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The Astron Road Show
The Astron Road Show
rolls on, with another stop in upstate New York. On
Thursday and Friday, June 7th and 8th,
National Director Mike Maciekowich and Senior Automation
Expert John Sazaklis will exhibit at the 15th
Annual HANYS Benefit Service Symposium. Turning Stone
Casino in Verona, NY will play host to the gathering. At
the conference, John will be demonstrating the newest
release of Astron Solutions’ web-based talent management
system. Stop on by and say hi!
On June 12th,
Michael Maciekowich will present his first webinar! Mike
will present on
The
CAR (Competency/Achievement/ Recognition) Methodology for
Employee Retention.
The webinar is presented by
HR.com and
sponsored by
PayScale.
Click here to register for the free webinar.
Welcome
New Subscribers
Over 700 Subscribers Added in May
We'd like to extend a
special welcome to the new subscribers to Astronology.
Specifically, we'd like to welcome everyone who
attended National Director Jennifer Loftus’ HR.com webcast
on April 17th.
For those of you who have just joined us, the
Astron Solutions website hosts an archive of past
Astronology newsletters. Regardless of when you
joined the mailing list, you have the opportunity to enjoy
any past issues. Welcome!
How
Can I Create Employee Ownership Without Using Stock Options?
For
compensation professionals in the for-profit world, the
concept of employee ownership via Employee Stock Ownership
Programs (ESOP) is nothing new. For those not well versed in
compensation or working for non-profit organizations, this
is not a familiar concept. Today we will explore basic
design concepts and implications on employee decision making
and involvement in the organization from using ESOPs. The
next issue of Astronology will explore creative
alternatives to ESOP programs.
An ESOP is an employee benefit plan that makes the employees
of a company owners of stock in that company. Several
features make ESOPs unique as compared to other employee
benefit plans.
First, only an ESOP is required by law to invest primarily
in the securities of the sponsoring organization.
Second, an ESOP is unique among qualified employee benefit
plans in its ability to borrow money. As a result, leveraged
ESOPs may be used as a technique of corporate finance. A
company that wants to set up an ESOP creates a trust to
which it makes annual contributions. These contributions are
allocated to individual employee accounts within the trust.
The most common allocation is in proportion to compensation.
The shares of company stock and other plan assets allocated
must vest before the employees are entitled to receive them.
The least liberal vesting schedule allowed by law is 20% per
year until the employees are fully vested after seven years
of service. Many companies vest an employee's entire account
immediately. The key is that employees now have an interest
in the value of the company's stock. The assumption is that,
as owners, employees will be more interested in how they
personally impact the success or failure of the company. It
also assumes more employee involvement in decision making
and participation in policy establishment.
Regardless of the type of industry we are in, we are all
familiar with the concept of goal sharing. Taken from the
WorldatWork Building Blocks series, goal sharing is a
business process that focuses on business unit performance
while rewarding participants for achieving continuous
improvement. It typically involves a balanced scorecard
approach in setting and measuring goals for individual
business units. These goals may include improvements in
financial performance, quality and customer satisfaction, or
growth and process improvements. Often, each goal stands
alone and pays out on its own. Payouts are incremental based
on the amount of improvement.
Key to the success of a goal sharing program is setting fair
goals that require each business unit to stretch its
performance beyond what is achieved during the prior
measurement period, typically a year. Like an ESOP program,
goal sharing assumes direct employee participation in
decision making on issues that impact the outcomes and thus
the level of "reward" available.
There are many organizations that are experimenting with
programs that offer advantages of both ESOP and goal sharing
programs. One common aspect of both programs lies in the
initial design process. There are several key strategic
questions that need to be addressed at the start of the
design process:
- What long and short term results are the
organization attempting to achieve?
- What employee efforts and behaviors are required to
achieve these results?
- Who will be eligible to participate?
- How will the program compliment and support current
compensation philosophy and strategy?
Wonder what your fellow readers think about critical HR topics? Is your organization unique from or similar to others?
Click here to view the results of our past polls!
If you have a topic you would like addressed in Astronology, or some feedback on a past article, don't hesitate to tell us! Simply reply to this e-mail. See your question answered, or comments addressed, in an upcoming issue of Astronology.
Looking for a top-notch presenter for your human resource organization's meeting? Both Jennifer Loftus and Michael Maciekowich present highly-rated sessions on a variety of compensation and employee retention issues. For more information, send an e-mail to
info@astronsolutions.com.
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this button
to start your own subscription today!
Send inquiries to
info@astronsolutions.com or call 800-520-3889, x105.
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Copyright 2007, Astron Solutions, LLC
ISSN Number 1549-0467
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