Reward

by Toronto Training and HR

November 2014

1

CONTENTS3-4 Introduction5-6 Types of financial reward7-9 Types of non-financial reward10-11 Is reward a cost or an investment?12-13 Objectives of reward strategy14-15 Issues with reward practices today16-17 Determining the reward budget18-20 Making changes to the existing reward program21-23 Total rewards optimization 24-26 Value-driver analysis and value trees27-28 Realized and realizable reward29-30 Types of incentive plan31-32 Areas to consider around executive reward33-35 Research around executive reward36-38 Trends around reward strategy39-41 Trends around reward design42-44 Trends around reward implementation45-46 What is likely to happen in 2015?47-48 Risks and priorities for 201549-50 Conclusion, summary and questions

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Introduction

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Introduction to Toronto Training and HR

Toronto Training and HR is a specialist training and human resources consultancy headed by Timothy Holden

10 years in banking

15 years in training and human resources

Freelance practitioner since 2006

The core services provided by Toronto Training and HR are:

Training event design

Training event delivery

HR support with an emphasis on reducing costs, saving time plus improving employee engagement and morale

Services for job seekers4

Types of financial reward

5

• Base or fixed pay

• Total earnings

6

Types of financial reward

Types of non-financial reward

7

• Opportunities for personal and career development

• Flexible working (such as working from home or flexitime)

• Being involved in decisions that affect how and when employees do their work

8

Types of non-financial reward1 of 2

• A pleasant working environment

• Good performance management and performance reviews

• Recognition, such as through an ‘employee of the month’ award or team-based events

9

Types of non-financial reward2 of 2

Is reward a cost or an investment?

10

• Minimize it

• Optimize it

11

Is reward a cost or an investment?

Objectives of reward strategy

12

• Externally competitive

• Internally fair

• Is motivational

• Rewards at a reasonable cost

13

Objectives of reward strategy

Issues with reward practices today

14

• Strategy and design

• Implementation

15

Issues with reward practices today

Determining the reward budget

16

• Ability to pay

• Inflation

• Movement in market rates

• The ‘going rate’ of pay awards elsewhere

• Recruitment and retention issues

17

Determining the reward budget

Making changes to the existing reward program

18

• How does the change reflect real business success? Does it reward the right people?

• Does it add value to the business? Is it cost competitive to other organizations?

• Does it fit the talent we need for the future?

19

Making changes to the existing reward program 1 of 2

• Is the organization able to acquire and retain a viable, reliable, and quality workforce?

• Does the communication make sense to a discriminating workforce?

• Is it more responsive to workforce needs?

20

Making changes to the existing reward program 2 of 2

Total rewards optimization

21

• Definition

Questions

• What’s the right overall level of total investment in rewards?

• What’s the best way to allocate that investment across reward elements to maximize the employee behaviour we want to influence?

22

Total rewards optimization 1 of 2

Questions (cont.)

• How do these results vary across targeted employee segments (whether by business unit, age, job level, tenure, skill group, location, performance or other categories)?

23

Total rewards optimization 2 of 2

Value-driver analysis and value trees

24

Value-driver analysis

• Definition

• Interrelationships among various metrics and levers to pull in order to impact results

• People-related costs

25

Value-driver analysis and value trees 1 of 2

Value trees

• Definition

• Deconstructing a high-level driver

• Primary and subordinate drivers

26

Value-driver analysis and value trees 2 of 2

Realized and realizable reward

27

• Realized reward

• Realizable reward

• Issues to consider in developing a realized/realizable pay analysis

28

Realized and realizable reward

Types of incentive plan

29

• At-risk incentive plan

• Add-on incentive plan

30

Types of incentive plan

Areas to consider around executive reward

31

• Determinants (the ‘why’ question)

• Unit of analysis (individual or group)

• Consequences (the ‘why does it matter’ question)

32

Areas to consider around executive reward

Research around executive reward

33

• Are executive compensation and company performance disconnected?

• Did so-called ‘fat cat’ pay caused the worldwide economic crisis of 2008?

• Do Presidents and CEOS manipulate the remuneration committees who set their pay? 34

Research around executive reward 1 of 2

• Has C-suite play taken off because HR was ‘asleep at the wheel’ ?

• Does widening pay dispersion damage employee engagement, satisfaction, performance, fairness, trust or innovation?

35

Research around executive reward 2 of 2

Trends around reward strategy

36

• Externally competitive to motivational

• Inconsistent strategy and design toconsistent strategy and design

• Short-term performance orientation to longer-term performance orientation

37

Trends around reward strategy 1 of 2

• Financial performance measures to balanced performance measures

• Cost orientation of reward to ROI orientation of reward

38

Trends around reward strategy 2 of 2

Trends around reward design

39

• Base pay program management tovariable pay program management

• Paying for jobs and work to focus on paying for value and contribution

• Flexible work arrangements to career development, culture and recognition

40

Trends around reward design 1 of 2

• Defined benefits plans to defined contribution plans

• Siloed reward orientation to total rewards orientation

41

Trends around reward design 2 of 2

Trends around reward implementation

42

• Reward program design to reward program implementation

• Consistent treatment in pay toperformance-based differentiation

• HR-led implementation toline manager-led implementation

43

Trends around reward implementation 1 of 2

• Ad-hoc reward communications tosustained senior leader messaging

44

Trends around reward implementation 2 of 2

What is likely to happen in 2015?

45

• Managing cost base

• Alignment

• Pay for performance

• Total rewards

• Doing more with less

• Communications

• Coaching line managers

• Differentiating rewards

• Non-financial rewards

• Business acumen46

What is likely to happen in 2015?

Risks and priorities for 2015

47

• HR

• Finance

48

Risks and priorities for 2015

Conclusion, summary and questions

49

Conclusion, summary and questions

Conclusion

Summary

Videos

Questions

50