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Performance Reward should not impact on Base Salary

The performance pay should not influence the base salary at all; the old “job” evaluations used to confuse perceived performance with base salary increases through the old 85% to 115% model. This approach was fundamentally flawed for many reasons including; good performance in one year does not guarantee on going above and beyond normal performance in subsequent years and therefore bonus plus pay increase is double dipping. Also the concept of incremental increases certainly would not constitute equal pay for equal work.

Base Salary is calculated for the position say Position A = $95,754 and when there is an appointment made the individuals are assessed and valued (assessed if promoted internally and/or recruited externally). At the time of the appointments the organisation will know the individual value against the ideal designed position (contributing element of the structure). Say 2 appointments are made one might match the idea competence (Incumbent 1 to Position A) and get the $95,754 base while the other (Incumbent 2 to Position A) may not have all the competence (but had potential to develop) and they would be appointed at their assessed base salary of say $89,346. Note: the Letter of Offer should have contained the Learning and Development plan. Allowances, negotiated amounts etc are adjustments to the calculated base salary and should be dealt with as an additional line and not alter the base salary. In say 12 months you would re assess Incumbent 2 and they may now be fully competent and be entitled to the ideal base salary which is now $95,754 plus any market increases that has occurred.

Performance reward should be again set up using a quantitative, envelope process where the individual can be empowered to manage their [...]

Harvard Business Review LinkedIn Reduction of productivity in organizations

Improving Organisational Productivity

After a lot of comments in LinkedIN¬†on factors that effect productivity, at what we would call micro level relating to specific leadership/supervision and management practices (which is relevant), Maxumise felt it was time to elevate the issue to what we see as initially strategic, organisational and structure issues including defining the ideal contribution – 13th May 2014 Maxumise Consulting Pty Limited responded: At the macro level this is a strategic and organisational issue not an individual or even departmental issue. We find the biggest constraint on productivity is the lack of a well-defined structure including the definition of the “contributing elements” i.e. position descriptions. The definition of the position must include the Outcomes (not a shopping list of poorly defined activities or tasks); quantitative Performance Measures (which empowers the employee when we appoint them) and then we can define the outcome based competency (and attributes) needed to produce the outcome at the standard specified by the performance measures. Now we have a comprehensive specification to recruit against or assess the existing employees. A case study we undertook for a retail group which started with defining the positions in the outcome based competency approach and when we assessed the top 19 managers only 2 were competent but half had been recruited in last 3 years against a “gut feeling” of what they wanted, not a quantitative and definitive system – they put more effort into buying a photocopier than they did designing what they needed before recruiting a departmental manager reporting to the CEO. Yes the right structure and capabilities needed are dependent on a clear strategic direction and understanding of the corporate risk. The bottom-line is, if you do not have the [...]

Human Resources for Retail Sector

The retail sector must have competent human resources to provide results in a highly competitive environment.  Read more in our detailed PDF provided here:

Retail World Article June 2013 Maxumise HCM