September 2014

REWARD AND COMPENSATION

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3 Introduction 4-5 Definitions 6-7 The reward lifecycle 8-9 Determining base pay and total earnings 10-11 End goals of reward 12-13 Reasons for joining an organization 14-15 Competitive market and positioning 16-17 Engaging stakeholders in the process 18-19 Reasons to offer non-financial rewards 20-22 Attendance reward programs 23-24 Pay for performance 25-26 Linking effective reward to performance 27-28 Stock options 29-30 Total reward 31-32 Linking behaviour and performance 33-34 Outcomes when adopting reward technology 35-37 The optimal reward process 38-39 Implementation of the optimal reward process 40-44 A typical sales compensation report card 45-46 Wage mobility for foreign-born workers 47-48 Reward initiatives to retain top talent 49-50 Trends around reward 51 Summary and questions

Agenda

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

10 years in banking15 years in training and human

resourcesFreelance practitioner since 2006

The core services provided by Toronto Training & HR are:

Training event designTraining event deliveryHR support with an emphasis on

reducing costs, saving time plus improving employee engagement and morale

Assistance for job seekers

Introduction to Toronto Training and Human Resources Inc.

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DEFINITIONS

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RewardBase or fixed payTotal earnings

Definitions

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THE REWARD LIFECYCLE

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Market analysisProgram designAdministrationAnalysis and refinement

The reward lifecycle

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DETERMINING BASE PAY AND TOTAL EARNINGS

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Pay structuresPay levelsPay awardsPay progressionVariable pay; cash bonuses and incentives

Determining base pay and total earnings

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END GOALS OF REWARD

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Make the right offersKeep people engaged and motivatedDrive the behaviours that drive valueRetainInvest wisely

End goals of reward

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REASONS FOR JOINING AN ORGANIZATION

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EmployeesEmployers

Reasons for joining an organization

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COMPETITIVE MARKET AND POSITIONING

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Definitions for your competitive setRecommendations for your competitive positioningSalary structure

Competitive market and positioning

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ENGAGING STAKEHOLDERS IN THE PROCESS

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ExecutivesEmployees

Engaging stakeholders in the process

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REASONS TO OFFER NON-FINANCIAL REWARDS

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Personal and career developmentFlexible workingInvolvement in decision-makingPositive working environmentPerformance managementRecognition

Reasons to offer non-financial rewards

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ATTENDANCE REWARD PROGRAMS

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Attendance reward programs 1 of 2

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Attendance reward programs 2 of 2

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PAY FOR PERFORMANCE

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Components to include when creating a valid and legally defensible planElements to include in the development of a model for the distribution of merit pay increasesJust Noticeable Differences (JNDs)Steps for an effective pay-for-performance system

Pay for performance

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LINKING EXECUTIVE REWARD TO PERFORMANCE

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Current trendsIssues for HRResearchRationaleReaching out

Linking executive reward to performance

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STOCK OPTIONS

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Greater CEO riskReducing riskTheoretical perspectives

Stock options

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TOTAL REWARD

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Foundational rewardsCareer and environmental rewardsPerformance-based rewards

Total reward

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LINKING BEHAVIOUR AND PERFORMANCE

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Total rewards and work experienceEmployee mindset and behaviourCustomer behaviourFinancial performance

Linking behaviour and performance

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OUTCOMES WHEN ADOPTING REWARD TECHNOLOGY

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EfficiencyConsistencyVisibilityTransparencyTrust

Outcomes when adopting reward technology

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THE OPTIMAL REWARD PROCESS

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Target pay levelsHow are targets set?Award and recognition programsWeight on base, weight on incentivesControllable, measurable and strategicThe hierarchy of performance measures

The optimal reward process 1 of 2

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Typical sales incentive measuresHaving a threshold or no thresholdCapsCommunication

The optimal reward process 2 of 2

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IMPLEMENTATION OF THE OPTIMAL REWARD PROCESS

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Develop implementation planConfirm systems capabilitiesDevelop transition approachDevelop objective setting approach and set individual objectivesDevelop communication plan materialsDevelop and conduct trainingMeasure understanding, acceptance and success

Implementation of the optimal reward process

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A TYPICAL SALES COMPENSATION REPORT CARD

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Sales characteristicsIndividual versus team influence on outcome of the salePercentage of current annual revenue that would repeat without the existence of this job roleDirect contact with the customer (in-person or by phone)

A typical sales compensation report card 1 of 4

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Sales characteristics (cont.)Influence of the company or the job incumbent on the saleRole in the customer’s buying process

A typical sales compensation report card 2 of 4

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Alignment of compensation plan to job roles and sales strategyMotivation and recognition for top performanceMarket competitivenessPay mixMeasurement clarityTeaming and cross-selling

A typical sales compensation report card 3 of 4

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Mechanics and payment cyclesCompensation cost of salesGoal equity and achievabilityPlan management and administration

A typical sales compensation report card 4 of 4

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WAGE MOBILITY FOR FOREIGN-BORN WORKERS

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Wage distribution of natives and immigrantsWage mobility by immigration statusWage mobility by years since migrationWage mobility by country of originWage mobility by education

Wage mobility for foreign-born workers

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REWARD INITIATIVES TO RETAIN TOP TALENT

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Spot cash awardsIndividual incentives for non-managementBroad-based equityTeam/small group incentivesCash profit sharingGainsharing plans

Reward initiatives to reward top talent

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TRENDS AROUND REWARD

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Base and variable pay policiesEmployee share schemes and long-term incentive plansEmployee benefitsPensions

Trends around reward

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SUMMARY AND QUESTIONS

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