Compensation and Planning for the Future
Presented by:
Ann Bares E. James (Jim) Brennan
Laura Schroeder
August 18, 2011
Today’s Presenters
Ann Bares Managing Partner, Altura Consulting Group Compensation Café Founder & Editor
E. James (Jim) Brennan Senior Associate, ERI Economic Research Compensation Café Contributor
Laura Schroeder Global Talent Specialist, Workday Compensation Café Contributor
The Story Research Tells Us
Ann Bares Managing Partner, Altura Consulting Group
2012 Salary Increase Budgets Employee Group WorldatWork Hay Group ERI
Hourly Nonexempt 2.9%
3.0% 2.6%
Salaried Nonexempt 2.9%
3.0% 2.8%
Salaried Exempt 2.9%
3.0% 2.9%
Officers/Executives 2.9%
3.0% 3.0%
Steady as She Goes… Sources: WorldatWork 2011/2012 Salary Increase Budget Survey, Hay Group’s U.S. Database (7/11 Press Release), ERI 2012 Salary Increase Survey
2012 Salary Structure Adjustments
Employee Group WorldatWork Hay Group ERI
Hourly Nonexempt 1.9%
-- 1.4%
Salaried Nonexempt 1.9%
-- 1.5%
Salaried Exempt 1.9%
-- 1.6%
Officers/Executives 2.9%
-- 1.7%
…Playing a Little Catch-Up? Sources: WorldatWork 2011/2012 Salary Increase Budget Survey, Hay Group’s U.S. Database (7/11 Press Release), ERI 2012 Salary Increase Survey
Another More Chaotic Reality
The General Salary Program Picture
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2006 2007 2008 2009 2010 2011 2012
Salary increases Structure adjustments
Sources: WorldatWork 2011/2012 Salary Increase Budget Survey
Put in Larger Economic Context
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2006 2007 2008 2009 2010 2011 2012
Salary increases Structure adjustments CPI Unemployment
Sources: WorldatWork 2011/2012 Salary Increase Budget Survey
With an Interesting Twist
The State of Variable Pay
2006 2007 2008 2009 2010 2011
% of organizations using variable pay
79% 80% 81% 80% 80% 79%
The percent of organizations using variable pay hovering
around 80%
Sources: WorldatWork 2011/2012 Salary Increase Budget Survey
Most Popular Programs/Practices
Program 2009 2010 2011
Employee referral bonus 66% 55% 62%
Sign-on/hiring bonus 64% 50% 62%
Market adjustments to base salary 37% 35% 60%
Program 2009 2010 2011
Spot bonus 39% 36% 48%
Non-cash recognition -- 38% 41%
Top Three
Next Two
Making Compensation Planning Dynamic
E. James (Jim) Brennan Senior Associate ERI Economic Research
Budgeting Principles
• Fixed budget = guaranteed expense • Human enterprises, dynamic treatments
P P P P P P
1. Anticipate your market situation 2. Target Midpoints or Job Values
• study your market ratios • analyze your compa-ratios • define your closure needs
3. Plan action steps to • minimize residual risk exposures • remedy shortfalls over time • protect key talent
Timing of Increases
• Simultaneous (Focal) • Variable (Anniversary)
Expect Variations
• Prepare A B C budgets • Randomness is lumpy • Human reality is rarely neat, smooth or
symmetrical • Ready, aim, fire, score, adjust, repeat
Compensation 2.0 Five Trends That Will Change
How We Think About Compensation
Laura Schroeder Global Talent Specialist Workday
5 Trends in Compensation
1. Evolving Role of Salary Surveys 2. A New Kind of Workforce 3. Flexible Compensation 4. New Business Priorities 5. Growing Demand for Transparency
Evolving Role of Salary Surveys
• Hard to get reliable non-US information • Jobs are evolving – new jobs, ‘hybrid’ jobs • Growing emphasis on total rewards
A New Kind of Workforce
• Global, contingent, multi-generational, flexible, virtual
• Different locations, priorities, work styles • Growing demand for cost and performance
analysis
Flexible Compensation
• Compensation should support your strategic workforce goals
• Your compensation processes should be as dynamic as your workforce
• Once a year performance and compensation review may not cut it
New Business Priorities
• Business priorities that shaped current compensation have changed
• It’s a good time to analyze whether business priorities match what is actually rewarded
• Everyone should have an incentive to perform as an individual as well a stake in overall company performance
Growing Demand for Transparency
• Clear communication – and a bit of positive spin – can make the difference between resentment and gratitude
• Be honest about your total rewards offering • Total rewards statement to showcase your
real investment in people
Questions and (Hopefully)
Answers