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Presentation on Total Reward Management Model

  1. 1. Presentation on Total Reward Management Model
  2. 2. Total Rewards Expertise Executive Benefits Health & Welfare Healthcare Analytics Human Resources & Compensation Retirement Plan Voluntary Benefits Multinational Benefits & HR Institutional Investment & Fiduciary Services
  3. 3. Discussion Points • What is Total Rewards? • Key elements of Total Rewards • Why is a Total Rewards Strategy important? • Considerations for Re- Tuning your Total Rewards Program
  4. 4. What is Total Rewards? Everything an employee values in the employment relationship. A system of rewards. Not just compensation and benefits. Includes compensation and non-compensation elements
  5. 5. Total Rewards Compensation Benefits Work-Life Programs Professional Development Human Capital / Talent Management Strategy Organizational Strategy Engage & retain employees Attract talent
  6. 6. Key Elements to Total Rewards
  7. 7. Compensation • Fixed Pay - base wages • Variable Pay – pay at risk – Short term Incentive Pay – Long-term Incentive Pay
  8. 8. Employee Benefits • Health & Welfare – Medical, Dental, Vision • Income Protection – Life, STD, LTD • Retirement – Defined Benefit/Contribution • Executive – Non-Qualified Deferred Comp • Financial Support – FSA, Education Assistance
  9. 9. Work/Life Programs • Culture of Wellbeing • Telecommuting • Flexible work schedules • Parental Leave • Reduced Hours • Community Service Time • Job Sharing • On-Site Daycare • Concierge Services
  10. 10. Professional Development • Employee development based on stated career goals. Focus is on enhancing both technical skill set and competencies or “soft skills” –Traditional training programs –Mentoring from management or other respected company leaders –On-the-job or stretch assignments • Employee recognition programs
  11. 11. Why is a Total Rewards Strategy Important?
  12. 12. Your Top Talent is KEY to your Total Rewards Strategy… as retaining this talent is important to your business success
  13. 13. External Factors Influence the Necessity of a Fluid Total Rewards Strategy 1. Ever-changing PPACA landscape and various provision delays 2. Changing workforce demographics & dynamics 3. A much more competitive business environment 4. Substantial increase in healthcare costs
  14. 14. External Factors Influence the Necessity of a Fluid Total Rewards Strategy 5. Rapid decline of Defined Benefit pension plans as viable retirement source 6. Advancement of pay-for- performance practices 7. New interest in Private Exchanges and Defined Contribution strategies 8. Competition for Talent (Skill Shortage)
  15. 15. A Solid Talent Management Foundation is Key to Total Rewards Establish and Maintain Alignment w/ Organizational Objectives Job Descriptions On-boarding Competency Models Performance Management Build on Organizational Strengths and Grow Talent Individual Development Plans Coaching & Mentoring Leadership Development Programs Anticipate & Plan for the Future Staff Portfolio Management Succession Planning Strategic Planning
  16. 16. Identifying Critical Talent is Key • Know your organizational strategy & identify key competencies needed to get there • Conduct a Talent Inventory – bench strength & future leaders (i.e., Nine Box). • Critical talent identification should extend beyond the top executive level to all tiers of the organization that play a pivotal role in the success of the business. • Identify “stakeholders” - top 15% of the company that: – Directly impact Financial Net Income – Would be difficult to replace
  17. 17. Know What’s Meaningful to Critical Talent Rank Employers 1 Challenging Work 2 Career Development Opportunities 3 Org Mission, Vision, and Values 4 Base Pay 5 Org financial performance Rank Employees 1 Job Security 2 Base Pay 3 Career development opportunities 4 Promotion opportunity 5 Health care benefits What Employers THINK their Hi-Po’s define as important What Hi-Po’s REALLY THINK is important Source: Towers Watson
  18. 18. Engaged employees hold the key to your success!
  19. 19. The number one factor in increasing the level of highly satisfied and engaged CUSTOMERS in your businessis… The level of highly satisfied and engaged EMPLOYEES in your business.
  20. 20. Impact of Engaged Employees • Actively disengaged employees can reduce revenues by up to 22% • Highly engaged employees can drive profits UP by as much as 189%
  21. 21. Impact of Engaged Employees on Business Outcomes Difference Between Top and Bottom Quartile Performance Top decile Companies have 3.9 times the Earnings Per Share (EPS) GROWTH RATE Employee Engagement and Critical Business Outcomes 2018 Total Rewards Survey: AON Hewitt
  22. 22. Impact of Engaged Employees on Business Outcomes Gallup Survey 2018
  23. 23. Sales in 1998 =0 Sales in 2008 =1.2Zappos Billion Looking back, a big reason we hit our goal early was that we decided to invest our time, money and resources into three key areas: customer service (which would build our brand and drive word-of-mouth), culture (which would lead to the formation of our core values), and employee training and development (which would eventually lead to the creation of our Pipeline Team). Even today, our core belief is that our Brand, our Culture and our Pipeline are the only competitive advantages we will have in the long run. Everything else can and will be copied.
  24. 24. REMEMBER MASLOW? EMPLOYEE ENGAGEMENT AND TOTAL REWARDS GO HAND IN HAND Self Actualization (Reaching full potential) Aesthetic Needs (Order and beauty) Cognitive Needs (knowledge and understanding) Esteem Needs (Positive self-image) Belonging and love (Affection, identification with a group) Safety and Security Needs (long-term survival) Physiological Needs (Short-term survival) Advancement, professional growth, work- life Interesting, challenging work Learning & development Recognition, promotion, performance feedback Affiliation & coworkers Other compensation, health & retirement Base salary
  25. 25. Percent of Companies Aligning Rewards with Business Objectives 2018 Total Rewards Survey: AONHewitt
  26. 26. Considerations for Re-Tuning your Total Rewards Program
  27. 27. Current Trends in Total Rewards Programs More Emphasis Less Emphasis Compensation Programs 67% 33% Learning & Development Programs 66% 34% Wellness & Disease Management 64% 36% Health Programs (medical, dental, vision) 63% 37% Retirement Programs 51% 49% Welfare Programs/Risk Benefits 39% 61% Source: 2018 Top Five Global Employer Rewards Priorities Survey: Deloitte
  28. 28. Planned Investments in Total Rewards Programs Increased Spending Wellness 67% Manager effectiveness/ coaching 62% Training 57% Career development 55% Recognition programs 41% Culture 41% Decreased Spending Post-retirement medical 29% Retiree Medical 24% Pension/defined benefits 19% Healthcare Benefits (medical, dental, vision) 14% Concierge services 10% Long-term incentives 7% Source: 2018 Top Five Global Employer Rewards Priorities Survey: Deloitte
  29. 29. Health Care Trends • 2014 Total Health Benefit Cost per employee is expected to be $12,535 – Includes employer and employee shares – Up from $11,938 in2013 • 95% of employers expect healthcare benefits to undergo either modest of major changes by 2018 – PPACA impacting bottom line – Costs continue to rise well above rate of inflation 2014 19th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care
  30. 30. Health Care Best Practices • The Most Successful Companies are making strides in six core areas: – Health Improvement – Engagement – Accountability – Linking providing strategies – Technology – Healthy environment 2013 18th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care
  31. 31. Private Exchanges and Defined Contribution •What is a Private Exchange? Sponsored benefitsmarketplace Processvs. transaction ShoppingExperience oSponsor selects vendors oBudget determined oEmployees purchase based on need using decision support tools Way for employer to cap expenses Alternative to public options
  32. 32. Private Exchanges and Defined Contribution (cont.) •What is Defined Contribution? Similarto defined contribution for retirement (e.g. 401k) oEmployer establishes budget oDetermines buckets Linkto Total Rewards philosophy oBudgeted growth oPerformance factor Givesemployees ownership in how they spend
  33. 33. • The Mercer study shows that the average raise in base pay for 2014 in the U.S. is projected to be 2.9%. • Employers are using the dollars they do have available to reward performance. • Average salary increases (based on a five point rating scale) shows the highest rated performers getting base increases approximately 180% of those received by their middle rated cohorts. Base Pay Trends Mercer 2013 Salary Trend Survey Performance Rating Percent of Workforc e Average Pay Increas e Highest-rated 7% 4.60% Next Highest-rated 30% 3.50% Middle-rated 54% 2.60% Low-rated 7% 0.90% Lowest-rated 2% 0.20%
  34. 34. Salary Budget Information 0.0% 1.0% 2.0% 3.0% 4.0% Actual 2007 3.9% Actual 2008 3.9% Actual 2009 2.2% Actual 2010 2.5% Actual 2011 2.8% Actual 2012 2.8% Actual 2013 2.9% Projected 2014 3.1% World at Work Survey Data / Projection for 2014 Salary Budget Trends
  35. 35. Professional Development • Tuition Assistance • Mentoring Programs • Succession Planning • Leadership Development • Individual Coaching • Training • Career pathways (with on and off ramps throughout the career life cycle)
  36. 36. Professional Development Best Practices • Think holistically about people development: – Only 10% of someone’s on-the-job behavior change comes from training – 20% comes from assessment/feedback – 70% comes from on the job experience • Cross functional teams • Cross group teams • Ad Hoc committees, special projects, etc. • Informal methods of development/information sharing become ever important in today’s workplace (blogs/wikis/on-line forums/internal expert directories).
  37. 37. Leaders Have a Direct Impact on Critical Talent Source: The Post-Recession Workplace: Competitive Strategies for Recovery & Beyond, SHRM 2010 Leadership Competencies • Strategic thinking • Strong personal ethics/values • Emotional intelligence • Business acumen • Managing change/ chaos/ innovation • Risk management- dealing with crisis/ transition • Global mindset Leadership Soft Skills • Communication • Planning & organizing • Personal effectiveness • Workforce diversity & cross cultural relations • Collaboration/team- orientation • People development Leadership Styles • Authenticity • Collaborative knowledge & power • Trust/credibility- building • Openness to learning • Managing with transparency • People-first management • Leading by example
  38. 38. Leaders Have a Direct Impact on Critical Talent 5 Keys for Leaders: 1.Know Them 2.Grow Them 3.Inspire Them 4.Involve Them 5.Reward Them