Strategic total rewards management remuneration and rewards summit 11 june 2014

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Strategic Total Rewards Management (STORM) process, principles and best practice guidelines, Strategic Talent Attraction, Motivation and Employee Engagement and Benchmarking and Evaluating STORM

Strategic Total Rewards Management (STORM) process, principles and best practice guidelines, Strategic Talent Attraction, Motivation and Employee Engagement and Benchmarking and Evaluating STORM

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  • 1. SMART-LINK CONSULTANCY REMUNERATION AND REWARDS SUMMIT 2014 PREMIER HOTEL OR TAMBO CHARLES COTTER 11 JUNE 2014 (DAY 1)
  • 2.  INTRODUCTION AND INTRODUCTORY ACTIVITY (DIAGNOSIS)  WORKSHOP A: STRATEGIC TOTAL REWARDS MANAGEMENT (STORM)  WORKSHOP B: UTILIZING STORM TO ATTRACT AND RETAIN THE BEST TALENT  WORKSHOP C: UTILIZING STORM TO ENGAGE AND MOTIVATE EMPLOYEES TO ACHIEVE IMPROVED LEVELS OF PRODUCTIVITY  WORKSHOP D: BENCHMARKING, MEASURING AND EVALUATING THE IMPACT OF STORM WORKSHOP OVERVIEW (DAY 1)
  • 3.  Refer to pages 6-19 of the Delegate hand-out  Definition of Rewards Management  Objective of Rewards Management  Types of rewards  The components of Total Rewards  The evolution of Rewards Management  Best Practice Rewards Management INTRODUCTION
  • 4. TYPES OF REWARDS
  • 5. THE EVOLUTION OF REWARDS MANAGEMENT
  • 6. BEST PRACTICE REWARDS MANAGEMENT PRINCIPLES
  • 7.  #1 Your organization offers competitive and market-related (above market- related) remuneration packages to employees (prospective employees).  #2 Your organization adequately and accurately recognizes the knowledge, skills, competencies and experience of employees and rewards them accordingly.  #3 Your organization applies fairness in methods, procedures and practices for compensating, recognizing and rewarding employee contributions.  #4 Your organization applies equitable methods, procedures and practices for compensating, recognizing and rewarding employee contributions.  #5 Your organization promotes transparency through sharing information about their compensation practices, pay rates criteria and how they are determined – especially at the managerial and executive levels. DIAGNOSIS OF CURRENT REWARDS MANAGEMENT PRACTICES
  • 8.  #6 Your organization applies consistency (standardization) in the allocation of remuneration and rewards e.g. performance bonuses and incentives etc., thereby serving as a retention and motivation mechanism.  #7 Your organization’s applies objectivity throughout the performance management process, as the pre-cursor and chief determinant of performance bonuses.  #8 Your organization has an efficient, user-friendly and stream-lined job evaluation and job grading process.  #9 The value of remuneration and rewards offered by your organization is affordable (feasible) promoting business sustainability and continuity.  #10 Your organizations’ rewards system is effective in that to directly contributes to and enables the achievement of business management goals e.g. higher levels of retention, productivity and performance. DIAGNOSIS OF CURRENT REWARDS MANAGEMENT PRACTICES
  • 9.  Contextual introduction to STORM  The strategic imperative of Rewards Management  Defining the fundamental concepts  Creating/Developing a reward strategy  Implementing Strategic Rewards Management WORKSHOP A: STRATEGIC TOTAL REWARDS MANAGEMENT (STORM)
  • 10.  An effective total rewards strategy enables organizations to deliver the right amount of rewards, to the right people, at the right time, for the right reason.  Best Fit vs. Best Practice vs. Hybrid (integration)  Reward strategies must be anchored in business reality to be effective. Which means linking it to your business strategy, the needs of your employees as well as your organization.  “Effective reward is about finding the right reward programs for the strategic direction of your business.” (Tom McMullen)  Appropriate Total Rewards Framework CONTEXTUAL INTRODUCTION TO STORM
  • 11.  “Effective reward is about finding the right reward programs for the strategic direction of your business.” (Tom McMullen)  Strategic reward management involves the formulation and implementation of an equitable reward system that is congruent with the organization’s strategic objectives.  The reward system must be congruent with the management style and other organizational systems, in particular, communication and decision-making. (Lawler)  To be effective, a total rewards package must tie together the organizational strategy, workforce strategy, and HR strategy. Total rewards should align each employee with the organizational objectives. THE STRATEGIC IMPERATIVE OF REWARDS MANAGEMENT
  • 12.  Strategic reward is based on the design and implementation of long-term reward policies and practices to closely support and advance business or organizational objectives as well as employee aspirations.  The concept of total reward encompasses all aspects of work that are valued by employees, including elements such as learning and development opportunities and/or an attractive working environment, in addition to the wider pay and benefits package.  Links between strategic and total reward DEFINING THE FUNDAMENTAL CONCEPTS
  • 13. COMPONENTS OF TOTAL REWARD STRATEGY
  • 14.  Holistic  Best fit  Integrative  Strategic  People-centred  Customized  Distinctive  Evolutionary CHARACTERISTICS OF TOTAL REWARD SYSTEM
  • 15.  Advantages/Benefits: Economic: Creates affordable and sustainable costs Financial: Generates maximum return on the reward program investment Strategic and Performance-related: Connects with the business strategy to create a high performance culture Reputational: Supports the employment brand BUILDING A BUSINESS CASE FOR STORM
  • 16.  Costs/drawbacks: Management: Managerial apathy Cultural: Organizational cultural resistance and readiness Provision: The supply of resource-constrained rewards (across the board) Weighting: Attempting to measure the comparative value of certain rewards BUILDING A BUSINESS CASE FOR STORM
  • 17.  Step 1: Define the context and issues (environmental analysis)  Step 2: Set the total reward strategy (guiding principles and reward priorities)  Step 3: Set reward change agenda (status quo relative to desired end state)  Step 4: Implementation overview  Step 5: Design individual plans  Step 6: Implement  Step 7: Measure and manage  Outcome: A cohesive and comprehensive reward strategy that is both value-oriented and cost-effective and aligned with the organization's business strategy. CREATING/DEVELOPING A REWARD STRATEGY (7-STEP PROCESS)
  • 18.  Develop a business case for Strategic Total Rewards Management (STORM). Do the benefits outweigh the costs? Justify and motivate your viewpoint. SYNDICATE GROUP LEARNING ACTIVITY 1
  • 19.  Total Rewards Statement (TRS)  Strategic Talent Attraction: Employee Value Proposition (EVP) Employer Branding WORKSHOP B: UTILIZING STORM TO ATTRACT AND RETAIN THE BEST TALENT
  • 20. TRS PROCESS FLOW
  • 21.  Organizations need to communicate the total rewards provided to each individual employee, demonstrating the organization's investment in ensuring employees are competitively rewarded for their skills, contribution and performance.  The rewards package that you provide to your employees is among your organization's most significant investments.  Total reward statements may help reduce turnover and increase retention rates  A Total reward statement provides employees with a personalized document that communicates the overall value of their financial rewards such as base pay, incentives and employee benefits.  Total reward statements can also be used to reinforce the communication of less tangible benefits such as work/life programs, learning and development and flexible work arrangements. TOTAL REWARDS STATEMENTS (TRS) – RATIONALE AND VALUE
  • 22.  To attract, motivate and retain employees.  Differentiation: To reinforce your brand and set yourself apart from other organizations.  Raise awareness and appreciation by focusing attention on the benefits you offer.  To reduce the cost of benefits administration by providing an employee self-service tool that results in fewer phone calls thereby enabling HR to focus on more strategic initiatives. OBJECTIVES OF TRS
  • 23. BENEFITS OF TRS
  • 24.  Objective: Magnetically attracting the “Cream of the Crop”  Objective: Facilitating an optimal Person- Environment (P-E) fit  Strategy: Developing, articulating and advocating of a compelling Employee Value Proposition (EVP)  Strategy: Employer Branding – (re) positioning as an “Employer of Choice” STRATEGIC TALENT ATTRACTING
  • 25.  A resourcing strategy is concerned with shaping what an organization has to offer to people to join and stay in the organization. (Armstrong, 2011)  EVP is a statement of what an organization will provide for people that they will value - why the total work experience at their organization is superior to that at other organizations.  The EVP is an employee-centered approach that is aligned to existing, integrated workforce planning strategies because it has been informed by existing employees and the external target audience.  Key Selling Points (KSP): Host of financial and non-financial benefits  Non-financial benefits:  The attractiveness of the organization  Responsibility – corporate conduct, ethics and CSR/CSI  Respect – diversity and inclusiveness  Work-life balance  Opportunities for personal and professional growth EMPLOYEE VALUE PROPOSITION (EVP)
  • 26. COMPONENTS OF VIABLE EVP
  • 27. HISTORICAL EVP’S
  • 28.  “At Campbell Arnott’s, we are committed to attracting a diverse group of talented employees and providing all our team members with development opportunities and a culture in which they can flourish.” CONTEMPORARY EXAMPLE: CAMPBELL ARNOTT’S
  • 29.  Unique Selling Points (USP) - Employer brand that is unique and special  Creation of a Brand image of the organization for prospective employees  Influenced by the reputation of the organization  Creating an Employer Branding strategy EMPLOYER BRANDING
  • 30.  Analyze what ideal (preferred) applicants need and want  Establish how far core values of the organization support the creation of an attractive brand and ensure these are inculcated into organizational value system  Define the features of the employer brand on the basis of examination and review of each of the areas that affect the perception of people e.g. quality of management  Benchmark the approaches of top performing companies as a means of improvement  Pragmatic approach: be honest and realistic CREATING AN EMPLOYER BRANDING STRATEGY
  • 31. THE LINK BETWEEN TALENT ATTRACTION AND EMPLOYEE ENGAGEMENT
  • 32.  For a defined organization, craft and develop the following key statements as a form of attracting and retaining top talent: Total Rewards Statement (TRS) Employee Value Proposition Employer brand SYNDICATE GROUP LEARNING ACTIVITY 2
  • 33.  Employee motivation  Recognition and praise  Employee Engagement WORKSHOP C: UTILIZING STORM TO ENGAGE AND MOTIVATE EMPLOYEES TO ACHIEVE IMPROVED LEVELS OF PRODUCTIVITY
  • 34.  “INSIDE JOB” - A motive is an inner drive, stimulus or incentive to satisfy a human need of some kind.  “CUSTOMIZATION” - People differ from one another and no one has the same needs so people will be motivated differently. “Different strokes for different folks.”  “CITIZEN KANE” – Employees who experience a heightened sense of emotional connection with the organization, demonstrate higher levels of motivation.  “MONEY MYTH” – “financial rewards are more of a mover than a motivator” CONVENTIONAL WISDOM REGARDING MOTIVATION – FACT OR FICTION?
  • 35.  Business Leaders and Managers need to transform from applying Compliance-driven (extrinsic) motivational strategies to Commitment-driven (intrinsic) strategies  Business Leaders and Managers need to adopt a targeted (rifle) approach and not a hit and miss (shotgun) approach to employee motivation – “one size fits all” is inappropriate  Business Leaders and Managers need to transform employees into associates (sense of ownership) and brand/company ambassadors  Business Leaders and Managers need to develop a bouquet of recognition-oriented strategies and de- emphasize the value of monetary rewards MANAGEMENT LESSON – CONVENTIONAL WISDOM REGARDING MOTIVATION
  • 36. WHAT MOTIVATES EMPLOYEES?
  • 37.  #1 Job and Organizational Cultural Fit  #2 Conducive Work Environment  #3 Policies, procedures and work practices  #4 Trust and Relationship Management  #5 Meaningful Work and Responsible Tasks DIAGNOSE CURRENT LEVELS OF MOTIVATION - GENERIC MOTIVATIONAL STRATEGIES
  • 38.  #6 Participatory Management and Leadership practices  #7 Performance Feedback and Recognition  #8 Customized Rewards  #9 Career, Learning and Development opportunities  #10 Employee Engagement DIAGNOSE CURRENT LEVELS OF MOTIVATION - GENERIC MOTIVATIONAL STRATEGIES
  • 39.  Only 18% of employees are satisfied with their jobs  Only 10% of employees look forward to going to work everyday  70% of the workforce are more motivated by (favour) non- monetary rewards  79% of employees who resign cite a lack of appreciation as the main reason  Only 12% of employees actually leave for more money MOTIVATION – INTERESTING STATISTICS
  • 40.  20% of employees are actively seeking new jobs  83% of executives and 84% of employees rank having engaged and motivated employees as the top factor that substantially contributes to a company’s success  There is a correlation between employees who say they are “happy at work” and feel “valued by their company,” and those who say their organization has a clearly articulated and lived culture MOTIVATION – INTERESTING STATISTICS
  • 41. MOTIVATIONAL APPROACHES CARROT STICK
  • 42.  EMPLOYEE  MANAGER  (WORK) ENVIRONMENT 3 KEY COMPONENTS OF MOTIVATION EMPLOYEE ENVIRONMENT MANAGER
  • 43. PERCEPTUAL GAP
  • 44. FUN OPPORTUNITIES FOR GROWTH RECOGNITION EMPLOYEE ENGAGEMENT ESCALATING MOTIVATION TO THE F-O-R-E
  • 45.  90% of employees find a fun working environment very/extremely motivating  Collegial working relations - 80% of employees value working for people that they like  Technology-enabled Gamification - 70% of Forbes Global 2000 companies are using gamified platforms as a way to boost employee engagement, retention, and revenues  Objective: Design an “Industrial Playground”  Conducive and Positive Work Environment  Celebrating work success and creating corporate “Rituals” FUN
  • 46.  Retention - 76% of employees cited opportunities for growth were the top reason why they stayed in organizations. In every age and demographic category, opportunities for growth were more of a motivating reason to stay in an organization than pay increases  Managers should apply a strengths-based approach to employee development  Establish a Learning Organization, climate and culture  Learning, Development and Empowerment Opportunities  Career Development and Advancement  Mentoring and Coaching  Creativity and Innovation through Action Learning  Collaboration OPPORTUNITIES FOR GROWTH
  • 47.  40% of employees who do not meaningfully feel recognized will not go above and beyond their formal work responsibilities to get the job done. 86% of those who feel recognized will.  83% of employees cited recognition for contributions is more fulfilling than rewards and gifts.  Type of recognition matters – 68% favoured individual above team-based recognition; 88% found recognition from their managers as very/extremely motivating and 76% found praise from peers as very/extremely motivating.  Recognition strategies RECOGNITION - STATISTICS
  • 48. RECOGNITION - STATISTICS
  • 49.  Create a Fabulous Work Environment with Praise  Employees Need Praise  What Praise Can Give Employers  How to Give Praise THE POWER OF PRAISE AND RECOGNITION
  • 50.  Engagement happens when people are committed to their work and the organization and motivated to achieve high levels of performance  Engaged employees at work are positive, interested in and even excited about their jobs and are prepared to put discretionary effort into their work beyond the minimum to get it done  Say  Stay  Strive DEFINING EMPLOYEE ENGAGEMENT
  • 51.  The Global Assessment Trends Report (GATR) (2013 Global Assessment Trends Report - SHL.com) identifies the top priorities for HR globally as follows: Engagement and retention (55%)  71% of employees are disengaged  Highly engaged employees are 26% more productive than disengaged employees  Companies earned 13% greater total returns for shareholders over a 5-year financial period  90% of leaders think an engagement strategy will impact business success  Only 40% of the workforce knew about their company’s goals, strategies and tactics EMPLOYEE ENGAGEMENT – INTERESTING STATISTICS
  • 52.  71% of employees are disengaged: 45% are not engaged 26% are actively disengaged 29% of the workforce are engaged CURRENT DEGREE OF EMPLOYEE ENGAGEMENT Engaged 29% Not Engaged 45% Actively disengaged 26%
  • 53. THE VALUE OF EMPLOYEE ENGAGEMENT
  • 54.  According to Gallup (2013), employers can reap the following benefits of an engaged workforce:  202% better performance  $11 billion is lost annually due to employee turnover  Direct correlation to 9 key business performance indicators BENEFITS OF EMPLOYEE ENGAGEMENT
  • 55.  Are employees COMMITTED to the organization?  Are employees proud to work for the organization – company/brand ambassadors? CITIZEN  Do employees put forth extra/discretionary effort to help the organization and their colleagues achieve business objectives? COMRADE  Are employees enthusiastic and passionate about their work/jobs? CREATOR  Are employees CONNECTED (intellectually and emotionally) to their work/jobs – offer value add? MEASUREMENT OF EMPLOYEE ENGAGEMENT - 5c INDICATORS
  • 56.  According to Dale Carnegie research: Relationship with the immediate supervisor Senior Leadership’s ability to lead the company and communicate its goals Organizational Pride - vision of organization and corporate social responsibility KEY DRIVERS OF EMPLOYEE ENGAGEMENT
  • 57.  Work  People  Opportunities  Total rewards  Company practices  Quality of Work Life KEY DRIVERS OF EMPLOYEE ENGAGEMENT
  • 58.  According to Gallup (2013), three (3) strategies to accelerate employee engagement are: Select the Right People and Managers Develop employees’ strengths Enhance employees’ well-being STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT
  • 59.  According to Armstrong (2011), the five (5) strategies to enhance employee engagement are:  The work itself  The work environment  Leadership  Opportunities for personal growth  Opportunities to contribute STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT
  • 60.  According to Dale Carnegie research:  Senior managers must articulate the company vision in a clear and compelling way  Senior managers need to define organizational goals and objectives in realistic, clear and attainable manner  Leaders should project a positive manner with employees, and be accessible  Leaders should ensure that employees understand how their role contributes to the overall company success  Senior leaders should create a climate of trust and encourage managers to demonstrate that they care about employees (on personal level) LEADERSHIP STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT
  • 61.  According to Dale Carnegie research:  Managers should determine how each employee’s personal motivators align with organizational goals  Managers should praise publicly, reprimand privately and coach team members who demonstrate disengaged behaviour  Employees should be encouraged to communicate clearly and provide input into the company vision  Direct managers should foster healthy relationships with employees  Senior leadership should continuously demonstrate that employees have an impact on their work environment  Managers should show that employees are valued as true contributors, giving them a sense of empowerment STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT
  • 62.  According to Gallup (2013) research, the best organizations deeply integrate employee engagement into the following four areas: Strategy and Leadership Philosophy Accountability and Performance Communication and Knowledge Management Development and on-going Learning Opportunities BEST PRACTICE EMPLOYEE ENGAGEMENT
  • 63.  Describe which motivational strategies can be applied in your organization to reward employees and boost performance and productivity.  Describe which employee engagement strategies can be applied in your organization to enhance retention and productivity levels. SYNDICATE GROUP LEARNING ACTIVITY 3
  • 64.  Benchmarking STORM  Annual STORM reviews  Best practice guidelines and principles WORKSHOP D: BENCHMARKING, MEASURING AND EVALUATING THE IMPACT OF STORM
  • 65.  Question: How do you know if your rewards program is offering the right levels of total remuneration to recruit and retain staff?  Benchmarking offers a useful tool to answer this question. Benchmarking aims at improving performance - a search that never ends. Therefore, benchmarking is not a single action but a continuous, cyclical process.  Performance Assessment  Performance Improvement BENCHMARKING
  • 66. P-D-C-A BENCHMARKING CYCLE
  • 67. REMUNERATION REVIEW PROCESS
  • 68.  A clear, executable remuneration philosophy aligned with business strategy  Employee-centricity  Investment in front-line manager capability  Well thought-through decision-support data and tools  A continual process, not a one-off project 5 KEY FOCUS FOR STRONG REMUNERATION EXECUTION (AON HEWITT)
  • 69.  Review your programs and rewards frequently to keep them aligned with corporate goals as well as employee expectations.  Measure the effectiveness and impact of your reward and recognition programmes.  Create a performance measurement framework so you can measure the impact of your reward and recognition programme.  Track the performance metrics that form the basis of your reward structure and conduct surveys to gain qualitative feedback from employees and supervisors.  24% of participants do not measure reward and recognition programme success.  Measure your reward and recognition programme impact and improve based on your results. EVALUATION GUIDELINES
  • 70. METHODS FOR MEASURING REWARD AND RECOGNITION PROGRAMME SUCCESS
  • 71.  Explain the best practice methods and process that your organization will apply in the benchmarking, reviewing and measuring of your Strategic Total Rewards Strategy. SYNDICATE GROUP LEARNING ACTIVITY 4
  • 72. Key points Questions SUMMARY
  • 73.  CHARLES COTTER  084 562 9446  charlescot@polka.co.za  LINKED IN  TWITTER: Charles_Cotter CONTACT DETAILS