2. CONTENTS
3-4 Introduction
5-6 Types of financial reward
7-9 Types of non-financial reward
10-11 Is reward a cost or an investment?
12-13 Objectives of reward strategy
14-15 Issues with reward practices today
16-17 Determining the reward budget
18-20 Making changes to the existing reward program
21-23 Total rewards optimization
24-26 Value-driver analysis and value trees
27-28 Realized and realizable reward
29-30 Types of incentive plan
31-32 Areas to consider around executive reward
33-35 Research around executive reward
36-38 Trends around reward strategy
39-41 Trends around reward design
42-44 Trends around reward implementation
45-46 What is likely to happen in 2015?
47-48 Risks and priorities for 2015
49-50 Conclusion, summary and questions
2
4. Introduction to Toronto Training
and HR
Toronto Training and HR is a specialist training and
human resources consultancy headed by Timothy Holden
10 years in banking
15 years in training and human resources
Freelance practitioner since 2006
The core services provided by Toronto Training and HR
are:
Training event design
Training event delivery
HR support with an emphasis on reducing
costs, saving time plus improving employee
engagement and morale
Services for job seekers
4
8. • Opportunities for
personal and career
development
• Flexible working (such
as working from home
or flexitime)
• Being involved in
decisions that affect
how and when
employees do their
work
8
Types of non-financial
reward
1 of 2
9. • A pleasant working
environment
• Good performance
management and
performance reviews
• Recognition, such as
through an ‘employee
of the month’ award or
team-based events
9
Types of non-financial
reward
2 of 2
17. • Ability to pay
• Inflation
• Movement in market
rates
• The ‘going rate’ of pay
awards elsewhere
• Recruitment and
retention issues
17
Determining the
reward budget
19. • How does the change
reflect real business
success? Does it
reward the right
people?
• Does it add value to
the business? Is it cost
competitive to other
organizations?
• Does it fit the talent we
need for the future?
19
Making changes
to the existing
reward program
1 of 2
20. • Is the organization able
to acquire and retain a
viable, reliable, and
quality workforce?
• Does the
communication make
sense to a
discriminating
workforce?
• Is it more responsive to
workforce needs?
20
Making changes
to the existing
reward program
2 of 2
22. • Definition
Questions
• What’s the right overall
level of total
investment in rewards?
• What’s the best way to
allocate that
investment across
reward elements to
maximize the employee
behaviour we want to
influence?
22
Total rewards
optimization
1 of 2
23. Questions (cont.)
• How do these results
vary across targeted
employee segments
(whether by business
unit, age, job level,
tenure, skill group,
location, performance
or other categories)?
23
Total rewards
optimization
2 of 2
25. Value-driver analysis
• Definition
• Interrelationships
among various
metrics and levers to
pull in order to
impact results
• People-related costs
25
Value-driver
analysis and
value trees
1 of 2
26. Value trees
• Definition
• Deconstructing a
high-level driver
• Primary and
subordinate drivers
26
Value-driver
analysis and
value trees
2 of 2
32. • Determinants (the
‘why’ question)
• Unit of analysis
(individual or group)
• Consequences (the
‘why does it matter’
question)
32
Areas to consider
around executive
reward
34. • Are executive
compensation and
company performance
disconnected?
• Did so-called ‘fat cat’
pay caused the
worldwide economic
crisis of 2008?
• Do Presidents and
CEOS manipulate the
remuneration
committees who set
their pay? 34
Research around
executive reward
1 of 2
35. • Has C-suite play taken
off because HR was
‘asleep at the wheel’ ?
• Does widening pay
dispersion damage
employee engagement,
satisfaction,
performance, fairness,
trust or innovation?
35
Research around
executive reward
2 of 2
37. • Externally competitive
to motivational
• Inconsistent strategy
and design to
consistent strategy and
design
• Short-term
performance
orientation to longer-term
performance
orientation
37
Trends around
reward strategy
1 of 2
38. • Financial performance
measures to balanced
performance measures
• Cost orientation of
reward to ROI
orientation of reward
38
Trends around
reward strategy
2 of 2
40. • Base pay program
management to
variable pay program
management
• Paying for jobs and
work to focus on
paying for value and
contribution
• Flexible work
arrangements to career
development, culture
and recognition
40
Trends around
reward design
1 of 2
41. • Defined benefits plans
to defined contribution
plans
• Siloed reward
orientation to total
rewards orientation
41
Trends around
reward design
2 of 2
43. • Reward program
design to reward
program
implementation
• Consistent treatment
in pay to
performance-based
differentiation
• HR-led
implementation to
line manager-led
implementation
43
Trends around
reward
implementation
1 of 2
44. • Ad-hoc reward
communications to
sustained senior
leader messaging
44
Trends around
reward
implementation
2 of 2
46. • Managing cost base
• Alignment
• Pay for performance
• Total rewards
• Doing more with less
• Communications
• Coaching line
managers
• Differentiating rewards
• Non-financial rewards
• Business acumen
46
What is likely to
happen in 2015?