Findings from the 2016 Global Talent Management ... from the 2016 Global Talent Management & Rewards...

© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

Findings from the 2016 Global Talent Management & Rewards and Global Workforce Studies

New Jersey Compensation AssociationMarch 7, 2017

Brian Bechan, Willis Towers WatsonDarren Tse, Willis Towers Watson

About the 2016 studies

Fielded April – June, 2016§ 29 markets globally§ 2,004 employer

respondents representing >21 million employees

§ 21st annual survey

Key topics covered:§ Attraction and retention

drivers§ Talent mobility and challenges§ EVP and total rewards§ Leader and manager

effectiveness§ Career management§ Performance management § Pay for performance

35%

21%

18%

26%

2016 Global TM&R Study

Asia Pacific EMEALatin America North America

Key topics covered:§ Attraction and retention

drivers§ Drivers of sustainable

engagement§ Leader and manager

effectiveness§ Career management§ Performance management§ Health, stress, wellness§ Communication

Fielded April – May, 2016§ 29 markets globally§ >31,000 employee

respondents

Global Talent Management & Rewards Study (TM&R)

© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 2

Global Workforce Study (GWS)

Number of participants in the US:GWS: 3,105TM&R: 441

Challenges attracting employees in key workforce segments remain high overallEven more so for organizations operating in emerging economies

Mature Markets Emerging Markets


28%

45%

55% 54% 56%

44%

57%

66%

77% 76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

All employees Diverseemployee

populations

Critical-skillemployees

High-potentialemployees

Top-performingemployees


populations




Attraction Challenges

Nearly half (48%)of employers report

hiring activity increased

Retaining key employee groups remains difficult, especially in emerging markets

Mature Markets Emerging Markets


Close to three quarters of employers have trouble retaining high potentials

20%

28%

37%

47% 44% 41%47%

59%

70%65%

0%

10%

20%

30%

40%

50%

60%

70%

80%


populations





populations




Retention Challenges

One-third (35%) of employers report

turnover activity increased

The cost of turnover puts significant value at risk

Job LevelFinancial cost of turnover

(% of annual compensation)*% of ee’s at highrisk of turnover**

Financial costat risk***

Senior Manager/Executive 74% 31% 23%

Professional 59% 25% 15%Sales & Customer/ClientManagement 59% 27% 16%

Business Support 48% 27% 13%

Lost productivity

Hiring

Training

Job vacancy

Probability of turnover

Financial cost at risk

Financial cost of

turnover


*FCOT measured in our proprietary benchmark database**% at risk of turnover from 2016 Global Workforce Study ***Financial cost at risk=FCOT*% at risk of turnover

Getting it right starts with understanding the top drivers of attraction

Rank Employee view - USA Employer view - USA Employee view - Global Employer view - Global

1 Base pay/salary Organization's mission, vision and values Base pay/salary Career advancement

opportunities

2 Job security Challenging work Job security Base pay/salary

3 Career advancement opportunities

Career advancement opportunities

Career advancement opportunities

Reputation of organization as a great place to work

4 Vacation/Paid time offReputation of the

organization as a great place to work

Challenging work Challenging work

5 Opportunities to learn new skills

Ability to have a real impact on the organization's

performanceOpportunities to learn new

skills Job security

6 Health care and wellness benefits Base pay/salary Reputation of organization

as a great place to workOrganization's mission,

vision and values

7Reputation of the

organization as a great place to work

Health care and wellness benefits

Health care and wellness benefits

Opportunities to learn new skills


Comparing top drivers of attraction

You also need to understand why employees would choose to leave your organization

Rank Employee view - USA Employer view - USA Employee view - Global Employer view - Global

1 Base pay/salaryCareer advancement

opportunities Base pay/salary Career advancement opportunities

2 Career advancement opportunities

Relationship with supervisor/manager

Career advancement opportunities Base pay/salary

3 Job security Base pay/salary Physical work environment Relationship with supervisor/manager

4 Trust/Confidence in senior leadership

Ability to manage work-related stress

Job security Ability to manage work-related stress

5 Opportunities to learn new skills Flexible work arrangements

Ability to manage work-related stress


6 Length of commute Trust/Confidence in senior leadership

Relationship with supervisor/manager

Flexible work arrangements

7 Ability to manage work-related stress


Trust/Confidence in senior leadership

Short-term incentives (e.g., annual bonus)


Comparing top drivers of retention

Conclusion


Setting the Stage

The Modernization AgendaGetting it right

Effective Leaders are Critical to a Compelling EVP

Addressing the Work Component of the EVPEmployers need to focus on workplace stress and wellness

Achieving Effective Performance Management

Implications for Total Rewards

Future of WorkEffective management of work types, channels and options is part of the modernization agenda

Additional Information

37%44% 47%

54%

62%

0%

10%

20%

30%

40%

50%

60%

70%

How my totalcompensation compares

to the CEO at myorganization

How my totalcompensation comparesto the typical employee atother organizations like

mine

How my totalcompensation comparesto the typical employee in

my organization

How my bonus isdetermined

How my base pay/salaryis determined

Percentage of employees who agree they understand…

Employees claim to understand how pay is determined, but not its value relative to other groups


Employee perceptions of internal equity and market competitiveness are mixed


18%

33%

23%

19%

34%

20%

43%

36%

38%

42%

34%

38%

39%

31%

39%

39%

32%

42%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Base Pay

Bonus

Total Rewards

Base Pay

Bonus

Total Rewards

Below Average Average Above Average

Overall, how do you think the value of each of the following compares to that offered for similar positions in other organizations?

Pay fairness Globally, half think they are paid fairly, but 1 in 5 disagree Paid fairly compared to

others in other companiesPaid fairly compared to

others in my organization

USA

Global

global USA global USA50% 53% 51% 55%

The organization has defined job levels that reflect a common definition of internal job contribution across the organization

Our career planning and growth program includes emphasis on dual career paths for people managers and comparable-level individual contributors

My organization has a formal process to ensure there is no bias or inconsistency in performance reviews

No Yes No Yes

39% 59% 52% 62%

My organization has a formal process to ensure there is no bias or inconsistency in compensation distribution

39% 66% 57% 68%

The need for consistency in performance reviews and compensation decisions raises the importance of job leveling and career frameworks


The transparency agenda demands it

52% of organizations report that they have formally defined and communicated career paths/tracks (e.g., support/professional/management)52% of organizations report that they have formally defined and communicated career paths/tracks (e.g., support/professional/management)

Employers promise pay for performance differentiation, but fail to deliver


Employer view Manager view

USA Global USA GlobalOur base salary increases are effective at driving higher individual performance 24% 40% 27% 48%

Our base salary increases are effective at differentiating pay based on individual performance 42% 55% 28% 49%

Our short-term incentive programs are effective at driving higher individual performance 40% 50% 30% 52%

Our short-term incentive programs are effective at differentiating pay based on individual performance 41% 52% 48% 52%

Our formal performance ratings are effective at driving higher levels of performance among my direct reports n/a n/a 31% 50%

Our performance management system is effective at differentiating performance among my direct reports n/a n/a 48% 53%

40% globally 24% USA

Of employers think that base salaryincreases drive performance

Only

50% globally 40% USAthink that short term incentives do

Perceptions of differentiation effectiveness are mixed

Merit increase

Employees who did not meet expectations 0%

Employees who partially met expectations 1%

Employees who met expectations 3%

Employees who exceeded expectations 4%

Employees who far exceeded expectations (e.g., top 10%) 6%

Overall merit increase 3%

Incentive plan funding and differentiation resultsSuggest that “pay for performance” programs are not delivering the differentiation levels intended in design

Short-term incentive/bonus amounts Target differentiation*

Actual differentiation*

Employees who did not meet expectations 21% 18%

Employees who partially met expectations 52% 50%

Employees who met expectations 88% 86%

Employees who exceeded expectations 101% 99%

Employees who far exceeded expectations (e.g., top 10%) 118% 113%

And 90 percent of organizations have, are planning, or areconsidering changing some aspect of their performance management program

*Values represent averages


On merit increase decisions, HR emphasizes the final rating and achievement of goals while managers take a more holistic view


HR’s view Manager’s view

Factor should effect

Manager gives more weight than intended

Factor does effect their decision

USA Global USA Global USA Global

Final rating in most current year-end performance review 71% 72% 41% 52% 68% 63%

Achievement of individual goals 63% 65% 40% 47% 68% 65%Demonstration of knowledge and skills required in current role 55% 55% 34% 41% 73% 68%

Penetration in pay range for current role 51% 54% 28% 30% 39% 57%Achievement of team goals 46% 49% 21% 29% 71% 66%Concerns over market competitiveness 45% 48% 39% 37% 54% 55%Possession of skills critical to the success of the future business model 33% 46% 28% 40% 48% 63%

Criticality of the role 30% 48% 42% 54% 56% 62%Concerns over internal equity 36% 42% 47% 44% 30% 52%Perceived potential 32% 41% 40% 41% 40% 59%Demonstration of company values 36% 35% 20% 19% 60% 57%

Base pay, the number 1 driver of attraction and retention, gets mixed reviews while the world will get more complicated


Performance Rating

Salary Range PositionBelow

MinimumLower Third

Middle Third

Upper Third

Unsatisfactory performance

0.0% – 2.0% 0.0% – 2.0% 0.0% 0.0%

Performance needs improvement

2.0% – 4.0% 1.0% – 3.0% 0.0% – 2.0% 0.0% – 1.5%

Good performance 4.0% – 7.0% 3.5% – 6.0% 2.5% – 4.5% 1.0% – 3.0%

Excellent performance

7.0% – 11.0% 5.0% – 8.0% 3.5% – 6.0% 2.5% – 4.5%

Suggesting that old tools and approach tothe annual merit cycle may needto change. As the number onedriver of attraction and engagement, weneed to get base pay right in themodern context

Half of employersglobally expect to pay more for certain skill sets in the next 3 years

Our managers execute our base pay program well

51% global

39% USA

After base pay, career management continues to be a top driver of attraction, retention and sustainable engagementBut effective career management remains elusive


USA GlobalAll

employeesAll

employeesTop

performersHigh

potential

My company does a good job explaining how I can advance in my career 41% 42% 48% 59%

My immediate supervisor/manager helps me with career planning and decisions 32% 38% 47% 54%

My organization provides career planning tools and resources that are helpful to me (coaching, self-assessment, career paths, job rotation, competencies)

41% 44% 51% 60%

I have to leave my organization and join another organization in order to advance to a job at a higher level 47% 44% 42% 45%

Most employers provide traditional career paths, on-the-job training and internal job boards

Only a third of employersglobally provide lateral or dual career paths, beyond-the-job training, employee self-service tools and integration within technology (e.g. HRIS)

44% of employees globally feel they need to leave to advance their career.This doesn’t change for top performers (42%) or high potentials (45%)

Employees with alternative and flexible work arrangements are more engaged and less likely to be retention risks

Flexible work schedule

Compressed work week

Work from home

Work from other remote

location

Hot desking/ hoteling

None of these

By Engagement Group

Highly engaged 48% 46% 43% 49% 49% 29%

Unsupported 15% 17% 19% 19% 17% 16%

Detached 19% 19% 19% 17% 19% 23%

Disengaged 18% 18% 19% 15% 16% 32%

By Retention Risk

Stayers 45% 38% 47% 47% 45% 39%

Soft Stays 29% 30% 27% 28% 29% 35%

At Risk 10% 17% 10% 10% 9% 5%

Leavers 15% 15% 16% 15% 17% 21%


For each work arrangement, distribution of employees across the engagement or retention risk groups

Conclusion


Setting the Stage








Percent of children entering school today who will end up in jobs that do not exist yet

19© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

Source: Scott McLeod and Carl Fisch, quoted by World Economic Forum Future of Jobs Report, Davos, 2016

?

The Reality: The employment relationship is changingThe plurality of work options is here…


Artificial IntelligenceRobotics

Talent platforms

AlliancesOther types of workers

OutsourcingTraditional employees

Volunteers

Resulting in fundamental shifts in how work and organizations are organized

Our organization is a place containing employees doing work.

Our organization organizes work and talent.

Our organization is a fixed set of functions that work together to create value.

Supply chain ManufacturingRetail stores Marketing

IT R&D

Our organization is a malleable set of functions and deciding which ones get done inside the organization is a big part of strategy.

Supply chain Manufacturing

Retail stores MarketingIT R&D

R&DRetail stores


The use of non-employee talent is increasing and having an impact on businesses

Growth in share of non-employee talent expected over next three years

25% 24% 46% 54%Of all managers say they manage at least one contingent worker on their team

Of all managers say they manage at least one contractor

Of companies report changing their workforce activities enabling them to use more non-employee talent due to technology now or in in the next three years


Talent Platforms: Freelancers & the redefined “job”


Hiring for work, not jobs


Identify the tipping pointsWhile jobs filled by employees will continue to be the dominant means for getting work done, companies are experiencing challenges in two key areas

High Value/Limited Supply: “Premier”

§ Highly skilled work with challenges attracting & retaining and market supply (e.g., software development talent)

§ By deconstructing jobs companies can change the talent curve creating supply for select activities and tasks

High Supply/Eroded Value:“Democratized”

§ Technology is fragmenting traditional skilled work into tasks that can increasingly be performed by less skilled talent (e.g., accounting, manufacturing assembly)

§ There are significant cost opportunities to be realized by thinking beyond employment


Valu

e

Supply

Conclusion


Setting the Stage








3 Modernizing pay for performance starts with re(defining) performance

The new Total Rewards reality suggests…

1 Transparency is a core principle

5 Recognize that the “total” in total rewards includes flexibility and a move away from “one size fits all”

2 Career security is the new job security

4 Base pay needs an identity check; it’s purpose may be lost


Modernizing Total Rewards means challenging conventional thinking

Traditional approach New reality


Employeesnever discuss pay and benefit details with each other

“Living out loud” on Glass Door; emerging legislative agendas that prescribe pay transparency

Provide guaranteed jobs Enable career security through career development

Pay for performance = merit increase and incentive pay based on last year’scompany performance + individual “performance rating”

Changing business models and nature of work means challenging the individual performance definition and the role of base pay

“One size fits all” Segmentation and customization

What HR Leaders should be doing now to address these issues…

29

Leaders within every organization have a call to action!

§ Are new or different skills needed to guide the future?

§ Do you understand the workforce of your future? § What is the new desired organization culture?

Understand how technology is impacting your business

§ How can work be deconstructed?§ Can you accommodate a range of work options

(from AI and Robotics to contingent labor?)§ How will you align the right rewards to the

workers?

Take advantage of digitalization for how work

gets done at your company

§ Build out your learning and development programs to ensure you upskill the workforce to meet your future needs

Provide opportunities for Learning and Development

§ Build out a Worker Value Proposition that takes advantage of technology touchpoints inside and outside of your organization

§ Leverage technology and data insights to shape a value proposition for all of the workers

Consider using new technology to shape your employment and worker

value proposition

© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.


Thank you

Date post:	23-May-2018
Category:	Documents
Upload:	vancong
View:	217 times
Download:	1 times

Findings from the 2016 Global Talent Management ... from the 2016 Global Talent Management & Rewards...

Documents