Finding and keeping great people has never been more important—or as competitive. As a result, once you’ve secured premier talent, the last thing you can afford to do is lose those employees. However, if your organization is like most, you are at risk of losing your key performers. There are four primary reasons your best people may be considering leaving and why a focus on greater employee engagement is so critical. To learn what they are—and how they might work for your business—be sure to view this broadcast.
VisionLink has been building rewards strategies for over 20 years. Now we want to share our secrets with you. Join us to learn the four steps to effective pay design and why each is essential.
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Today’s Presenter:
Ken Gibson
SeniorVice President
(949) 265-5703
kgibson@vladvisors.com
7700 Irvine Center Drive, Suite 930 ⬧ Irvine, CA 92618 ⬧ 949-852-2288
www.VLadvisors.com ⬧ www.PhantomStockOnline.com
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4. 44
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6. 66
7700 Irvine Center Dr., Ste. 930
Irvine, CA 92618
(888) 703 0080
www.vladvisors.com
www.phantomstockonline.com
www.bonusright.com
Headquartered in Irvine, CA
Founded in 1996
Over 450 Clients throughout North America
7. VisionLink’s Focus: Help Business Leaders Build and
Sustain a High Performance Culture
Accelerate performance through pay strategies that
transform employees into growth partners.
8. If you do that…
• Quality of talent will improve.
• Employee engagement will expand.
• Performance will be magnified.
• Business growth will be accelerated.
• Shareholder value will increase.
9. 99
Do You Really Need to Worry?
“A January 2018 survey of 1,000-plus C-suite executives found that
attracting and retaining talent is their number-one concern, outranking
anxiety over the threat of a global recession, trade war, and even
competitive disruption.” (Moneyball for Business, Fast Company, September 2018,
Austin Carr)
10. 1010
Do You Really Need to Worry?
“The US broke many long-standing employment and
labor records in 2018, with the effects rippling through
all business verticals nationwide. With the 2008
recession now 10 years behind us, the 2018 economy
showed strong jobs growth and shrinking
unemployment. This is good news for job candidates
who are looking to upgrade their jobs. For
businesses, however, last decade’s hiring strategies
won’t work anymore. The talent pool is shrinking,
and updated strategies are a must.
“In a talent shortage, candidates (not employers) have
the power to dictate wages, benefits, and job content.
“Despite high demand, only 50% of employees feel
like their wages are competitive with market rates.”
(Don’t Panic, but the Talent Pool is Shrinking,” Blue Signal,
September 25, 2018)
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Do You Really Need to Worry?
“Nearly 70% of business leaders participating in a new global survey said the
current talent pool is shrinking. As a result, the competition for talent has
increased, forcing employers to change their recruiting strategies.” (“Study: Shrinking
Talent Pool Has Recruiters shifting Strategies,” HR Dive, October 5, 2018, Valerie Bolden-Barrett)
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Why You Are Vulnerable
In a talent market that has a shrinking
pool of skilled labor, where will employers
look for new talent? No one can afford to
passively wait until the right talent
appears. They have to proactively pursue
the people they need.
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Why Do People Leave?
Ceridian Report: 2018-19 Pulse
of Talent
“Not surprisingly, financial
compensation is the leading reason
cited by all age segments for
leaving their last job…However, it’s
not all about the paycheck.”
28%--I didn’t make a good salary/good pay
14%--My work was not interesting/I didn’t like
it
13%--I was not respected
12%--I had no opportunities to take on
additional responsibilities/tasks
12%--I had a poor relationship with my
manager
14. 1414
Conclusions
The talent market is highly
competitive.
Companies are at risk if they ignore
current realities.
Skilled workers are in the driver’s
seat.
Former employee value propositions
are ineffective.
Pay is not sole factor in retention, but
it is a critical one.
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Talent Assessment
Define skill “categories” needed to
drive business model
Identify gaps
Form recruiting & retention strategy
17. 1717
Talent Alignment
Align People, Roles &
Business Model
Have top performers
working in roles that
maximize their unique
abilities
Avoid placement in roles
that don’t have a
strategic impact
18. 1818
Recruit to a Role (Not a Position)
Position: characterized by specific duties you
need someone to carry out.
Role: defined by outcomes and stewardship.
Positions are filled. Roles are fulfilled.
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Accelerators
Experience with more than
one company
Desire to rise in ability,
recognition, contribution
and influence.
Many single but a growing
number are married and are
starting families
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Catalysts
Mid-30s
Meaningful experience
Unique abilities
Able to affect significant
(positive) change
Companies are competing
for their talents
Have leverage
Many married and have
children
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4 Reasons People Join…or Leave
Compelling Future
PositiveWork
Environment
Opportunities for
Personal and
Professional Growth
Financial Rewards
24. 2424
4 Parts of a Total Rewards Approach
Compelling Future
PositiveWork
Environment
Opportunities for
Personal and
Professional Growth
Financial Rewards
25. 2525
Compelling Future
The company’s
purpose and
mine are
aligned.
I see myself in
the company’s
future.
I have a “seat at
the table” in
determining
the direction of
the company.
I like the
direction the
company is
headed.
I embrace the
company’s
values.
I believe the
company can
achieve its
growth goals.
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Positive Work Environment
I like the nature of the
work I’m doing.
I am working within my
unique ability.
My responsibilities have
strategic purpose.
I work in a team of
individuals with
complementary skills.
There are channels and
processes for solving
problems and decision
making.
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Personal and Professional Development
As a result of my immersion in
the culture and resources of
this organization, my unique
abilities will improve—and I will
experience personal and
professional fulfillment.
28. 2828
Financial Rewards
I have some control over
how much I can earn if I
produce.
I feel a sense of
partnership with
ownership.
There is a philosophy
that guides pay decisions
and I relate to it.
There is a mechanism for
sharing value with those
who help produce it.
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Reason # 2 Career Measurement
The pay level and
programs in which an
employee participates
become a means of
measuring where that
person is in their career
and where they need to
go next.
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A Comparative Exercise
“Is my pay offering equal to or
better than my peers?” If not,
the employee will do one of
two things:
▪ 1) Determine has not yet
developed the skills
needed to attain the
career level of peers
▪ 2) Determine you do not
fully recognize what a
person of that talent and
ability should be paid at
this stage of professional
development.
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Reason # 3 Contribution Ambitions
Personal Vision
Most growth-oriented people
aspire to make certain
contributions in their personal
and professional lives.
The ability to achieve their
contribution goals is the source
of their motivation.
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Contribution Ambitions
Different for Every Individual
Causes and Charities
Children’s Education
Family Well-Being
Freedom to Build Something
Control Over Time &
Commitments
Vary by generation.
Vary by career stage.
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Reason # 4 Roles, Expectations & Priorities
Vision
Where?
Model &
Strategy
How ?
Roles and
Expectations
My Contribution?
Rewards
What’s in it for
me?Line of Sight
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Market a Future that’s Relevant
Here’s our future.
Here’s how we’re
going to get there.
Here’s the role we
picture for you.
Here’s how we
encourage our people
to grow and
contribute.
Here’s our philosophy
about pay and
rewards.
Here are our specific
pay programs.
Here’s how our pay
programs will work for
you if we achieve our
plan.
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Financial “Hierarchy of Needs”
Cash Flow & Living Standard
Risk Protection
Retirement Planning
Value Sharing
Wealth Accumulation
Qualified & Executive
Retirement Plans
Comprehensive, Flexible
Benefits Plan
Short & Long-Term Incentive
Plans
Salary & Bonus
Wealth Multiplier Philosophy
Clear Pay Philosophy
1
2
3
4
5
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Establish a Clear Pay Philosophy
Pay Philosophy: A written statement
of what the company is willing to
“pay for.”
Should be tied to value creation.
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Compensation Philosophy Statement
How value creation is defined.
How value is shared—and with
whom.
Market pay standards.
How guaranteed pay and value-
sharing will be balanced.
How short and long-term value-
sharing will be balanced.
When or if equity will be shared.
How merit pay is defined.
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Old School
People Are Lucky to Have a Job
Philosophy Pay the least you can to get the work done.
Cost or Investment? Every dollar spent on pay is one dollar less in profits.
Salaries Check the market; pay less if we can get away with it.
Bonuses Maybe; let's wait and see if we have a good year.
Long-term Incentives
(quasi-equity)
Are you crazy?
Results
If you have a business with sustainable cash flow and it doesn't
require innovative employees or much customer interaction,
this can work…but won’t attract or retain premier talent.
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Defensive
Don’t Rock the Boat
Philosophy We want to pay people well, but we have to be very cautious.
Cost or Investment? We need to be very careful to control costs--including pay.
Salaries We want to be "at market." Keep searching for it.
Bonuses We will try to pay bonuses as long as we can afford them.
Long-term Incentives
(quasi-equity)
Not our cup of tea. Seems expensive and unnecessary.
Results
If you want employees who are cautious about bringing up pay
issues . . . and accept that pay should never go lower but rarely
should go higher, this is the approach for you.
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Wealth Creation
Let’s Focus on Performance
Philosophy
Pay strong salaries and incentives to enable the company to
attract great talent. We are willing to pay "above market" for
top performers.
Cost or Investment?
We see compensation as an investment that should produce a
positive return for shareholders.
Salaries
Salaries should be "at market" for most positions but
somewhat above for high value positions.
Bonuses
Bonuses are set and communicated early in the year; they are
expressed as a meaningful percentage of salaries.
Long-term Incentives
(quasi-equity)
May play a small role.
Results
If you want to focus on aligning employee performance and
pay with your crucial budgeted goals, consider this approach.
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Wealth Multiplier
Let’s Secure Growth Partners
Philosophy
Share economic value. "If you create financial value, you will
participate in a generous portion of it."
Cost or Investment?
Compensation is allocated to produce the highest possible
return for both shareholders and contributing employees.
Salaries
We use data for benchmarking, but our pay philosophy drives
where we want to be vis a vis market pay.
Bonuses
Bonuses (value sharing plans) are tied to crucial metrics,
recognize personal contributions, and are not capped.
Long-term Incentives
(quasi-equity)
Viewed by top performers as the most meaningful part of their
rewards program.
Results
If you want to be able to attract and retain the best talent in
your industry and have them adopt a stewardship mindset
regarding shareholder goals, this is your system.
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Structured Flexibility
Look at compensation
strategy as you would an
investment portfolio.
Individual pay
components are your
“asset classes.”
As things change, adjust
weighting of each asset
class.
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Creating a Balance
Total Compensation Structure
Name Title/Position Tier Salary
Short-term
Incentive
Target
Long-term
Incentive
Target
Total Direct
Comp
H&W
Annual
Value
QRP
Annual
Value
Security
Plans Annual
Value
Total
Indirect
Comp TRI
Jason Smith CEO 1 $ 300,000 $ 120,000 $ - $ 420,000 $ 18,200 $ 8,000 $ - $ 26,200 $ 446,200
Lucy Jones VP Marketing 2 $ 210,000 $ 45,000 $ - $ 255,000 $ 16,200 $ 7,000 $ - $ 23,200 $ 278,200
Rick Miller VP Sales 2 $ 160,000 $ 85,000 $ - $ 245,000 $ 9,200 $ 6,000 $ - $ 15,200 $ 260,200
Janice Johnson CFO 2 $ 195,000 $ 40,000 $ - $ 235,000 $ 10,200 $ 5,000 $ - $ 15,200 $ 250,200
Maria York Director 3 $ 160,000 $ 10,000 $ - $ 170,000 $ 12,200 $ 4,000 $ - $ 16,200 $ 186,200
Frank North Director 3 $ 150,000 $ 10,000 $ - $ 160,000 $ 11,200 $ 3,000 $ - $ 14,200 $ 174,200
Ricardo South Director 3 $ 140,000 $ 10,000 $ - $ 150,000 $ 7,700 $ 2,000 $ - $ 9,700 $ 59,700
Simon Lewis Director 3 $ 130,000 $ 10,000 $ - $ 140,000 $ 8,700 $ 2,500 $ - $ 11,200 $ 151,200
$ 1,445,000 $ 330,000 $ - $ 1,775,000 $ 93,600 $ 37,500 $ - $ 131,100 $ 1,906,100
How are
these values
determined?
Why no LTI
to balance
the STI?
Should we be
addressing
these needs?
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What Does It Tell You?
Total Rewards Investment (TRI) Allocation
TRI looks at each component of pay as a percentage of the total
Name Tier Salary STI% LTI% H&W% QRP% SP% TRI
Jason Smith 1 67.2% 26.9% 0.0% 4.1% 1.8% 0.0% $ 446,200
Lucy Jones 2 75.5% 21.4% 0.0% 7.7% 3.3% 0.0% $ 278,200
Rick Miller 2 61.5% 53.1% 0.0% 5.8% 3.8% 0.0% $ 260,200
Janice Johnson 2 77.9% 20.5% 0.0% 5.2% 2.6% 0.0% $ 250,200
Maria York 3 85.9% 6.3% 0.0% 7.6% 2.5% 0.0% $ 186,200
Frank North 3 86.1% 6.7% 0.0% 7.5% 2.0% 0.0% $ 174,200
Ricardo South 3 87.7% 7.1% 0.0% 5.5% 1.4% 0.0% $ 159,700
Simon Lewis 3 86.0% 7.7% 0.0% 6.7% 1.9% 0.0% $ 151,200
Salary STI% LTI%
H&W% QRP% SI%
55. 5555
Balanced Structure
Total Compensation Structure
Name Title/Position Tier Salary
Short-term
Incentive
Target
Long-term
Incentive
Target
Total Direct
Comp
H&W
Annual
Value
QRP
Annual
Value
Security
Plans Annual
Value
Total
Indirect
Comp TRI
Jason Smith CEO 1 $ 300,000 $ 75,000 $ 75,000 $ 450,000 $ 18,200 $ 8,000 $ 15,000 $ 41,200 $ 491,200
Lucy Jones VP Marketing 2 $ 210,000 $ 36,750 $ 36,750 $ 283,500 $ 16,200 $ 7,000 $ 10,500 $ 33,700 $ 317,200
Rick Miller VP Sales 2 $ 160,000 $ 60,000 $ 40,000 $ 260,000 $ 9,200 $ 6,000 $ 8,000 $ 23,200 $ 83,200
Janice Johnson CFO 2 $ 95,000 $ 34,125 $ 34,125 $ 263,250 $ 10,200 $ 5,000 $ 9,750 $ 24,950 $ 288,200
Maria York Director 3 $ 160,000 $ 16,000 $ 16,000 $ 192,000 $ 12,200 $ 4,000 $ 8,000 $ 24,200 $ 216,200
Frank North Director 3 $ 50,000 $ 15,000 $ 15,000 $ 180,000 $ 1,200 $ 3,000 $ 7,500 $ 21,700 $ 201,700
Ricardo South Director 3 $ 140,000 $ 14,000 $ 14,000 $ 168,000 $ 7,700 $ 2,000 $ 7,000 $ 16,700 $ 184,700
Simon Lewis Director 3 $ 30,000 $ 13,000 $ 13,000 $ 156,000 $ 8,700 $ 2,500 $ 6,500 $ 17,700 $ 173,700
$ 1,445,000 $ 263,875 $ 243,875 $ 1,952,750 $ 93,600 $ 37,500 $ 72,250 $ 203,350 $ 2,156,100
We’ve
reduced the
STI targets.
But we’ve
balanced with a
LTIP (wealth
creation).
This can
strengthen
partnership and
improve retention.
56. 5656
A balanced approach will typically appeal to premier
talent who hold a long-term view
Total Rewards Investment (TRI) Allocation
TRI looks at each component of pay as a percentage of the total
Name Tier Salary STI% LTI% H&W% QRP% SP% TRI
Jason Smith 1 61.1% 15.3% 15.3% 3.7% 1.6% 3.1% $ 491,200
Lucy Jones 2 66.2% 17.5% 17.5% 7.7% 3.3% 5.0% $ 317,200
Rick Miller 2 56.5% 37.5% 25.0% 5.8% 3.8% 5.0% $ 283,200
Janice Johnson 2 67.7% 17.5% 17.5% 5.2% 2.6% 5.0% $ 288,200
Maria York 3 74.0% 10.0% 10.0% 7.6% 2.5% 5.0% $ 216,200
Frank North 3 74.4% 10.0% 10.0% 7.5% 2.0% 5.0% $ 201,700
Ricardo South 3 75.8% 10.0% 10.0% 5.5% 1.4% 5.0% $ 184,700
Simon Lewis 3 74.8% 10.0% 10.0% 6.7% 1.9% 5.0% $ 173,700
Salary STI% LTI%
H&W% QRP% SI%
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What is an Employer Brand?
The perception
employees,
future employees
and the
community hold
of your company.
You don’t get to
decide what your
brand is. Others
determine it.
While you don’t get
to decide what
your brand is, you
can decide what
you want it to be.
CEOs must lead
that effort.
Employer branding
is largely a
marketing effort. It
is not an HR
function.
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Build an Employer Brand Strategy
As the global economy picks up, there is growing
concern among CEOs about finding and keeping the
best talent to achieve their growth ambitions.
Different surveys show that in 2014, 36% of global
employers reported talent shortages, the highest
percentage since 2007, and in a more recent 2015
survey, 73% of CEOs reported being concerned about
the availability of key skills. So how can
companies compete effectively in this new
war for talent? First and foremost, it’s time
for leaders to focus on strengthening their
organizations’ employer brands.
(“CEOs Need to Pay Attention to Employer Branding,” Harvard
Business Review, May 11, 2015, Richard Mosley)
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4 Reasons People Join…or Leave
Compelling Future
PositiveWork
Environment
Opportunities for
Personal and
Professional Growth
Financial Rewards
62. 6262
4 Parts of a Total Rewards Approach
Compelling Future
PositiveWork
Environment
Opportunities for
Personal and
Professional Growth
Financial Rewards
65. 6565
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66. 6666
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