Vlerick HRDay 2013: Compensation & Benefits Management - Prof. X. Baeten

3. SOME FACTS AND FIGURES – ACADEMIC INTRO

4. 4
Toyota forecasts further gains as net
profit triples.
Toyota has so far resisted pressure from its employees’
union to increase hourly wages and salaries.
To reduce costs, Toyota has standardised more parts
and pushed suppliers to slash their prices, while
managers have forgone bonuses and taken wage cuts.

5. 5
“The shale gas agenda should be an
enormous game changer for the US. And
Europe has no big game changer at this point
in time. We have higher energy costs and we
have higher labour costs as a bloc.”

6. © Vlerick Business School
ECONOMIC - BELGIUM
6
Nationale Bank van België

7. © Vlerick Business School
HOURLY LABOR COSTS 2012
7
Eurostat

8. © Vlerick Business School
EVOLUTION IN HOURLY LABOUR COSTS
2008-2012
0%
2%
4%
6%
8%
10%
12%
14%
8,6%
13,1%
9,5% 9,1%
7,5%
3,3%
8
Eurostat

9. © Vlerick Business School
AGEING –
IMPACT ON WORKFORCE COMPOSITION
9 | European Commission (2012)

10. 10

11. © Vlerick Business School
PAY-RAISES
18% Yes, index + merit increase
17% Yes, index + seniority-based
42% Yes, only indexation
4% Yes, because of promotion
11% No (not even indexation)
8% I don’t know
Did you receive any pay-raises since January 2012?
11
Centre for Excellence in Strategic Rewards

12. © Vlerick Business School
WHAT DRIVES PAY SATISFACTION
2,0 2,5 3,0 3,5
Yes, index + merit
Yes, index + seniority
Only index
“Satisfaction with the way pay-raises are determined”
12
Centre for Excellence in Strategic Rewards

13. © Vlerick Business School
MERIT PAY
What drives the relationship between
performance and pay?
Difference expected-received
Trust
Performance evaluation system
Merit compensation allocation system
Satisfaction with:
Percent of merit compensation
Performance evaluation rating
Salary level
13
St-Onge

14. 14
“employee performance is substantially better
under incentive plans that are coupled with
communication than under more traditional
work practices.”

15. © Vlerick Business School
EXPLAINING WORK ENGAGEMENT
15
Centre for Excellence in Strategic Rewards

16. © Vlerick Business School
EMPLOYEE PREFERENCES:
FIXED VS. VARIABLE PAY
On average, employees prefer 78% fixed pay
and 22% variable
%
Stable between
regions and
public/private,
industries,
function domains!
,00 20,00 40,00 60,00 80,00 100,00
Pct 25
Mean
Pct 75
70
78
90
10
22
30
Variable
Fixed
16
Centre for Excellence in Strategic Rewards

17. © Vlerick Business School
EMPLOYEE PREFERENCES:
CRITERIA DRIVING BASE PAY INCREASES
17
Centre for Excellence in Strategic Rewards

18. © Vlerick Business School
EMPLOYEE PREFERENCES: CRITERIA DRIVING
VARIABLE REMUNERATION
18
Centre for Excellence in Strategic Rewards

19. © Vlerick Business School
PROFIT SHARING
19
Bayo-Moriones & Larraza-Kintana

20. © Vlerick Business School
PROFIT SHARING
20
Bayo-Moriones & Larraza-Kintana

21. TOWARDS A MOTIVATING AND AGEING-PROOF
REWARD STRUCTURE
21

22. © Vlerick Business School
WHO DO YOU PREFER?
100K/y 70K/y

23. © Vlerick Business School
DISCUSSION - TOPICS
Causes & solutions
Wage span (age-related)
Logic of pay increases (cost of living + …)
‘Loonblokkering’
Internal mobility
Variable pay
23

24. TRANSPARENCY & COMMUNICATION
24

25. © Vlerick Business School
TRANSPARENCY & COMMUNICATION
Examples?
How to explain reward systems?
Expectation management
Young(er) employees and transparency: specific
needs?
Sensitive towards fairness-equity-feedback
Need for more transparency?

26. THANK YOU!
XAVIER.BAETEN@VLERICK.COM