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SMART-LINK CONSULTANCY
REMUNERATION AND REWARDS SUMMIT
2014
PREMIER HOTEL OR TAMBO
CHARLES COTTER
11 JUNE 2014 (DAY 1)
INTRODUCTION AND INTRODUCTORY ACTIVITY (DIAGNOSIS)
WORKSHOP A: STRATEGIC TOTAL REWARDS MANAGEMENT (STORM)
WORKSHOP B: UTILIZING STORM TO ATTRACT AND RETAIN THE BEST TALENT
WORKSHOP C: UTILIZING STORM TO ENGAGE AND MOTIVATE EMPLOYEES TO ACHIEVE IMPROVED LEVELS OF PRODUCTIVITY
WORKSHOP D: BENCHMARKING, MEASURING AND EVALUATING THE IMPACT OF STORM
WORKSHOP OVERVIEW (DAY 1)
Refer to pages 6-19 of the Delegate hand-out
Definition of Rewards Management
Objective of Rewards Management
Types of rewards
The components of Total Rewards
The evolution of Rewards Management
Best Practice Rewards Management
INTRODUCTION
TYPES OF REWARDS
THE EVOLUTION OF REWARDS MANAGEMENT
BEST PRACTICE REWARDS MANAGEMENT PRINCIPLES
#1 Your organization offers competitive and market-related (above market-related) remuneration packages to employees (prospective employees).
#2 Your organization adequately and accurately recognizes the knowledge, skills, competencies and experience of employees and rewards them accordingly.
#3 Your organization applies fairness in methods, procedures and practices for compensating, recognizing and rewarding employee contributions.
#4 Your organization applies equitable methods, procedures and practices for compensating, recognizing and rewarding employee contributions.
#5 Your organization promotes transparency through sharing information about their compensation practices, pay rates criteria and how they are determined – especially at the managerial and executive levels.
DIAGNOSIS OF CURRENT REWARDS MANAGEMENT PRACTICES
#6 Your organization applies consistency (standardization) in the allocation of remuneration and rewards e.g. performance bonuses and incentives etc., thereby serving as a retention and motivation mechanism.
#7 Your organization’s applies objectivity throughout the performance management process, as the pre-cursor and chief determinant of performance bonuses.
#8 Your organization has an efficient, user-friendly and stream-lined job evaluation and job grading process.
#9 The value of remuneration and rewards offered by your organization is affordable (feasible) promoting business sustainability and continuity.
#10 Your organizations’ rewards system is effective in that to directly contributes to and enables the achievement of business management goals e.g. higher levels of retention, productivity and performance.
DIAGNOSIS OF CURRENT REWARDS MANAGEMENT PRACTICES
Contextual introduction to STORM
The strategic imperative of Rewards Management
Defining the fundamental concepts
Creating/Developing a reward strategy
Implementing Strategic Rewards Management
WORKSHOP A: STRATEGIC TOTAL REWARDS MANAGEMENT (STORM)
An effective total rewards strategy enables organizations to deliver the right amount of rewards, to the right people, at the right time, for the right reason.
Best Fit vs. Best Practice vs. Hybrid (integration)
Reward strategies must be anchored in business reality to be effective. Which means linking it to your business strategy, the needs of your employees as well as your organization.
“Effective reward is about finding the right reward programs for the strategic direction of your business.” (Tom McMullen)
Appropriate Total Rewards Framework
CONTEXTUAL INTRODUCTION TO STORM
“Effective reward is about finding the right reward programs for the strategic direction of your business.” (Tom McMullen)
Strategic reward management involves the formulation and implementation of an equitable reward system that is congruent with the organization’s strategic objectives.
The reward system must be congruent with the management style and other organizational systems, in particular, communication and decision-making. (Lawler)
To be effective, a total rewards package must tie together the organizational strategy, workforce strategy, and HR strategy. Total rewards should align each employee with the organizational objectives.
THE STRATEGIC IMPERATIVE OF REWARDS MANAGEMENT
Strategic reward is based on the design and implementation of long-term reward policies and practices to closely support and advance business or organizational objectives as well as employee aspirations.
The concept of total reward encompasses all aspects of work that are valued by employees, including elements such as learning and development opportunities and/or an attractive working environment, in addition to the wider pay and benefits package.
Links between strategic and total reward
DEFINING THE FUNDAMENTAL CONCEPTS
COMPONENTS OF TOTAL REWARD STRATEGY
Holistic
Best fit
Integrative
Strategic
People-centred
Customized
Distinctive
Evolutionary
CHARACTERISTICS OF TOTAL REWARD SYSTEM
Advantages/Benefits:
Economic: Creates affordable and sustainable costs
Financial: Generates maximum return on the reward program investment
Strategic and Performance-related: Connects with the business strategy to create a high performance culture
Reputational: Supports the employment brand
BUILDING A BUSINESS CASE FOR STORM
Costs/drawbacks:
Management: Managerial apathy
Cultural: Organizational cultural resistance and readiness
Provision: The supply of resource-constrained rewards (across the board)
Weighting: Attempting to measure the comparative value of certain rewards
BUILDING A BUSINESS CASE FOR STORM
Step 1: Define the context and issues (environmental analysis)
Step 2: Set the total reward strategy (guiding principles and reward priorities)
Step 3: Set reward change agenda (status quo relative to desired end state)
Step 4: Implementation overview
Step 5: Design individual plans
Step 6: Implement
Step 7: Measure and manage
Outcome: A cohesive and comprehensive reward strategy that is both value-oriented and cost-effective and aligned with the organization's business strategy.
CREATING/DEVELOPING A REWARD STRATEGY (7-STEP PROCESS)
Develop a business case for Strategic Total Rewards Management (STORM). Do the benefits outweigh the costs? Justify and motivate your viewpoint.
SYNDICATE GROUP LEARNING ACTIVITY 1
Total Rewards Statement (TRS)
Strategic Talent Attraction:
Employee Value Proposition (EVP)
Employer Branding
WORKSHOP B: UTILIZING STORM TO ATTRACT AND RETAIN THE
BEST TALENT
TRS PROCESS FLOW
Organizations need to communicate the total rewards provided to each individual employee, demonstrating the organization's investment in ensuring employees are competitively rewarded for their skills, contribution and performance.
The rewards package that you provide to your employees is among your organization's most significant investments.
Total reward statements may help reduce turnover and increase retention rates
A Total reward statement provides employees with a personalized document that communicates the overall value of their financial rewards such as base pay, incentives and employee benefits.
Total reward statements can also be used to reinforce the communication of less tangible benefits such as work/life programs, learning and development and flexible work arrangements.
TOTAL REWARDS STATEMENTS (TRS) – RATIONALE AND VALUE
To attract, motivate and retain employees.
Differentiation: To reinforce your brand and set yourself apart from other organizations.
Raise awareness and appreciation by focusing attention on the benefits you offer.
To reduce the cost of benefits administration by providing an employee self-service tool that results in fewer phone calls thereby enabling HR to focus on more strategic initiatives.
OBJECTIVES OF TRS
BENEFITS OF TRS
Objective: Magnetically attracting the “Cream of the Crop”
Objective: Facilitating an optimal Person-Environment (P-E) fit
Strategy: Developing, articulating and advocating of a compelling Employee Value Proposition (EVP)
Strategy: Employer Branding – (re) positioning as an “Employer of Choice”
STRATEGIC TALENT ATTRACTING
A resourcing strategy is concerned with shaping what an organization has to offer to people to join and stay in the organization. (Armstrong, 2011)
EVP is a statement of what an organization will provide for people that they will value - why the total work experience at their organization is superior to that at other organizations.
The EVP is an employee-centered approach that is aligned to existing, integrated workforce planning strategies because it has been informed by existing employees and the external target audience.
Key Selling Points (KSP): Host of financial and non-financial benefits
Non-financial benefits:
The attractiveness of the organization Responsibility – corporate conduct, ethics and CSR/CSI Respect – diversity and inclusiveness Work-life balance Opportunities for personal and professional growth
EMPLOYEE VALUE PROPOSITION (EVP)
COMPONENTS OF VIABLE EVP
HISTORICAL EVP’S
“At Campbell Arnott’s, we are committed to attracting a diverse group of talented employees and providing all our team members with development opportunities and a culture in which they can flourish.”
CONTEMPORARY EXAMPLE: CAMPBELL ARNOTT’S
Unique Selling Points (USP) - Employer brand that is unique and special
Creation of a Brand image of the organization for prospective employees
Influenced by the reputation of the organization
Creating an Employer Branding strategy
EMPLOYER BRANDING
Analyze what ideal (preferred) applicants need and want
Establish how far core values of the organization support the creation of an attractive brand and ensure these are inculcated into organizational value system
Define the features of the employer brand on the basis of examination and review of each of the areas that affect the perception of people e.g. quality of management
Benchmark the approaches of top performing companies as a means of improvement
Pragmatic approach: be honest and realistic
CREATING AN EMPLOYER BRANDING STRATEGY
THE LINK BETWEEN TALENT ATTRACTION AND EMPLOYEE ENGAGEMENT
For a defined organization, craft and develop the following key statements as a form of attracting and retaining top talent:
Total Rewards Statement (TRS)
Employee Value Proposition
Employer brand
SYNDICATE GROUP LEARNING ACTIVITY 2
Employee motivation
Recognition and praise
Employee Engagement
WORKSHOP C: UTILIZING STORM TO ENGAGE AND MOTIVATE EMPLOYEES TO
ACHIEVE IMPROVED LEVELS OF PRODUCTIVITY
“INSIDE JOB” - A motive is an inner drive, stimulus or incentive to satisfy a human need of some kind.
“CUSTOMIZATION” - People differ from one another and no one has the same needs so people will be motivated differently. “Different strokes for different folks.”
“CITIZEN KANE” – Employees who experience a heightened sense of emotional connection with the organization, demonstrate higher levels of motivation.
“MONEY MYTH” – “financial rewards are more of a mover than a motivator”
CONVENTIONAL WISDOM REGARDING MOTIVATION – FACT OR FICTION?
Business Leaders and Managers need to transform from applying Compliance-driven (extrinsic) motivational strategies to Commitment-driven (intrinsic) strategies
Business Leaders and Managers need to adopt a targeted (rifle) approach and not a hit and miss (shotgun) approach to employee motivation – “one size fits all” is inappropriate
Business Leaders and Managers need to transform employees into associates (sense of ownership) and brand/company ambassadors
Business Leaders and Managers need to develop a bouquet of recognition-oriented strategies and de-emphasize the value of monetary rewards
MANAGEMENT LESSON – CONVENTIONAL WISDOM REGARDING MOTIVATION
WHAT MOTIVATES EMPLOYEES?
#1 Job and Organizational Cultural Fit
#2 Conducive Work Environment
#3 Policies, procedures and work practices
#4 Trust and Relationship Management
#5 Meaningful Work and Responsible Tasks
DIAGNOSE CURRENT LEVELS OF MOTIVATION - GENERIC
MOTIVATIONAL STRATEGIES
#6 Participatory Management and Leadership practices
#7 Performance Feedback and Recognition
#8 Customized Rewards
#9 Career, Learning and Development opportunities
#10 Employee Engagement
DIAGNOSE CURRENT LEVELS OF MOTIVATION - GENERIC MOTIVATIONAL
STRATEGIES
Only 18% of employees are satisfied with their jobs
Only 10% of employees look forward to going to work everyday
70% of the workforce are more motivated by (favour) non-monetary rewards
79% of employees who resign cite a lack of appreciation as the main reason
Only 12% of employees actually leave for more money
MOTIVATION – INTERESTING STATISTICS
20% of employees are actively seeking new jobs
83% of executives and 84% of employees rank having engaged and motivated employees as the top factor that substantially contributes to a company’s success
There is a correlation between employees who say they are “happy at work” and feel “valued by their company,” and those who say their organization has a clearly articulated and lived culture
MOTIVATION – INTERESTING STATISTICS
MOTIVATIONAL APPROACHES
CARROT STICK
EMPLOYEE
MANAGER
(WORK) ENVIRONMENT
3 KEY COMPONENTS OF MOTIVATION
EMPLOYEE
ENVIRONMENT
MANAGER
PERCEPTUAL GAP
FUN
OPPORTUNITIES FOR GROWTH
RECOGNITION
EMPLOYEE ENGAGEMENT
ESCALATING MOTIVATION TO THE F-O-R-E
90% of employees find a fun working environment very/extremely motivating
Collegial working relations - 80% of employees value working for people that they like
Technology-enabled Gamification - 70% of Forbes Global 2000 companies are using gamified platforms as a way to boost employee engagement, retention, and revenues
Objective: Design an “Industrial Playground”
Conducive and Positive Work Environment
Celebrating work success and creating corporate “Rituals”
FUN
Retention - 76% of employees cited opportunities for growth were the top reason why they stayed in organizations. In every age and demographic category, opportunities for growth were more of a motivating reason to stay in an organization than pay increases
Managers should apply a strengths-based approach to employee development
Establish a Learning Organization, climate and culture
Learning, Development and Empowerment Opportunities
Career Development and Advancement
Mentoring and Coaching
Creativity and Innovation through Action Learning
Collaboration
OPPORTUNITIES FOR GROWTH
40% of employees who do not meaningfully feel recognized will not go above and beyond their formal work responsibilities to get the job done. 86% of those who feel recognized will.
83% of employees cited recognition for contributions is more fulfilling than rewards and gifts.
Type of recognition matters – 68% favoured individual above team-based recognition; 88% found recognition from their managers as very/extremely motivating and 76% found praise from peers as very/extremely motivating.
Recognition strategies
RECOGNITION - STATISTICS
RECOGNITION - STATISTICS
Create a Fabulous Work Environment with Praise
Employees Need Praise
What Praise Can Give Employers
How to Give Praise
THE POWER OF PRAISE AND RECOGNITION
Engagement happens when people are committed to their work and the organization and motivated to achieve high levels of performance
Engaged employees at work are positive, interested in and even excited about their jobs and are prepared to put discretionary effort into their work beyond the minimum to get it done
Say
Stay
Strive
DEFINING EMPLOYEE ENGAGEMENT
The Global Assessment Trends Report (GATR) (2013 Global Assessment Trends Report - SHL.com) identifies the top priorities for HR globally as follows: Engagement and retention (55%)
71% of employees are disengaged
Highly engaged employees are 26% more productive than disengaged employees
Companies earned 13% greater total returns for shareholders over a 5-year financial period
90% of leaders think an engagement strategy will impact business success
Only 40% of the workforce knew about their company’s goals, strategies and tactics
EMPLOYEE ENGAGEMENT – INTERESTING STATISTICS
71% of employees are disengaged:
45% are not engaged
26% are actively disengaged
29% of the workforce are engaged
CURRENT DEGREE OF EMPLOYEE ENGAGEMENT
Engaged29%
Not Engaged45%
Ac-tively dis-en-
gaged 26%
THE VALUE OF EMPLOYEE ENGAGEMENT
According to Gallup (2013), employers can reap the following benefits of an engaged workforce:
202% better performance$11 billion is lost annually due to employee turnover Direct correlation to 9 key business performance
indicators
BENEFITS OF EMPLOYEE ENGAGEMENT
Are employees COMMITTED to the organization?
Are employees proud to work for the organization – company/brand ambassadors? CITIZEN
Do employees put forth extra/discretionary effort to help the organization and their colleagues achieve business objectives? COMRADE
Are employees enthusiastic and passionate about their work/jobs? CREATOR
Are employees CONNECTED (intellectually and emotionally) to their work/jobs – offer value add?
MEASUREMENT OF EMPLOYEE ENGAGEMENT - 5c INDICATORS
According to Dale Carnegie research:
Relationship with the immediate supervisor
Senior Leadership’s ability to lead the company and communicate its goals
Organizational Pride - vision of organization and corporate social responsibility
KEY DRIVERS OF EMPLOYEE ENGAGEMENT
Work
People
Opportunities
Total rewards
Company practices
Quality of Work Life
KEY DRIVERS OF EMPLOYEE ENGAGEMENT
According to Gallup (2013), three (3) strategies to accelerate employee engagement are:
Select the Right People and Managers
Develop employees’ strengths
Enhance employees’ well-being
STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT
According to Armstrong (2011), the five (5) strategies to enhance employee engagement are:
The work itself
The work environment
Leadership
Opportunities for personal growth
Opportunities to contribute
STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT
According to Dale Carnegie research:
Senior managers must articulate the company vision in a clear and compelling way
Senior managers need to define organizational goals and objectives in realistic, clear and attainable manner
Leaders should project a positive manner with employees, and be accessible
Leaders should ensure that employees understand how their role contributes to the overall company success
Senior leaders should create a climate of trust and encourage managers to demonstrate that they care about employees (on personal level)
LEADERSHIP STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT
According to Dale Carnegie research:
Managers should determine how each employee’s personal motivators align with organizational goals
Managers should praise publicly, reprimand privately and coach team members who demonstrate disengaged behaviour
Employees should be encouraged to communicate clearly and provide input into the company vision
Direct managers should foster healthy relationships with employees
Senior leadership should continuously demonstrate that employees have an impact on their work environment
Managers should show that employees are valued as true contributors, giving them a sense of empowerment
STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT
According to Gallup (2013) research, the best organizations deeply integrate employee engagement into the following four areas:
Strategy and Leadership Philosophy
Accountability and Performance
Communication and Knowledge Management
Development and on-going Learning Opportunities
BEST PRACTICE EMPLOYEE ENGAGEMENT
Describe which motivational strategies can be applied in your organization to reward employees and boost performance and productivity.
Describe which employee engagement strategies can be applied in your organization to enhance retention and productivity levels.
SYNDICATE GROUP LEARNING ACTIVITY 3
Benchmarking STORM
Annual STORM reviews
Best practice guidelines and principles
WORKSHOP D: BENCHMARKING, MEASURING AND EVALUATING THE
IMPACT OF STORM
Question: How do you know if your rewards program is offering the right levels of total remuneration to recruit and retain staff?
Benchmarking offers a useful tool to answer this question. Benchmarking aims at improving performance - a search that never ends. Therefore, benchmarking is not a single action but a continuous, cyclical process.
Performance Assessment
Performance Improvement
BENCHMARKING
P-D-C-A BENCHMARKING CYCLE
REMUNERATION REVIEW PROCESS
A clear, executable remuneration philosophy aligned with business strategy
Employee-centricity
Investment in front-line manager capability
Well thought-through decision-support data and tools
A continual process, not a one-off project
5 KEY FOCUS FOR STRONG REMUNERATION EXECUTION (AON HEWITT)
Review your programs and rewards frequently to keep them aligned with corporate goals as well as employee expectations.
Measure the effectiveness and impact of your reward and recognition programmes.
Create a performance measurement framework so you can measure the impact of your reward and recognition programme.
Track the performance metrics that form the basis of your reward structure and conduct surveys to gain qualitative feedback from employees and supervisors.
24% of participants do not measure reward and recognition programme success.
Measure your reward and recognition programme impact and improve based on your results.
EVALUATION GUIDELINES
METHODS FOR MEASURING REWARD AND RECOGNITION PROGRAMME SUCCESS
Explain the best practice methods and process that your organization will apply in the benchmarking, reviewing and measuring of your Strategic Total Rewards Strategy.
SYNDICATE GROUP LEARNING ACTIVITY 4
Key points
Questions
SUMMARY
CHARLES COTTER
084 562 9446
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