Compensation & Benefits Management: Xavier Baeten
 

Compensation & Benefits Management: Xavier Baeten

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Presentation by Prof. Xavier Baeten during the 8th editon of Vlerick HR-day 2011.

Presentation by Prof. Xavier Baeten during the 8th editon of Vlerick HR-day 2011.

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Compensation & Benefits Management: Xavier Baeten Compensation & Benefits Management: Xavier Baeten Presentation Transcript

  • Compensation & benefits management:het beloningshuis van de toekomstVlerick HR Day - Xavier Baeten
  • “The changing face of reward” "Plato believed that no-one in a community should earn more than five times the pay of the lowest paid worker." “incentives will never be perfectly aligned with value-creation.” “One-quarter of the highest-potential people in your company Intend to jump ship within the year” “The Silver Tsunami” “work is becoming the new face of retirement in the 21st century”“SRIHRM” “Age management” “FFWP”
  • Trends & challenges1. Flexible rewards: pay-for-performance2. Family-friendly workplace practices3. Flexible rewards: choice4. Health benefits5. Corporate Citizenship6. Retirement and pension plans7. Employee value proposition© Vlerick Leuven Gent Management School
  • 1. Flexible rewards: pay-for-performance Less fixed, more variable 39% plan to increase the proportion of variable pay More differentiation Targets & measures Collective bonus Bonus deferral Some tips: Do not over-incentivise 5 – 10 – 15 Target setting Go beyond financial measures Flexibility& discretion© Vlerick Leuven Gent Management School
  • 2. Family-Friendly Workplace Practices Holidays: number & Total hours regulation worked per week Childcare subsidy Working from home Childcare flexibility Job Job switching sharing5| © Vlerick Leuven Gent Management School
  • 2. Family-friendly workplace practices Bloom, N., Kretschmer, T., & Van Reenen, J. (2011): Sample: 50-10.000 employees Countries: Germany, France, UK, US Findings: No relationship with firm performance No relationship with % female employees overall Positive relationship with female managers Positive relationship with ‘good management practices’ Operations Monitoring Targets Incentives6| © Vlerick Leuven Gent Management School
  • 3. Flexible rewards: choice Low flexibility High flexibility Low cost High cost Salary Core Plus Modular reduction • Core: basic Mix and options coverage • Premium Match • Choice: • Plus: flexible conversion different credits to • Flexible credits • Flexible combinations purchase spending of benefits additional account coverage Barringer & Milkovich (1998)7| © Vlerick Leuven Gent Management School
  • 3. Flexible rewards: choice Do not provide too much choice – most important: Time (holidays, leave) Mobility (car, public transport) Pension contribution Main barriers: Tax treatment Administrative burden Main effects: Employer reputation Improves knowledge of benefits8| © Vlerick Leuven Gent Management School
  • 3. Flexible rewards: choice What are the most popular ingredients of a cafeteria plan? Money for… Extra holidays Bigger car Holidays for… Sabbatical or early retirement Extra cash Extra benefits9| © Vlerick Leuven Gent Management School
  • 4. Health benefits Wellness programs Social, mental and physical health Food, fitness, stop smoking, stress, … Health risk appraisal Growing focus in the USA 74% use incentives (e.g., small cash awards, t- shirts, memberships in health clubs), up from 50% in 2008 J & J: return of $2.71 for $1.00 spent Positive impact on retention Clear signal about firm culture: culture of health10 | © Vlerick Leuven Gent Management School
  • 5. Corporate Citizenship CSR – PR = HR Research results: More than 90% of MBAs are willing to forgo financial benefits in order to work for an organisation with a better reputation for CSR and ethics (Stanford) 72% deciding between 2 jobs choose to work for the company that also supports charitable causes (Deloitte) Only 15% say their employer has an employee sustainability engagement policy (Brighter Planet)11 | © Vlerick Leuven Gent Management School
  • 5. Corporate Citizenship12 | © Vlerick Leuven Gent Management School
  • 5. Corporate Citizenship13 | © Vlerick Leuven Gent Management School
  • 5. Corporate Citizenship14 | © Vlerick Leuven Gent Management School
  • 6. Retirement & pension plans “In Europe, fewer older individuals work because public policies encourage them to step down and create job openings for younger employees Pension plans: Impact of economic crisis? People do not think enough about retirement ‘Older’ workers – some research results: Fewer sich days Less turnover Better interpersonal skills More engaged However… 13% actively recruit older workers15 | © Vlerick Leuven Gent Management School
  • 6. Retirement and pension plans Impact on Reward Management End-of-career is not an “on-off” switch - flexible retirement (4th pillar) Impact on job content Need for flexible rewards: Benefits: pension plan, mobility, holidays Bonus plans? Need for changes in social security and tax system16 | © Vlerick Leuven Gent Management School
  • 6. Retirement & pension plans17 | © Vlerick Leuven Gent Management School
  • 7. Reward Proposition Important Less important Financial rewards: Financial rewards: Pay structure Bonus How raises are determined Employee benefits Pay structure Non-financial rewards: Information Management approachability Non-financial rewards: Responsibilities Colleagues Security Career opportunities18 | © Vlerick Leuven Gent Management School
  • 7. Reward Proposition19 | © Vlerick Leuven Gent Management School
  • What are companies working on? Projects in reward management20 | © Vlerick Leuven Gent Management School
  • What are companies working on? Projects in reward management Benchmarking Bonus design: Simplification Collective bonus Bonus deferral Pension plans: from defined benefits to defined contribution21 | © Vlerick Leuven Gent Management School
  • “There is now more attention being paid to the balance between financial and non-financialperformance; it has been too financially oriented” “The trend will go to ‘one size fits me’” “Distilling the message and getting line managers to really buy it … is critical”