salary and compenstion

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  • 1. Salary & Compensation
    Welcome to the Class of Spring 2011
  • 2. About Me
  • Today’s Economic Challenges
    Slow economic growth in many parts of the world
    Globally there is a conservative approach to spending as reward budgets remain limited; emphasis on distributing funds more effectively through variable pay
    Legislative mandates are forcing companies to review their pay programmes
    Globalization and competition has companies adopting lean staffing models and looking at restructuring and outsourcing non-core activities
    Companies are putting a strong emphasis on profitability and the demands on employees to perform at higher levels continue to grow
  • 9. Today’s Talent Challenges
    People investments are significant bottom line cost
    Attraction and retention continue to be challenges
    20% of employers report moderate to great difficulty in attracting critical-skill employees
    44% are having significant difficulty attracting top performers
    Compensation continues to be one of the top attraction factors and employees are unhappy about it, particularly in Asia
  • 10. Today’s Talent Challenges
    There is a significant opportunity to improve the return on people investments
    Alignment with business strategies
    Successful attraction and retention of top-performing employees
    Effective monetary reward through short-term incentives to differentiate performance
  • 11. Global trends in reward management
    Financially high performing companies continue to put greater emphasis on their people investments by offering more short-term (STI) and long-term incentives (LTI) to their employees
    High performing organizations are changing their reward mix to maintain their competitive position and to increase emphasis on STI
    Executive compensation issues, are prompting many companies to carefully re-evaluate their compensation programs; Compensation committees have become more assertive
    More multinational companies are moving towards a globally consistent reward program as they strive to build a common culture and internal equity across borders
  • 12. Trends in North America
    Base salary is primarily seen as an effective attraction, retention and cost management tool
    Short-term incentives are effective reward tools for:
    Aligning behavior with goals and culture
    Achieving key strategic goals
    Attraction and retention (after base pay)
    Controlling costs
  • 13. Employers are reducing eligibility among non-executives for long-term incentives
    Nearly half of those revising plans are decreasing eligibility
    High-performing firms are almost twice as likely as low performers to offer LTI eligibility to all employees
  • 14. Trends in Europe
    Globalization and competition has resulted in local and multinational companies in Europe setting aggressive targets and business plans
    There is increased speculation in Central Europe for shared services centres (Czech Rep & Hungary in particular)
    Competition for talent is fierce
    This goes double in Russia!
    Experienced professionals & managers are in high demand to fuel new business initiatives
    There is a convergence of multinational & local companies’ people and reward strategies
    Greater attention paid to structuring, benchmarking & retention
    Continuing to move beyond “just cash”…but not too far!
    Pay for performance is rapidly becoming a fixture in many markets
  • 15. Non-cash elements are also becoming increasingly important
    Company cars: valued as much as ever by employees
    Typically offered to direct sales staff and all levels of management
    Most companies have clear allocation guidelines in place
    Other most common perquisites:
    Mobile phones (Professional level and above)
    Free medical check-ups
    Free/discounted company products
    Social/sports club membership
    Subsidised transportation (non Management)
  • 16. Trends in Asia Pacific
    • Salary increases in Asia Pacific are on the higher side, with India, Indonesia, China, Philippines and South Korea having more than 6% increase in salaries
    • 17. On comparing the fastest growing markets in Asia –China and India, compensation levels in China are lower than in India
  • …yet employees are dissatisfied
    Compensation listed as the #1 reason why employees chose to leave their company
    Employees believe their pay is linked to their company’s performance
    But, they are neither satisfied with their pay nor their benefits
  • 18. So what can be done to address this issue?
  • 19. Review the employment deal…
    Value Creation Through People:
    • Attract
    • 20. Develop
    • 21. Focus and engage
    • 22. Productivity
    • 23. Build commitment, ownership and loyalty
    A meaningful work experience:
    • Personal fulfillment
    • 24. Wealth accumulation
    • 25. Competitive Pay
    • 26. Security
  • Remember what employees want…
    Top Performers’ Priorities when Considering to Accept Employment
    Employment Priorities % Responding to “Critically Important”
    Opportunity to Develop Skills
    Corporate Culture
    Freedom to Work Independently
    Opportunities for promotions
    Start-up Opportunity
    Job Security
  • 27. Adopt a holistic approach: The Total Rewards approach
    Annual Incentives & Cash Recognition
    Growth & Career Development
    Communication & Nonmonetary Recognition
    Long Term
    Base Pay
    Business Strategy
    Work Design
    Desired Culture
    Human Capital Strategy
    The Employment Deal
  • 28. Best Practices
    The most successful companies
    Differentiate rewards by performance and ensure top-performing and critical-skill employees are rewarded the best
    Ensure incentive plans are driving the right outcomes – to engage employees to improve financial performance
    Apply globally consistent reward strategies to create a common culture, to focus employees on achieving desired results and to deliver rewards accordingly
  • 29. Best Practices
    The most successful companies
    Ensure costs are in line with the results achieved (e.g., competition for talent, turnover, attraction of desired talent and business performance)
    Support reward strategy execution with an effective performance management system, ensuring clarity surrounding expectations and the pay-performance link
    Manage rewards in their totality and make appropriate trade-offs among reward elements to get better ROI in terms of business results and employee value
    Develop effective communication strategies to help employees better understand the value of their total compensation packages
  • 30. Job Analysis & Description
    Whole Job Ranking
    Performance Management
    Job Evaluation
    Market Pricing
    Structured Questionnaires and Interviews
    Point Factor (Hay)
    Organization Design
    System Market Pricing
    Compensation Activities
    Organization Research
    Job Design
    Job Enlargement
    Job Enrichment
    Incentive Plan Design
    Individual Pay Assessment
    Peer Comparisons
    Sales Comp
    Stock Options
  • 31. The Aims of Reward Management
    Reward people according to the value they create
    Align reward practices with business goals and with employee values and needs
    Reward the right thing to convey the right message about what is important in terms of behaviours and outcomes
    Help to attract and retain the high-quality people the organization needs
    Motivate people and obtain their engagement and commitment
  • 32. Achieving The Aims
    Reward philosophy
    Distributive justice
    Procedural justice
    Strategic alignment
    Contextual and culture fit
    Fit for purpose
    Developing a high performance culture
  • 33. Defining The Reward System
    Reward strategies
    Reward policies
    Reward practices
    Reward processes
    Reward procedures
  • 34. Elements of A Reward System
    Business strategy
    Reward strategy & policy
    Base pay or basic pay
    Continent pay
    Employee benefits
    Total earnings
    Total remuneration
    Job analysis
    Market rate analysis
    Grade & pay structures
    Performance management
    Non financial rewards
    Total rewards
  • 35. Factors Affecting Reward Management Policy & Practice
    The internal environment
    The external environment
    Strategic management
    Total reward
    Human capital management
    The factors affecting levels of pay
    Engagement and commitment
    The psychological contract
  • 36. Q & A