Attracting Premier Talent Comes with a Price You Can’t Afford Not to Pay!
PwC’s 18th Annual Global CEO Survey revealed that “one of the biggest headaches for CEOs is making sure that the organization has the right people to cope with what lies ahead.” It further said that “CEOs need to be sure that the business is fit to react quickly to whatever the future may throw at it – and that means filling it with adaptable, creative people, working in a culture where energy fizzes and ideas spark into life. If they can’t be found, they must be created.” View this presentation that will address how you can successfully address this priority for your organization.
2. Vision: HelpYou Become a
Wealth Multiplier Organization
Transform the way you use
compensation to share value with
employees.
3. If you do that…
• Quality of talent will improve.
• Employee engagement will expand.
• Performance will be magnified.
• Business growth will be accelerated.
• Shareholder value will increase.
4. 44
Key Questions
Why is this an issue?
What do trends and
data say?
Therefore, what?
5. 55
The Issue
One of the biggest headaches for CEOs is making sure
that the organization has the right people to cope with
what lies ahead. There’s the basic question of planning
for the skills that are needed now and in the future:
Which roles will be automated? What new roles will be
needed to manage and run emerging technology? What
skills should the company be looking for, and training
their people for? Where will we find the people we
need?
PwC’s 18th Annual Global CEO Survey
6. 66
But more importantly, CEOs need to be sure that the
business is fit to react quickly to whatever the future
may throw at it – and that means filling it with
adaptable, creative people, working in a culture where
energy fizzes and ideas spark into life. If they can’t be
found, they must be created.
PwC’s 18th Annual Global CEO Survey (continued)
7. 77
Key Talent Trend
By 2020, the worldwide shortage of
highly skilled, college-educated
workers could reach 38 to 40
million, or 13% of demand.
(Source: McKinsey Global Institute)
8. 88
Attracting Premier Talent
3 Keys
1. Define What Talent You Need
2. Recruit to a Role (not a Position)
3. Market a Partnership
9. 99
1. Know What Talent You Need
Talent & Business Model
Alignment
Have top performers
working in roles that
maximize their unique
abilities
Avoid placement in roles
that don’t have a
strategic impact
10. 1010
Talent Assessment
Define skill “categories” needed
to drive business model
Identify gaps
Form recruiting strategy
13. 1313
Accelerators
Experience with more than
one company
Desire to rise in ability,
recognition, contribution
and influence.
Many single but a growing
number are married and are
starting families
14. 1414
Catalysts
Well into their 30s or
early 40s
Meaningful experience
Unique abilities
Able to affect significant
(positive) change
Companies are
competing for their
talents
Have leverage
Many married and have
children
E
L
O
N
M
U
S
K
15. 1515
The Emergence of Catalysts
The New Corporate Garage
…Apple’s inventiveness is no anomaly; it indicates a dramatic
shift in the world of innovation. The revolution spurred by
venture capitalists decades ago has created the conditions
in which scale enables big companies to stop shackling
innovation and start unleashing it.
Harvard Business Review,
September 2012
16. 1616
Catalysts Change Growth Trajectory
“…entrepreneurial individuals, or
‘catalysts,’ within big companies are
using those companies’ resources,
scale, and growing agility to develop
solutions to global challenges in ways
that few others…”
Harvard Business Review,
September 2012 (continued)
Jony Ive
17. 1717
2. Recruit to a Role
(Not a Position)
Position: characterized by specific duties you
need someone to carry out.
Role: defined by outcomes and stewardship.
Positions are filled. Roles are fulfilled.
19. 1919
Key Questions
What outcomes need to be
achieved if the company’s
growth goals are going to be
fulfilled?
What specific skill sets are
needed to produce those
outcomes?
What value proposition will
attract and retain that kind of
talent?
20. 2020
3. Market a Partnership
1.Compelling Future
2.PositiveWork
Environment
3.Opportunities for
Personal and
Professional Growth
4.Financial Rewards
Total Rewards
21. 2121
1. Compelling Future
I see myself in
the company’s
future.
I want a “seat at
the table” in
determining
the direction of
the company.
I like the
direction the
company is
headed.
I embrace the
company’s
values.
I believe the
company can
achieve its
growth goals.
22. 2222
2. Positive Work Environment
I like the nature of the
work I’m doing.
I am working within my
unique ability.
My responsibilities have
strategic purpose.
I like the team of people
with whom I work.
There are channels and
processes for solving
problems and decision
making.
23. 2323
3. Personal and Professional Development
As a result of my immersion in
the culture and resources of
this organization, my unique
abilities will improve—and I will
experience personal and
professional fulfillment.
24. 2424
4. Financial Rewards
I have some
control over
how much I
can earn if I
produce.
I feel a sense of
partnership
with
ownership.
There is a
philosophy that
guides pay decisions
and I relate to it.
There is a
mechanism for
sharing value with
those who help
produce it.
25. Link Company & Employee Goals
Employee “Hierarchy of Needs”
Cash Flow & Living Standard
Risk Protection
Retirement Planning
Value Sharing
Wealth Accumulation
Qualified & Executive
Retirement Plans
Comprehensive, Flexible
Benefits Plan
Short & Long-Term Incentive
Plans
Salary & Bonus
Wealth Multiplier Philosophy
Clear Pay Philosophy
1
2
3
4
5
26. 2626
Hierarchy & Millennial Segments
Launchers
Area Orientation
Cash
Flow/Standard of
Living
• Pay expectations still being
formed
• Modest needs
• Competitive salary and
mentoring
Risk Protection • Basic needs
• Don’t want to pay anything
Retirement • Small or little concern
VS/Wealth
Accumulation
• More concerned about money
for this weekend
• Short-term preferred over long-
term
27. 2727
Hierarchy & Millennial Segments
Accelerators
Area Orientation
Cash
Flow/Standard of
Living
• Context:
• Experience
• Peer Pay
• Life Responsibilities
• College Debt
Risk Protection • Adequacy of coverage—
family focus
• Cost sensitive
Retirement • Growing Focus
VS/Wealth
Accumulation
• Emphasis on increased cash
flow
• Short-term preferred over
long-term
28. 2828
Hierarchy & Millennial Segments
Catalysts
Area Orientation
Cash
Flow/Standard of
Living
• Prefer median of market pay
but with high upside potential
Risk Protection • Want flexibility and options
• Maximum Control
Retirement • Two areas of focus:
• Retirement accumulation
• Current tax savings
• Deferred compensation
VS/Wealth
Accumulation
• Large area of emphasis
• Focus on long-term
opportunity
• Mirror owner opportunity
30. 3030
Criteria for Value Proposition
Appeal to top talent (catalysts)
Promote and reinforce
innovation
Flexible
Tied to business growth
Minimize guarantees
Large “upside” potential
Value creation and sharing
focus
31. 3131
Future Trends for Defining a
Financial Partnership
Performance Agreements
Opt-In Plans
Internal Venture Capital
Long-Term Value Sharing Plans
32. 3232
Performance Agreements
Prominent Media Company
High performers excluded from profit
sharing-type incentive plan
Annual negotiated “deal”
“Deal sheet”
Quarterly self-evaluation
33. 3333
Performance Agreement
Outcomes
High performance threshold
Small or even $0 payouts can occur
High-risk, high-upside
Mentoring environment
Ownership mindset
High retention
34. 3434
Opt-In Plans
Most Ideal in Start-Up Environment
Opt for:
“Higher” salary plus modest incentives
“Low” or no salary and high upside through short and long-term value
sharing
Tied to a revenue or profit-sharing formula
Volatility: payments lowered &/or deferred
Opt-In periods may differ
35. 3535
Opt-In Plans
Outcomes
Employees feel in control
Owners limit exposure
Highly flexible
“Shared” entrepreneurial experience
Promotes an ownership mindset
“Self-identifies” key performers
36. 3636
Internal Venture Capital
Highly Entrepreneurial
Approach
Larger organizations
Establish venture capital
account
Define access criteria
Fund innovative ideas
Performance criteria set
Value sharing plan tied to
performance criteria
Accompanied by performance
agreements or “opt-in” comp
plans
38. 3838
Long-Term Value Sharing Plans
Broad Application
Any size organization
Can be tied to any of
previous approaches
Creates “wealth
multiplier” mindset
Links employees to
company vision and
business plan
39. 3939
Select the Right Plan Type
Stock Option
Performance Shares
Restricted Stock
Phantom Stock
Option
Performance
Phantom Stock
Phantom Stock
Profit Pool
Performance Unit
Strategic Deferred
Compensation
40. 4040
Grant Equity or
Not Equity?
Full Value or
Appreciation Only?
Yes
Appreciation
Stock Option
Full Value
Performance Based?
Yes
Performance Shares
No
Restricted Stock
No
Reward for Value
Increase or Financial
Performance?
Value Increase
Full Value or
Appreciation?
Appreciation
Phantom Stock
Option
Full Value
Performance Based?
Yes
Performance
Phantom Stock
No
Phantom Stock
Financial
Performance
Appreciation-
Performance Based or
Employee Directed?
Performance
Based Reward for
Profit/Cash Flow or
Other Metrics?
Profits
Allocation or
Objectives Based?
Allocation
Profit Pool
ObjectivesOther Metrics
Performance Unit
Employee Directed
Strategic Deferred
Compensation
41. 4141
Market a Future that’s Relevant
Build a sense of partnership
Demonstrate commitment
To the future business
To key contributors
Promote don’t just
communicate
Be consistent
42. 4242
Communicate and Promote the
Plan
1. Explain, celebrate and
reinforce the total value
proposition
2. Communicate a sense of
partnership
3. Project the wealth
multiplier opportunity
44. 4444
Employee Messaging
(Preferred)
Here’s our
philosophy about
pay and rewards
Here are our specific
pay programs
Here’s how our pay
programs could
work for you if we
achieve our plan
Here’s our future
Here’s how we’re
going to get there
Here’s the role we
picture for you
Here’s how we
encourage our
people to grow and
contribute
45. 4545
Key Producer
Employee Value Statement
Sample EVS
Year 1 2 3 4 5
5-Year Plan
Achievement Level 100% 100% 100% 100% 100%
Current and Inflated
Salary $ 160,000 $ 166,400 $ 173,056 $ 179,978 $ 187,177
Cash Incentives Paid at
Target $ 64,000 $ 66,560 $ 69,222 $ 71,991 $ 74,871
LTIP Vested Value at
Year End $ - $ 74,000 $ 186,000 $ 311,000 $ 448,000
Retirement Plan Value
(at 7%) $ 17,120 $ 36,123 $ 57,169 $ 80,428 $ 106,086
Total Cash Received $ 224,000 $ 232,960 $ 242,278 $ 251,970 $ 262,048
Total Wealth
Accumulation $ 17,120 $ 110,123 $ 243,169 $ 391,428 $ 554,086
Total Paid or
Accumulated $ 241,120 $ 567,083 $ 942,407 $ 1,342,636 $ 1,767,343
46. 4646
Evaluate & Refine
Line of Sight
Vision
Where?
Model &
Strategy
How ?
Roles and
Expectations
My Contribution?
Rewards
What’s in it
for me?