retainingtalent_benchmarkingyourrewards

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BENCHMARKING YOUR REWARDBENCHMARKING YOUR REWARD

STRATEGYSTRATEGY

Lawrence ZammitLawrence Zammit



Introduction

A reward strategy is an integrated approach for

rewarding employees in accordance to their

contribution, skill and competence and their market

worth.

A reward strategy is not created in isolation.

The theory is not rocket science; the practice is the

difficult bit. Current practice is not necessarily best practice.

What works today won¶t necessarily work

tomorrow.



Reward Strategy in Perspective«

Mission

Objectives

BusinessStrategy

HR Strategy

RewardStrategy



«Reward Strategy in Perspective«

RewardStrategy

Performance Management

Process

Non-FinancialReward Process

Financial RewardProcess

EmployeeBenefits

BasePay

VariablePay

JobEvaluation

RemunerationSurveys

PayStructure

TotalRemuneration

Improved individualand organisational

effectiveness

Recognition,responsibility,Achievement &

Growth

Good management& work±life balance



Determinants of Pay

Internal and external labour markets

Economic determinants ± Supply and Demand of Labour

± Firms could pay more since they believe that a higher remuneration will increase performance

± Firms could pay more since they believe the more skills or competence the higher should be the remuneration.

± Firms could pay higher incentives to reward the desired behaviour

± Cost of living

± Government policy Bargaining between employer and employee

Internal/External relative value of jobs

Individual contribution

Management policy



Reward in Context

Reward

Strategy

Culture

Engage

Measure

Align

Reward



Where do you put the focus?

± On the job/role people fulfil

± On their performance in terms of output

± On their competence

What to pay for?

Individual Competence

PerformanceJob



Link to company structure

Hierarchical Process/project Network

Job Based Results Based Person Based



Components of Financial Rewards«

Basic salary

Performance related pay

± Team-based pay ± Bonus

± Incentives

± Commission

± Competence based



«Components of Financial Rewards«

Allowances

± Substitution allowance

± Special skills allowance ± Shift allowance

± Danger money

± Dirt money

± Disturbance allowance

± Service allowance

± Expenditure allowance



± Qualification allowance

± Fuel allowance

± On-call allowance ± Clothing allowance

± Confidentiality allowance

± Company cars

± Insurance

± Club/Institute membership

± Holidays

± Mobile phones and telephone bills

«Components of Financial Rewards«



«Components of Financial Rewards

Other Financial Components

± Profit-sharing schemes

± Employee share ownership schemes ± Pension schemes



Non Financial Rewards

Training

Career development

Empowerment

Recognition

Promotion



The Salaries and Benefits Report2004/2005 ± Introduction«

Report surveys 2,257 remuneration packages.

Sample Structure

Participating Companies - Classified by Number of EmployeesNumber of Employees

Up to 50 employees 23.7%

51 to 150 employees 28.9%

More than 151 employees 47.4%

Participating Companies - Classified by Sector

Sector

Services 76.3%

Manufacturing 23.7%



The Salaries and Benefits Report2004/2005 ± Introduction«

«Sample Structure

Participating Companies - Classified by Shareholding

Shareholding

Local Private 47.4%Local Public 21.1%

Foreign 31.6%

Remuneration packages of expatriates are not

included. Statutory bonuses are not included.



The Salaries and Benefits Report2004/2005 ± Introduction

When the value of fringe benefits is not disclosed by

the company, MISCO values fringe benefits as

follows:

± Company Car - Lm1,500 to Lm4,000

± Communications Allowance ± Lm360 to Lm600

± Health Insurance - Lm40 to Lm600

± Life Insurance - Lm100 ± Personal Accident - Lm20

± Club Membership - Lm100



The Salaries and Benefits Report2004/2005 ± Salient Points

Increases in median remuneration packages:

± 2000 ± 3.2%

± 2001 ± 3.4% ± 2002 ± 2.6%

± 2003 ± 2.6%

± 2004 ± 3.2%




The median salaries of Supervisors and Assistant Managers

/ Executives increased by 9.5% and 9.0% respectively. These

increases could be attributed to the fact that more is being

demanded from such middle management positions in the light

of a more results oriented approach in management.

Other increases where recorded in the median packages of

Marketing Managers (7.4%) and Sales Managers (5.4%)most probably in view of the increased demand for such

personnel to market and sell an ever increasing variety of

products and services.



Operations Managers experienced an increase of 6.4% in

their median remuneration packages highlighting the

importance of very effective coordination and response in an

ever fast moving business environment.

The median remuneration packages of Shop Assistants have

also experienced above average increases (5.5%). Most

probably this stems from the increased number of retail outletswhich have generated a higher demand for such personnel.




The remuneration package of Clerks increased by 8.5% this

increase could be attributed to the higher responsibilities

attached to such positions as a consequence of restructuring

and higher demand on performance.

Financial Controllers and Accountants experienced an

increase of 5.0% and 2.4% respectively.




The usual increases in the remuneration packages of

Engineers and Technicians that have been persistently

present during the past few years are jarringly absent this year.

In fact the median remuneration packages of Engineers have

increased by a mere 0.9% and the median remuneration

packages of Technicians have decreased by 1.4%. The

difficulties that plagued the manufacturing sector are the mostly

likely culprits for such changes.




During the past years changes in the packages of Information

Technology Managers and Analysts/Programmers have

experienced very meagre growth especially when compared to

the increases that these positions experienced during the 90¶s.

This year, the median remuneration packages of Information

Technology Managers and Analysts/Programmers, have

experienced decreases of 2.8% and 3.4% respectively. This

could be explained the lack of new investment in the sector and

the general international slow down in the ICT sector.




Analysis of Median RemunerationPackages by Majority Shareholding

Median emuner ation Packages paid to Gener al Management

Classif ied by Shar eholding

Lm0

Lm5,000

Lm10,000

Lm15,000

Lm20,000

Lm25,000

Lm30,000

Lm35,000

Lm40,000

Pr S r P S r r S r




Median e uneration Packages paid to Manage en

lassif ied by hareholding

Lm0

Lm2,000

Lm4,000

Lm6,000

Lm8,000

Lm10,000

Lm12,000

Lm14,000

Lm16,000

Pr r Public Shar holding For ign Shar holding




Med n emunerat on ackages paid to Midd e Management

Classif ied by Shareholding

Lm6,600

Lm6,800

Lm7,000

Lm7,200

Lm7,400

Lm7,600

Lm7,800

Lm8,000

Pr iv te r e l i Public r e l i F r ei r e l i




Median Remuneration Packages paid to Technical Personnel

Classified by Shareholding

Lm6,200

Lm6,400

Lm6,600

Lm6,800

Lm7,000

Lm7,200

Lm7,400

Lm7,600

Lm7,800

Lm8,000

Private Shareholding Public Shareholding Foreign Shareholding




Median Re uneration ackages paid to Fr ont iners

Classi ied b areholding

L 4,

L 5,

L 5,

L 5,200

L 5,

L 5,400

L 5,500

L 5,600

r iv te r e l i ubli r e l i F r ei r e l i



THANK YOUTHANK YOU

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