" The distribution of the VPB budget to the individual business units has turned out to be very different.
The area HPS, approx. 60% of German employees, has been fobbed off with a VPB budget approaching zero. Areas such as IPG / PSG / Central Functions (e.g. HR, REWS etc.), on the other hand, have in some cases been allocated two-digit VPB budgets.
To date, despite being requested to do so by the Works Council, German management has not provided any information regarding the amount of the budget and its distribution among the individual business units. In the meantime, some information has filtered through to the Works Council members.
These unconfirmed figures reflect a bandwidth of 0% to 2% in the HPS area for employees and supervisors up to and including MGR 1. On the other hand, every MGR 2 at HPS has received a bonus of more than 14%! The amount of the bonus as of MGR 3 level upwards is something we would rather not know. We no longer understand this inequitable treatment.
Here, company management lacks all sense of proportion, and for us as Works Council members this is unacceptable. Why has German management allowed this to happen and supported it?
In the last few years, HPS employees have had to bear their share of the burden involved in substantial restructuring measures with the shift of jobs nearshore, off-shore or to partners. In this phase, they went a considerable number of 'extra miles' and continue to do so to ensure the delivery capability of HP and customer satisfaction. They also represent HP beyond TSG at our customers, offer services for the PSG/IPG/TSG product families, and thus make a decisive contribution to the overall success of the company. This makes it all the more difficult to understand why so little came through from VPB !
Why is this not rewarded by the company management?
The VPB was introduced by management with the aim of rewarding the individual performance of the employees better than was the case with CPB. As we are now finding out to our dismay, this principle is not being lived! The 'reward' does not seem to depend on individual performance, rather on affiliation to the right organizational unit.
To date, company management has provided no explanations in this connection! Management will have even greater difficulty providing explanations when you bear in mind that no HPS manager is able to explain to their employees why they are among the losers in this company as regards VPB. The HPS managers have to justify themselves and are being left out in the rain by area management!
Following workforce reduction, JAI downgrading, downgrading to lower pay grades, and the company car discussion, this renewed slap in the face is affecting the motivation of managers and employees alike. What kind of other negative steps are the workforce to expect from company management?
Company management has not adhered to the rules agreed with the Works Council. It has come to our attention that the distribution of the budget made by top management has in some cases been overridden by the HPS managers responsible.
Furthermore, the budgeting process was also strange. Some managers' budgets changed from one day to the next or were reduced later by EMEA without explanation.
This fits in well with the information that the budget of HPS employees was reduced at the last minute by 2.4% due to a calculation error. To date, German management has made no statement as to how the deviations in the distribution mechanism occurred - a mechanism that was communicated and agreed in advance worldwide.
As Works Council members, we have noticed that the level of frustration among the employees and also among managers is continuing to rise, leading to a sense of defeat and inner or external resignations.
The level of willingness to 'go the extra mile' is falling. A mood of 'work to rule' is gaining ground. Why is there no reaction from German HPS management? Is German management deliberately closing its eyes to this fact and is it even being consciously accepted?
The Works Council will not go along with thi inequitable distribution of the VBP. For the next round of VPB negotiations, we will exploit every possibility - also of a legal nature - to restore peace in the company.
Please, someone explain to me what is this VPB?? I believe some people in some teams got up to about 15% of their annual salary as VPB bonus in Dec 2008 while some didn't get a cent even though there rating is same as those who got rewarded. Is this something written in an employment contract that they get VPB? What criterias govern this VPB distribution? Is VPB the same as the company performance bonus that one used to get yearly? I'm confused.
Most regular full-time and part-time employees of HP and its designated affiliates, except those who participate in Pay-for-Results (PfR), Sales incentive programs, business-specific bonus programs, and other similar variable pay programs, may be eligible for VPB and begin participation on the date of hire.
In a few countries, employees whose employment status is other than regular full-time or regular part-time may also be eligible for VPB in order to comply with local laws. Employees can participate in only one variable pay program at a time. The bonus is discretionary and although all eligible employees can be considered for a bonus, not all employees will necessarily receive one.
Performance Period VPB is aligned to HP’s fiscal year. The 2008 performance period will run from 01 November 2007 through to 31 October 2008.
Performance Metrics There are two metrics in the program: HP revenue and HP net profit. Both are weighted equally and HP’s world-wide performance on these metrics determines overall funding for the program. HP Services (HPS) employees continue to be on their own set of metrics, described in a later section. Metrics Weighting HP worldwide revenue 50% HP worldwide net profit 50%
Metric Goals Goals are established for each metric at three distinct levels of performance – Gate, Target, and Stretch. Performance Levels Gate Minimum expected level of performance. As the focus is on year-over-year improvement, the gate is set with consideration to what the FY07 Gate was Target Targeted level of performance. Meets company goals and our commitment to stockholders Stretch Superior level of performance. Sets the standard and leads the market. Reflects superior achievement and signifies our dominance in the marketplace and achieves the stretch improvement goals
The HR and Compensation Committee of the Board of Directors (the “Committee”) approves the goals at each performance level at the beginning of the fiscal year. Specific details regarding performance goals are not disclosed.
Although specific goals are set at these three performance levels, performance is recognized at any point along the performance continuum once the Gate has been passed.
Funding Funding for the program is determined at the end of the performance period based on the company’s results against its revenue and net profit targets. The HP net profit Gate must be passed before the plan can fund. This assures that the company is meeting a minimum expected level of profitability before any bonus pool is created. Once Target goals are exceeded, only net profit performance funds the plan. This is to assure that revenue growth is profitable growth.
The HR and Compensation Committee of the Board of Directors has the discretion to adjust overall funding in light of competitive performance, general market conditions, and other business factors it deems appropriate.
Once funding for the program is determined, each Business Segment and Global Function receives its allocation. Allocations to the Business Segments are based on their business results. Allocations to the Global Functions are based on HP world-wide results. The CEO has discretion to adjust the funding allocations based on his assessment of each organization’s relative contribution to HP. In turn, business and global function leaders can differentiate the bonus budgets for their respective organizations as they distribute their allocations.
Bonuses Bonuses are based on a consideration of business and individual performance, job level, and job role. Managers have the discretion to distribute their bonus budgets appropriate to their organization taking these factors into consideration. Bonuses can therefore vary by individual and depending on the budget available, not everyone will necessarily participate. Bonus guidelines by job level/job family will be provided to managers, together with relevant market data, to assist them in making bonus decisions. All recommended bonuses must be reviewed and approved by the next level of management.
Bonuses are paid out in local currency and made by December 31 where Payroll schedules permit, and by the end of January in remaining countries.
U.S. employees are able to access their eligible earnings via a self-service tool on the @hp portal.
HP Services Plan HP Services continues to have its own Variable Performance Bonus for FY08. Funding for the HPS plan will be based on a combination of HPS revenue and net profit (75%) and HP revenue and net profit results (25%). The HPS net profit Gate must be passed before this plan can fund.
Removal of the HPS Services worldwide and regional layer for the second half of this year does not impact funding for the FY08 VPB, TGP and PfR Plans. Overall funding for CI, TS and OS Business Units continues to be based on the FY08 HPS metrics and results. Should the plans fund, each Business Unit will receive their proportionate funding, based on their own financial performance. Senior leaders can adjust this funding by region or country performance before distributing to manager pools.
The Variable Performance Bonus (VPB) Q8: Who is eligible to participate in the VPB? All active employees who are not participating in other variable pay programs are eligible to be considered for a VPB bonus. Although VPB is a global program, program deployment is subject to local laws and regulations. Q9: Will everyone who is eligible receive a bonus? Not necessarily. The Variable Performance Bonus is discretionary. Every eligible employee will be considered for a bonus; however not every employee may receive one. Bonuses are based on business results, individual performance, job level, and job role guidelines. “I” rated employees are not eligible for the bonus. Q10: Are Sales employees included in the program? No. HP’s policy is that all employees are eligible to participate in only one variable pay program at a time. The Variable Performance Bonus does not apply to sales employees who participate in a sales incentive plan, or to any other HP employees who already participate in other variable pay plans. [Top] Bonus Calculation Q11: How is the bonus pool determined? Overall funding for the program is determined by HP’s net profit and revenue results. If the program funds for FY08, each Business Segment and Global Function will receive an allocation from this funding based on their results. Senior leaders will determine how the allocation is to be distributed, and this will determine each manager’s bonus pool. Funding for HP Services will be based on their set of metrics and results. Q12: How is the bonus determined? Bonuses will be based on individual performance, job level, and job role guidelines. As there are only three performance ratings, managers will differentiate further within each rating category. Based on how the program funds, managers will have a budgeted amount of bonus dollars available to them and will consider all of these factors when distributing their budget. Bonuses will vary among individual employees and as the bonus is discretionary, not all employees necessarily receive one. Q13: If there are differences in payouts between businesses, won’t this make it more difficult for lower-performing businesses to attract the talent they need to improve? Similarly, won’t differentiation deter movement into newer, higher-risk businesses areas? We have a pay-for-performance culture at HP, which drives the company’s success. In any given year, some businesses will do better than others - and should be rewarded appropriately. Differentiation, therefore, is a reality. The CEO has the discretion to adjust funding in order to ensure our bonus programs do not impede talent acquisition or retention in growth businesses that are key to the company’s success. [Top] Administrative Rules Q14: Why are bonuses paid out only once a year? Plan funding is based on company and business performance for a complete fiscal year. Annual programs are standard industry practice, as business performance can fluctuate throughout the year. Q15. Will those employees who have left the company during the fiscal year due to WFR or Retirement be eligible for a VPB bonus? Employees who left HP due to an eligible termination like WFR or Retirement are eligible to be considered for a bonus and will appear on the manager's bonus administration screen. The manager has the discretion to give a bonus. Q16. Will those employees who proceed on a Leave of Absence during the fiscal year be eligible for a VPB bonus? Employees who go on a Leave of Absence during the fiscal year (i.e. Military Leave, Parental Leave, etc) are eligible to be considered for a prorated bonus based on the time spent in active status and will appear on the manager's bonus administration screen. Q17. Will an employee who voluntarily terminated be eligible for a VPB bonus? No. An employee who voluntarily terminated their employment during the performance period is not eligible for a bonus. Q18. Are all acquired employees eligible for the Variable Performance Bonus? It depends on the terms of the acquisition deal and the effective date of transfer to HP’s variable pay plans. If you are unsure of your plan eligibility, ask your manager or HR. Q19. What happens if an employee transfers from a non-VPB plan like PfR to a VPB plan? If the employee has changed from a non-VPB plan to a VPB plan, VPB funding for that employee will be based on the amount of time spent in the VPB plan and included in the manager’s bonus pool. In this particular example, the employee would also be eligible for a PfR bonus based on the time spent in the PfR bonus plan. Q20. What happens if a VPB eligible employee moves from one Business to another (i.e. IPG to PSG)? The bonus is based on Oct 31 Business Segment alignment as funding is determined at the plan level, not individual level. The specific bonus is at the discretion of the manager to determine. Q21. What happens if a VPB eligible employee moves from one country to another? For employees who transfer between countries during the fiscal year, eligible earnings will be converted to the host country currency using the currency exchange rate at the time (month of) of transfer. HP uses the published Bank exchange rate in effect on the last day of the month in this calculation. Q22. What happens if an employee has a job level change during the performance period? Bonuses are based on Job Level in effect at the time of bonus planning (i.e. November) Q23. If an employee changes jobs or managers during the performance period, which manager will do the VPB planning for this employee and will the full year’s performance be considered? The employee's manager at the time the bonus is being planned will determine the bonus. Managers should contact the employee’s prior manager to gather input on performance for the full year and the bonus decision.
4 comments:
" The distribution of the VPB budget to the individual business units has turned out to be very different.
The area HPS, approx. 60% of German employees, has been fobbed off with a VPB budget approaching
zero. Areas such as IPG / PSG / Central Functions (e.g. HR, REWS etc.), on the other hand, have in some cases been allocated two-digit VPB budgets.
To date, despite being requested to do so by the Works Council, German management has not
provided any information regarding the amount of the budget and its distribution among the individual
business units. In the meantime, some information has filtered through to the Works Council members.
These unconfirmed figures reflect a bandwidth of 0% to 2% in the HPS area for employees and supervisors
up to and including MGR 1. On the other hand, every MGR 2 at HPS has received a bonus of more than
14%! The amount of the bonus as of MGR 3 level upwards is something we would rather not know. We
no longer understand this inequitable treatment.
Here, company management lacks all sense of proportion, and for us as Works Council members this is unacceptable. Why has German management allowed this to happen and supported it?
In the last few years, HPS employees have had to bear their share of the burden involved in substantial restructuring measures with the shift of jobs nearshore,
off-shore or to partners. In this phase, they went a considerable number of 'extra miles' and
continue to do so to ensure the delivery capability of HP and customer satisfaction. They also represent HP beyond TSG at our customers, offer services for the
PSG/IPG/TSG product families, and thus make a decisive contribution to the overall success of the
company. This makes it all the more difficult to understand why so little came through from VPB !
Why is this not rewarded by the company management?
The VPB was introduced by management with the aim of rewarding the individual performance of the employees better than was the case with CPB. As we are now finding out to our dismay, this principle is not being lived! The 'reward' does not seem to depend on individual performance, rather on affiliation to the right organizational unit.
To date, company management has provided no explanations in this connection! Management will have even greater difficulty providing explanations when you bear in mind that no HPS manager is able to explain to their employees why they are among the losers in this company as regards VPB. The HPS managers have to justify themselves and are being left out in the rain by area management!
Following workforce reduction, JAI downgrading, downgrading to lower pay grades, and the company car discussion, this renewed slap in the face is affecting the motivation of managers and employees alike. What kind of other negative steps are the
workforce to expect from company management?
Company management has not adhered to the rules agreed with the Works Council. It has come to our
attention that the distribution of the budget made by top management has in some cases been overridden
by the HPS managers responsible.
Furthermore, the budgeting process was also strange. Some managers' budgets changed from one day to the next or were reduced later by EMEA without explanation.
This fits in well with the information that the budget of HPS employees was reduced at the last minute by 2.4% due to a calculation error. To date, German management has made no statement as to how the deviations in the distribution mechanism occurred - a mechanism that was communicated and agreed in advance worldwide.
As Works Council members, we have noticed that the level of frustration among the employees and also among managers is continuing to rise, leading to a
sense of defeat and inner or external resignations.
The level of willingness to 'go the extra mile' is falling. A mood of 'work to rule' is gaining ground. Why is there no reaction from German HPS management? Is German management deliberately closing its eyes to this fact and is it even being consciously accepted?
The Works Council will not go along with thi inequitable distribution of the VBP. For the next round of VPB negotiations, we will exploit every possibility - also of a legal nature - to restore peace in the company.
We demand that all employees be treated equally!"
Please, someone explain to me what is this VPB?? I believe some people in some teams got up to about 15% of their annual salary as VPB bonus in Dec 2008 while some didn't get a cent even though there rating is same as those who got rewarded. Is this something written in an employment contract that they get VPB? What criterias govern this VPB distribution? Is VPB the same as the company performance bonus that one used to get yearly? I'm confused.
Some answers :
Most regular full-time and part-time employees of HP and its designated affiliates, except those who participate in Pay-for-Results (PfR), Sales incentive programs, business-specific bonus programs, and other similar variable pay programs, may be eligible for VPB and begin participation on the date of hire.
In a few countries, employees whose employment status is other than regular full-time or regular part-time may also be eligible for VPB in order to comply with local laws. Employees can participate in only one variable pay program at a time. The bonus is discretionary and although all eligible employees can be considered for a bonus, not all employees will necessarily receive one.
Performance Period
VPB is aligned to HP’s fiscal year. The 2008 performance period will run from 01 November 2007 through to 31 October 2008.
Performance Metrics
There are two metrics in the program: HP revenue and HP net profit. Both are weighted equally and HP’s world-wide performance on these metrics determines overall funding for the program. HP Services (HPS) employees continue to be on their own set of metrics, described in a later section.
Metrics Weighting
HP worldwide revenue 50%
HP worldwide net profit 50%
Metric Goals
Goals are established for each metric at three distinct levels of performance – Gate, Target, and Stretch.
Performance Levels
Gate Minimum expected level of performance. As the focus is on year-over-year improvement, the gate is set with consideration to what the FY07 Gate was
Target Targeted level of performance. Meets company goals and our commitment to stockholders
Stretch Superior level of performance. Sets the standard and leads the market. Reflects superior achievement and signifies our dominance in the marketplace and achieves the stretch improvement goals
The HR and Compensation Committee of the Board of Directors (the “Committee”) approves the goals at each performance level at the beginning of the fiscal year. Specific details regarding performance goals are not disclosed.
Although specific goals are set at these three performance levels, performance is recognized at any point along the performance continuum once the Gate has been passed.
Funding
Funding for the program is determined at the end of the performance period based on the company’s results against its revenue and net profit targets. The HP net profit Gate must be passed before the plan can fund.
This assures that the company is meeting a minimum expected level of profitability before any bonus pool is created. Once Target goals are exceeded, only net profit performance funds the plan. This is to assure that revenue growth is profitable growth.
The HR and Compensation Committee of the Board of Directors has the discretion to adjust overall funding in light of competitive performance, general market conditions, and other business factors it deems appropriate.
Once funding for the program is determined, each Business Segment and Global Function receives its allocation. Allocations to the Business Segments are based on their business results. Allocations to the Global Functions are based on HP world-wide results. The CEO has discretion to adjust the funding allocations based on his assessment of each organization’s relative contribution to HP. In turn, business and global function leaders can differentiate the bonus budgets for their respective organizations as they distribute their allocations.
Bonuses
Bonuses are based on a consideration of business and individual performance, job level, and job role. Managers have the discretion to distribute their bonus budgets appropriate to their organization taking these factors into consideration. Bonuses can therefore vary by individual and depending on the budget available, not everyone will necessarily participate. Bonus guidelines by job level/job family will be provided to managers, together with relevant market data, to assist them in making bonus decisions. All recommended bonuses must be reviewed and approved by the next level of management.
Bonuses are paid out in local currency and made by December 31 where Payroll schedules permit, and by the end of January in remaining countries.
U.S. employees are able to access their eligible earnings via a self-service tool on the @hp portal.
HP Services Plan
HP Services continues to have its own Variable Performance Bonus for FY08. Funding for the HPS plan will be based on a combination of HPS revenue and net profit (75%) and HP revenue and net profit results (25%). The HPS net profit Gate must be passed before this plan can fund.
Removal of the HPS Services worldwide and regional layer for the second half of this year does not impact funding for the FY08 VPB, TGP and PfR Plans. Overall funding for CI, TS and OS Business Units continues to be based on the FY08 HPS metrics and results. Should the plans fund, each Business Unit will receive their proportionate funding, based on their own financial performance. Senior leaders can adjust this funding by region or country performance before distributing to manager pools.
More :
The Variable Performance Bonus (VPB)
Q8: Who is eligible to participate in the VPB?
All active employees who are not participating in other variable pay programs are eligible to be
considered for a VPB bonus. Although VPB is a global program, program deployment is subject
to local laws and regulations.
Q9: Will everyone who is eligible receive a bonus?
Not necessarily. The Variable Performance Bonus is discretionary. Every eligible employee will
be considered for a bonus; however not every employee may receive one. Bonuses are based on
business results, individual performance, job level, and job role guidelines. “I” rated employees
are not eligible for the bonus.
Q10: Are Sales employees included in the program?
No. HP’s policy is that all employees are eligible to participate in only one variable pay program at
a time. The Variable Performance Bonus does not apply to sales employees who participate in a
sales incentive plan, or to any other HP employees who already participate in other variable pay
plans.
[Top]
Bonus Calculation
Q11: How is the bonus pool determined?
Overall funding for the program is determined by HP’s net profit and revenue results. If the
program funds for FY08, each Business Segment and Global Function will receive an allocation
from this funding based on their results. Senior leaders will determine how the allocation is to be
distributed, and this will determine each manager’s bonus pool. Funding for HP Services will be
based on their set of metrics and results.
Q12: How is the bonus determined?
Bonuses will be based on individual performance, job level, and job role guidelines. As there are
only three performance ratings, managers will differentiate further within each rating category.
Based on how the program funds, managers will have a budgeted amount of bonus dollars
available to them and will consider all of these factors when distributing their budget. Bonuses will
vary among individual employees and as the bonus is discretionary, not all employees
necessarily receive one.
Q13: If there are differences in payouts between businesses, won’t this make it more
difficult for lower-performing businesses to attract the talent they need to improve?
Similarly, won’t differentiation deter movement into newer, higher-risk businesses areas?
We have a pay-for-performance culture at HP, which drives the company’s success. In any given
year, some businesses will do better than others - and should be rewarded appropriately.
Differentiation, therefore, is a reality. The CEO has the discretion to adjust funding in order to
ensure our bonus programs do not impede talent acquisition or retention in growth businesses
that are key to the company’s success.
[Top]
Administrative Rules
Q14: Why are bonuses paid out only once a year?
Plan funding is based on company and business performance for a complete fiscal year. Annual
programs are standard industry practice, as business performance can fluctuate throughout the
year.
Q15. Will those employees who have left the company during the fiscal year due to WFR
or Retirement be eligible for a VPB bonus?
Employees who left HP due to an eligible termination like WFR or Retirement are eligible to be
considered for a bonus and will appear on the manager's bonus administration screen. The
manager has the discretion to give a bonus.
Q16. Will those employees who proceed on a Leave of Absence during the fiscal year be
eligible for a VPB bonus?
Employees who go on a Leave of Absence during the fiscal year (i.e. Military Leave, Parental
Leave, etc) are eligible to be considered for a prorated bonus based on the time spent in active
status and will appear on the manager's bonus administration screen.
Q17. Will an employee who voluntarily terminated be eligible for a VPB bonus?
No. An employee who voluntarily terminated their employment during the performance period is
not eligible for a bonus.
Q18. Are all acquired employees eligible for the Variable Performance Bonus?
It depends on the terms of the acquisition deal and the effective date of transfer to HP’s variable
pay plans. If you are unsure of your plan eligibility, ask your manager or HR.
Q19. What happens if an employee transfers from a non-VPB plan like PfR to a VPB plan?
If the employee has changed from a non-VPB plan to a VPB plan, VPB funding for that employee
will be based on the amount of time spent in the VPB plan and included in the manager’s bonus
pool. In this particular example, the employee would also be eligible for a PfR bonus based on the
time spent in the PfR bonus plan.
Q20. What happens if a VPB eligible employee moves from one Business to another (i.e.
IPG to PSG)?
The bonus is based on Oct 31 Business Segment alignment as funding is determined at the plan
level, not individual level. The specific bonus is at the discretion of the manager to determine.
Q21. What happens if a VPB eligible employee moves from one country to another?
For employees who transfer between countries during the fiscal year, eligible earnings will be
converted to the host country currency using the currency exchange rate at the time (month of) of
transfer. HP uses the published Bank exchange rate in effect on the last day of the month in this
calculation.
Q22. What happens if an employee has a job level change during the performance period?
Bonuses are based on Job Level in effect at the time of bonus planning (i.e. November)
Q23. If an employee changes jobs or managers during the performance period, which
manager will do the VPB planning for this employee and will the full year’s performance be
considered?
The employee's manager at the time the bonus is being planned will determine the bonus.
Managers should contact the employee’s prior manager to gather input on performance for the
full year and the bonus decision.
Post a Comment