aon hewitt trq_vol 5 issue 2

India • Volume 5 • Issue 2

The Skill is Not Enough

Health & Wellness Initiatives – A Win-Win Approach Stephanie Pronk

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Public Sector Banks – More Bang for the Buck?

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Stability in Volatility Vinay Razdan

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Total Rewards QuarterlyIndia • Volume 5 • Issue 2

www.aon.com/india

Anandorup Ghose

Director – Talent and Rewards,

Aon Hewitt

For more information, please write to us

at [email protected]

Follow us on LinkedIn at Aon India & Twitter @Aon_India

Dear Reader,

It gives me great pleasure to present to you the 15th edition of our Total Rewards Quarterly. 15 is a special number for us this year – we recently completed the 15th year of our Best Employers Study and some months back, the 15th year of our Salary Increase Survey. This year as a firm, we are also completing 30 years of helping companies solve HR problems in India. Statistically we have been around in India for more than the average age of the working population of the country!

This is also a special edition for us as we cover themes from our Annual Rewards Conference. This is an annual event where we ensure that we get to hear from the best in the industry, and focus on driving a mature dialogue through the course of this conference to enrich our participants as well as give us better insights into what companies are thinking. We have been noticing a new pattern in the world of rewards. At one level, new age companies are pushing the compensation paradigm into totally new territories. In parallel, companies in traditional industries are also incorporating distinct changes in the way they look at Total Rewards. Through two very diverse sectors – technology and public sector banks, we understand these non-traditional ways of looking at rewards practices.

Also, across most organizations, we are seeing far greater focus towards driving better health and wellness for their employees – and in a very fundamental way, this shift is going to change the way employment value proposition gets structured. An interview with our global expert, Stephanie Pronk, explores this in detail. We are also happy to present an interview with Vinay Razdan, the CHRO of Idea Cellular, which explores how Idea is coping with the changing talent landscape.

We enjoyed putting this edition together and hope you will enjoy reading it.Thank you.

what’s inside

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Stability in Volatility Vinay Razdan 04Public Sector Banks – More Bang for the Buck?08

Health & Wellness Initiatives – A Win-Win Approach Stephanie Pronk

18The Aon Hewitt 8th Annual Rewards Conference – The New Order of Rewards22

Trend Check 2014 Consumer Health Mindset – A Global Perspective

24Survey Calendar26

As skills go through shorter cycles, “non-traditional” rewards delivery practices which infuse funds to employees while giving organization's flexibility to move its investments are gaining prominence.

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The Skill is Not Enough

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tracking manpower productivity in these areas ensures alignment with business strategy. Centers of Excellence ensure creation of value for the business in a manner that is in sync with the overall strategy. Talent management – with the spirit of leaders at all levels, we ensure a steady pipeline of right talent in the right role at the right time. We follow the overarching Aditya Birla Group Talent Management Framework. Capability development – ensuring employees have the skills necessary to do their jobs well in the face of dynamically changing business requirements. Employee engagement – thorough analysis of engagement scores at enterprise and team levels and targeted and direct action planning to work on improvement areas which is tracked and measured to lead to definite change.

Q. Sectors like telecom, oil and gas, power, etc. are closely driven by the constantly changing regulations. Does this have any implications on rewards for your organization? If yes, how have you designed your rewards strategy to combat/buffer your organization from these changes?A. We have kept a certain amount of flexibility in the rewards strategy in anticipation of regulations that may affect the business. We may revisit the business performance criteria/goals like target EBIT, gross service revenue, etc., if necessitated by change in regulation. These calls would be taken to ensure that employee’s rewards are not unduly impacted and good performance is rewarded.

Q. With the evolving nature of work, we see a growing demand of ‘hot skills’ in the industry. What

rewards strategies have you adopted to cater to these growing demands?A. In an environment that requires large scale teamwork, all members of the team contribute to the overall output and each member is dependent on the others for their own output. Excessive differentiation in terms of rewards can potentially have a negative impact and needs to be managed carefully. The key is being sure of what you identify as a 'hot skill' in your context. Having said that, in the face of growing requirements of some specific skills and telecom competing with other sectors, we would consider some tweaking of our rewards strategy going forward.

Q. The advent of new age industries like e-Commerce organizations has created a stiff competition for different talent profiles. How has your hiring strategy evolved to keep pace with this change?A. A robust talent management process ensures that we are developing our talent at all levels with a special focus on top talent, allowing us to have a healthy pipeline of successors available in various roles. We have

been the fastest growing large operator in the country. This focus on people and successful execution of our HR strategy has been a key factor, amongst others, in enabling our consistent business results.

Q. What have been the three key HR imperatives that have helped you align with the business strategy?A. Focus at three different levels of operation for the HR function has helped us align with the business strategy – Brilliant Basics, Effective Business Partnering and developing Centers of Excellence. Brilliant basics is a mantra we follow being a part of the Aditya Birla Group, and it means ensuring near zero error in execution of our processes and a delightful experience for all employees in all people-related services. We set up our centralized shared services for HR, People Service Center five years ago in 2010. This helped us consolidate and standardize the processes of varying business operations. Idea has seen many mergers and acquisitions in its history so such consolidation was necessary and it led to improvements in speed and efficiency. The streamlining of operations has been in line with consolidation and centralization of other business operations like service, finance, analytics, etc. The HR function has been effectively partnering the business with a special focus on launching and propagating new business streams like m-Commerce, Wi-Fi, enterprise solutions, and business transformation initiatives like revamp of rural sales organization and managing changes due to regulation. Creating appropriate staffing guidelines, effective talent development and deployment and

Brilliant basics is a mantra we follow being a part of the Aditya Birla Group, and it means ensuring near zero error in execution of our processes and a delightful experience for all employees

Vinay Razdan, is the Chief Human Resource Officer at Idea Cellular (An Aditya Birla Group Company). Vinay is a part of the Executive Committee (EC) and Management Committee (MC) at Idea Cellular.

He is a commerce graduate from Delhi University and has a postgraduate degree in PM & IR from XLRI, Jamshedpur. He joined Idea in January 2006, and has a total work experience of over 25 years. Prior to joining Idea, Vinay worked with HCL Technologies as Associate Vice President - HR for over five years and with ITC Limited as HR Manager for over 12 years.

Vinay RazdanChief Human Resource Officer, Idea Cellular (An Aditya Birla Group Company)

Stability in volatilityQ. Idea has shown consistently stable company performance over the last five years. Has your HR strategy played a role in enabling business to achieve such results in this dynamic sector?A. Our HR strategy is to attract and retain the best talent, encourage innovation, create an engaging and motivating workplace environment and be an employer of choice.

The HR strategy has been integral to achieving business results. We have the lowest attrition in the sector, have been ranked as the Best Employer in the sector in the Great Place to Work survey in 2011 and 2013, and have consistently had very high employee engagement scores. A significant number of our recruitment happens via referrals from our existing employees – 32%. We have consistently

tHeinterview

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tweaked our talent management strategy to deal with increased competition in the talent market. At the entry level, we have ensured that our employee value proposition (Rewards, Development, Well-being and Career) allows us to attract top talent from the best institutes through our young Leaders Program. We have maintained competitiveness not through just compensation but through our overall value proposition and have ensured business requirements are being met.

Q. In an industry with varying levels of outsourcing, do you put a lens on productivity? If yes, how do you measure it and how does this productivity matrix impact your compensation strategies?A. There is a keen focus we have on productivity, especially in the three largest functions of networks, sales and service delivery. Telecom is a capex-intensive business and it is important to ensure that we get the necessary return on investment. Network expansion plans, sales targets and service metrics influence our manpower requirements and these requirements are established basis productivity norms. The Aditya Birla Group, as a whole, has institutionalized an extensive Strategic Workforce Planning process and we are at the forefront in terms of ensuring successful

implementation and deriving maximum output from the process. Implementing Strategic Workforce Planning ensures that business drivers are translated into manpower requirements down to the lowest level. We are now in the process of building systems to integrate these outputs into all our HR processes including our compensation strategy.

Q. Do you think benefits have seen a resurgence recently? Also, what kind of measures are you taking beyond compensation to increase engagement?A. Our Employee Value Proposition (EVP), which is the EVP of the Aditya Birla Group as a whole, is based on four pillars – Rewards and Recognition, Career, Training and Development and Well-being. We have a bouquet of benefits that fall into these areas, all contributing to increased engagement levels. We have a rewards and recognition framework that includes recognition for individual and team excellence, innovation and living our values. It also includes spot recognition and long service rewards. This is an automated, online system. We have a long-term incentive plan in place enabling wealth creation basis business results. Around career dimension, we have an automated process for employees to help build their careers at Idea by enabling career conversations and long-term career planning. Around well-being, we have a variety of work-life balance interventions and special interest groups of employees formed. A recent initiative was Stepathlon – devices were given to certain sets of employees, including women, to track their daily physical activity and compete with others,

encouraging physical activity and well-being. We are going beyond just compensation through Total Rewards which is the Aditya Birla Group's rewards philosophy.

We have kept a certain amount of flexibility in the rewards strategy in anticipation of regulations that may affect the business

For more information, please write to us at

total.rewardstaonhewitt.com

Follow us on LinkedIn at Aon India

& Twitter @Aon_India

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"Total Rewards Statements" (TRS )An impactful approach to communicating your Total Rewards programOur research suggests that a majority of companies are spending vast sums of money on complex Total Rewards packages, which many employees do not fully understand or appreciate.

At Aon Hewitt, we believe that progressive organizations offer compelling rewards to employees. But the leverage of these offers is lost if it is not communicated effectively to the employees.

Aon Hewitt's comprehensive and customized approach to communicating Total Rewards can help:

We have built a comprehensive and robust online portal that communicates your Total Rewards programs. This portal generates unique and customized Total Rewards Statements for each employee, helping them see the value of their Total Rewards package.

Total Rewards Statements – Showcase the value, build engagement.

Enhance an employee's understanding of rewards programs

Define and articulate all elements of rewards programs

Showcase the differentiation of rewards programs from competitors

Enhance the appreciation of rewards programs

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is four times that at private sector banks (5.85 years). This article is an attempt to explore elements of pay practices in public sector banks which give them a unique advantage as employers and may remain unseen at first glance.

The Pay Paradox - Debunking the Myth

A. Quantum of PayAt `9.5 lakh per annum, an average PSB employee gets paid about 1.5 times higher than an average private sector bank employee. At senior and top management levels, pay lags significantly with respect to private sector banks. However, these levels account for less than 6% of the overall headcount of PSBs. For majority of the headcount at junior and mid management level, median cost to company at state-run banks is higher than that seen in private sector.

Source: Aon Hewitt Research

Prima facie, the higher pay at junior management level for public sector banks may seem contrary to public perception. The answer to the gap between this perception and reality lies in the composition of the pay.

B. Composition of Pay


Across levels of management, benefits and retirals together account for a larger proportion of total pay at

public sector banks, as compared to that prevalent in the private sector banks. Combined with relatively higher entry level cash salaries, the benefits make total pay at public sector banks competitive with respect to private sector banks at junior and mid management levels.

Benefitting from Benefits Public sector banks continue to offer the standard benefits prevalent in private sector banks like home loans, education loans, club membership provident fund and gratuity. In addition, there is a plethora of other benefits like scholarship for meritorious students, laptops/tablets, subsidized canteens, company car and fuel which are not universally prevalent in the private sector. Plus, there are a host of benefits which truly tilt the balance. We cover five such benefits as examples herein: Pension: Although not granted to new employees,

this accounts for a substantial benefit for older employees. The fact that pension is a defined benefit, unlike provident fund (defined contribution) makes it more attractive for the employees

Staff Quarters: Leading public sector banks provide maintained staff quarters at locations across the country. While the value of this benefit is difficult to cost, it is usually higher than the HRA the employee would have otherwise received. Furniture reimbursement is usually provided along with the quarters

Medical Protection: Some public sector banks offer an unlimited medical protection for employee as well as dependents. In addition, the banks actually have arrangements and tie-ups with hospitals across circles for reservation of beds. Some banks extend this facility to pensioners as well, which is perceived as a huge benefit by the Gen X workforce prevalent in these banks

Holiday Homes: At least one public sector bank offers holiday homes at popular hill stations and destinations as a benefit to its employees

Reservation of School Seats: Some public sector banks enter into tie-up with reputed schools at each circle

Public Sector Banks – More Bang for the Buck?

Given factors ranging from strong unions, ownership and legacy, pay policies at public sector banks have been at a peculiar variance as compared to those seen in the private sector

“Major banks should be not only socially-controlled, but publicly-owned,” announced Indira Gandhi on the eve of the nationalization of banks in the Indian summer of 1969. Indian policy making has come a long way since, with three series of banking licenses and now talks of licenses on tap, thanks to RBI Governor, Raghuram Rajan. However, 46 years on, state-owned banks continue to account for 77% of deposits and 76% of advances of the banking sector. Touted to be the main reason why India’s banking sector withered the storms of the global financial crisis of 2009 rather gallantly, the state-owned banks have held their own while foreign banks went in out of fashion, and Indian private sector banks made steady headway in both quantity as well as quality. With their performance steadily improving and as they continue to give their private counterparts a consistent run for their money (no pun intended), what

emerges as a bit of a paradox is their ability to compete in the talent market. Given factors ranging from strong unions, ownership and legacy, pay policies at public Sector Banks (PSBs) have been at a peculiar variance as compared to those seen in the private sector. After all, institutions that make money by dealing in money have always been known to drive employees through money! So how would the state-owned super banks survive? Usually, it is the large pay gap that PSBs have with the private sector at the top management levels that grabs the headlines. However, scratching beneath the surface reveals that an average public sector bank employee is rewarded competitively, especially considering the wide gamut of benefits that are doled out. It is not really a coincidence then that the PSB attrition number of less than 5% is significantly lower than banking attrition number of 14.9%. At 23.5 years, average tenure at public sector banks

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level for reservation of seats for children of the staff. This greatly facilitates the frequent transfers that a public sector employee encounters through his or her career

other Non-Monetary rewardsIn addition to the benefits which can be valued in monetary terms, public sector banks provide several non-monetary relational rewards which are uniquely different from the private sector. Four such non-monetary rewards have been detailed out to emphasize their significance in Total Rewards for a public sector bank employee: Job Security: Other than on disciplinary grounds, public sector banks have virtually zero involuntary attrition. Compared to 4.5% of involuntary attrition in private banks, job security stands out as a significant non-monetary reward. This policy of job security remained unchanged for public sector banks even at the height of the financial crisis in 2009-10. The private sector, on the other hand, saw 13% of the organizations implementing a headcount reduction. Rotation: Imagine a career trail where a bank employee gets to hone his or her skills through stints across foreign exchange, treasury, retail and corporate operations, with experience of working across all zones in India as well as a stint in New york. Sounds tough to implement? Add to that a stint in new business development, as a head of a subsidiary and as a CFO and you will have a well-rounded banker ready for the top role. This indeed is the career trail of current CMD of a leading public sector bank. Interestingly, such career paths at public sector banks are more of norms than exceptions. In fact, job rotation policy has been institutionalized as a part of career progression, by making certain rotations mandatory for promotions beyond a particular level. Such a policy on job rotation leaves an employee richer both in terms of capability and experience. Training: Frequent role changes on account of rotation necessitate role-based training in public sector banks. Coupled with behavioral trainings, these courses account for significant non-monetary people investments. A leading public sector bank, for instance, provided training to over 60% of its officer population in the previous fiscal.

Work-life Balance: Public sector banks clearly trump their private peers on this count. Further, they offer a more liberal leave policy as compared to their private peers, especially when accruals and caps are compared.

Summary List of Benefits

Staff Quarters Company Car Entertainment Expense

Medical – Unlimited

Driver Compassionate Appointment

Pension Fuel Sabbatical Policy

Provident Fund Laptops/Tablets Cleansing Expense/Cleaning Material

Gratuity Scholarships for Children

Uniform (For Certain Roles)

Education Loans

Festival Advance Subsidized Canteen

Home Loans Holiday Homes Ex-gratia Lumpsum

Newspapers & Periodicals

Casual Labor Kit Allowance – For Branch Heads

Advantages of Distinct Pay PracticesPeople advantages of benefits and non-monetary rewards are visible. Compared to cash, they are more difficult to replicate and match by the competition. Further, some lifestyle benefits like club membership or staff quarters in prime locations are difficult to ‘cash out’. Also, non-monetary benefits prevalent in public sector banks like liberal leave policy and job security help create a sense of belonging. It may be argued that benefits, though desirable, may not be the most cost-effective way of delivering compensation. Three illustrations show that benefits can actually help lower costs for the employer:

Cost Advantages of Distinct Pay PracticesThe Scale Advantage: As mass employers, bank can procure/administer benefits for the employees at a fraction of a cost that the employee would have to pay as an individual. E.g. Holiday homes: The annual cost of operating holiday homes for one public sector bank is less than `1,500 per eligible employee. A private holiday resort membership for an individual would cost a significant upfront amount in addition to annual charges. The Increment Advantage: A Total Rewards structure leaning more on non-monetary rewards ensures that the total cost to company increases at a rate slower than cash

At `9.5 lakh per annum, an average PSB employee gets paid about 1.5 times higher than an average private sector bank employee

increments. This is because spends on non-monetary rewards need to go up by the same amount. E.g. It is quite possible that premium per employee actually falls in the next year instead of growing at a rate of increment. Similarly, it is quite possible that spend per employee on training falls in the next year on account of greater use of technology. The Tax Advantage: The tax rules corresponding to costing of certain perquisites enable significant tax savings. Needless to say, non-monetary rewards like training and paid time off are not taxed at all. E.g. Company provided car: Specifically at senior management, the maximum perquisite value that gets added to taxable income is `2,400 per month. The value of the benefit (depending on the car) is typically much higher. These cost advantages, along with the obvious people advantage of increased engagement, sense of belonging and employee welfare help make benefits a strong differentiating factor for public sector banks.

Pay Practices-related challengesBenefits Administration: Administering benefits in public sector banks involves significant effort, bandwidth and time. One public sector bank has over 30 different policy documents governing benefits. Further, given the large headcount, even the exceptions and special cases for these policies can run into thousands. Automation of benefits administration coupled with use of third-party administrators can help overcome this challenge. Flexibility: A rupee received by an employee in the form of cash may be valued more than a rupee received as benefits, simply because cash offers the employee a choice to spend it as per his or her preference. This challenge can be partly overcome by offering a flexible benefits basket, where an employee can allocate a fixed budget to the benefits he or she values most. Pay for Performance: A rather socialist approach to pay has ensured that there is little incentive for higher performance in public sector banks. On the other hand, approach to job security has ensured that there is little disincentive for non-performance. The absence of both carrot and stick did create an unenviable challenge of performance management for public sector banks. However, positive changes on these fronts are evident with leading public sector banks introducing robust performance management and variable pay plans. Communication: Relational elements of Total Rewards like benefits and non-monetary rewards are less visible than

For more information, please write to us at [email protected]


Aditya NanavatySenior Analyst,

McLagan, An Aon Company

Roopank ChaudharyAssociate Partner,

McLagan, An Aon Company

cash. An employee may therefore not always value and appreciate their due worth. Communication of relational rewards as important and valuable element of Total Rewards is essential to help employees understand its value.

The King’s New councilThe question that still crops up time and again even in the backdrop of a changing people and pay paradigm, 'Is cash still the king' when it comes to the most impactful rewards mechanism? Perhaps, yes. It will remain to be. However, cash alone may not conquer the war for talent that both new-age as well as traditional companies find themselves enmeshed in. There are many other non-monetary rewards that can and have created an impact across levels. This is what the public sector banks also vindicate. Due to differences in business imperatives and nature of ownership and cost constraints, some of the pay practices may not be replicable for private sector banks. The study of pay practices at public sector banks offers three irrefutable lessons for employers across the board. Firstly, it establishes that well- designed Total Rewards practices can create a unique differentiator for the employer to attract and retain talent. Secondly, a differentiated approach to pay practices need not necessarily be more expensive. Finally, the effectiveness of such a Total Rewards design can be further enhanced by thoughtfully pre-empting and addressing the challenges faced by public sector peers. Cash may perhaps never go out of fashion and will continue to be the most visible and virulent rewards system that employers use to remunerate their employees. And while cash may be king (of the good times and not so good times) it can certainly work well with its new council of non-monetary rewards to become a formidable fortress that can ring fence top talent and enable companies to remain unscathed as the war for people intensifies in the years to come.

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The times They are a changingThe technology space is going through interesting times these days in India. Not only is it generating enough buzz to keep providing daily news to the media, it is revolutionizing the technology marketplace. On the back of Social, Mobility, Analytics and Cloud (SMAC), technology organizations are changing their roles from organizations that can help optimize costs to organizations that can help improve top line and shareholder return. With this change, the audience that these technology organizations are reaching out to is changing from the CIO or CTO to the Chief Sales Officer or the CEO of organizations. “SMAC will be a platform that will enable organizations to drive consumerization of technology. It will become the new basis of competition, helping organizations build new business and operating models”, highlights R Chandrasekaran, Group Chief Executive, Cognizant. Gartner projects the worldwide spending in IT (in USD) to go up by ~12% in the period between 2012-16, roughly at about 3-3.5% a year. Aon Hewitt believes this to be just half the story. What needs to be closely looked at is the fact that there is a tremendous reallocation of client spends moving away from traditional Application Development and Maintenance (ADM) and Enterprise Resource Planning (ERP) towards SMAC. Between social media, mobility, analytics and cloud, the projected growth rates are anywhere between 8-72% CAGR till 2016. This is a tectonic shift that is gripping the technology business across the world which is reducing the competitive market space. If that wasn’t enough, the rate at which newer technologies are emerging is also increasing. Earlier technology waves were longer and allowed organizations that missed the wave to play catch up with the early adopters. That trend is now changing. “Five years ago, technology cycles used to be seven years, which is now down to three. My sense is this will soon hit the 18 months to 2-year time frame”, points out TK Kurien, CEO, Wipro. The real impact of that would be the fact that if organizations miss a technology wave, playing catch up no longer makes sense, for most organizations, the focus would then be to identify and become an early adopter of the next wave of technology. Quoting Dylan “For the loser now will be later to win” seems to be the mantra of the new age of technology that is upon us!

talent Imperatives in the time of SMAcGiven the dynamic nature of the landscape, organizations are looking at upskilling, maintaining and reskilling talent

differently from how they have done in the past. Aon Hewitt conducted a research with some of the largest system integrators in India to assess an organization’s talent and rewards management journey, as the organization moves from one business/technology lifecycle to another. The research uncovered a consistent trend in the way the talent dynamics evolve in an organization as they look at adapting to emerging business/technology lifecycle progresses. The research presented three broad ways organizations look at scaling up headcount for emerging businesses. Build Talent: Predominantly used by the pioneers of the technology waves, the success of the strategy depends solely on the ability to either spot or dictate the way the technology landscape will change and then undertake massive reskilling programs through isolated incubation hubs to have talent that can service the new landscape. 1. Buy Talent: Often used by the organizations

that missed the technology boat so to say, the focus is to tap organizations that spearheaded the change and attract talent through monetary and non-monetary means to build your own service offering at whatever cost.

2. Seed Talent: A newer and fairly more interesting way of managing growth that blends the above two approaches. It buys talent at only the critical levels however, for the rank and file, it uses the bought talent to then build a workforce that can deliver on newer technology. We see this consistently being used in organizations that though weren’t the first to spot an emerging technology wave or build market consensus around it, they were early adopters none the less. The blended talent management approach gives the organization a much needed fillip and helps it play catch-up with the pioneers.

The Skill is Not Enough There is a tectonic shift that is gripping the technology business across the world and is reducing the competitive market space

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traditional rewards Management: Why it Won’t Work?Traditionally, organizations have used the pay range to position skills with a demand supply mismatch at the higher end of the range. With technology cycles panning over considerable time frames, this let organizations hire and manage talent towards the max of the range while allowing for gradual deceleration as the technologies cooled down. Organizations that were innovators would train resources on the emerging technologies and accelerate their positioning in the range through disproportionate funding of base pay increases as skill proficiency and business demand increased. Organizations that looked to buy talent would position talent in the higher end of the range and continue to increase exit barriers through higher than average increases to these groups. Given range spreads of greater than 100% from commoditized skills to super hot skills in the market and the long gestation period of technologies in the past, the approach of increasing base pay has worked to a fairly large extent in the past. However, now with technology

Skill Premiums Baked into Base Pay


Skill Based Allowances


PayJust for the Skill or Also for the Proficiency?Most organizations Aon Hewitt spoke to, on how they differentiate employees compensation based on skill, suggested that there were no conscious level based differentiations that they applied. In other words, if they deemed a skill to be “hot”, they were willing to provide a premium to employees at all levels uniformly. Aon Hewitt carried out a quantitative survey on the pay differentials that exist for digital skills across major system integrators that predominantly build talent and were early adopters/ innovators in the digital space. What was surprising was that across these organizations, there was a clear differentiation on the skill premiums being provided to employees by level, which was contrary to the stated objective they were running. Across all the major skill groups, it is very clear that the skill differentiation at the entry level was minimal, perhaps signifying the fact that most of these organizations hire a common pool of resources at the bottom of the pyramid and deploy them across different

cycles becoming much shorter, positioning employees at the higher end of the spectrum just on the basis of skill and skill proficiency will lead to organizations not being able to gradually reduce the cost of skills which are cooling down and ramp up costs for skills which are heating up.

citius Altius FortiusGiven the below dichotomies1. Hot skills in the market have significant premiums2. Rate at which skills become hot and cool down is

increasing dramatically3. Technology lifecycles will not allow you to ramp up/

ramp down employee costs over a period of time The need of the hour is to look at more “non-traditional” rewards delivery practices which can infuse funds in the right pockets of the employee population while giving the organization the flexibility and agility to move its investments from one area to the other based on market demand and supply of skills. Some early adopters of this thought have moved towards incorporating skill-based compensation programs which are based on the demand and supply of skills and are over and above the base compensation of the employee. Essentially organizations are designing a STI program for employees with niche skills that reward the employee as long as the market is willing to pay a premium for the skills. From a pure affordability and expense perspective, it allows the organizations to be fairly agile in determining which pockets of the employee population need differentiated investments while at the same time not increasing the carry forward costs for employee groups. However, it is not as simple as it sounds, organizations need to embark on a significant change management journey to ensure that employees do not perceive it as an entitlement and organization can retain the right and the ability to remove the skill bonuses at their discretion.

skills. Even though the individuals were being trained in “hot skills”, there hadn’t been enough differentiation built into the system yet from a pay perspective which tends to build over a period of time.

e-Commerce Skill Premiums


Most interestingly, we see the skill based differentiation peak at the senior individual contributor levels where you would expect large scale technology specialization. These organizations were building towards increasing the employees exit barrier as the proficiency levels of the employees increase. Surprisingly, after a certain level in the hierarchy the increasing trend of higher skill differentiation disappears. This is predominantly based on the fact that in large system integrators, the higher levels have a greater supply of business managers and project managers than technology specialists. However, given the intent that has been shared by multiple system integrators in public forums, the clear intent is to increase the no. of technology specialists that exist in the organization at the cost of the “general” managers. As we see this trend gain momentum, Aon Hewitt’s point of view is that as these organizations build technology specialists, the trend of skill premiums increasing with hierarchy would become a lot stronger and would have much higher correlation.

Analytics Skill Premiums


With technology cycles becoming much shorter, positioning employees at the higher end of the spectrum just on the basis of skill and skill proficiency will lead to organizations not being able to gradually reduce the cost of skills which are cooling down


coVeRstory


Putting it All together... Where are We Headed?With the technology landscape changing at a dramatic pace and with technology lifecycles becoming shorter, it becomes imperative for technology organizations to be able to monitor the spread of their employee cost across different skills and be able to proactively realign themselves to the dynamic marketplace. Organizations would need to invest in being able to track employees not just at a department or job family level but at a skill level to ensure that the available funding is being directed to the right place. The way organizations look to secure market information will also need to change dramatically by focusing on more micro segregation of employees, i.e. at a skill level rather than at the job family level. Lastly, organizations need to balance their talent management imperatives with how they reward niche skills. The approach of “one size fits all” may not be relevant or feasible in the world of skills. Organizations need to identify levels in the pyramid which bring distinctive client value and look at ring-fencing them rather than increasing the cost of these skills across the board. At Aon Hewitt, we believe that for organizations to be successful in this new world, they would need to be able to monitor data at the skill level while building in alternative ways of compensating employees with niche skills to ensure easy/effortless reallocation of costs as the client landscape changes.

For more information, please write to us at [email protected]


Anirban GuptaSenior Consultant,

Aon Hewitt

Chetna Arora Consultant,

Aon Hewitt

Organizations would need to invest in being able to track employees not just at a department or job family level but at a skill level to ensure that the funding available is being directed to the right place

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Health & Wellness Initiatives – A Win-Win ApproachQ. In the recent past, organizations have started focusing on health and wellness initiatives. Why do you think has this become a top concern for HR leaders globally?A. The health of the global population has changed and there are increasing health risks which

lead to increase in healthcare and disability-related costs as well as absenteeism and impact on job performance. Organizations are looking to create a healthy and high performing workforce. This includes well-being in terms of how people respond from an emotional and

mental perspective, as well as from a financial standpoint how happy and productive they are at work. It is becoming a business imperative and while different organizations will have different needs, from a bottom line perspective, everyone wants that advantage to have the best

Stephanie Pronk is a Senior Vice President and leads Aon’s US National Health Transformation Team. Stephanie combines more than 28 years of experience in developing, implementing and evaluating health improvement and benefit strategies while using the power of data analytics to provide evidence-based health solutions for clients that improve health and productivity while positively impacting the bottom line.

Stephanie holds a bachelor’s degree in physical education and health from Hastings College and a master’s degree in health education from the University of Nebraska at Kearney (formally Kearney State College). Emphasis in both degrees included exercise physiology and health. Stephanie has published in various professional health journals and is a featured speaker at national and global conferences in the area of health and healthcare management.

and brightest of people at work and making sure they are at their optimal health.

Q. Apart from the basic practices like annual health check-ups and reimbursements, can you throw some light on different initiatives that can be covered under health and wellness?A. Setting up a successful health program requires an organization to go through four stages. There are different initiatives for each step. First is ‘Building Awareness’ amongst their population on health risks they are susceptible to and the impact on individuals as well as the organization.Usually it is this awareness phase that organizations do not move out of. This phase includes initiatives like a health assessment program to identify risk, a biometric screening to look at health values like cholesterol levels or weight or blood pressure and also assessments of mental health and depression, etc. There are multiple kinds of assessments that can be done within a population to build awareness. Unfortunately, a lot of organizations stop there. They don’t take the next step which is what can we do to help people change their behaviors that identify that risk. We call it the ‘Action and Behavior Change Phase’. One should put in initiatives which work from an organization’s as well as individual standpoint in terms of changing the behaviors. For example, in an organization where people are seated all day, a message promoting walking and physical activity can be conflicting. The organization also has to introduce initiatives which promote physical activity at work to ensure that it is not just an empty message. Initiatives like standing

workstations, walking treadmills, etc. ensure that from a behavior change standpoint the organization isn’t asking people to do certain things but not giving them the right tools and resources to accomplish that in their workday as well. It is not about the individual making the change but also about looking at what the organization can do from a culture and work environment perspective to support the behavior change. The last phase is ‘Sustaining the Change’. Many organizations institute a walking program challenge which usually lasts 12 weeks, but at the end of the 12 weeks, how these organizations sustain these behaviors is a key question. All three phases are incredibly important in creating the atmosphere where people can actually improve their physical health, exercise more and be resilient from a stress standpoint.

Q. What are the key results derived through implementation of health & wellness programs in an organization? Also, how do organizations measure the return on wellness programs?A. Across the many clients that we have worked with, the consistent key results that we have seen is that with improved health, people engage more with their employer. So, the healthier you are, the more engaged you are with the workforce and as a result your work performance improves. While there are linkages to reduced absenteeism and reduction in healthcare costs, these results typically take some time and don’t show effect immediately. But we do know that people, who engage, become more active, are healthier, less stressed and cost less money, even if they started out at a higher

cost! There is always the question if there is any direct correlation on business. There are practices and metrics to measure these programs. There are processes which capture the participation and number of people engaging in the program. There are impact reports to see if health behaviors are changing, and if there is a change in attitudes, and then obviously there is the final yardstick that organizations look at like absenteeism, productivity, healthcare product costs and costs of these programs. We are slowly moving away from solely looking at internal investment on these programs and looking at – value-added investments and recognizing the fact that organizational behavior change take some time and hence, it is prudent to look at the value of the investment from a different standpoint. For example, if an organization observes that their employees are working better together, it implies they are more productive. Such a result may be visible long before there is a reduction in the healthcare cost. Tangible things may be very difficult to measure immediately, but there are visible effects on the workforce, since these physical activities and challenges will bring

Setting up a successful health program requires an organization to go through four stages. Usually it is this awareness phase that organizations do not move out of

ASKoUreXPeRt


people together in a different way since they achieve results as a team.

Q. What are the typical steps involved in designing a corporate wellness program?A. Typically from a consulting perspective, we have four phases –first part is ‘Discovery Phase’ where the available data and information is analyzed to create evidence-based approach by using the employer data and analyzing it from health and business standpoint. We start by looking at current initiatives in an organization whether in-house or through external vendors or community programs. By analyzing all possible sources of information, we do a current state as-is analysis and then identify the things most important to an organization going forward to improve the health of its employee population. Again, the key there is not doing what the company next door does, but looking at what it is that your organization needs. It is not any different from making conscious business decision to buy a new equipment or new product line or acquire a new business. There has to be concentrated focus to collect

the data and build a business case to why the initiative will help the firm. The second phase is ‘Develop and Design’. This phase takes up all the information collected in the discovery phase and then utilized it to plan from a strategy and tactical plan standpoint. At this stage, the business case is presented to the senior leadership and the strategic direction and the tactics that will follow both from individual and organization standpoint to actually make a difference are decided. Then we move on to the ‘Deliberate Stage’ where we find the right vendor partner to deliver the program or identify the right people internally to deliver this program. This stage includes steps like identifying the right kind of models to drive the tactical plan, planning the communication and marketing strategy. The last stage is to look at ‘Evaluating the Program’ to ensure there are results in the right direction and identify the things that need to be tweaked to achieve high results. We found that by using data and getting focused on two or three behaviors, we are able to see positive focused results.

Q. What do you think are the top constraints/challenges faced while implementing these programs?A. While data is always an issue, we are very fortunate to have a very strong database across the country on the health of a population. Many times the business case is a very important stage because there will always be people who will question the connection of health of an individual to the health of an organization, and yes there will be skeptics who will say ‘the health of my employees is my agenda and I

don’t need an external person’s help in it’. There are these smaller issues but there are no major barriers. There will always be a certain part of the employee population who will not participate in these initiatives and that is unfortunate for them, but that is a chance an organization needs to take. The other aspect is looking at how to incorporate healthy practices in the workplace. People today don’t have a lot of time so it would be ideal if organizations can create a culture of work environment where healthy habits such as taking the stairs or eating healthy or de-stressing are all a part of the work environment. All these things if included in a workday tend to eliminate any type of barriers because now it becomes a part of the daily job.

Q. What has been the appeal of these wellness programs across the varied workforce demographics i.e. traditionalists, baby boomers, Gen X, Y & Z? A. There is this perception that younger workforce is healthier but recent health surveys have proved otherwise. The younger people are coming into the workforce with issues like obesity, high blood pressure, hearth diseases, diabetes and so forth. Such issues now start at very young ages primarily due to child obesity and inactivity. Whereas traditionalists and baby boomers entered the workforce healthy but developed these issues as they aged. So it will actually be wrong to say that a younger workforce is equivalent to a healthier workforce. The way organizations deliver the program needs to be very different between generations. For example, a technology company primarily has average employee age as 32





It is not about individual making the change but also about looking at what the organization can do from a culture and work environment perspective to support the behavior change

but the majority of the population is in 20s. So the approach to getting people to pay attention to their health will need to be different. Baby boomers would want to do things that keep them young so they would participate in these programs more enthusiastically. However, they are not technology-savvy as younger people, so organizations will have to build in special environment to keep these people engaged. While the health issues are the same even with younger people coming in, but how these programs are delivered to keep their attention will be very different.

Q. Have you observed any specific industry where the adoption rate of these initiatives has been higher in comparison to other sectors? A. 10 years ago, I would have been able to tell you there are specific industries in the US, but today it spreads across every industry. Organizations across each sector are interested in creating a healthy population. Specifically in the US, it started with the manufacturing environment which was also due to the safety practices. But increasingly, these programs are spreading across all industries. In developing countries, organizations have just started to discuss these initiatives and these will definitely pick up.

Q. Is there any difference in setting up these programs in developed vs. developing countries? A. Developing countries are actually at an interesting stage right now. Historically, they only had to combat public health issues like diseases on a national level. But now with globalization and increasing penetration of technology, lifestyle issues have

also become predominant. It is obviously challenging but there is an opportunity to be able to create an impact as well. I think adopting such initiatives is a win-win approach. It helps the individual as well as impacts the organization in a positive and productive way.

People today don’t have a lot of time so it would be ideal if organizations can create a culture of work environment where healthy habits such as taking the stairs or eating healthy or de-stressing are all a part of the work environment

ASKoUreXPeRt


the Aon Hewitt 8th Annual rewards conference – the New order of rewardsThe Aon Hewitt 8th Annual Rewards Conference this year focuses on the changing order of rewards and the next-gen rewards practices. The action packed day has a line-up of veterans and industry experts from traditional as well as new age industries like the e-Commerce sector, focus on how rewards practices are changing. Here is a look in detail on the topics on focus.

Key Note Speaker Session – Uday Kotak, Executive Vice Chairman & Managing Director, Kotak Mahindra Bank Ltd.

Learnings from the West – The New Era of Rewards – Focus on Non-Monetary Rewards – Stephanie Pronk, Senior Vice President, National Health Transformation, Aon

Health and wellness is a far more advanced concept in developed countries like USA where organizations as well as employees are aware of the importance of these initiatives and are acutely aware of their well-being. This session focuses on what Indian organizations can learn from the western organizations to set up these initiatives and increase awareness of the importance of such programs.

Case Study – Health & Wellness as a Pillar for Driving Non-Monetary Rewards – Nanjappa BS, Head – Employee Relations, Infosys Ltd.

Amongst the many organizations in India that have started adopting health and wellness initiatives, Infosys has been at the forefront. This session gives an Indian context and helps organizations to understand how to leverage health and wellness as non-montary rewards

Technology is playing an increasingly important role in our daily interactions. Needless to say, early adopters of technology have a clear advantage in connecting with their employees and also gaining the maximum returns out of their rewards programs. This session helps to understand the role and importance of technology in staying ahead of the curve.

An Entrepreneur Perspective – Rewards in New Age Companies – Kavin Bharti Mittal, Founder & CEO – Hike

The e-Commerce sector has seen a sudden rise in the last year. In conversation with Kavin Mittal, we try to understand how rewards mechanisms work in new age industries and on how they are really different from traditional organizations?

Panel Discussion – Sustainability/Viability of New Age Rewards Practice – Anurag Mohit,Vice President, Compensation & Benefits, APAC, GCG & Japan, IBM; Babu Vittal, Senior Director, Human Resources, Flipkart; Nitin Nayar, Managing Director, Warburg Pincus; Saurabh Nigam, Vice President, Human Resources, Snapdeal

practice to showcase an organizations employee value proposition.

Panel Discussion – The Changing Face of Non- Monetary Rewards in India – Animesh Kumar, Group Head, Human Resources & Corporate Services, IDFC Ltd.; Anuj Gulati, MD & CEO, Religare Health Insurance Company Limited; Leena Sahijwani, Head of Rewards, GE India; Suryanarayana Kodukulla, Director People Operations, Sales India, Google

It is evident that traditional rewards practices are no longer the yardstick of a successful rewards program. With the changing workforce demographics and lifestyles, organizations are looking to create radical rewards programs which are favorable for the next-gen workforce. This session attempts to understand from established organizations, how the non-monetary rewards are changing and gaining prominence in the overall rewards strategy of an organization.

Expert Address – The Role of Technology in Driving New Forms of Rewards Mechanisms – Olivier Pestel, Director, Solution Consulting, Asia Pacific & Japan, Cornerstone On Demand

In conversation with a mix of experts from different backgrounds, this session explores the sustainability of these new age rewards practices. Different perspectives from traditional organization, e-Commerce sector and investors as well, help to debate the future of such practices.

Signature Speech – Dr. Nachiket Mor, Member of RBI Board & Board Chair of CARE India






2014 consumer Health Mindset – A Global Perspectivetrend check

tRendcheck

Behaviors Driven by Workplace Health Culture

There is value for me and the employer in having strong

workplace wellness.

In a strong health culture

In a weak health culture

Had an annual physical last year

Exercise at least 3x per week

In a strong health culture

In a weak health culture

Communication ChannelsHealth PlansWellness

ProgramsWorkplace WellnessPersonal Health

59% say they’re in at least good health but are actually overweight or obese

I’m not always honest with myself about how healthy I am.“ ”

85%of consumers say at least one

obstacle gets in the way

lack of time andare the hurdles they cite most often

TOP 3Sources most influential on

personal health and wellness

Advice from doctor

Advice from family or friends

My own view of how I feel

In a strong culture of health, I am more likely to

do what’s good for me.“

”

Weak

Mediocre

Perception of Workplace

Health Culture

Strong

Incentive Drivers

would have blood drawn and

tested for health measures for

$50 or less

24%

would participate in

a blood draw just for the

benefit of doing it

38%

93%

Participating has improved their or their family’s health

Fitness Program

HealthyEating Program

85%I have a pretty good sense of

what health care costs me, but I still underestimate what it

costs my employer.

“

$Out-of-pocket spend

15% higher

than actual spend (on average)

Employer spend

24%lower

than actual spend (on average)

Consumers’ Guess on Health Care Spend

Actions consumers take more often since enrolling in an HDHP

30%

23%

21%

19%

Get Routine Preventive Care

Postpone Care

Seek Lower Cost Options

Make Healthy Choices

Tools & InformationConsumers Find Most Helpful

Consumersover age 60 are more likely to value health plan decision tools (66%)

Consumers under age 30 are more likely to value general wellness information (63%) and cost clarity tools (60%)

Aon Hewitt | 2014 Consumer Health Mindset Overview

79%

I’m much more likely to be using mobile apps than I was last year.

5 %+

“ ”

Of the 79%

regularly use at least one social media platform or mobile application (up 10% from last year)

use community boards/blogs, Foursquare, Pinterest and mobile apps at least monthly for health and wellness activities

Follow this space to read about emerging compensation, benefits and other rewards trends in short insightful bytes.For more information, please write to us at total.rewardstaonhewitt.com | Follow us on LinkedIn at Aon India & Twitter @Aon_India


Capital Markets Forum Study

April-SeptemberA benchmark study conducted for global investment banks and Indian institutional securities firms covering equity capital markets, debt capital markets and investment banking job families.

India Banking Forum Study May-OctoberA platform for all major Indian and MNC banks to come together to share and benchmark their positions, levels, functions and sub-functions across the industry.

Investment Management Forum Study June-OctoberA flagship study in the asset management sector covering key job families like fund management and sales.

Private Banking Forum Study

June-SeptemberThis study covers large Indian and MNC private wealth management organizations benchmarking key roles across functions.

Life Insurance Forum Study September-JanuaryThis study covers the largest life insurance players in India covering positions across all channels of distribution and key corporate functions.

General Insurance Forum Study September-FebruaryThis study covers the largest general insurance players in India covering positions across all channels of distribution and key corporate functions.

McLagan – Banking & Financial Services Insights

SuRVeycalendar

FMCG/D Outsourced Field Sales Force (OFS) Study July-October Flagship study in the FMCG/D industry focused on presenting comprehensive compensation and benefits benchmarking trends for the off-roll field sales staff in India.

Aon Hewitt FMCG Forum May-October This forum brings together 15 leading FMCG organizations in India to benchmark compensation, benefits and other best practices for on-roll employee population.

Aon Hewitt Consumer Industry Study September-DecemberThis study provides benchmark information around compensation, benefits, manning, sales incentives and structures across small and mid-sized FMCG and FMCD organizations.

Chemicals Forum July-September The study covers leading organizations in the chemicals sector and benchmarks compensation & benefits and rewards trends.

SIAM C&B Forum September-January A study facilitated by SIAM members covering more than 25 large auto OEMs in the country. The study benchmarks compensation, benefits and people and productivity measures in the auto OEM industry.

Auto Ancillary C&B ForumSeptember-January A study conducted for auto ancillary organizations across the country. The study benchmarks compensation, benefits and people and productivity measures.

India Hotel Survey July-December The forum brings together leading hotel groups to benchmark their compensation, benefits, people practices and key organizational metrics and covers multiple properties and locations.

India Retail Forum July-OctoberThe study covers leading organizations, in the retail industry providing robust, and comprehensive information on cash compensation and industry trends.

India QSR (Quick Service Restaurant) Forum August-DecemberThis forum brings together leading QSRs to benchmark compensation, benefits and other best practices.

India Telecom Towers Forum February-MayThis forum brings together leading telecom towers companies to benchmark compensation and other leading practices.

India Pharmaceutical Forum June-September

The forum brings together the key MNCs and Indian pharmaceutical organizations to benchmark their positions, levels and benefits across the industry.

Medical Technology Forum July-October

The study covers leading organizations in the medical devices/technology domain providing robust and comprehensive information on cash compensation and industry trends.

Life Sciences Forum August-November

The study covers leading organizations in the contract research, manufacturing, clinical research, vaccine, biotech domain providing robust and comprehensive information on cash compensation and industry trends.

ITeS Industry Study May-August

The forum brings together ITeS sector organizations to benchmark their compensation, people practices and presents detailed analysis across third party, BFSI captives, other captives and KPOs.

Hi-Tech Industry Study May-September

The study provides robust information on cash compensation and other industry trends across IT sectors – IT services, IT products, semiconductors and engineering design.

Indian Semiconductor and EDA Forum (ISEF) October-December

The forum brings together leading semiconductor and EDA companies to benchmark compensation, variable pay practices and key organizational metrices.

Salary Increase Survey Phase I: June-September Phase II: December-February

One of the most exhaustive studies in the area of performance and rewards in India, the study measures actual and projected salary increases, variable pay and performance data across employee categories.


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upcoming Insights

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