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Kevin Empey
Director of Consulting Services,Towers Watson
Introducing and Maintaining Market Based
Reward Systems
New Order, New Challenges
Introducing and Maintaining Market Based Reward Systems
Kevin EmpeyTowers WatsonOctober 6th, 2015
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Source: Towers Watson Global Workforce Studies - IRELAND Towers Watson Talent Management and Rewards Study - EMEA
The employee perspective ?- Some warning signs for employers….
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40%likely to leave their employer over
the next 2 years. 10% in 2010
70%of employees are often worried
about their financial future
29%
of employees see clear link between
performance and pay
70% believe they will have to
leave their current employer for better career and pay prospects
50%of employees say they have been working more than before and believe that this trend will continue 50%
of highly engaged employees also report high stress and low well
being scores
Only
4
40%Feel their retirement benefits
meet their needs
Less than
Almost
Over
Top drivers of attraction, retention and sustainable engagement in Ireland
Attraction Retention Sustainable engagement
Base pay/salary Base pay/salary Leadership
Job security Career advancement opportunities
Workload & Work-Life Balance
Learning and development opportunities Job security Goals & Objectives
Career advancement opportunities
Trust/confidence in senior leadership Empowerment
Organisation’s reputation as good employer Length of commute Image
Source: Towers Watson 2014 Global Workforce Study — Ireland
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Safe to say that the classic employer-employee deal is becoming extinct…
It’s unaffordable.
It’s outmoded.
It’s ineffective — and inefficient.
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…Making way for the 21st century work experience
Shared responsibility and risk.
A sum greater than its parts.
Many sizes; many shapes.
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Emerging topics in shaping future reward and pay- Current issues underpinning reward reform in Ireland
Cost and investment balance- Employer / Employee co-investment
What next for variable pay ?Total Reward and EVP view – value versus cost
Market alignment & Segmentation
Performance, recognition & differentiation
Simplification and flexibility Governance, regulation & control- Changing nature of the reward function itself
Delivery system- Manager capability, comms, technology…
7
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Pay Prospects 2015 / 2016
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Qatar
Mali
Greece
Estonia
Croatia
Spain
Germany
France
Denmark
Belgium
United Kingdom
Ireland
0.0 1.0 2.0 3.0 4.0 5.0 6.0
2015 2016
Overall Salary Increase (avg. % change p.a.)
Cou
ntry
2015 Actual
• General Industry = 2.2
• FS = 2.4• HT = 2.4• PHS = 2.2
2016 Projected
• General Industry= 2.5• FS = 2.5• HT = 2.7• PHS = 2.5
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Salary Review Practice 2009 – 2015
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2009 2010 2011 2012 2013 2014 20150
10
20
30
40
50
60
70
80
90
100
General Industry
Revised Salary Postponed/Freeze SalaryYear
Per
cent
age
(%)
An opportunity to reframe a new deal with employees
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EMPLOYER EXPECTATIONSEMPLOYEE EXPERIENCE
The desired affiliation, mindset and behaviour that optimise the employee’s contribution to business success
Employees’ interactions with the company, colleagues and customers, the work environment and total rewards that drive their behaviors
and engagement
Providing a customer grade employment story & experience…- A whole new level of EVP design and delivery is ahead
Total Rewards on a page……
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Total Rewards
Career & Environmental Rewards
Performance-Based Rewards
Foundational Rewards
Program Delivery
Program Design
Strategy & Structure
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Reward reform and change can be too focused on the “what” at the expense of the “how”……
Leadership/manager ownership
Website: Q&As, feedback, videos,
updates
Proposal pack: booklet, letter, feedback form
Shock/angerCan you do this?
Is this legal?
Why is this happening?
BlameWho’s fault is this?
Is there another solution?
Why can’t the Company put more money in?
UnderstandingWhat does this mean for me?
Show me some examples
What are my options?
AcceptanceI understand the need for
change.
I don’t like it but I need to move on.
AgreementI have to manage my
pension. Show me how
Financial education tools: games, profilers
Personal Illustrations
Modellers and ready ‘reckoners’
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For example - Pension Change
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Implementation Challenges & Trade Offs– impossible to keep everyone happy
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1. Know your customer(s) and your business case
2. Define your “story” for your current and future talent needs
3. A talent (and reward) strategy to get where you want to go
4. Design with the future in mind – transition compromises may be necessary
5. Manage the change at the pace that will bring success
6. Implement & communicate effectively, support your managers
7. Be open to change over time
Reward Reform – Final Thoughts & Observations
