Post on 19-Jan-2017
NOVEMBER 2016
What to do if Brexit and market volatility are impacting
your rewards and talent
© 2016 Willis Towers Watson. All rights reserved.
Richard Veal and Tamsin Sridhara
In July clients told us that talent issues had become more important
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Source: WTW Brexit Compass Survey (July 2016)
Don’t know and not applicable responses removed
Which people issues have become more a priority as a consequence of Brexit
(% of respondent companies)
Workforce & Talent
75%
Total Rewards
49%
Engagement &
Communications
49%
Clients’ exposure varies significantly by sector and by company
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Source: Oxford Migration Watch based on ONS Labour Force Survey Q1-Q4 2014
Four of top 10 sectors by share of workforce, % migrant
ACCOMMODATION
27% 27%
FOOD &
BEVERAGE
22%
SCIENTIFIC
R&D
21%
COMPUTER
PROGRAMMING
Company’s choice
Since July its market volatility that is causing the immediate issues
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UNKNOWN
₤
Limit movement orSterling
FTSE Protect freedom to
trade?
Business as usual
Change course
KNOWN
Market Volatility
Brexit terms
Question 1: Have Rewards issues become more pressing?
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Source: WTW Brexit Compass Survey (July 2016)
Don’t know and not applicable responses removed
Which people issues have become more a priority as a consequence of Brexit (% of respondent companies)
Workforce & Talent
75%
Total Rewards
49%
Engagement &
Communications
49%
The immediate Rewards issues we are hearing
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1. In-flight incentives 2. 2017 targets &
objectives
4. Pension funding 3. 2017 budget planning
Market
Volatility
Question 2: What are you doing about your 2016 and 2017 incentives?
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2016 Bonus
Source: WTW 2016 Incentives Pulse Survey October 2016
50%
Results of WTW Incentives & Currency Flash Survey
50%
General Approach
Currency neutral
appropriate for all or
some financial
measures
27%
Management fully
accountable
for results (incl
currency)
Currency neutral
for at least one
significant financial
measure
27%
No adjustments
to measures, funding
or pay outs for
currency fluctuations
Talent issues
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1. Expatriates
2. Mobility
4. Sourcing talent
3. Retaining critical
skill groups
Today
Tomorrow
Who are our EU nationals?
How critical are they?
What is our exposure - today and
tomorrow?
How do we mitigate?
Adjusting salary and COLA
Relocation, retention
& recruitment issues
Talent issues
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Who are our EU nationals?
How critical are they?
What is our exposure - today and
tomorrow?
How do we mitigate?
Adjusting salary and COLA
Relocation and recruitment issues
Question 4: how far have you reached in answering these questions?
Question 3: how are you dealing
with expat/ non-UK issues?
Summary
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Expatriates
Mobility
Sourcing talent
Retaining critical skill groups
Today Tomorrow
In-flight incentives
2017 targets & objectives
Pension funding
2017 budget planning
Employee Engagement and Communication
NOVEMBER 2016
What to do if Brexit and market volatility are impacting
your rewards and talent
© 2016 Willis Towers Watson. All rights reserved.
Richard Veal and Tamsin Sridhara
Pension funding
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Increase in
pension costs
PENSION FUNDING COSTS
0% 30%+
DC only, or well-hedged
DB with no future serviceDB only, minimal hedging &
continued future accrual
Turning to Talent
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Scenario Politics Economics UK economic impact
1. Good Brexit /
Renegotiation
Swift Brexit or Brexit avoided
No political implications for UK
or Eurozone
Trade under EFTA type arrangement (or EU)
Near-term uncertainty reduces investment
Longer-term impact is minimal
Modest:
1.5% lower GDP over 5
years
2. Central Bumpy road to Brexit
Scottish referendum
Calls for EZ referenda
EUCU type trade deal struck after 5 years
Business investment, hiring and asset prices
weak
Monetary stimulus and fiscal “easing” helps
Moderate:
2.5% lower GDP over 5
years
3. Bad Brexit Swift but acrimonious Brexit
Scottish referendum to leave
Additional referenda in EZ
Trade with EU under WTO terms
Sharply lower investment and house prices
Unemployment undermines real income
growth
Fiscal and monetary stimuli ineffectual
Severe: 5% lower GDP
over 5 years
4. EZ break up Swift but acrimonious Brexit
Very high political contagion to
EZ
Key EZ member votes to leave
Very large investment and consumption
shock, more severe than GFC
Deep global recession, sharply higher
unemployment
Fiscal and monetary stimuli ineffectual
Extreme: 7.5% lower GDP
over 5 years
Willis Towers Watson Brexit Scenarios
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Speaker details
Richard VealUK Line of Business Leader, Talent and Rewards
Phone: +44 (0) 17 3727 4634
richard.veal@willistowerswatson.com
Tamsin SridharaDirector, Talent and Rewards
Phone: +44 (0) 20 7170 2914
tamsin.sridhara@willistowerswatson.com