The Most Pressing Global Benefit Themes for Multinationals in 2012 - Towers Watson
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The Most Pressing Global Benefit Themes for Multinationals in 2012 - Towers Watson

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Multinational organizations must contend with a multitude of issues daily - at a global level, as well as across diverse local legislative and cultural environments. They face internal challenges as ...

Multinational organizations must contend with a multitude of issues daily - at a global level, as well as across diverse local legislative and cultural environments. They face internal challenges as well as external forces such as political and economic uncertainties to global health risks.
With so much going on, it's sometimes difficult to know what to prioritize for success, and how. In this presentation, we explore the global themes that are currently top of mind for our multinational clients, including benefits and total rewards, and emerging countries of interest.

We will also explore one of these themes in greater depth: global total rewards. Towers Watson experts discuss why total rewards is such a crucial topic for multinationals right now, how multinationals from different regions of the world are responding to this growing need and what approaches can be considered to integrate different aspects of total rewards in support of the global employee value proposition.

To view the complete Webcast, please visit:
https://us.reg.meeting-stream.com/towerswatsonpennsylvaniainc_052412/

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The Most Pressing Global Benefit Themes for Multinationals in 2012 - Towers Watson The Most Pressing Global Benefit Themes for Multinationals in 2012 - Towers Watson Presentation Transcript

  • Global Benefit Themes Current and Emerging May 24, 2012© 2012 Towers Watson. All rights reserved.
  • Our presenters today Michael Broomhead Senior Consultant Philadelphia, PA Iain Jones Senior Consultant Irvine, CA Jon Randall Senior Consultant San Francisco, CA 2towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • Our discussion today Highlights from our global employee benefits survey Why the Employee Value Proposition (EVP) and Total Rewards are of growing importance to global companies A global total rewards checklist 3towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • Today’s global environment Key factors Imperatives for MNCs Balancing growth Uncertainty with engagement Euro instability Exploring markets Functional Business climate transformation Political change Managing risk Competitive landscape Governance 4towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • 2012 survey of global benefits themes 100,000  or  Fewer than  Corporate greater 5,000 Location 19% 14% Not specified Asia Pac 2% 4% 5,000 to  9,999 50,000 to  15% 99,999 16% Europe 36% 10,000 to  North  20,000 to  19,999 America 49,999 16% 56% 20% Middle  Latin  Global America East/Africa 2% Employee Scale 0% 5towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • Common themes… and local specifics Common Themes Local Specifics Rising healthcare costs 68%Investment in a low interest 65% rate environment Reaction to legislation 55% changes Working longer & benefit 55% adequacy Flexible rew ards 52% 0% 20% 40% 60% 80% 6 towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • 2012 current and emerging global themes Emerging • Global defined contribution • Benefits management optimization Current • Keeping sight of the • Living with pensions “employee experience” financial risks through total rewards • Austerity/cost reduction • Global healthcare and wellbeing • Oversight as a discipline: Financial and non-financial risks • Business-driven change: MA&D 7towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • Think of your employees as investors, not assets Assets are passive: they are acquired and managed Investors make daily decisions  Where to invest  How much to invest  How long to invest Investment decisions are driven by factors such as . . .  Confidence in leadership  Confidence in business model and strategy  Expected return on investment To attract investors, you need to have a clear value proposition and evidence you can deliver. The same is true for talent . . . 8towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • Total Rewards is a key component of a company’s EmployeeValue Proposition (EVP) and stems directly from businessstrategy 9towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • Global Perspective: The leading drivers ofretention and engagement are not monetary . . . Attraction Drivers* Retention Drivers** Engagement Drivers** Competitive base pay Career development Leadership Vacation/paid time off Leadership Image Competitive health care benefits Empowerment Career development Convenient work location Supervision Empowerment Flexible schedule Pay and rewards Customer focus Career advancement Stress, balance and workload Values opportunities Competitive retirement benefits Benefits Goals and objectives Competitive benefits Organizational change Supervision Challenging work Image Pay and rewards Organization’s reputation Customer focus Communication as a good employer *Source: Towers Watson 2010 Global Workforce Study. **Source: Towers Watson Normative Database 10towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • Total Rewards builds from strategic objectives and takes aportfolio approach to deliver desired results. . . 11towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • Globally, the war for (critical skill and top performing )talent continues . . . Attraction and Retention Difficulties U.S. EMEA Asia Global Critical-skill employees Problems attracting 52% 62% 81% 65% Problems retaining 31% 44% 75% 49% Top-performing employees Problems attracting 45% 67% 74% 61% Problems retaining 25% 41% 70% 45% High-potential employees Problems attracting 40% 58% 69% 56% Problems retaining 25% 43% 67% 45% All employees Problems attracting 15% 19% 39% 25% Problems retaining 11% 12% 42% 21%Source: Towers Watson 2010 Talent Management and Rewards Study 12towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • The emerging focus on global total rewardsis driven by business needs . . .Key Imperatives Implications Business  Scaling up of workforce in  Deliver a locally compelling EVP markets outside home country  Growth through acquisition At the same time . . .  Cost management & ROI  Embrace global platforms  Leverage scale; pool resources People  Drive consistency in methods, decision  Engagement & productivity making  Development  Send cohesive and consistent messages  Optimal deployment/mobility  Drive strategic resource allocation HR Begin by establishing  Proactive vs. reactive  Clear guiding principles  Rigorous analytics; fact-based decision-making 13towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLIST1. Defining a common set of principles provides the basis forHR to play a proactive role in supporting the business . . . Direction and magnitude of change C D All reward elements need to be The overall package needs to be competitive competitive, but not necessarily each element Direction and magnitude of change C D Same deal (e.g., targeted marketpositioning, pay mix and leverage, Customized deal for targeted benefit programs, etc. ) groups, business units, etc. Considerations  Are there particular groups, segments, etc., that impact our business differently?  How do we ensure we attract, retain and engage our critical workforce segments?  How different is our competition for talent within our various workforce segments?  Do we know what segments might warrant a different “deal”? Why those groups?  Are there particular groups that have particularly high turnover and/or are hard to attract? 14towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLISTTotal Rewards philosophy (illustration) Our Programs Are... What This Means for Cash Compensation Market competitive Our cash compensation program is based on the relevant labor markets where we compete for talent. Base pay is targeted at the median, and incentives are targeted above the median. Superior individual and company performance results in superior pay. Used to drive We have a pay-for-performance culture where employees have a clear understanding of performance and how their performance impacts company and their compensation. engagement We differentiate pay based on organizational performance and further differentiate based on individual performance and other critical business factors. Incentives play a more significant role in the total compensation opportunity as job levels increase. Globally consistent We have a consistent global framework that is flexible and sustainable across our organization and supports global talent management. We customize programs to reflect meaningful differences in local markets and lines of business, subject to transparent company-wide governance requirements. All pay programs adhere to the principles outlined in the global framework. Balanced Our pay programs are balanced to support both short- and long-term performance and to manage risk. They also balance the impact that individual, business and overall company performance has on pay. Communicated clearly We openly communicate and explain our pay programs and measures used to evaluate performance, so employees clearly understand the components of the program, the rationale for them and how they operate. Aligned with Our pay program rewards employees whose behaviors are consistent with the company our mission mission and values. Our incentive programs align the interests of employees with shareholders. 15towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLIST2. Key facts are considered to drive strategic resourceallocation Process and Program Diagnostics Workforce Perspective Provides insight regarding External Benchmarking current workforce programs and Provides insight regarding processes Provides insight regarding workforce engagement, trends and industry process demographics and performance and program practices PIVOTAL INSIGHTS Business Plan/ Performance Issues Leadership Perspective Opportunities Directions for Change Provides insight regarding Provides insight regarding current business plans, future vision, business strategy, priorities and performance corporate culture and presenting issues STRATEGY Philosophy ● Guiding Principles ● Objectives GAP ANALYSIS People ● Process ● Programs CHANGE PLAN Interventions ● Timing ● Measurement/ROI 16towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLISTA company’s “presence” will influence how closely it needs toadhere to local market practices Low Presence 0 1 2 3 4 High Presence Low Global Market Share High New Entrant Brand Strength Demand Leader Uncertain Product Competitiveness Proven Few & Stretched Local Workforce Size Top Employer Lacking Financial Strength & Results AAA Limited Beyond Career Opportunities Diverse Global Roles Management Unproven Management Strength Well Regarded Local Market Adherence Company-Driven Practices 17towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLISTThe types of strategic allocation choices we see today Percent of companies indicating a differentiated use of rewards (by reward type and workforce segment) Not Critical-Skill High- Top Program Differentiated Employees Potentials Performers Base pay 34% 45% 39% 57% Short-term incentives 47% 26% 27% 49% Long-term incentives 53% 25% 29% 37% Coaching or mentoring 42% 15% 55% 29% Recognition programs 74% 9% 11% 24% Recruiting and selection 50% 46% 23% 17% Career pathing and planning 47% 19% 51% 32% Employee learning and development 58% 21% 37% 27% Leadership development 31% 16% 65% 40% Succession management 30% 26% 65% 44%Source: Towers Watson 2011 Talent Management and Rewards Survey 18towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLIST3. Global architecture elements are needed to proactively manage risk and ROI across the countries in which MNCs operateArchitecture Examples . . . Global inventory of total rewards programs and spend Global benefits governance framework Global job leveling Global incentive design frameworks Global total rewards scorecard 19towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • ILLUSTRATIVE Global architecture example: global job leveling provides framework for pay decisions Global Job Level Management Role Executive VP SVP EVP CEO Management Long-term Incentive Supv Mgr Sr Mgr Grp Mgr Sr Grp Mgr Eligible Professional/Expert Entry Intermed Career Specialist Master Expert Annual Individual Contributor Role Incentive Eligible Business Support Entry Intermed Senior Lead Supv Spot Award Production Eligible Entry Intermed Senior LeadSalary Grade Low High STI Target 10% 10% 10% 15% 20% 20% 25% 30% 40% LTI Target 30% 35% 40% 50% 20 towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • ILLUSTRATIVEGlobal architecture example: global levelingprovides framework for talent development . . . Global Job Level Management Role Executive Executive Development and VP SVP EVP CEO Reviews Management Supv Mgr Sr Mgr Grp Mgr Sr Grp Mgr Professional/Expert Entry Intermed Career Specialist Master Expert Individual Contributor Role Assignment and Replacement Talent Planning Reviews Business Support and HiPo Entry Intermed Senior Lead Supv Identification Production Individual Development Entry Intermed Senior Lead Plans 21towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLIST3. Global architecture and governance are in place to proactively manage risk and ROI across the countries in which MNCs operate Corporate HQ Setting global direction and framework Ensure value is derived from global  Having cohesive leadership and messages strategies in execution and local adaptation,  Setting overall strategies for example:  Identifying key metrics  Multi-country coordination, knowledge and  Monitoring and insights information flow  Leveraging scale  Consistency in terms of methods, assumptions, decision-making  Multi-country financing optimization, cost reductions  Multi-country market benchmarking  Global metrics production Strategic Operational Local strategic adaptation of global Local country activity, for example: direction  Local rules interpretation/compliance/change  Specific country issues: strategic direction  Local valuation and administration  Local design  Single-country market practice benchmarking  Local leadership messages  Local communications and support Local 22towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLIST4. A consumer grade experience drives employee awareness,understanding and appreciation of the total rewards offeringEasy. Interactive. On demand. Sound bite videos QR codes eMags Employee Networks Apps/Games Discussion Forums 23 Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLISTHR portals have the power to facilitate communication andengagement across boundaries . . .  Stories/testimonials Integrated  Alerts/promos messaging to  Message driven content style align perceived value with actual value Easy-to-use tools and  Modeling tools resources to help employees  Simplified online transactions gain the most value from  Interactive media what the organization provides  Online content Easy access to general and personalized information  Personalized statements about Total Rewards to ensure employees know what  Whiteboard videos the organization provides and how to use/participate Generate attention, create understanding, build engagement, align the experience with the EVP, inform decisions, drive action 24 Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLIST5. We monitor global total rewards ROI Extent to which Extent to which total rewards total rewards support your are valued by business objectives Total employees Rewards Optimization Total investment and cost structure Portfolio Mix and Design Effectiveness Communication Effectiveness Manager Effectiveness HR Service Delivery Effectiveness 25towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLIST ROI example method: Total Rewards Optimization (TRO) ILLUSTRATIVE Increase in Indicated Retention from Current Level (Percentage) Three Points on the Curve 3) Increase investment and Each point along the curve increase retention represents the best allocation of the corresponding total investment: 40% 1) To reduce total cost, the curve identifies which programs should be reduced to reallocate 30% investments in other areas and maintain current levels of 2) Maintain current level retention1) Maintain current level of investment while of retention 2) To maintain current investment 20% increasing retention at lower investment levels, the curve identifies how to reallocate investment across Current levels of programs to increase retention 10% retention and reward without raising cost investment 3) To increase retention dramatically and make the most of each reward dollar, the curve indicates the best ways to invest –$20mm –$10mm 0 $10mm $20mm $30mm additional rewards funds Decrease in investment Increase in investment from current level from current level 26 towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
  • GLOBAL TOTAL REWARDS CHECKLISTA global total rewards checklist — recap Total rewards across the globe are aligned with a common set of principles that reflect our values and strategic choices Key facts are considered to drive strategic resource allocation Architecture and governance are in place to proactively manage risk and ROI across the countries in which we operate We utilize a consumer-grade experience to help drive employee awareness, understanding and appreciation of the total rewards offering We monitor global total rewards ROI 27towerswatson.com Proprietary and Confidential. For Towers Watson and Towers Watson client use only.