to offer attractive packages at no
extra cost.

CARS
Novated Lease or Other Arrangement
PCQ will consider novated lease or other vehicle supply
arrangements for any employee.
PCQ will allow more than one vehicle to be supplied to any
employee. Due to public
perception, PCQ will not enter arrangements for certain types
of vehicles at its discretion.
The CEO will only permit PCQ entering into novated lease or
alternate arrangements where
there is minimal or no liability attaching to PCQ should the
employee terminate employment for whatever reason
(including death).
Under such arrangements, PCQ would provide the payments
related to leasing
arrangements entered into by the employee. Actual lease,
petrol and ancillary payments and
any fringe benefits tax are to be fully met by reduction in salary
payments.

ENTITLEMENTS NOT CONSIDERED PART OF

REMUNERATION
Any contractual arrangements between PCQ and an individual
employee may deal with any
or all of the matters in this section in which case the
contractual arrangements override the
policy.

FLIGHT CLUB AND FREQUENT FLYER MEMBERSHIPS

PCQ will fund flight club and frequent flyer memberships where
such membership is
approved by the CEO in accordance with the Travel Policy.

MOBILE PHONES
PCQ issues mobile phones for short term or longer use by
Corporation employees.The
purpose is to assist in communication with the employee for
business purposes.

CAR PARKING
Certain senior employees have been provided with car parking
spaces in or near PCQ’s
premises at no cost to the employee. It is a condition of
acceptance of a car parking space
that the employee will not claim from PCQ for business use of
their own car within the local area (which includes the Brisbane
airport).
The Chief Executive Officer may vary who is entitled to be
provided with a Corporation
supplied parking space. The Chief Executive Officer will
determine which Senior Executives
will be provided with a PCQ supplied parking space on the basis
of the demonstrated
benefits to PCQ of doing so.
The Chief Executive Officer must give one month’s notice to
any employee who has been
provided with a car parking space that the entitlement is to be
withdrawn.

CORPORATE PROGRAMS FOR EMPLOYEES :These

programs are available to both award and contract employees
as per the ‘Corporate
Program for Employees policy. These programs are provided as
additional entitlement and
thus are not to be offset from an employee’s remuneration
total.

PROFESSIONAL MEMBERSHIPS
There is no substantial benefit for the employee if PCQ provides
professional memberships
as a salary sacrifice and deducts the FBT, if applicable, from the
employee.
However, where PCQ may benefit from information from
organisations and a corporate
membership is either not available or uneconomic, the Chief
Executive Officer may authorise
PCQ’s funding of a personal membership. In these
circumstances, the value of the payment
will not be offset against the employee’s remuneration total,
and any information and
materials supplied become the property of PCQ.

CLUB MEMBERSHIP
PCQ may fund club memberships for senior employees where
PCQ perceives value to its
business activities from that employee's ability to utilise those
club facilities. Private use of
the club membership is permitted but will always be treated as
the employee's personal
liability and not a corporate liability. PCQ will bear the full costs
of membership and a
contribution related to personal use of the membership will not
be required.

LAPTOP COMPUTERS
Where an employee identifies a personal requirement for use of
a laptop computer, the CEO
may approve the provision of the benefit on a full salary
sacrifice basis.

INDEPENDENT ADVICE
Before entering remuneration options,employees are required
to provide a disclaimer to
PCQ that they have taken their own advice in relation to the
financial and other effects of the selected option. As this
approach expands, the firm must shift the emphasis of its
recognition programs from individual to team rewards. Even
individual rewards should acknowledge people who are
effective team players, freely sharing their expertise. The
fairest compensation approach gets away from a star system
that rewards only the individuals who stand out from the crowd;
it also rewards those individuals who help the crowd perform
better. An employee compensation and benefit statement is a
great communication tool that any company can and should
use. An effective compensation and benefit statement provides
the employee with timely, important, and relevant information.
It can improve employee morale, retain existing employees, aid
in recruiting new employees, and it can be a true "value-add"
to an organization.

EQUAL PAY FOR EQUAL WORK

Workers with similar qualifications doing similar jobs at a

company should receive equal pay. This seems fair enough. In
the real world, though, that's not always what happens, which
is why there needs to be a reasonable way for employees to
seek redress for pay discrimination. There are a lot of variables
that go into employees' compensation, including the amount of
responsibility they have, how hard they work, whether they
initiate ideas, are team players, are punctual, have special
skills, etc.

EMPLOYEE ASSISTANCE PROGRAMS

According to Carol Wilson, Senior Vice President, Customer
Relations, for Waukesha-based NEAS Inc., employee assistance
programs are a good way for employers to bridge that gap. "If
you have good employees, you should be investing in them,"
rfays Wilson. "At any given time, it's estimated that 10% of
your workforce is likely to be distracted by some sort of
personal issue." EAPs actually began as informal programs
within the union environment to assist employees dealing with
alcoholism and other related issues. By the 1980s, with the
implementation of the federal mandate for drug-free
workplaces, EAPs became more formal and structured. Now,
the range of services provided by EAPs only begins with
substance abuse. Wilson says that, at least among NEAS's book
of business, substance abuse issues only account for 4% of
contact, while 37% of employee contacts are for mental health
issues. "It's not that substance abuse issues have decreased,
but rather it's that so many other areas are now being
addressed," she says. "We help employees with financial
issues, legal issues, even occupational issues, such as work
conflicts." If you don't think your employees can benefit from
such services, consider a typical scenario. If an employee is
dealing with a serious issue - problems with a truant teen, an
impending foreclosure or even a minor legal problem when is
that employee most likely attempting to solve it? On break,
during lunch, or even during the workday while on the clock.
"These are typically not issues that an employee can try and
solve after work," says Wilson. "Professionals like bankers and
lawyers work during the day." And it's rarely a good idea for
you, as the employet, to step in and try to help. We're seeing
this now with the mortgage problem," says Wilson. "Some
employers want to help, but don't know how." But what
employers can do is provide a means of assistance, which is
why an EAP might be something to consider for the future if
you don't offer it now. "EAPs have gone from an era where they
were a nice, fluffy benefit to an evidence-based practice," says
Wilson. "There is a definite, quantifiable return on this
investment." Employees who have a good work-life balance,
who are able to manage stress and conflict and resolve any
personal issues, also spend less time away from work and less
time distracted while at work. Not every employee will utilize
an EAP; the more important benefit is to know that it is
available if your employees need it.
What makes a satisfied employee ?

Employees felt they had an opportunity every day to do what

they do best.

* They believed their opinion counted.

* They sensed that their co-workers were committed to quality.

* There was a direct connection of their work to the company's

mission statement.

Yes, it's true that people need to feel as if they are fairly
compensated; but actually, people want to feel like they are a
part of the company, that their ideas and suggestions are
important, and that they add value and help the company grow.

How To Improve Employee Satisfaction?

1. Measure your staff's level of satisfaction. A simple employee
survey can provide you with invaluable information. Structure
the survey to be as objective as possible.

Some suggestions for areas to solicit their feedback might

include:

Available benefits -- determine if they are aware of the benefits

you provide and ask them to rank each benefit's value. Don't
spend time and money on benefits that employees perceive as
having minimal value.

Training programs -- do they feel that the training provided is

adequate and provides them with the proper skills for their job
functions and additional opportunities?

Understanding company philosophy -- do they know your

corporate beliefs and values?

Professional standards -- do they understand what levels of

service you expect and the behaviors/actions that will
accomplish this?

Likes and dislikes -- give them the opportunity to tell you what
they like and dislike about your company.
Motivators -- ask them what would motivate them.

Most employees will give you honest feedback if they believe

there will be no backlash or a negative consequence. So allow
them to give you information freely, anonymously. Take this
information and use it as a means for improvement.

2. Facilitate a weekly or monthly brainstorming session.

Oftentimes the best source for new ideas comes from within.
Your employees see things every day that could be improved,
changed or done differently. Let their experiences and
observations become your funnel of knowledge.

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