Reward June 2010

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Reward June 2010

  1. 1. Compensation & Benefits <br />by Fluid <br />June 2010<br />
  2. 2. Page 2<br />Contents<br />3-4 Introduction to Fluid<br />5-7 Evolution in strategic reward management<br />8-16 Flexible benefits <br />17-18 Childcare vouchers<br />19-20 Corporate incentives<br />21-22 Cycle to Work scheme<br />23-24 Employee assistance programmes (EAPs)<br />25-26 Employee share schemes<br />27-28 Private medical insurance<br />29-30 Dealing with minimum wage increases<br />31-32 Perfect perks<br />33-35 Benefits and allowances<br />36-38 Negotiating with a motivation & incentives supplier <br />39-41 Rescuing motivation schemes that are failing<br />42-43 Exercise<br />44-48 Pensions<br />49-51 Salary reviews and surveys<br />52-53 Conclusion and questions<br />
  3. 3. Page 3<br />Introduction<br />
  4. 4. Page 4<br />Introduction to Fluid<br />Fluid Consulting Limited (Fluid) is a specialist human resources consultancy headed by Tim Holden MCIPD <br />10 years in banking<br />10 years in Human Resources consultancy<br />Fluid trading since 2006<br />The core services provided by Fluid are:<br /><ul><li>Retention
  5. 5. Selection</li></ul>- Attraction<br />- Remuneration & Reward <br />- Outplacement<br />- Training & HR consultancy<br />
  6. 6. Page 5<br />Evolution in strategic reward management<br />
  7. 7. Page 6<br />Evolution in strategic reward management 1 of 2<br /><ul><li>FROM business-driven TO aligning reward with business strategy, employee needs and environment
  8. 8. FROM isolated initiatives TO integrated and balanced reward management
  9. 9. FROM focus on cash TO focus on total reward and engagement
  10. 10. FROM mechanistic and inflexible systems TO organic, simpler, variable process
  11. 11. FROM pay progression based on individual performance/service TO pay progression based on contribution, skills and knowledge</li></li></ul><li>Page 7<br />Evolution in strategic reward management 2 of 2<br /><ul><li>FROM planning TO practising
  12. 12. FROM design best practice TO process: best fit
  13. 13. FROM HR control TO line/employee ownership
  14. 14. FROM top-down telling TO communicate and involve
  15. 15. FROM ‘big bang’ change TO evolutionary change
  16. 16. FROM guess work/faith TO evaluation of initiatives
  17. 17. FROM ‘Elastoplast’ technology TO integrated HR and reward information systems</li></li></ul><li>Page 8<br />Flexible benefits<br />
  18. 18. Page 9<br /><ul><li>PREPARATION
  19. 19. Existing benefits-policy decisions about what to include and what to exclude
  20. 20. Breadth and design of scheme-years one and two and beyond
  21. 21. Data-the quality, accessibility and its updating
  22. 22. Integration-HR and payroll
  23. 23. Administration-should it be internal or external?
  24. 24. Discrimination issues-for instance age and sex
  25. 25. Harmonisation or savings-never conceal what the scheme might be changing
  26. 26. Technology-the fit, integration and capacity</li></ul>Flexible benefits 1 of 8<br />
  27. 27. Page 10<br /><ul><li>TYPICAL FLEXIBLE BENEFITS
  28. 28. Pension
  29. 29. Private medical insurance
  30. 30. Childcare vouchers
  31. 31. Dental insurance
  32. 32. Holiday trading
  33. 33. Life assurance
  34. 34. Share incentive plan
  35. 35. Give-as-you-earn charitable donations
  36. 36. Health screening
  37. 37. Critical illness cover</li></ul>Flexible benefits 2 of 8<br />
  38. 38. Page 11<br /><ul><li>TYPICAL FLEXIBLE BENEFITS
  39. 39. Share save plan/SAYE plan
  40. 40. Retail vouchers
  41. 41. Discounted services
  42. 42. Cycle to Work schemes
  43. 43. Optical care/vouchers
  44. 44. Gym membership
  45. 45. Healthcare cash plan
  46. 46. Company car
  47. 47. Personal accident insurance
  48. 48. Travel insurance</li></ul>Flexible benefits 3 of 8<br />
  49. 49. Page 12<br /><ul><li>TYPICAL FLEXIBLE BENEFITS
  50. 50. Season ticket for travel
  51. 51. Mobile phone
  52. 52. Cash alternative to company car
  53. 53. Personal computer
  54. 54. Income protection
  55. 55. Financial planning
  56. 56. Cash alternative to other benefits
  57. 57. Home insurance
  58. 58. Concierge benefits
  59. 59. Home phone package</li></ul>Flexible benefits 4 of 8<br />
  60. 60. Page 13<br /><ul><li>A SUCCESSFUL FLEX LAUNCH
  61. 61. Build a strong business case to obtain senior buy-in
  62. 62. Select an experienced broker to negotiate favourable terms
  63. 63. Choose a technology provider with a proven record
  64. 64. Don’t be over-ambitious initially-much better to enjoy the successful launch of a core flex package that you can build on in future years than being associated with a failed project
  65. 65. Spend as long as it takes cleansing your benefits data</li></ul>Flexible benefits 5 of 8<br />
  66. 66. Page 14<br /><ul><li>A SUCCESSFUL FLEX LAUNCH
  67. 67. Appoint a project team with at least one senior champion
  68. 68. Choose a system with built-in rules that prevent uninsured liabilities or additional administration burden
  69. 69. Communicate clearly with employees at all stages, including focus groups initially and feedback surveys after launch
  70. 70. Remember that flex is flexible-you can add benefits in future years to maintain interest and change any that don’t work</li></ul>Flexible benefits 6 of 8<br />
  71. 71. Page 15<br /><ul><li>IMPLEMENTING A SCHEME
  72. 72. Pick people to do the planning
  73. 73. Assess feasibility
  74. 74. Get the numbers to add up
  75. 75. Build the scheme
  76. 76. Look to the law
  77. 77. Concentrate on clear communication
  78. 78. Integrate-whether system in in-house or outsourced</li></ul>Flexible benefits 7 of 8<br />
  79. 79. Page 16<br /><ul><li>SCHEMES FOR SMALLER EMPLOYERS
  80. 80. Consider the specific needs of the organisation
  81. 81. Communicate ease of set up and use to employees
  82. 82. Remind the workforce about the new scheme</li></ul>Flexible benefits 8 of 8<br />
  83. 83. Page 17<br />Childcare vouchers<br />
  84. 84. Page 18<br />Childcare vouchers<br /><ul><li>WHAT TO LOOK FOR?
  85. 85. Paper and e-vouchers
  86. 86. Online transactions available-Mac and PC compatible?
  87. 87. Can vouchers be used for ‘registered’ or ‘approved’ care?
  88. 88. Dedicated helpline
  89. 89. Services included
  90. 90. Standalone or part of flexible benefits online
  91. 91. Set-up time
  92. 92. Cost based on 100 employees taking their full entitlement of £243 per month</li></li></ul><li>Page 19<br />Corporate incentives<br />
  93. 93. Page 20<br /><ul><li>WHAT TO LOOK FOR?
  94. 94. Product range
  95. 95. Cost to employer
  96. 96. Delivery time
  97. 97. How scheme is administered
  98. 98. Support given
  99. 99. Particular selling points</li></ul>Corporate incentives<br />
  100. 100. Page 21<br />Cycle to Work scheme<br />
  101. 101. Page 22<br /><ul><li>WHAT TO LOOK FOR?
  102. 102. Brand of bike
  103. 103. Type of bike
  104. 104. Safety items available
  105. 105. Number of stores where available
  106. 106. How is scheme administered
  107. 107. Home delivery/delivery time
  108. 108. Order online/mail order
  109. 109. Marketing support
  110. 110. Software linked to client’s software
  111. 111. Helpline
  112. 112. Set-up time
  113. 113. Cost to client</li></ul>Cycle to Work scheme<br />
  114. 114. Page 23<br />Employee assistance progammes<br />
  115. 115. Page 24<br /><ul><li>WHAT TO LOOK FOR?
  116. 116. Cost per head
  117. 117. Set up time
  118. 118. Essentials of the scheme
  119. 119. Manager training
  120. 120. Support given
  121. 121. Particular selling points</li></ul>Employee assistance programmes <br />
  122. 122. Page 25<br />Employee share schemes<br />
  123. 123. Page 26<br />Employee share schemes<br /><ul><li>WHAT TO LOOK FOR?
  124. 124. Type of scheme
  125. 125. Discretionary share schemes?
  126. 126. Cost to employer
  127. 127. Set up time
  128. 128. How scheme is administered
  129. 129. Support given
  130. 130. Particular selling points</li></li></ul><li>Page 27<br />Private medical insurance<br />
  131. 131. Page 28<br /><ul><li>WHAT TO LOOK FOR?
  132. 132. Inpatient cover
  133. 133. Outpatient cover
  134. 134. Extras
  135. 135. Dependant cover
  136. 136. Tailored to fit individual groups
  137. 137. Cost containment
  138. 138. Telephone support
  139. 139. Online support
  140. 140. Internal marketing support
  141. 141. Set-up time
  142. 142. Cost’</li></ul>Private medical insurance<br />
  143. 143. Page 29<br />Dealing with minimum wage increases<br />
  144. 144. Page 30<br />Dealing with minimum wage increases<br /><ul><li>Do your research
  145. 145. Revisit your pay structure
  146. 146. Consider the costs of staff turnover and training
  147. 147. Involve the bean counters
  148. 148. Know the law
  149. 149. Use alternatives to retain people
  150. 150. Consult, test and review
  151. 151. Talk to your employees
  152. 152. Invest in management
  153. 153. Measure the results</li></li></ul><li>Page 31<br />Perfect perks<br />
  154. 154. Page 32<br />Perfect perks<br /><ul><li>Once in a lifetime-Ford Motor Co
  155. 155. Pampering-Alexander Associates
  156. 156. Fun and friendly-NM Rothschild
  157. 157. Instant reward-Volvo
  158. 158. Prize variety-Carphone Warehouse
  159. 159. Cash bonus-KPMG</li></li></ul><li>Page 33<br />Benefits and allowances<br />
  160. 160. Page 34<br /><ul><li>Childcare vouchers
  161. 161. Long service awards
  162. 162. First aid payments
  163. 163. Call-out payments
  164. 164. Money-purchase pension schemes
  165. 165. Final-salary pension scheme
  166. 166. Stakeholder pension scheme
  167. 167. Standby allowances
  168. 168. Discounts on own organisation’s products or services</li></ul>Benefits and allowances 1 of 2<br />
  169. 169. Page 35<br /><ul><li>TRAVEL AND SUBSISTENCE
  170. 170. Mileage allowance
  171. 171. Car allowance
  172. 172. Subsistence allowance
  173. 173. Free car parking
  174. 174. Company car scheme
  175. 175. Interest-free season ticket loan
  176. 176. Subsidised staff canteen
  177. 177. Car leasing scheme
  178. 178. Subsidised car parking
  179. 179. Interest-free car park loan
  180. 180. Interest-free congestion charge loan</li></ul>Benefits and allowances 2 of 2<br />
  181. 181. Page 36<br />Negotiating with a motivation & incentives supplier<br />
  182. 182. Page 37<br />Negotiating with a motivation & incentives supplier 1 of 2<br /><ul><li>Can you demonstrate an ability to help me solve my business problem?
  183. 183. What resources have you got to help me handle my account?
  184. 184. How much of the solution you’re proposing is handled in-house and how much is outsourced?
  185. 185. What service agreements can you out in place to ensure delivery?
  186. 186. What sort of systems do you have in place to make sure that the management information I get from you is accurate, on time and reliable?</li></li></ul><li>Page 38<br />Negotiating with a motivation & incentives supplier 2 of 2<br /><ul><li>How confident are you that you will still be around in a year’s time?
  187. 187. How do you charge for your products and services?
  188. 188. What are your commission rates and what is your mark-up on reward media that is brought in-for example vouchers, merchandise, travel and so on?
  189. 189. How do you propose we measure the impact of your recommendations?
  190. 190. Do you charge for advice upfront?</li></li></ul><li>Page 39<br />Rescuing motivation schemes that are failing<br />
  191. 191. Page 40<br />Rescuing motivation schemes that are failing 1 of 2<br /><ul><li>STEP ONE-identify the business objectives behind the initiative, for example: reducing absence, improving productivity or boosting customer service
  192. 192. STEP TWO-decide whether the rewards are target based and if so take care to set achievable parameters
  193. 193. STEP THREE-before selecting a programme or one-off gift research employees’ desires using tools such as email, the intranet, line manager interaction or focus groups</li></li></ul><li>Page 41<br /><ul><li>POTENTIAL PITFALLS
  194. 194. The scheme design or reward offered is unsuitable for employees’ age, sex or desires
  195. 195. The reward has a gimmicky quality that could be perceived to insult the employees’ professionalism
  196. 196. The reward conflicts with the employees’ culture or religion
  197. 197. The reward is offered for a target that is beyond the employees’ reach
  198. 198. The gift is selected on the assumption that money is the best motivator for everyone
  199. 199. The incentive is something that the employee already has
  200. 200. The reward is not delivered in the way that it was originally promised</li></ul>Rescuing motivation schemes that are failing 2 of 2<br />
  201. 201. Page 42<br />Exercise<br />
  202. 202. Page 43<br />Exercise<br />
  203. 203. Page 44<br />Pensions <br />
  204. 204. Page 45<br /><ul><li>TERMINOLOGY
  205. 205. DB
  206. 206. DC
  207. 207. CSIPP
  208. 208. Deficit
  209. 209. FRS17
  210. 210. GPP
  211. 211. Hybrid scheme
  212. 212. Rate of accrual
  213. 213. Trustees</li></ul>Pensions 1 of 4<br />
  214. 214. Page 46<br />Pensions 2 of 4<br /><ul><li>COMMUNICATION
  215. 215. Beware giving financial advice
  216. 216. Take the initiative
  217. 217. Use your providers for additional support
  218. 218. Use a variety of media
  219. 219. Avoid jargon</li></li></ul><li>Page 47<br />Pensions 3 of 4<br /><ul><li>COMMUNICATION
  220. 220. Engage your people
  221. 221. Use plain English
  222. 222. Communicate regularly
  223. 223. Measure their understanding
  224. 224. Use experts if appropriate</li></li></ul><li>Page 48<br />Pensions 4 of 4<br /><ul><li>KEEPING THE PEACE
  225. 225. Inform employees about changes and why they are happening
  226. 226. Create a handbook
  227. 227. Approach the matter sensitively
  228. 228. Look for options to find a balance between defined benefit and defined contributions</li></li></ul><li>Page 49<br />Salary reviews and surveys<br />
  229. 229. Page 50<br />Salary reviews and surveys 1 of 2<br /><ul><li>CONDUCT AN ANNUAL REVIEW
  230. 230. Work out your budget
  231. 231. Review reward principles
  232. 232. Analyse market pay data
  233. 233. Gain budget approval
  234. 234. Communicate the timetable
  235. 235. Support line managers
  236. 236. Fine-tune the process
  237. 237. Explain decisions to employees
  238. 238. Inform payroll</li></li></ul><li>Page 51<br />Salary reviews and surveys 2 of 2<br /><ul><li>GET THE MOST OUT OF SURVEYS
  239. 239. Ask who produced the survey
  240. 240. Check out the methods of data collection
  241. 241. Make sure the sample size is large enough
  242. 242. Pay attention to all reward package elements
  243. 243. Understand the key statistics
  244. 244. Get the right match
  245. 245. Decide your market position
  246. 246. Use your judgement</li></li></ul><li>Page 52<br />Conclusion & Questions<br />
  247. 247. Page 53<br />Conclusion<br />Summary<br />Questions<br />

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