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Reward trends - Aon Hewitt

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Employee remuneration trends in the UK in 2011/2012

Employee remuneration trends in the UK in 2011/2012

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  • 1. Employee Remuneration Trends in 2011/12Aon Hewitt | United Kingdom
  • 2. Aon Hewitt SpeakersAndrew MacLeod John PuddephattEMEA Reward Data Services Leader Principal Benefits ConsultantTel: +44 (0)207 086 9181 Tel: +44 (0)788 940 6624Cheryl Hinman Nishant MahajanSenior Executive Compensation Consultant Market Intelligence ExpertTel: +44 (0)207 086 9138 Tel: +44 (0)207 086 9184Nikki SeversSenior Global Rewards ConsultantTel: +44 (0)117 900 4435 2
  • 3. Agenda• Aon Hewitt Total Reward Survey Methodology• Key Economic Indicators• Salary Increases & Budgets• Bonus Awards• Long-Term Incentive Trends• Employee Benefits• 2012 Reward Outlook• Aon Hewitt 2012 Survey Calendar 3
  • 4. Survey Methodology – Aon Hewitt’s CareerLink Framework 4
  • 5. Economic Indicators 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%-1% 2007 2008 2009 2010 2011 2012-2%-3%-4%-5% CPI Inflation GDP UnemploymentSource: Office for National Statistics 5
  • 6. Salary Increase Trends 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%-1% 2007 2008 2009 2010 2011 2012-2%-3%-4%-5% CPI Inflation GDP Unemployment Actual Salary Budgets Projected Salary Budgets Real Increase/DecreaseSource: Aon Hewitt’s Global Salary Increase Survey and Office for National Statistics 6
  • 7. Salary Increase Trends 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%-1% 2007 2008 2009 2010 2011 2012-2%-3%-4%-5% CPI Inflation GDP Unemployment Actual Salary Budgets Projected Salary Budgets Real Increase/DecreaseSource: Aon Hewitt’s Global Salary Increase Survey and Office for National Statistics 7
  • 8. Salary Increase Trends 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%-1% 2007 2008 2009 2010 2011 2012-2%-3%-4%-5% CPI Inflation GDP Unemployment Actual Salary Budgets Projected Salary Budgets Real Increase/DecreaseSource: Aon Hewitt’s Global Salary Increase Survey and Office for National Statistics 8
  • 9. Salary Increase Trends 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%-1% 2007 2008 2009 2010 2011 2012-2%-3%-4%-5% CPI Inflation GDP Unemployment Actual Salary Budgets Projected Salary Budgets Real Increase/DecreaseSource: Aon Hewitt’s Global Salary Increase Survey and Office for National Statistics 9
  • 10. Key Engagement Drivers – Reward is Vital Driver Name Global * Asia-Pacific Europe Latin America North America Career Opportunities 1 1 1 1 1 Brand Alignment 2 2 3 3 4 Recognition 3 3 5 2 5 People/HR Practices 4 5 2 Organisation Reputation 5 3 Managing Performance 2 Pay 4 4 4 Valuing People/ People Focus 5 * Ranking of drivers based on percentage of time the driver appear as one of top 3 opportunity areas in the organisationSource: Aon Hewitt Global Employee Engagement Database 10
  • 11. Base Salary Increases from 2010 to 2011(Constant Incumbent & Constant Company Comparison) 7% 6% 5% 4% 3% 2% 1% 0% Level 11 Level 10 Level 9 Level 8 Level 7 Level 6 Level 5 Level 4 Level 3 Level 2 Level 1 Lower Quartile Median Upper Quartile 11
  • 12. 0% 1% 2% 3% 4% 5% Banks/ Financial Services Construction/ Engineering (By Industry Sector) Consumer Products Energy 2011 2010 vs 2011 Average Salary Increases Information/ Communication/ Technology 2010 Manufacturing - Aerospace/ Automotive/ Industrial Media/ Entertainment Pharmaceutical/ Biotechnology/ Healthcare Real Estate12
  • 13. 0% 1% 2% 3% 4% 5% Banks/ Financial Services Construction/ Engineering (By Industry Sector) Consumer Products Energy 2011 2010 vs 2011 Average Salary Increases Information/ Communication/ Technology 2010 Manufacturing - Aerospace/ Automotive/ Industrial Media/ Entertainment Pharmaceutical/ Biotechnology/ Healthcare Real Estate13
  • 14. 0% 1% 2% 3% 4% 5% Banks/ Financial Services Construction/ Engineering (By Industry Sector) Consumer Products Energy 2011 2010 vs 2011 Average Salary Increases Information/ Communication/ Technology 2010 Manufacturing - Aerospace/ Automotive/ Industrial Media/ Entertainment Pharmaceutical/ Biotechnology/ Healthcare Real Estate14
  • 15. 0% 1% 2% 3% 4% 5% Banks/ Financial Services Construction/ Engineering (By Industry Sector) Consumer Products Energy 2011 2010 vs 2011 Average Salary Increases Information/ Communication/ Technology 2010 Manufacturing - Aerospace/ Automotive/ Industrial Media/ Entertainment Pharmaceutical/ Biotechnology/ Healthcare Real Estate15
  • 16. 2011 Median On‐Target and Actual Variable Pay as % of Base Salary 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Level 11 Level 10 Level 9 Level 8 Level 7 Level 6 Level 5 Level 4 Level 3 Level 2 On-Target Variable Pay Actual Variable Pay* Variable Pay includes Performance Bonus and where relevant Sales Commission / Incentive 16
  • 17. 2010 vs 2011 Total Cash Compensation Mix100%95%90%85%80%75%70%65%60%55%50% 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 Level 11 Level 10 Level 9 Level 8 Level 7 Level 6 Level 5 Level 4 Level 3 Level 2 Base Salary Annual Variable Pay 17
  • 18. 2010 vs 2011 Median Long‐Term Incentives % of Base Salary 30% 25% 20% 15% 10% 5% 0% Level 11 Level 10 Level 9 Level 8 Level 7 2011 2010 18
  • 19. Top Three Reasons for Providing a Benefits Programme Attract talent Retain talent Meet market norms Productivity & engagement Create alignment Control costs 0% 10% 20% 30% 40% 50% 60% 70% 80% 1st 2nd 3rd Number of responses 185Source: Aon Hewitt Benefits and Trends Survey 2011 19
  • 20. Status of Salary Sacrifice and Flexible Benefits Schemes Introduced Decided to introduce Decided not to introduce Not considering introducing 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Salary sacrifice Flex Number of responses 100Source: Aon Hewitt Benefits and Trends Survey 2011 20
  • 21. Satisfaction with Flexible Benefits Schemes Changes to pension scheme Competitive pressures Diverse needs of employees Inconsistent compensation arrangements Organisational change Retention, recruitment Tax and NI efficienciesTo improve employee understanding of total rewards To increase employee engagement Increase employee satisfaction with benefits Introduce / extend employee self service 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Very satisfied Satisfied Dissatisfied Very dissatisfied Number of responses 52Source: Aon Hewitt Benefits and Trends Survey 2011 21
  • 22. Insured Benefits Prevalence 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Level 11 Level 10 Level 9 Level 8 Level 7 Level 6 Level 5 Level 4 Level 3 Level 2 Death-in-Service Private Medical Insurance Long-term Disability 22
  • 23. 2012 ‐ Organisations Have More Reward Options Than They ThinkUse budgets wisely– Differentiate to recognise high performers and ensure alignment with business needs– Bring the meaning back to variable pay– Optimise benefits programmes for both employers and employeesBe fair in pay programmes– Ensure fairness and transparency– Benchmark to ensure competitivenessBe creative in what you offer and how you communicate it– Focus on all elements of the package including benefits– Communicate and educate employees on the value of their deal– Understand the critical role of the line manager– Listen to employee needs and measure impact 23
  • 24. Aon Hewitt’s 2012 Survey CalendarTotal Reward Survey (TRS) and Executive Total Reward Survey (ETRS)• Data collection period : April – July• Reports available: September – OctoberBenefits & Trends Survey• Data collection period : July – September• Reports available: December – JanuarySales Incentive Survey• Data collection period : March – May• Reports available: July – AugustWe also have three specialist divisions within Aon Hewitt:• Radford - specialist compensation and benefits data within the Hi-Tech / Life-sciences sector• McLagan - specialist compensation and benefits data within the Financial Services sector• New Bridge Street - executive remuneration data and consulting 24
  • 25. Sharing our thought leadership with clients• Aon Hewitt makes a significant ongoing investment in reward, performance, talent and employee engagement research. We regularly publish research reports, white papers and articles that we make available to our clients.• Our compensation database covers 180 countries, over 680 globally consistent benchmark positions and over 6 million incumbents. That’s more than any other compensation data provider worldwide.• Below are some of the recent reward research reports we have published. Please click on the images to read more. 25
  • 26. Aon Hewitt Global Footprint 26
  • 27. Copyright © 2012 Aon Hewitt Limited. All rights reserved.Aon Hewitt Limited, 8 Devonshire Square, London EC2M 4PL. Registered in England No. 4396810To protect the confidential and proprietary information included in this material, it may not be disclosed or provided to any third parties without the prior writtenconsent of Aon Hewitt Limited.Aon Hewitt Limited does not accept or assume any responsibility for any consequences arising from any person, other than the intended recipient, using or relyingon this material. 27

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