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2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
2009/2010 U.S. Strategic Rewards Report by Watson Wyatt
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2009/2010 U.S. Strategic Rewards Report by Watson Wyatt

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Event hosted by Houston Compensation Association by Fred Crandall from Watson Wyatt - November 18, 2009

Event hosted by Houston Compensation Association by Fred Crandall from Watson Wyatt - November 18, 2009

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  • While headlines point to improved economic performance, the impact of HR actions taken during the recession may prove to be challenging to overcome. Employers made deep cuts during the recession which have had a negative impact on employee morale, productivity and engagement. As the economy rebounds and the demand for talent rises, employers will have to proactively re-evaluate their “deal” with employees and create a new deal that will aid in attraction and retention.
  • Widespread restructuring and changes to HR programs in response to the recession had a negative impact on employees Declining morale and productivity, and poor perceptions of quality and customer service can have detrimental effects on an organization’s ability to rebound and position itself for improved performance.
  • While layoffs were pervasive across industries, many companies took other actions to reduce the number of layoffs. High performing companies were better positioned to weather the downturn and were able to avoid cutting salary, benefits and bonus.
  • High performing firms were well positioned to respond to the financial crisis and avoided cutting the core components of salary, benefits and bonus. Salary freezes were reported as the most effective action taken to minimize workforce reductions.
  • Layoffs have declined significantly although some employers are still anticipating more layoffs to come
  • Planning and preparation prior to the downturn provided high performing companies with tools to aid in effective staffing decisions during the crisis. Performance management is a key decision making tool that allowed high performing companies to segment their population and make informed staffing decisions. Performance management programs are also effective in establishing line of sight for employees, an important factor in employee engagement and critical to business performance recovery.
  • When to use When comparing a single percent value change Benefits The callout indicating the amount of change can be directly linked to the bar chart Tips and instructions Because the graphic elements of the callout (the dotted lines and highlight gradient) must be manually adjusted, care must be taken to ensure that alignments are correct. 1. The dotted lines should be perfectly horizontal. Holding down the shift key while adjusting the position of each end of the line will ensure that the line stay horizontal. 2. The dotted lines should extend across the top of each bar. The call out box can be moved to the area you want to call out
  • With funding levels down, top performers are not seeing the level of rewards they have in the past Some companies have introduced recognition programs to offset the downward trend in STI awards
  • When to use Space is a determining factor: The number of categories, length of category names, and number of variables all have a significant effect on the amount of space needed when using this template. For longer category names consider using a horizontal bar chart (see template 2D) Benefits Provides a strong visual comparison between categories. Drawbacks Limited space for category labels. Tips and instructions Don’t stack category names into more than three lines, or turn labels on their sides to fit them. If category names are too long to fit horizontally consider changing to the vertical template (2D). The call out box can be moved to the column you want to emphasize or provide more information about. The blue highlight bar can be manually adjusted to call attention to specific columns. The blue highlight box should be pushed to the bottom most layer once modifications are complete. ( To do this: right click on the blue bar – select options – send to back. The blue bar should now be behind of the chart. If you want to manipulate the blue bar, follow the same instructions, but send it to the front.)
  • Lending to participants and hardship withdrawals have increased for more than a third of the participating organizations
  • Employers expect to shift more health care costs to employees as a result of the economic downturn
  • When to use The data lacks a clear trend, defeating the purpose of visual representation If one or more variables can be emphasized, consider templates XX that combine charts with tables. Not using a percentile scale Benefits Simple and direct Drawbacks Lacks visual representation, making comparisons between intervals more difficult Tips You can't add a row if you've unlocked the table grouping. You’ll need to regroup the cell first. The call out box can be moved to the column you want to emphasize or provide more information about. The blue highlight bar can be manually adjusted to call attention to specific columns. Use a darker tint of orange in the highlighted column to further emphasize the callout and highlight areas. (To change the color of a column, right click in the column you want to change – select borders and fill – click the fill tab at the top – there will be a colored bar with an arrow button to the right – click on the arrow and it will bring up a color pallet – select your color and click ok. If the dark orange is not in your pallet you can add it by selecting more colors under the color pallet – type in RGB 244, 205,128 and click ok.) The blue highlight box should be pushed to the bottom most layer once modifications are complete. ( To do this: right click on the blue bar – select options – send to back. The blue bar should now be behind of the chart. If you want to manipulate the blue bar, follow the same instructions, but send it to the front.)
  • The EVP is an important tool for communicating the employee deal Employees view the array of programs offered by their employers as an articulated deal and they feel the impact of changes made during the recession Employers don’t seem to recognize the explicit power of the rewards package and its impact on employee engagement, productivity and customer satisfaction Employers who do recognize the power of the EVP and work to communicate it and ensure alignment with company actions have an implicit advantage in employee retention and re-engagement
  • Engagement is a combination of employee commitment and line of sight. Employee engagement is an important factor in employee retention. The significant decline in engagement, notably for top performers, is a warning sign for attrition risk.
  • Top performers no longer earning the same level of rewards for their contribution; the employment deal has clearly changed. As a result, line of sight, a critical indicator of employee engagement, has decreased and organizations are at risk of losing key employees as the economy rebounds
  • Overall declines in top performer satisfaction levels across key indicators of the EVP point to a further retention risk for top performing employees.
  • Productivity decline may be attributable to employees perceiving reduced resources to do their job well. It may also be due to declining employee engagement, weakened commitment and fewer rewards for performance. Employees whose employers took fewer actions report less of a negative experience – suggesting that these employers may be better positioned to retain employees when the economy recovers
  • As a result of widespread restructuring, challenges in attracting and retaining employees are at historically low levels. This poses an opportunity for employers to position themselves to attract critical-skill and top performing talent from other organizations where employee engagement is low. However, it also creates an opportunity for employers to re-engage their top performers so they will stay as the business conditions improve and more opportunities exist in the job market. The historical pattern also reinforces the notion that once the economy does recover, the challenge in attracting critical skill and top performing employees will return
  • Challenges in retaining employees are also at historic lows. However, we anticipate this will change when the economy recovers and employees who are less engaged and motivated as a result of significant company cuts begin to seek new opportunities. Companies must proactively look for ways to re-engage and motivate their workforce or risk significant attrition.
  • When to use Comparing a set of values. Space is a determining factor: The number of categories, length of category names, and number of variables all have a significant effect on the amount of space needed when using this template. For longer category names consider using a horizontal bar chart (see template 2D) Benefits Provides a strong visual comparison between categories. Good for showing volatility or changes over time. Drawbacks Limited space for category labels. Tips and instructions Don’t stack category names into more than three lines, or turn labels on their sides to fit them. If category names are too long to fit horizontally consider changing to the vertical template (2D). The call out box can be moved to the column you want to emphasize or provide more information about. The blue highlight bar can be manually adjusted to call attention to specific columns. The blue highlight box should be pushed to the bottom most layer once modifications are complete. ( To do this: right click on the blue bar – select options – send to back. The blue bar should now be behind of the chart. If you want to manipulate the blue bar, follow the same instructions, but send it to the front.)
  • While employers recognize the post-economic recovery retention risk and are actively communicating, more needs to be done. Re-engaging top performers will mitigate attrition as the economy improves. Reconsider EVP within context of new business environment - Strategic changes to talent and reward programs - Tactical changes to address immediate workforce needs
  • The majority of organizations are increasing communication with employees in an effort to keep them engaged. Less than a quarter of employers are using special reward programs to help engage top performers; this reflects a lost opportunity to mitigate attrition risk
  • The new business environment requires a review of total reward offerings and the EVP. Reframing the EVP in light of the new environment and communicating the revised EVP to employees will help create a new bond with employees. Realigning the EVP requires vision, diligence in monitoring and commitment to take action Establishing a realigned EVP can position an organization to attract and retain critical-skill and top performers – this in turn will help to position for recovery.
  • Transcript

    1. Looking Toward Recovery: Realigning Rewards and Re-engaging Employees 2009/2010 U.S. Strategic Rewards Report Fall 2009
    2. Discussion Outline <ul><li>About the Survey </li></ul><ul><li>Impact of the Recession on HR Programs </li></ul><ul><li>Current Landscape of Rewards </li></ul><ul><li>Impact of Recession on Employee Engagement </li></ul><ul><ul><li>Employee Value Proposition </li></ul></ul><ul><ul><li>Attraction and Retention </li></ul></ul><ul><li>The Path Forward </li></ul>
    3. 2009/2010 U.S. Strategic Rewards Survey <ul><li>14th Annual Strategic Rewards study </li></ul><ul><li>Study fielded between April and May 2009 </li></ul><ul><li>235 U.S.-based companies participated </li></ul><ul><li>Cross-industry representation of organizations with at least 1,000 employees </li></ul><ul><li>Select data from the October and August issues of Watson Wyatt’s bimonthly survey series “Effect of the Economic Crisis on HR Programs” </li></ul><ul><ul><li>201 large U.S.-based companies participated </li></ul></ul><ul><li>Employee data reflect responses of 1,300 full-time workers at organizations with more than 1,000 employees </li></ul>
    4. Impact of the Recession on HR Programs
    5. Impact of recession has been widespread and is likely to linger
    6. August 2009 June 2009 October 2009 With regard to the recession, when do you think your company's results will “bottom out&quot; and begin to improve? Impact of recession has been widespread and is likely to linger * As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009
    7. Key findings: Few companies have been immune to the effects of the downturn <ul><li>Organizational restructuring pervasive and deep </li></ul><ul><ul><li>Many rounds of layoffs since the downturn began </li></ul></ul><ul><ul><li>Cost-cutting measures employed to avoid layoffs and to augment them </li></ul></ul><ul><li>Reward programs affected </li></ul><ul><ul><li>Merit budgets low but expected to rebound </li></ul></ul><ul><ul><li>Annual incentive plan funding reduced </li></ul></ul><ul><li>Plans to begin reversing many cuts </li></ul><ul><ul><li>Most plan to begin within next 12 months </li></ul></ul><ul><ul><li>Restoration will be a long-term process </li></ul></ul><ul><li>Negative impact on employee engagement </li></ul><ul><ul><li>Greatest impact on high performers </li></ul></ul><ul><ul><li>Retention risks loom as we move toward recovery </li></ul></ul><ul><li>Adverse impact on Quality and Customer Service </li></ul><ul><ul><li>Employees believe recent changes affecting quality and customer service </li></ul></ul><ul><ul><li>Employers not as concerned </li></ul></ul><ul><li>Looking forward </li></ul><ul><ul><li>Restoring employee engagement can create a compelling bond </li></ul></ul><ul><ul><li>Companies must proactively address employee morale and productivity </li></ul></ul>
    8. <ul><li>High-performing organizations took fewer actions </li></ul><ul><ul><li>Average of 3 actions versus an average of 4 actions for other firms </li></ul></ul><ul><ul><li>Laid off 7% of their workforce versus 9%, on average, for other firms </li></ul></ul><ul><li>Objectives for layoffs were to maintain profitability (84%) and size staffing to reflect future demand (66%) </li></ul>Companies took multiple actions aimed at minimizing layoffs Number of actions taken to minimize workforce downsizing On average, survey participants report taking 3.5 different actions to minimize or avoid layoffs .
    9. Actions taken and their effectiveness at minimizing layoffs All organizations Very effective/moderately effective High-performing organizations All other organizations
    10. Layoffs have tapered off, but are continuing <ul><li>If you have made or are planning to make layoffs, what percentage of your employee population is affected? </li></ul>* As reported in the Effect of the Economic Crisis on HR Programs – Update: August 2009 Respondents have laid off an average 8.4% of their workforce and expect to lay off an average 1.9% over the next 12 months Already laid off (median) Expect to lay off in next 12 months (median)
    11. As of October, companies beginning selective hiring 96% Yes – In last 3 months 93% Yes – In next 3 months The most commonly hired positions were professional, non-managerial – those with specific domain expertise. Companies making offers to new hires in the last 3 month or in the next 3 months * As reported in the Effect of the Economic Crisis on HR Programs – Update: August 2009 Administrative/clerical/manual Other First-line supervisor/team leader Director/manager/middle management Professional, non-managerial Senior manager/executive
    12. Financially high-performing firms were better prepared for a recession <ul><li>78% of high-performing firms indicated existing contingency plans effective in responding to recession versus 56% for other firms </li></ul><ul><li>More high-performing firms used a formal workforce plan to make layoff decisions </li></ul><ul><ul><li>57% for high-performing firms versus 47% for other firms </li></ul></ul><ul><li>High-performing firms more-often rated performance management systems as effective in evaluating which employees to lay off </li></ul><ul><ul><li>53% for high-performing firms versus 45% for other firms </li></ul></ul><ul><li>Performance was a critical factor in layoff decisions </li></ul><ul><ul><li>71% of all companies used performance as a factor in layoff decision making </li></ul></ul><ul><ul><li>73% used functional skills as a factor as well </li></ul></ul>
    13. Current Landscape of Rewards
    14. June 2009 (median) August 2009 (median) In October, 40% reported a 0% increase for 2009, and 10% reported a 0% increase for 2010. The median merit increase of those who did give raises was 3.0 October 2009 (median) Merit budgets remain low for 2009 but are expected to have some rebound in 2010 * As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009
    15. Recession has reduced funding for annual incentive plans for broad-based employees <ul><li>STI funding down over the past 2 years </li></ul>STI funding levels down from 99% of target in 2007 * As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009 79% 79% Median STI funding 68% 71% Mean STI funding Expect to fund this year Funded last year
    16. Of those reversing hiring freezes, 70% will retain them for selected groups (business units, locations, job families, etc.). The percentage of respondents planning to roll back salary freezes in the next 6 months has increased by 21 percentage points since August (33%). Most companies plan to reverse salary freezes, hiring freezes and salary reductions over the next 12 months * As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009 56% Salary freeze 15% Salary reduction 56% Hiring freeze Percentage that made change
    17. Of those reversing reductions to 401(k) matches, 70% will restore the match to its previous level, 17% will vary based on profits, and 13% will be reinstated to a new, lower level. Retirement savings and health care programs will be treated differently * As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009 25% Reduce employer 401(k)/403(b) match 42% Raise percentage employees pay for health care premiums Percentage that made change
    18. Recession has lingering impact on retirement savings <ul><li>Changes in participant activity in 401(k) or 403(b) plans in the last two months </li></ul>* As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009 2% 58% 40% Rate of hardship withdrawals 3% 55% 42% Rate of lending to participants 32% 65% 3% Percent of pay contributed by participants 35% 56% 9% Percent of assets invested in equities Decreased Stayed the same Increased
    19. 71% of respondents have made some change to their 2010 health care plan due to the economy. * As reported in the Effect of the Economic Crisis on HR Programs – Update: August 2009 Anticipated changes to 2010 health care plan as a result of the economic downturn Recession has lingering impact on health care plans Increase deductibles, co-pays or out-of-pocket maximums Increase percentage of premiums paid by the employee Consolidate or eliminate plans Add/increase spousal surcharges Consolidate vendors Add restrictions on eligibility No changes planned Introduce a total replacement CDHP Reduce/eliminate wellness programs Other Reduce co-pays on preventive services/primary care visits
    20. The post-recession landscape Anticipated changes in 3-5 years * As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009 17% 73% 11% Employer contributions for pension plan 8% 41% 51% Development programs for employees 3% 41% 55% Difficulty retaining critical-skill employees 4% 47% 50% Difficulty attracting critical-skill employees 11% 82% 7% Employer contributions for defined contribution plan 4% 25% 72% Percentage of health care costs paid by employee 1% 17% 83% Employees working past their desired retirement age 43% 27% Decrease 29% 38% No change 28% Staff sizes 35% Salary increase levels Increase
    21. Impact of Recession on Employee Engagement
    22. Employees are cognizant of the EVP <ul><li>Employers and employees have opposite perspectives on the EVP: </li></ul><ul><ul><li>Only 28% of employers state their EVP is formal, however… </li></ul></ul><ul><ul><li>74% of employees indicate their company has a formal EVP </li></ul></ul><ul><li>Only 20% of employers that took 4 or more actions related to the reward program believe changes negatively impacted the EVP </li></ul><ul><li>42% of top-performing employees believe cost-cutting and/or restructuring resulted in significant changes to their EVP </li></ul>EMPLOYEE VALUE PROPOSITION (EVP) <ul><li>EVP encompasses the collective array of programs the organization offers in exchange for employment </li></ul><ul><li>EVP is influenced by the organization’s brand, values, culture, leadership, environment, talent and reward programs </li></ul><ul><li>Employees determine the worth or value of their experience and determine whether to join, stay or give discretionary effort </li></ul><ul><li>Employers can shape the organizations EVP through talent and reward program design that is aligned with both their culture and current/future employee expectations </li></ul>
    23. Employee engagement shows a sharp decrease from 2008 <ul><li>Employee engagement down from last year </li></ul><ul><li>Top-performing employees substantially less engaged than before the recession </li></ul><ul><li>Decline in engagement poses significant attrition risk! </li></ul>Drop in employee engagement since 2008 -23% -9% * 2008 score set as baseline Score on Watson Wyatt’s Engagement Index Percentage change 92 91 2009 100 All employees 2008* Top-performing employees 119
    24. Significant decline in line of sight among top-performing employees <ul><li>Significant declines in line of sight indicators for top performers </li></ul><ul><ul><li>43% believe the performance bar for earning bonus has been raised </li></ul></ul><ul><ul><li>32% indicate company financial performance expectations have increased </li></ul></ul>-24% -37% -20% Drop in line of sight for top-performing employees (2009 vs 2008) Percentage change My performance objectives are motivating My supervisor ties my rewards (compensation) to organizational performance My performance goals are linked to company’s strategy and goals
    25. Top performers’ satisfaction declines <ul><li>Top performers view their company more negatively </li></ul><ul><ul><li>36% say company situation has worsened </li></ul></ul><ul><ul><li>20% decline in recommending others take jobs at the company </li></ul></ul>-14% -28% -26% -31% Drop in top-performing employees’ satisfaction with key indicators of the employee value proposition Prefer to remain with company rather than take comparable job elsewhere Satisfaction with organization culture Satisfaction with opportunities for advancement -30% Percentage change Company aligns the employment deal with what it stands for in the market Company lives up to the employment deal
    26. Restructuring and cost-cutting actions have had a adverse impact on business and employees Changes have had an adverse impact on: There is a large disconnect between employers and employees on the adverse impact on quality and customer service. 48% 59% 42% 69% Ability to manage work-related stress 65% 76% 57% 79% Workload 47% 54% 37% 49% Loyalty/commitment to the company 41% 47% 34% 17% Quality/customer service 64% 36% Employer 44% 52% 36% Ability to have a healthy balance between work and personal life EMPLOYEE EXPERIENCE 44% All employees 56% Employees in organizations who took 4 or more actions 36% Productivity Employees in organizations who took less than 3 actions BUSINESS IMPACT
    27. Attraction challenges reported at historic lows Trend in difficulty attracting employees Challenges attracting critical-skill employees have not been this low since 2002 when they reached 45% All employees Critical-skill employees Top-performing employees
    28. Retention challenges are also at historic lows Trend in difficulty retaining employees Challenges retaining critical-skill employees have not been this low since 2002 when they hit 26% All employees Critical-skill employees Top-performing employees
    29. Concern about retention has continued to increase since August 2009. August 2009 October 2009 Retention risk for key employee groups is recognized * As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009
    30. Drivers of attraction have shifted in light of the recession <ul><li>Top reasons employees join an organization </li></ul>Health care benefits 22% Career development opportunities 26% Base pay 29% Company culture 30% Employer reputation 40% Employers Career development opportunities 21% Retirement benefits 22% Employer reputation 21% Health care benefits 27% Health care benefits 25% Base pay 33% Base pay 30% Job security 33% Job security 37% Nature of work 37% Nature of work 41% Top-performing employees All employees
    31. Drivers of retention have also shifted relative to prior years <ul><li>Top reasons employees leave an organization </li></ul>Work/life balance 24% Promotion opportunity 35% Career development opportunities 39% Base pay 39% Relationship with supervisor/manager 43% Employers Trust/confidence in management 23% Trust/confidence in management 22% Job security 23% Work/life balance 23% Work/life balance 22% Promotion opportunity 23% Promotion opportunity 29% Base pay 32% Stress levels 31% Stress levels 38% Base pay 35% Top-performing employees All employees
    32. The Path Forward
    33. Positioning talent for economic recovery <ul><li>Significant declines in productivity and customer service exacerbated by top performer attrition </li></ul><ul><li>Economic recovery will mean greater demand for key talent </li></ul><ul><li>Re-engaging top performers with focus on promotion and competency development is key to retention </li></ul><ul><li>Re-build thoughtfully for future success through the EVP and integrated reward and talent management programs </li></ul>An Employee Value Proposition can create a compelling bond
    34. Actions taken to keep employees engaged * As reported in the Effect of the Economic Crisis on HR Programs – Update: August 2009 Addressing employee engagement Only a small percentage of respondents are using recognition and special compensation programs that can help keep high performers engaged. Increasing communication Changing roles to expand responsibilities Holding additional employee forums, town halls, etc., to address concerns related to the economy Increasing focus on coaching and mentoring Increasing opportunities for special project assignments Providing additional development opportunities Other Creating special compensation programs for high performers and/or at-risk employees Expanding use of recognition programs Providing new opportunities for job rotation Giving more frequent performance feedback
    35. Use of Recognition Plans May be Increasing Companies that have encouraged managers to make increased use of recognition plans in light of cutbacks on other reward programs because of the recession. Use of recognition plans may increase * As reported in the Effect of the Economic Crisis on HR Programs – Update: August 2009 1% To a great extent 7% To a significant extent 43% To a small extent 3% Not at all 45% To a moderate extent To what extent have managers increased the use of recognition plans compared to before program cuts began? 1% No 64% Yes 35% Don’t know Do you expect managers to continue the increased use of recognition after other reward programs have been restored?
    36. Five steps to re-engaging employees <ul><li>Understand business drivers and objectives in new economic environment and implications for human capital management </li></ul><ul><li>Redefine EVP for relevance and strategic alignment with business objectives </li></ul><ul><li>Identify and implement changes to reward and talent management programs that the business can support </li></ul><ul><ul><li>Reinstate salaries as quickly as business results will allow </li></ul></ul><ul><ul><li>Return merit increases to pre-recession levels and differentiate as much as possible based on performance </li></ul></ul><ul><ul><li>Review STI metrics for alignment with modified business priorities </li></ul></ul><ul><ul><li>Review career development and performance management programs to align with new business landscape </li></ul></ul><ul><ul><li>Differentiate bonus awards based on performance </li></ul></ul><ul><li>Promise and deliver on the EVP </li></ul><ul><li>Establish and track EVP-related metrics to identify additional actions required </li></ul>
    37. Questions?
    38. Appendix
    39. Changes that affected hours are expected to be reversed * As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009 17% Reduced workweek 15% Mandatory shutdown Percentage that made change
    40. Impact on training, travel Anticipated timing to reverse/reinstate changes * As reported in the Effect of the Economic Crisis on HR Programs – Update: October 2009 75% Add/increase restrictions to company travel policy 41% Eliminate or reduce training programs Percentage that made change
    41. 2009 annual holiday parties affected 70% Yes – 2007 47% Yes – 2008 37% Yes – 2009 (planned) Holiday party budgets decreased from 2007 to 2008 and are expected to decrease again in 2009. Did your organization host a holiday party? 8% 32% 51% 7% 1% 2008 54% The same 4% Slightly higher 20% Slightly lower 1% Significantly higher 2007 Our 2009 Holiday Party budget is: Significantly lower 21%
    42. Legislative changes <ul><li>The Lilly Ledbetter Fair Pay Act redefines the statute of limitations on discrimination </li></ul><ul><ul><li>Restarts every time someone receives a paycheck or other remuneration that has been affected, in some way, by a prior discriminatory decision </li></ul></ul><ul><ul><li>71% of organizations indicate they plan to review their HR programs in light of the act </li></ul></ul><ul><ul><li>53% have already begun planning a response </li></ul></ul><ul><li>Employers should take a proactive approach to ensure their pay programs are credible, rational, defensible and bias-free. Best practices include: </li></ul><ul><ul><li>Job classification </li></ul></ul><ul><ul><li>Pay audit </li></ul></ul><ul><ul><li>Reward plan governance </li></ul></ul>
    43. Job classification <ul><li>65% of respondents indicate they have a systematic, organization-wide job leveling process in place </li></ul><ul><li>Of these, 55% continue to rely on market-based job slotting to develop the job hierarchy </li></ul><ul><li>Organizations might consider a hybrid approach that balances internal equity with market value to ensure like jobs can be easily organized by level </li></ul>
    44. Pay audit <ul><li>52% of respondents report they conduct pay audits to review pay programs on an annual basis, and another 33% indicate they do so but at no set time </li></ul><ul><li>Organizations are currently: </li></ul><ul><ul><li>Auditing competitiveness of pay (93%) </li></ul></ul><ul><ul><li>Assessing the way jobs are assigned to levels (39%) </li></ul></ul><ul><ul><li>Conducting statistical analyses of base pay difference by demographic group (38%) </li></ul></ul>
    45. Reward plan governance <ul><li>The Lilly Ledbetter Fair Pay Act requires that companies retain records regarding pay decisions </li></ul><ul><ul><li>70% of respondents say their organization is working to improve governance procedures related to gathering, storing and monitoring data in the United States </li></ul></ul><ul><ul><li>73% are implementing consistent tools, processes and/or technology to improve governance procedures </li></ul></ul>

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