Group 2 HUMAN RESOURCES MANAGEMENT Abdul Mukti Adrizal Yazid Alfredo Lesmana Alif Arif Wicaksono Belinda Larisa Sipota Desi Purnamasari Firman Ardiansyah Yusti Riyadini AGENDA 01 PERFORMANCE MANAGEMENT 04 02 EMPLOYEE BENEFITS MANAGING COMPENSATION 05 03 PAY FOR PERFORMANCE: INCENTIVE REWARDS STUDY CASE: SALESFORCE MANAGEMENT AT PT FINACCEL 01 PERFORMANCE MANAGEMENT Understanding about the purpose and methodology OBJECTIVES 1. The Definition of Performance Management 2. The Purposes of Performance Management 3. How To Conduct Performance Review Session 4. How To Improve Performance What is Performance Management? Definition of Performance Management The process of creating a work environment in which people can perform to the best of their abilities in order to meet a company’s goals. It is an entire work system that flows from a company’s goals. The Purposes of Performance Management Purpose of a Performance Management: - Developmental Purposes - Administrative Purposes Conducting The Performance Review Meeting or Feedback Session - Ask for a Self-Evaluation Invite Participation Express Appreciation Be Supportive and Demonstrate That You Care Minimize Criticism Establish Goals Follow Up Day to Day Improving Performance 1) 2) 3) 4) Identifying the Sources of Ineffective Performance Performance Diagnosis Managing Ineffective Performance Focus on Changing the Behavior, Not the Person 02 COMPENSATION MANAGEMENT Understanding about the purpose and methodology OBJECTIVES 1. Distinguish strategic compensation program from one that is non-strategic 2. Determine how to design pay systems 3. Estimate whether or not a pay system is consistent within the firm as well as comparable to industry standards and government laws 4. Design a compensation scorecard. Definition of Compensation Compensation is a way to increase employee loyalty and to decrease the likelihood that employees will be hired away by competitors. It reflects a strategic move on the part of the company to show that its employees are the most important component for success. Compensation consists of three main components: direct compensation encompasses employee wages and salaries, incentives, bonuses, and commissions; indirect compensation comprises the many benefits supplied by employers; and nonfinancial compensation includes employee recognition programs, rewarding jobs, organizational support, work environment, and flexible work hours to accommodate personal needs Compensation Alignment ALIF Compensation Design Compensation Design uses 3 factors in determining, Internal factors, external factors and Job Evaluation Systems ALIF Compensation Implementation Job Evaluation System In determining Pay Mix Job Evaluation is needed, systematically some jobs should pay more than the other. ADRI ADRI 03 PAY FOR PERFORMANCE: INCENTIVES REWARDS Understanding the implementation a strategic incentive program OBJECTIVES 1.Understanding incentives plan setting 3.Performance management 2. Advantages and disadvantages of incentive plans 4. Types of incentive plans Incentive Plans Setting You+pay-for-performance in a nutshell Objective of incentive plan is to motivate individual or group performance Incentive plans focusing on linking compensation rewards, both individual and group, to organizational goals. Managers believes that by meshing compensation and goals, workers will assume ownership of their jobs. Under this scheme, the compensation payable is tied to employee effort and performance. Rewards Basically do your job better than your coworkers Performance Incentive Plans Advantages and Disadvantages Advantages ● ● ● ● Motivate employee to achieve specific performance target Foster teamwork and unit cohesiveness Increase equity and justice in an organisation Attract and retain top performers employee Disadvantages ● ● ● ● Can lead to dispute among workers since some could be rewarded higher than other Tensions among workers to achieve the highest position Overwork to achieve target Temporary compliance, once the incentive stops, they’ll return to old habits Performance Measurement Before distributing incentive, managers should set performance measurement in the correct way to ensure fairness Individual Pay Do ● ● ● Don’t ● ● ● ● Group Pay Measure things are quantitative and simple Measure works that is independent Measure relationship between work & performance ● Like and dislike Personalities Political preferences Not considering contributions of peers ● ● ● Enterprise Pay Measure when work is group interdependent Measure in a way that shows a relationship between work and performance ● Not considering contribution to the team Measure unless there is a mechanism for teams to discipline their “slackers” ● ● ● ● Measure when work is organizationally interdependent Measure result that employee can control Measure relationship between work & performance Measure unless employees can see their work contribute to enterprise Not considering effects of the environment (e.g. economic downturns) Types of Incentive Plans Individual Group Enterprise Piecework Team compensation Profit sharing Standard hour plan Scanlon Plan Stock options Bonuses Improshare Employee stock ownership plans (ESOPs) Merit Pay Lump sum merit pay Incentive Rewards Sales incentives Professional employee incentive plans Executive incentive plans Types of Incentive Plans Bonuses It is a reward that is offered on a one-time basis for high performance.Frequently given at end of year and doesn’t become part of base pay. Bonuses can be a powerful tool to increase future performance. Hower, there’s also disadvantages for example, build up unrealistic expectation. Team compensation Rewards team members with an incentive when agreed-on performance standards are met or exceeded. Possible problem with team compensation is one individual in team may put less effort than others but share equally in team rewards (free-riders effect) Profit sharing Profit sharing plans are intended to give employee e the opportunity to increase their earnings by contributing to the growth of organization’s profit. To enable the workers to participate in profit sharing, they are required to work a certain number of years and develop some seniority. 04 EMPLOYEE BENEFITS Understanding the strategy for an effective and compliant benefits for the employees OBJECTIVES 1. Detect cost-effective strategies companies use to develop benefits plans. 3. Describe the types of work-life benefits that employers may provide. 2. Identify and explain the employee benefits required by law. 1. Strategies Use to Develop Benefits Plans General Benefits Offered: ● Containing Medical Benefits Costs ● Containing Dental, Optical, and Mental Health Benefits Costs ● Containing Additional Costs ● Value-Based Health Initiatives ● Wellness Programs ● Disease Management Programs ● Employee Assistance Programs ● Counseling Services Elements of Benefits Program Selecting Benefits Administering Benefits Communicating Employee Benefits 2. Employee Benefits required by Law in Indonesia Social Security Benefits Old Age Security (Jaminan Hari Tua) ● Participation: 1) Non-state official wage recipient; 2) not a wage earner ● Contribution: 1) Recipient of wages: 2% of workers; 3.7% of employers (5.7% of wages) 2) non-wage earners: selected by participants ● Benefits: in the form of cash, the amount of which is the accumulated value of contributions plus the results from the development ● Reference Link Work Accident Security (Jaminan Kecelakaan Kerja) ● Contribution: based on the level of work risk evaluated every 2 years (very low risk 0.24% - very high risk 1.75%) ● Benefits: protection against the risks of accidents that occur in work relations ● Reference Link Death Security (Jaminan Kematian) ● Contribution: Salary Worker: 0.3% (Of reported wages), Non-Salary Workers: IDR 6,800 ● Benefits: Provides cash benefits that are given to the heirs when the participant dies not due to a work accident ● Reference Link Pension Security (Jaminan Pensiun) ● Contribution: 2% employer contribution and 1% employee contribution (3% of wages). Max reported wage: Rp8.512.400. ● Benefits: an amount of money paid each month to participants who enter retirement age, have permanent total disability, or to the beneficiaries of participants who die. ● Reference Link 2. Employee Benefits required by Law in Indonesia (Cont’d) Annual Leave (Cuti Tahunan) Payment for the Time Not Worked Managed by UU Ketenagakerjaan Nomor 13 Tahun 2003 At least 12 days annually if the employee has worked minimum a year or 12 months sequentially in a company Big Leave (Cuti Besar) One month of leave after working for 6 years in a company. It’s managed by law and can be matched with the work contract. Mass Leave (Cuti Bersama) It’s managed by government for ineffective working days. It will reduce annual leave. Maternity Leave (Cuti Hamil) It’s entitled for pregnant woman 1.5 months before & after giving birth Sick Leave (Cuti Sakit) Menstrual Leave (Cuti Haid) Employee can rest for the duration as suggested by the doctor Employee can rest in the first day of menstruation 1. Marriage: 3 days 2. Kid’s marriage: 2 days 3. Child circumcision: 2 days Important Leave (Cuti Penting) 4. Child baptist:: 2 days 5. Wife birth / miscarriage: 2 days 6. The death of husband / wife, parents / parents-in-law or child or daughter-in-law: 2 day 7. The death of family member in one house: 1 day Implementation Example in the Workplace 2. Employee Benefits required by Law in Indonesia (Cont’d) Participation: All Indonesian residents are MANDATORY to become JKN-KIS participants managed by BPJS Health including foreigners who have worked for at least 6 (six) months in Indonesia and have paid the contribution (Reference link) National Health Scheme (BPJS Kesehatan) Contribution: 1) PBI -> paid by government 2) Government officials:4% by the employer and 1% by the participant 3) BUMN, BUMD and private: 5% (five percent) of Salary or Wage per month provided that: 4% by the Employer and 1% by Participants 4) Non wage recipient: can choose the class. Class 3 Rp25,500, Class 2Rp100,000, Class 1 Rp150,000 Reference link Benefit: Medical service for 1) First level health care 2) First level outpatient 3) First level inpatient Reference link 3. Work-Life Discretionary Benefits 1 Child and Elder Care 5 2 3 Payment for not Worked ● Vacations with ● Pay ● ● Paid Holidays ● ● Sick Leave Sabbaticals Severance Pay Supplemental Unemployment Benefits 6 Life Insurance 7 4 Long-Term Care Insurance Other Benefits and Services ● ● ● ● Credit Unions Educational Assistance Retirement Programs Preretirement and Phased Retirement Programs Pension Plans ● Contributory plan, noncontributory plan, defined benefit plan ● 401(k) Savings Plans ● Cash Balance Pension Plans ● Federal Regulation of Pension Plans Domestic Partner Benefits 05 STUDY CASE Sales Forces Management at PT. Finaccel Teknologi Indonesia (Kredivo) ABOUT FinAccel is a series C funding worth of $90 million (over 1.2 trillion Rupiah) financial technology company, built in 2016, focused on making financial services fast, affordable and accessible for the under-banked population of Southeast Asia. Kredivo, whose technology platform is exclusively powered by FinAccel, is the leading digital credit platform in Indonesia that gives customers instant credit financing for ecommerce purchases and personal loans at competitive interest rates. To know more about FinAccel and Kredivo, visit www.finaccel.co and www.kredivo.com. After being successful in online business, In February 2020, Kredivo started to pilot its offline retail expansion in Jakarta with 100 salesforces. Important Key Term Definitions Kredivo in Tokopedia checkout page Online Business Any kind of business or commercial transaction that includes sharing information across the internet. Kredivo Online Business The availability of Kredivo as one of the payment methods in the online retail platform, e.g Tokopedia checkout. Offline Retail Business The availability of Kredivo as one of the payment methods in the offline retail store, e.g Erafone store. Outlet Sales Volume The amount that an outlet generated in a specific period of time, measured in IDR. The Field Salesman of Kredivo As Kredivo Field Representative to educate new and existing user with expectations to increase merchants partner business by contribute at least 5% in total outlet sales volumes. Field Salesman Compensation Management, Reward Incentives, Benefits Focus of case study Salary 1.Monthly Salary Gross Salary 4.410.000 ● Net salary 4.200.000 ● BPJS 210.000 2.Additional Salary Holiday benefits: 4.200.000 (Prorate) Reward Incentive 1.User Acquisitions ● ● ● 80% : 800.000 100% : 1.000.000 120% : 1.200.000 Other Benefits & Rewards 1.Other Benefit: - Pulsa: 200.000 - Monthly Healthcare package 2.Annual Leave 2.Sales Volume ● ● ● 80% : 1.500.000 100% : 2.000.000 120% : 2.500.000 12 days in a year (prorate) 3.Other Rewards: - Voucher - Group entertainment: Dinner/Karaoke/etc FIELD SALESMAN PERFORMANCE MANAGEMENT Performance Evaluations Evaluation Matrix Sales ● % User Acquisitions ● % GMV Process ● % Absence ● % Leads ● % Outlet Productive Performance feedback is provided every month. THE POTENTIAL FUTURE CHALLENGE: SUSTAINABLE COMPENSATION PLAN Kredivo believes that the initial cost of acquiring one customer in the store is more expensive than later time when it has a great offline presence and excellent customer awareness. To ensure the program runs successfully, in the short term, Kredivo gives a very attractive compensation benefit especially incentive rewards for those people who achieved their sales target. In the future, there will be times the amount of incentive won't be as huge as it is today when the brand presence has achieved good result. This change will potentially impact to salesman motivation because their total wages that they received every months is also decreased. This is inline with the theory of disadvantage of Rewards: temporary compliance, once the incentive stops/decrease, the worker won’t have high motivation anymore. The questions is "How Kredivo can maintain its Field Salesman at High Level of productivity while also able to achieve the long term cost sustainable Reward Incentive scheme?" APPROACH TO PREVENT & RESOLVE FUTURE CHALLENGES ● ● ● Manage expectation and education about financial management is required. Before onboarded a field salesman, the company is mandatory to explain about the incentive and reward is additional benefit that can change anytime. So, this incentive type is temporary. In Parallel company can teach how to have a good financial plan. Company helps the field salesman to increase brand awareness, so the field salesman can get a customer easily. As the brand grows, the company also helps in pushing more visibility (eg. Baliho, Banner, etc) in order to pull the customer do registration and transaction organically. Create swadaya program to create a good corporate brand image. Company can replace the mass incentive rewards program with more exclusive reward that can give a positive image from societies eq. Ongkos naik Haji, Biaya Sekolah Anak, dll. By having this, the field salesman will be proud as part of the company LESSON LEARNED PT. APLIKASI KARYA ANAK BANGSA (GO-JEK)
