Infographic #2: 2013 Talent Management and Rewards Study — North America - Towers Watson

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The survey results of this Towers Watson 2013 Talent Management and Rewards Study shed light on how effectively companies are using annual incentives to motivate top performers.

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Infographic #2: 2013 Talent Management and Rewards Study — North America - Towers Watson

  1. 1. Although nine out of 10 organizations have some form of annual incentive plan, it is not clear these organizations are getting an adequate return on their plan investments. Insights From the 2013 Talent Management and Rewards Survey Series, North America Why Annual Incentives Often Fall Short Short-term incentive programs often miss the mark with employees. Fewer than half of employees agree that high performers in their organization are rewarded for performance. <50% Short-term incentives STIs STI programs are the 22nd (out of 27) most commonly selected reason to join a firm and the 15th (out of 27) most commonly selected reason to remain at a firm. Disappointing Funding Levels Why? Annual incentive plan funding has consistently been below target. 2005 2006 2007 2008 2009 2010 2011 2012 2013 U.S. 91% 101% 78% 82% 85% 116% 95% 88% 87% Canada — 107% 78% — 95% 97% 90% 85% 86% 7of the last 9years Below target: U.S. 6of the last 7 years Below target: Canada Flawed Design Many organizations are paying for the status quo, treating their annual incentive programs a de facto profit-sharing plan. of organizations give some payoutto employees who fail to meetexpectations (the lowest ranking possible). of organizations give employees the same payout relative to target regardless of individual performance. 24%24% 18% Insufficient Differentiation Organizations are not making enough distinction between top performers and average performers, as this example highlights. To improve the effectiveness of annual incentives and motivate top performers: Reallocate funds among average and below-average employees in order to ensure that top performers receive their full target payout. *Example assumes individual with base salary of $60,000 and an incentive target of 10% of pay. Level of employee performance expectations Target payout (%) Actual payout (%) Example payout ($)* did not meet 8% 6% $ 350 partially met 57% 56% $3,363 met 97% 97% $5,843 exceeded 112% 113% $6,767 far exceeded 131% 124% $7,464 About the Survey This survey was conducted in June and July 2013. A total of 121 organizations participated, including 30 from Canada and 91 from the U.S. Data on funding levels are mean data. Want to learn more? Contact your local Towers Watson consultant.

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