Conference 7.286::digital

2960.0. "Salary, PCBU...comments?" by USCTR1::JHERNBERG () Fri Mar 25 1994 16:21

	Moderator:  I did not receive permission from the author to reprint this
        announcement.  I assume because of the way it is addressed, that it
    	can be treated as company knowledge.  If this is not the case,
    	please remove it.
    
    	
    	
    
     
          TO:	    ALL U.S.A.  PCBU EMPLOYEES
         
F
FF
F         FROM:	           ENRICO PESATORI
         
         SUBJECT:   U.S.A. SALARY PROGRAM FOR CY94
                  
 
      I am pleased to be able to share with you the outline of the PCBU Salary 
      Program for this year.  More details of the program will be provided to 
      your manager, to whom you should address any questions.
               
      This year, we are taking the first step on a new path that will result 
      in all PCBU employees having an opportunity to benefit from the expected 
      success of the PCBU.  We all know the tasks before us are difficult and 
      will require sacrifice.  By working together, I believe we can meet and 
      beat our business goals.  A core principle in our compensation strategy 
      is that meeting and beating our business goals should result in higher 
      levels of compensation for PCBU employees.
               
      The overall PCBU U.S. Salary Program departs from traditional Digital 
      practice in a number of ways and is a major first step in aligning our 
      reward practices to the PC market.
               
      The first change is that we will be moving everyone to a base salary 
      review date of early August (this year 04 August 94).  This will enable 
      decisions on pay to be based on the prior fiscal year results.  A few 
      market-related adjustments may be made in March.  In future years, we 
      will continue to link our single focal date to the Company's fiscal year 
      end.
               
      The second change relates to the basis on which base salary increases 
      are given.  We have developed a practice inside the Company where 
      everyone expects an increase every year without much focus on the ending 
      pay level.  This approach has caused pay rates to get out of line with 
      market practice.  This year, and in the future, we will focus on ending 
      pay levels.
               
      The third change is an explicit recognition that everyone inside the 
      PCBU makes a difference and contributes to the achievement of our 
      overall goals.  I am pleased to announce that, if the business goals for 
      FY94 are exceeded, everyone not covered in a Management or Sales 
      Incentive arrangement will receive an additional 2% of their annual 
      salary (approximately "one weeks pay").  This will be paid as a cash 
      lump sum in August.  The exact goals will be communicated verbally by 
      your manager during the next few weeks.
      
      This is a significant change which we are modelling within the Company 
      in the USA.  We plan to build on this change in future years.
               
      Finally, the fourth change relates to individuals whose base salary is 
      already well-positioned under the ending pay comparison with the market.  
      In these circumstances, no increase in base salary should be expected.  
      However, a few people in this category who make an outstanding 
      contribution will be awarded a cash lump sum payment in recognition of 
      that contribution.
               
      Details on all of the above will be available to your manager in the 
      next few days.  If you have any questions, please ask your manager.
               
      I believe this program provides us with the best possible approach 
      during our time of growth within the context of the overall Company 
      performance.  Your sustained efforts and contributions are much 
      appreciated.
               
      Best regards,
      
      Enrico Pesatori
      
      /ct
      
 
Distribution:
[Deleted]

    
.0>   We have developed a practice inside the Company where 
.0>   everyone expects an increase every year...
    
    What company was that?
    

    Since Pesatori recently claimed he'd have Digital in the top 5
    PC vendors (by system shipments, we're currently 13th) by the
    end of FY95, perhaps there should be some financial incentives
    for him if he accomplishes his goal.  On the other hand, he should
    also be held to his commitment, and should be willing to take a pay
    cut if the goal is not reached... but you can bet that'll
    never happen.  .02KB 

Well, everyone expects a raise every year.  It takes slightly longer to
actually achieve that!

BobW
Not sure whether it should be 8-( or 8-)

>================================================================================
>Note 2960.1                 Salary, PCBU...comments?                      1 of 2
>WLDBIL::KILGORE "Time to put the SHARE back in DCU!"  6 lines  25-MAR-1994 16:31
>--------------------------------------------------------------------------------
>
>    
>.0>   We have developed a practice inside the Company where 
>.0>   everyone expects an increase every year...
>    
>    What company was that?
>    
>

I think it is an interest motivational strategy to offer the 2% bonus
if goals are met. The issue then centers around realistic goals. If 
the stated goal is "grow by 25%", I would be a little skeptical, since
I doubt that it could. If the growth was actually a healthy 20% because
everyone was pushing hard, the goal would not have been met, and no bonus.
Let this happen more than once and the 2% bonus is no longer an incentive.
So the key is honest, achievable goals, high enough to challenge, but not
so high as to be unattainable. The danger is end-of-period pushes
to meet the goal. If poor product goes out the door so the goal will have
been met on the books, it may come flying back in product returns and poor
customer satisfaction. You have to satisfy a customer every time, but
you only have to annoy him once.

	I think it's interesting just because 

>      The overall PCBU U.S. Salary Program departs from traditional Digital 
>      practice in a number of ways

	Once again, we see that the successful parts of this company are
	doing something that departs from the "tradition" of DEC. I don't
	think it's a coincidence.

	Roy

        re: .5
     
        I figure Digital is running in "Western Movie" mode.  Basically, the
        successful areas of the companies are those that have circled their
        wagons for protection.  Those outside the wagon circles are running
        around buck naked, trying to find a good place to dodge bullets.
    
        Steve