THE REWARD BAROMETER: TRENDS & PROJECTS SHAPING TODAY’S REWARD MANAGER’S AGENDA IN 2014 AND BEYOND

FEMKE DHONT, CENTRE FOR EXCELLENCE IN STRATEGIC REWARDS

1METHODOLOGY

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SURVEY

Questionnaire

17 December 2013– 25 January 2014

43 companies

All sectors

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COMPANY SIZE

2% 7%

7%

14%

69%

Number

0-200201-500501-10001001-2000More than 2000

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BUILDING BLOCKS

Current reward

practices

Strategic importance

& satisfaction

Reward Trends in

2014

Reward building of the future

2CURRENT REWARD PRACTICES

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REWARD FRAMEWORK

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DO YOU HAVE A FORMAL REWARD STRATEGY?

YesNo, but

planning No, not planning

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20132009

‘Reward strategy is ultimately a way of thinking’

(Brown)

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WHICH FACTORS DETERMINE BASE PAY PROGRESSION?

Individu

al P

erfo

rman

ce

Mar

ket P

ositi

oning

Individu

al C

ompe

tenc

ies

Compa

ny P

erfo

rman

ce

Other

Serv

ice-

relate

d Pa

y0%

20%

40%

60%

80%

100%

% of respondents

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WHICH FACTORS DETERMINE THE PAY-OUT OF INCENTIVES?

Indi

vidu

al P

erfo

rman

ce

Compa

ny P

erfo

rman

ce

Indi

vidu

al C

ompe

tenc

ies

Other

Mar

ket P

ositi

onin

g

Serv

ice-re

late

d Pa

y0%

20%

40%

60%

80%

100%

% of respondents

3STRATEGIC PRIORITIES & SATISFACTION

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4.25 4.75 5.25 5.75 6.25 6.754.25

4.45

4.65

4.85

5.05

5.25

5.45

109

8

5

4

7

2

6

3

1

Satisfaction

Strategic Importance

1 – Diversity2 – Recruitment3 – Retention4 – Grading5 – External Equity

6 – Competence management7 – Workforce Planning8 – Internal Equity9 – Performance Management10 – Cost Management

STRATEGIC IMPORTANCE VERSUS SATISFACTION

Keep

Areas of concern

Highest priority

Good Job

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HIGHEST PRIORITIES

4REWARD PROJECTS FOR 2014

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TOP OF MIND IN 2014

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WHAT WILL BE ON THE AGENDA THE COMING YEARS?

TOP Reward Projects 2014

Reward Communication

Short-term Incentives

Performance Management

Base Pay

Flexible Benefits

Car Policy

Pension & Group Insurance

Long-term Incentives

Work-Life Benefits

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CONCLUSION – CHALLENGE FOR 2014

Make rewards…

5THE REWARD BUILDING OF THE FUTURE

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Indicate to what extent you agree that the following suggestions are

sustainable elements for the reward building of the future

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BASE PAY – EVALUATE THE FEASIBILITY OF THE FOLLOWING SUGGESTIONS..

Increase based on individual performance

Competence-based increase

Index limited to the first 3500 euro gross

Increase till mid-Point

Seniority-based increase till Y6

Only indexation as increase

Seniority-based increase

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WHATS DOES THE LITERATURE SAY ABOUT SENIORITY-BASED PAY?

Tenure and performance are positively linked, but

At a diminishing rate

Y0 – Y3: positive effect

Y3 – Y6: decreasing positive effect

Y14 - …: zero effect

Rationale for ‘light’ seniority-based pay till certain seniority level

(NG &Feldman)

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VARIABLE PAY – WHAT DO YOU THINK ABOUT THE FOLLOWING SUGGESTIONS?

Target bonus as fixed amount

Profit Sharing Systems

Participation in Shares

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EMPLOYEE BENEFITS – YOUR THOUGHTS ON THESE IDEAS?

Mobility Budget

DC plan based on reference salary

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MORE INFORMATION?

Femke Dhont – Programme manager

Femke.dhont@vlerick.com

+ 32 (9) 210 97 64

FemkeDhont

www.vlerick.com/strategicrewards