salary and compenstion


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salary and compenstion

  1. 1. Salary & Compensation<br />Welcome to the Class of Spring 2011<br />
  2. 2. About Me<br /><ul><li> Pakistan
  3. 3. Family
  4. 4. Travel
  5. 5. Music
  6. 6. Literature
  7. 7. Rekie
  8. 8. Volunteer </li></li></ul><li>Today’s Economic Challenges<br />Slow economic growth in many parts of the world<br />Globally there is a conservative approach to spending as reward budgets remain limited; emphasis on distributing funds more effectively through variable pay<br />Legislative mandates are forcing companies to review their pay programmes<br />Globalization and competition has companies adopting lean staffing models and looking at restructuring and outsourcing non-core activities<br />Companies are putting a strong emphasis on profitability and the demands on employees to perform at higher levels continue to grow<br />
  9. 9. Today’s Talent Challenges <br />People investments are significant bottom line cost<br />Attraction and retention continue to be challenges<br />20% of employers report moderate to great difficulty in attracting critical-skill employees<br />44% are having significant difficulty attracting top performers<br />Compensation continues to be one of the top attraction factors and employees are unhappy about it, particularly in Asia<br />
  10. 10. Today’s Talent Challenges <br />There is a significant opportunity to improve the return on people investments<br />Alignment with business strategies<br />Successful attraction and retention of top-performing employees<br />Effective monetary reward through short-term incentives to differentiate performance<br />
  11. 11. Global trends in reward management<br />Financially high performing companies continue to put greater emphasis on their people investments by offering more short-term (STI) and long-term incentives (LTI) to their employees<br />High performing organizations are changing their reward mix to maintain their competitive position and to increase emphasis on STI<br />Executive compensation issues, are prompting many companies to carefully re-evaluate their compensation programs; Compensation committees have become more assertive<br />More multinational companies are moving towards a globally consistent reward program as they strive to build a common culture and internal equity across borders<br />
  12. 12. Trends in North America<br />Base salary is primarily seen as an effective attraction, retention and cost management tool<br />Short-term incentives are effective reward tools for:<br />Aligning behavior with goals and culture<br />Achieving key strategic goals<br />Attraction and retention (after base pay)<br />Controlling costs<br />
  13. 13. Employers are reducing eligibility among non-executives for long-term incentives<br />Nearly half of those revising plans are decreasing eligibility<br />High-performing firms are almost twice as likely as low performers to offer LTI eligibility to all employees <br />
  14. 14. Trends in Europe<br />Globalization and competition has resulted in local and multinational companies in Europe setting aggressive targets and business plans<br />There is increased speculation in Central Europe for shared services centres (Czech Rep & Hungary in particular)<br />Competition for talent is fierce<br />This goes double in Russia!<br />Experienced professionals & managers are in high demand to fuel new business initiatives<br />There is a convergence of multinational & local companies’ people and reward strategies<br />Greater attention paid to structuring, benchmarking & retention<br />Continuing to move beyond “just cash”…but not too far!<br />Pay for performance is rapidly becoming a fixture in many markets<br />
  15. 15. Non-cash elements are also becoming increasingly important<br />Company cars: valued as much as ever by employees<br />Typically offered to direct sales staff and all levels of management<br />Most companies have clear allocation guidelines in place<br />Other most common perquisites:<br />Mobile phones (Professional level and above)<br />Free medical check-ups<br />Free/discounted company products<br />Social/sports club membership<br />Subsidised transportation (non Management)<br />
  16. 16. Trends in Asia Pacific<br /><ul><li>Salary increases in Asia Pacific are on the higher side, with India, Indonesia, China, Philippines and South Korea having more than 6% increase in salaries
  17. 17. On comparing the fastest growing markets in Asia –China and India, compensation levels in China are lower than in India</li></li></ul><li>…yet employees are dissatisfied<br />Compensation listed as the #1 reason why employees chose to leave their company<br />Employees believe their pay is linked to their company’s performance<br />But, they are neither satisfied with their pay nor their benefits<br /> <br />
  18. 18. So what can be done to address this issue?<br />
  19. 19. Review the employment deal…<br />Employer<br />Value Creation Through People:<br /><ul><li>Attract
  20. 20. Develop
  21. 21. Focus and engage
  22. 22. Productivity
  23. 23. Build commitment, ownership and loyalty</li></ul>Employee<br />A meaningful work experience:<br /><ul><li>Personal fulfillment
  24. 24. Wealth accumulation
  25. 25. Competitive Pay
  26. 26. Security</li></li></ul><li>Remember what employees want…<br />Top Performers’ Priorities when Considering to Accept Employment<br />Employment Priorities % Responding to “Critically Important”<br />Opportunity to Develop Skills<br />Compensation<br />Corporate Culture<br />Freedom to Work Independently<br />Opportunities for promotions<br />Start-up Opportunity<br />Job Security<br />Benefits<br />
  27. 27. Adopt a holistic approach: The Total Rewards approach<br />MONETARY<br />NON-MONETARY<br />Annual Incentives & Cash Recognition<br />Growth & Career Development<br />Communication & Nonmonetary Recognition<br />Performance<br />Management<br />Work<br />Environment<br />Long Term<br />Incentives<br />Benefits<br />Base Pay<br />Business Strategy<br />Organizational<br />Structure<br />Work Design<br />Desired Culture<br />Systems<br />Human Capital Strategy<br />The Employment Deal<br />TOTAL REWARDS STRATEGY<br />
  28. 28. Best Practices<br />The most successful companies<br />Differentiate rewards by performance and ensure top-performing and critical-skill employees are rewarded the best <br />Ensure incentive plans are driving the right outcomes – to engage employees to improve financial performance<br />Apply globally consistent reward strategies to create a common culture, to focus employees on achieving desired results and to deliver rewards accordingly<br />
  29. 29. Best Practices<br />The most successful companies<br />Ensure costs are in line with the results achieved (e.g., competition for talent, turnover, attraction of desired talent and business performance)<br />Support reward strategy execution with an effective performance management system, ensuring clarity surrounding expectations and the pay-performance link<br />Manage rewards in their totality and make appropriate trade-offs among reward elements to get better ROI in terms of business results and employee value<br />Develop effective communication strategies to help employees better understand the value of their total compensation packages<br />
  30. 30. Job Analysis & Description<br />Whole Job Ranking<br />Performance Management<br />Job Evaluation<br /> Market Pricing<br />Structured Questionnaires and Interviews<br />PAQ<br />Point Factor (Hay)<br />Organization Design<br />System Market Pricing<br />Compensation Activities<br />Turnover<br />Organization Research<br />Job Design<br />Attraction<br />Job Enlargement<br />Retention<br />Job Enrichment<br />Incentive Plan Design<br />Individual Pay Assessment<br />Recognition<br />Peer Comparisons<br />Gainsharing<br />Experience<br />Sales Comp<br />Stock Options<br />Performance<br />
  31. 31. The Aims of Reward Management<br />Reward people according to the value they create<br />Align reward practices with business goals and with employee values and needs<br />Reward the right thing to convey the right message about what is important in terms of behaviours and outcomes<br />Help to attract and retain the high-quality people the organization needs<br />Motivate people and obtain their engagement and commitment <br />
  32. 32. Achieving The Aims<br />Reward philosophy<br />Distributive justice<br />Procedural justice<br />Fairness<br />Equity<br />Consistency<br />Transparency<br />Strategic alignment<br />Contextual and culture fit<br />Fit for purpose<br />Developing a high performance culture<br />
  33. 33. Defining The Reward System<br />Reward strategies<br />Reward policies<br />Reward practices<br />Reward processes<br />Reward procedures<br />
  34. 34. Elements of A Reward System<br />Business strategy<br />Reward strategy & policy<br />Base pay or basic pay<br />Continent pay<br />Employee benefits<br />Allowances<br />Total earnings<br />Total remuneration<br />Job analysis<br />Market rate analysis<br />Grade & pay structures<br />Performance management<br />Non financial rewards<br />Total rewards<br />
  35. 35. Factors Affecting Reward Management Policy & Practice<br />The internal environment <br />The external environment<br />Strategic management<br />Total reward<br />Human capital management<br />The factors affecting levels of pay<br />Motivation<br />Engagement and commitment<br />The psychological contract<br />
  36. 36. Q & A <br />