Talent as a Top Priority and Challenge Talent is viewed as source of competitive advantage and driver of performance, but it remains a challenge for today s organizations. Mercer s 2013 Talent Barometer, presented at the World Economic Forum in Davos, finds 60% of companies globally are investing more in talent. Yet only 24% say their workforce plans are highly effective in meeting their needs. According to the Conference Board s CEO Challenge 2013 Summary Report, human capital is the number one challenge faced by CEOs globally. The success of any national or business model for competitiveness in the future will be placed less on capital and much more on talent. We could say that the world is moving from capitalism to talentism. Klaus Schwab, Founder and Executive Chairman, World Economic Forum Overall, one in three workers globally is seriously considering leaving his or her organization at the present time according to Mercer s What s Working survey. 1
Total Rewards Trends The Era of Accountability What s happening now? We have entered the era of accountability a time when we are faced with more choices than ever before, yet expected to take more responsibility for our health, wealth, and work. What does this mean for employers? A single answer, program, or solution won t suffice, as today s generationally diverse workforce holds widely different attitudes, values, and goals. The critical question before today s employers: How do we engage empower, and effectively mobilize a generationally diverse workforce amidst this historic shift toward personal accountability? www.mercer.com\accountability 2
Marketplace Context What We Are Hearing New era of accountability Employers seeking to control costs, manage risk, ensure effectiveness Employees need to take control of their future We have four generations in the workforce and their attitudes, values and goals are very different. Rising health care costs Complex legislative requirements Shift to consumerism Benefits not meeting employee needs Need to control pension costs Need to manage risk Employees aren t saving enough Struggling to find the right talent No workforce plan Disconnected rewards Employees are not engaged 3
Driving Talent Performance Needs & Solutions In An Era Of Individual Accountability KEY EMPLOYER / EMPLOYEE NEEDS Employer NEEDS FORECAST: Ensure that the right people are in the right jobs, at the right location, at the right price, at the right time Employee NEEDS ENGAGE: Inspire and align people, ensuring that change is embraced and strategic business drivers are understood MOBILIZE: Fulfill strategic business requirements by pro-actively managing the relocation, up-skilling, and retooling of key talent REWARD: Design and implement executive & workforce rewards programs to secure key talent, enhance business performance, and adhere to external scrutiny ASSESS: Evaluate the performance, readiness, potential, and job fit of your key talent and the flow of talent into, through and out of your organization Performance; Engagement; Productivity DEVELOP: Enhance leader and manager capability to motivate employees, influence career decisions, champion talent management, and shape an org. s culture 4
Employee Preferences: Mercer s Inside Employees Minds US Top 5 Preferences by Age 16-24! Career advancement! Working for a respectable organization! Bonus or other incentives 25-34! Type of work! Retirement or pension plan! Career advancement! Paid time off 35-44! Retirement or pension plan! Bonus or other incentives! Low healthcare costs! Type of work 45-54! Retirement or pension plan! Low healthcare costs! Type of work! Paid time off 55-64! Retirement or pension plan! Low healthcare costs! Type of work! Working for a respectable organization 65+! Type of work! Working for a respectable organization! Retirement or pension plan! Flexible work schedule! Flexible work schedule 5
Total Rewards: A Holistic Perspective Employer perspective Money Pay Base salary / Hourly rate Bonus / cash incentives Long-term incentives Employer of choice idea awards Other monetary rewards Benefits Health and welfare benefits Retirement benefits Wellness / fitness initiatives Paid time off Maternity / Paternity time leave Auto allowances Employee referral bonus Employee Assistance Program (EAP) Employee stock purchase plan (ESPP) Careers Career paths Performance feedback Coaching programs Mentorship program Learning & Development Education assistance Job rotation programs Type of work Supervisor relationship Quality of leadership Quality of colleagues Location of facility Non-monetary recognition Special project time Work/Life Work / life balance Alternative work schedules Company paid mobile technology Corporate facilities Paid sabbaticals Vacation day purchase Commuter programs Dependent care Elder care Concierge services Corporate Social Responsibility initiatives Employee perspective My value today My financial security and protection My future value My quality of life 6
Total Rewards Strategy Development Sample Blueprint Compensation Benefits Careers and Worklife Base Pay Annual incentives Long-term incentives Health Retirement Perquisites Performance management Work/life balance Workforce planning/ Career Pathing Role of reward element Attract and retain; reward building skills Reward individual, business unit and corporate performance Link to shareholder value creation Personal risk management Wealth accumulation Tax efficiency Goal setting/ accountability Compelling place to work Adequate supply of talent Competitive positioning 25th percentile Base + STI = 75th percentile Base + STI + LTI = 90th percentile Leading edge design; 50th percentile 50th percentile Market practices Support build talent strategy Environment difficult to match by competitors Balance pay and benefits with career opportunities Impact of positioning Risk tolerance Performance orientation Rewards longterm growth Desirable employer Facilitate orderly retirement Employment brand Focused efforts Attraction and retention of qualified staff Support build talent strategy Metrics Acceptance rate turnover; appropriate skills Business results Stock price growth Cost and value delivered Retirement income adequacy; financial management Cost; commitment index Scorecard results Commitment index; turnover Percentage of outside hires 7
Employee Preferences: Importance + Satisfaction The importance scores are ranks of conjoint analysis results. The satisfaction scores are ranks of satisfaction means. Higher These rewards are more important and with lower satisfaction IMPORTANCE Lower Lower SATISFACTION Higher 8
Rise of HR Big Data and Analytics: People Metrics and Dashboards WORKFORCE STRUCTURE Headcount trend Span of control Staffing ratios Supervisory layers CAPABILITIES & SOURCING Internal labor market flow Build/buy trend Hire rate trend New hire premium Age/tenure distribution Retirement eligibility PERFORMANCE & ACCOUNTABILITY Performance distribution Year-to-year rating variability Pay change by rating Turnover by performance Movement by performance Base pay increase trend Pay mix Pay trend Pay change by promotion RECOGNITION & REWARDS Social network analysis (centrality, frequency, content) Page views and clickthroughs COMMUNICATION & CONNECTION Promotions of laterals Turnover of promotions and laterals Turnover/promotions of high performers Turnover/promotions of high potentials LEADERSHIP BEST PRACTICES IN METRICS & DASHBOARDS 9
Total Rewards: Rise of Segmentation 10
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