rewards planning for an evolving workforce...source: future of jobs report, world economic forum,...
TRANSCRIPT
H E A LT H W E A LT H C A R E E R
SEPTEMBER 12, 2017
Cathy Shepard, CCP +1 213 346 2495 [email protected]
R E W A R D S P L A N N I N G F O R A N E V O L V I N G W O R K F O R C E
CONFIDENTIAL & PROPRIETARY
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T O D AY ’ S S P E A K E R S
Cathy Shepard, CCP Senior Principal, Mercer Rewards & Talent Management
Michelle Corman Team Leader, Mercer Sirota Employee Sensing & Surveys
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T O D AY ’ S T O P I C S
Global Talent Trends
01 02 03 Workforce Rewards Insights
Looking Ahead To 2018
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GLOBAL TALENT TRENDS
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M A C R O T R E N D S I M PA C T I N G T H E W O R L D O F W O R K
Aging workforce
Technology at work
Talent scarcity
FORECAST OF TALENT SUPPLY
IT Technology
Core Operations / Service Delivery
Leadership
Marketing
Sales
Administration
Finance
Legal Sufficient/
Oversupply
Undersupply
Executives see the leadership shortfall more acutely than HR – making this
the No.1 skill gap for them
Leadership
WHAT ARE EXECUTIVES MOST CONCERNED ABOUT?
D I S R U P T I O N O N T H E H O R I Z O N
Strength of emerging market economies
Change in labor regulations
Change in border control
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T H E C H A N G I N G E M P L O Y M E N T L A N D S C A P E
B U S I N E S S M O D E L D I S R U P T I O N S
I M PAC T F E LT AL R E AD Y 2 0 1 8 – 2 0 2 0 2 0 1 5 – 2 0 1 7
Mobile Internet and Cloud Technology,
Crowd sourcing
Big Data Analytics
Young Demographics
in Emerging Markets
Changing Nature of Work
and Societal Norms
The Internet of
Things
Advanced manufacturing and 3D printing
Longevity and Ageing Societies
Women’s Economic Power,
Aspirations
Robotics, Autonomous
Transport
Artificial Intelligence
Five Generations in the Workforce
Source: Future of Jobs Report, World Economic Forum, 2016
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J O B D E C L I N E I N S O M E A R E A S O F F S E T B Y J O B G R O W T H I N O T H E R S
E M P L O Y M E N T O U T L O O K A C R O S S J O B F A M I L I E S JOBS CHANGE IN THOUSANDS, 2015-2020
G R O W T H
+492 Business and Financial Operations
+416 Management
+405 Computer and Mathematical
+339 Architecture and Engineering
+303 Sales and Related
+66 Education and Training
D E C L I N E
-4,759 Office and Administrative
-1,609 Manufacturing and Production
-497 Construction and Extraction
-151 Arts, Design, Entertainment, Sports and Media
-109 Legal
-40 Business and Financial Operations
Source: Future of Jobs Report, World Economic Forum, 2016
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N E W J O B S O N T H E H O R I Z O N
of current primary school children will end up in new job types that
don’t even exist as yet
Source: Future of Jobs Report, World Economic Forum, 2016 Source: Quartz.com, May 16 2017
65% Susan Peters, GE’s head of human resources, described the role as
experimental and wide-ranging, saying it could potentially influence everything from programs to re-skill employees to how GE uses data to
understand its workforce
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GROWTH BY DESIGN
THE QUEST FOR INSIGHT
A SHIFT IN WHAT WE
VALUE
M E R C E R TA L E N T T R E N D S 2 0 1 7 : K E Y F I N D I N G S
A WORKPLACE FOR ME
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G R O W T H B Y D E S I G N
ORG. REDESIGN BEING PROPOSED C-suite: How are you planning to change your organization
design over the next two years?
Moving support functions to
shared services
41%
Flattening the organization
structure
33%
Decentralizing authority
31%
Eliminating roles, functions,
departments
31%
WHAT IS DRIVING THIS CHANGE?
Increased innovation
Reduced costs
Greater customer intimacy
Increased agility
Greater efficiency
93% of executives are
planning a redesign in the
next 2 years Source: Mercer 2017 Global Talent Trends Study
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A S H I F T I N W H AT W E VA L U E
97% of employees want to be recognized and rewarded for a wide range of contributions
W H AT W O U L D M A K E A P O S I T I V E I M PA C T O N Y O U R W O R K S I T U AT I O N ?
Source: Mercer 2017 Global Talent Trends Study
LEADERS WHO SET CLEAR DIRECTION
FAIR & COMPETITIVE COMPENSATION
OPPORTUNITY TO GET PROMOTED
WORKING WITH THE BEST & BRIGHTEST
TRANSPARENCY ON PAY CALCULATIONS
CAREER PATH INFORMATION
MORE FLEXIBLE WORK OPTIONS
#1 for employees in Canada, China, France, Germany, Italy, Singapore, and US
#1 for employees in Brazil, Mexico, India, and South Africa
#1 for employees in Australia, Canada, Hong Kong, and UK
#1 for employees in Japan
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VOICE OF THE EMPLOYEE: “Meet me where I am” A W O R K P L A C E F O R M E
HELP ME INVEST IN MYSELF
Me.inc
CARING FOR MY HEALTH
53% of employees want their company to focus more on their health and wellness
BALANCING MY WORK/LIFE
56% want their company to offer more flexible work options
Technology enables individualized choice without adding an undue administrative burden for HR
Source: Mercer 2017 Global Talent Trends Study
STEERING MY CAREER
1 in 3 employees do not feel empowered to create their own career success at work
MANAGING MY MONEY
Mercer research shows that employees spend 13 hours per month worrying about money matters at work
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T H E Q U E S T F O R I N S I G H T D ATA A N D A N A LY T I C S
CHRO BECOMES CHIEF MARKETING OFFICER
Source: Mercer 2017 Global Talent Trends Study
As HR and Benefit teams create personalized services and benefit
packages for employees, the tools and tactics used by marketers will be essential. Data and analytics, segmentation, and distribution are phrases HR teams are
going to become familiar with to target and deliver to their customers – employees
27% of executives report that their HR delivers actionable analytics for business leader decision making
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WORKFORCE REWARDS INSIGHTS
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I S T H E A N N U A L S A L A R Y I N C R E A S E P R O C E S S B R O K E N ?
. . . But are organizations changing their approach?
BUDGETS ARE TOO SMALL TO DIFFERENTIATE
PROCESS IS TIME-CONSUMING
AND COSTLY
EMPLOYEES WANT MORE FREQUENT
PERFORMANCE DISCUSSIONS
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S O M E C H A N G E S B E I N G C O N S I D E R E D . . . N O T H I N G R A D I C A L
ANNUAL SALARY INCREASE PROCESS CHANGES BEING CONSIDERED
ALL ORGANIZATIONS
HIGH TECH INDUSTRY
Eliminating process altogether 7% 0%
Revising process 33% 34%
Increasing pay-for-performance differentiation 43% 42%
Increasing focus on pay equity/fairness 40% 50%
Eliminating performance ratings 13% 10%
Revising performance ratings 32% 28%
Removing the link between performance ratings and pay 14% 17%
Changing frequency of performance reviews 23% 17%
Increasing the frequency of communications about rewards 39% 39%
Increasing transparency of rewards 52% 65%
Source: Mercer Select Intelligence 2017 Rewards Decision-Making and Communications Survey
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P O T E N T I A L O P P O R T U N I T I E S F O R C H A N G E S A L A R Y I N C R E A S E B U D G E T S
FACTORS DETERMINING ORGANIZATION’S SALARY INCREASE BUDGET
% ORGS
Market Practices 76%
Organization’s Financial Performance 76%
Inflation Rates 53%
Affordability 49%
Overall Economic Health 48%
Organization’s Strategic Plan 35%
Other 4%
Opportunity for HR to link the strategic plan to workforce
planning to salary budget needs, reinforcing the ROI on
compensation
High Tech industry organizations were much more likely to consider market practices (90%) and affordability (63%), but less so for inflation rates (47%) or overall economy (43%)
n = 356 organizations
Source: Mercer Select Intelligence 2017 Rewards Decision-Making and Communications Survey
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AVERAGE WEIGHTING OF DIFFERENTIATION FACTORS BY EMPLOYEE GROUP
Executives Management Professional (Sales)
Professional (Non-Sales)
Para-Professional
Individual performance 52% 62% 60% 63% 64%
Company Performance 17% 10% 9% 9% 6%
Internal Equity 6% 7% 8% 8% 8%
Competencies 5% 3% 4% 3% 3%
Team Performance 3% 5% 3% 3% 3%
Tenure/Experience 2% 1% 1% 2% 1%
Unique/ hard-to-find skill set 1% 1% 1% 2% 1%
Potential 1% 1% 1% 1% 1%
Development/growth 1% 1% 1% 0% 1%
Driven by union 0% 0% 1% 0% 3%
Other 12% 8% 13% 9% 9%
N 85 73 57 71 64
P O T E N T I A L O P P O R T U N I T I E S F O R C H A N G E B A S E S A L A R Y I N C R E A S E D I F F E R E N T I AT I O N D R I V E R S
75% of organizations differentiate base salary increases within at least one employee group
Opportunity to consider other pay drivers for base salary increases, potentially only awarding increases for competency / skill development and growth while using incentives to reward performance
Source: Mercer Select Intelligence 2017 Rewards Decision-Making and Communications Survey
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P O T E N T I A L O P P O R T U N I T I E S F O R C H A N G E P E R F O R M A N C E M A N A G E M E N T
88% still use a performance rating scale (84% in the high tech industry)
FREQUENCY OF PERFORMANCE DISCUSSIONS
% ORGS
Biannually (Twice A Year) 48%
Annually 36%
Quarterly 8%
Ad Hoc / As Needed, with no set timing 5%
Monthly 2%
Daily 0%
Opportunity to increase
frequency of performance discussions
n = 360 organizations
Source: Mercer Select Intelligence 2017 Rewards Decision-Making and Communications Survey
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P O T E N T I A L O P P O R T U N I T I E S F O R C H A N G E C O M M U N I C AT I N G R E W A R D S
n = 357 organizations
Opportunities to improve the transparency of rewards and employees’ understanding of what they need to do to earn them.
Source: Mercer Select Intelligence 2017 Rewards Decision-Making and Communications Survey
INFORMATION SHARED WITH EMPLOYEES % ORGS HIGH TECH
Organization’s reward philosophy 67%
A clear description of the competence and performance expectations of the employee’s role 60%
Their manager’s honest view on how the employee has been assessed against the organization’s pay drivers
32%
The employee’s individual salary range 31% 10%
The annual pay mechanisms for guiding pay decisions (e.g., budgeting processes, manager guidelines, governance structures) 30% 13%
Size of the salary increase budget 24%
What drives progression through their range and into the next range 21% 3%
Their logical career path (and flexibility) and how this links to rewards 21% 10%
The pay range of positions along a relevant career path 15% 3%
Market data for the employee’s position 10% 16%
None of the above 6%
Other employees’ pay ranges 5%
Other employees’ pay levels 2%
Other 3%
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P O T E N T I A L O P P O R T U N I T I E S F O R C H A N G E M A N A G E R E D U C AT I O N
Source: Mercer Select Intelligence 2017 Rewards Decision-Making and Communications Survey
IS COMMUNICATOR WELL-VERSED IN TOPIC? % ORGS
Yes, because we conduct thorough training in this area
38%
Yes, although we don’t conduct specific training in this area
23%
No, but we’re planning to improve knowledge and communication skills through training
31%
No 8%
Opportunity to increase manager training on pay communications,
particularly as many organizations are considering increasing the
frequency of reward discussions and improving rewards
transparency.
High Tech industry organizations are less likely to conduct training on pay communications: • 23% yes because we conduct training • 33% yes although we don’t conduct training • 37% no but we’re planning training • 7% no
n = 358 organizations
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U S C O M P E N S AT I O N P L A N N I N G A N D M B D S U R V E Y O V E R V I E W
Comprehensive budget data collected for a broad spectrum of compensation planning aspects
16 M I L L I O N Surveying this topic for
20+ Y E A R S
1,500 More Than
P A R T I C I P A T I N G O R G A N I Z A T I O N S
E M P L O Y E E S R E P R E S E N T E D
US Compensation Planning Survey
2.5 M I L L I O N
1,500+ P O S I T I O N S
3,100 More Than
P A R T I C I P A T I N G O R G A N I Z A T I O N S
E M P L O Y E E S R E P R E S E N T E D
Mercer Benchmark Database Survey
35 J O B F A M I L I E S
16 C A R E E R L E V E L S
Job based research on changes in compensation across industries, job families, and career streams
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U S C O M P E N S AT I O N P L A N N I N G K E Y F I N D I N G S
AVERAGE BASE SALARY INCREASE BUDGET IN 2017(1)
2.8% 3.4%
AVERAGE 2017 TOTAL INCREASE BUDGET (INCLUDES SALARY INCREASE BUDGETS AND PROMOTIONAL INCREASE BUDGETS)
88%
98% OF PARTICIPATING ORGANIZATIONS WILL AWARD SALARY INCREASES
1.7x THE SALARY INCREASE OF AN AVERAGE PERFORMER.
AVERAGE PROJECTED 2018 BASE SALARY INCREASE BUDGET(1)
2 0 1 7 S A L A R Y I N C R E A S E S R E M A I N
CONSISTENT W I T H T H E PA S T 5 Y E A R S .
2.9% H I G H P E R F O R M E R S G E T
OF PARTICIPATING ORGANIZATIONS TIE SALARY INCREASES TO INDIVIDUAL PERFORMANCE
Source: 2017/2018 US Mercer Compensation Planning Report, effective July 2017. (1) Including 0’s.
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M B D S U R V E Y K E Y F I N D I N G S
• Overall, median base salary increased 2.8% from 2016, with 87% of incumbents having received an increase in base salary.
Year-Over-Year
• Jobs with the greatest increase in median base salary ranged from 4.5% to 5.8%*.
Key Jobs
• Incentive eligibility, receivership and payout amounts across career streams remained constant to 2016 levels.
Incentives
*Data is representative of same organization, same jobs, with the highest change in median base salary; only jobs with 10 or more organizations reporting were analyzed.
*Source: 2017 US Mercer Benchmark Database, effective March 1, 2017.
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3.3%
3.4% 3.4% 3.4%
3.3%
3.5% 3.5% 3.5% 3.5% 3.5%
Executive Management Professional(Sales & Non Sales)
Office/Clerical/Technical Trades/Production/Service
2017 2018 (Projected)
T O TA L I N C R E A S E B U D G E T S - N E W T H E F U L L P I C T U R E O F PAY I N C R E A S E S
Source: 2017/2018 US Mercer Compensation Planning Report, effective July 2017. Data including 0s.
Total Increase Budget combines salary increase budget along with promotional increase or other increase budgets
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3.0%
2.9% 2.9% 2.9%
2.8%
2.9% 2.9% 2.9% 2.9% 2.9%
3.0% 3.0% 3.0% 3.0% 3.0%
Executive Management Professional(Sales & Non Sales)
Office/Clerical/Technical Trades/Production/Service
2016 2017 2018 (Projected)
Salary Increase Budgets includes the traditional merit, COLA and across the board increase budget
S A L A R Y I N C R E A S E B U D G E T S R E P R E S E N T S T H E A N N U A L M E R I T I N C R E A S E
Source: 2017/2018 US Mercer Compensation Planning Report, effective July 2017.
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S A L A R Y I N C R E A S E B U D G E T S – I N D U S T R Y V I E W E N E R G Y S E C T O R S E E S A R E B O U N D
SALARY INCREASE BUDGETS BY INDUSTRY (INCLUDING 0s) ACTUAL PROJECTED
2016 2017 2018 Banking/Financial Services 2.9% 2.9% 3.0%
Chemicals 2.7% 3.0% 2.9%
Consumer Goods 2.9% 2.9% 3.0%
Energy 2.3% 2.8% 3.0%
High Tech 2.9% 2.9% 3.1%
Insurance/Reinsurance 3.0% 2.8% 2.9%
Life Sciences 2.9% 2.8% 2.9%
Logistics 2.3% 2.5% 2.5%
Other Manufacturing 2.7% 3.0% 3.0%
Other Non-Manufacturing 2.8% 2.9% 3.1%
Retail & Wholesale 2.8% 2.6% 2.8%
Services (Non-Financial) 2.8% 2.8% 2.9%
Healthcare Services* 2.8% 2.7% 2.7%
Transportation Equipment 2.9% 2.7% 2.8% * Healthcare Services is an Industry Sector and is included in the Services (Non-Financial) Super Sector
Including organizations with salary freezes, salary increase budgets for the Energy sector rebounded to 2.8% this year and is projected to be 3.0% in 2018, halting the 2015 and 2016 trend which saw salary increases in the Energy sector drop to a low of 2.3%.
Source: 2017/2018 US Mercer Compensation Planning Report, effective July 2017.
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2.8% 2.9% 3.0%
2.3%
2.7% 2.8% 2.7% 2.6%
3.0%
2.5% 2.5% 2.3% 2.5%
3.0%
3.5%
2.8% 2.8% 2.7% 2.7% 2.9% 2.8%
2.9%
Banking/Fin Svcs
ConsumerGoods
Energy HealthcareServices**
High Tech Insurance/Re-insurance
Retail &Wholesale
TransportationEquipment
2015 2016 2017
A C T U A L B A S E S A L A R Y C H A N G E S I N D U S T R Y V I E W *
2015: N=1,400,574 Incs 2016: N=1,495,613 Incs 2017 N=1,579,226 Incs
2017: N=1,579,226 Incs
*Median percentage changes. Each year of historical analysis (2015 and 2016) is taken in isolation. Healthcare Services is a sector within the Services (Non-Financial) super sector.
All industries show an increase in base salary, but some industries show smaller increases compared to prior year(s): Consumer Goods, Energy, Retail & Wholesale and Transportation Equipment.
*Source: 2017 US Mercer Benchmark Database, effective March 1, 2017.
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A C T U A L B A S E S A L A R Y C H A N G E S C A R E E R S T R E A M V I E W *
2.7% 3.0% 3.0%
2.5% 2.4% 2.7%
3.0% 2.9% 2.5% 2.5%
2.8% 3.0% 3.0%
2.7% 2.6%
Overall Executive Management Professional Para-professional
2015 2016 2017
*Median percentage changes. Each year of historical analysis (2015 and 2016) is taken in isolation.
2017: N=1,086,631 Incs
2015: N=1,400,574 Incs 2016: N=1,495,613 Incs 2017 N=1,579,226 Incs
Marginal change in base salary increases for management, professional, and para-professionals were reported for 2017.
*Source: 2017 US Mercer Benchmark Database, effective March 1, 2017.
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A C T U A L B A S E S A L A R Y C H A N G E S F U N C T I O N V I E W *
2.6% 2.9% 2.8%
3.0% 3.0%
2.6% 2.5% 2.8%
3.0% 2.7%
2.9% 2.9% 2.7%
2.9% 2.9% 3.0% 3.0%
2.5%
Engineering Finance HR IT Legal Marketing Sales
2015 2016 2017
2017: N=1,086,631 Incs
2015: N=1,400,574 Incs 2016: N=1,495,613 Incs 2017 N=1,579,226 Incs
*Median percentage changes. Each year of historical analysis (2015 and 2016) is taken in isolation.
Base salary increases over the past few years are consistent — either remaining the same or improving slightly.
*Source: 2017 US Mercer Benchmark Database, effective March 1, 2017.
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A C T U A L B A S E S A L A R Y C H A N G E S P O S I T I O N S W I T H L A R G E S T C H A N G E S *
J O B F A M I L Y
Communications Engineering Marketing R&D Marketing Corporate Affairs HR IT Analysis & Design
*Data is representative of same organization, same jobs, with the highest change in median base salary. Only jobs with 10 or more organizations reporting were included. Each year of historical analysis (2016) is taken in isolation.
8.6%
1.5%
3.5% 3.2% 3.0%
4.1%
5.8% 5.4% 5.3% 4.9% 4.8% 4.7% 4.6% 4.5%
140.287.362Social Media
CommunicationsProf - Entry
510.785.340Technologist -
Senior
410.448.210Category
ManagementDirector
500.628.360Research
Scientist - Entry
410.476.230Product/Brand
Mktg Supv
110.209.361Public Relations
Prof - Entry
120.244.221Employee AssistProgram (EAP)
Manager
320.428.360Web ApplicationsDeveloper - Entry
Med
ian
% C
hang
e in
Bas
e Sa
lary
2016 Change 2017 Change
Social Media Communications Professional – Entry had the greatest increase in median base salary (5.8%) for the second consecutive year; other positions ranged from 4.5% to 5.4%.
*Source: 2017 US Mercer Benchmark Database, effective March 1, 2017.
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S A L A R Y F R E E Z E S A T H I N G O F T H E PA S T
• 6.4% of Energy industry organizations froze salaries in 2017, down from 31% in 2016 and well off from a projected 2017 level of 15%.
• Participating organizations are projecting salary freezes to decrease even further in 2018.
Source: 2017/2018 US Mercer Compensation Planning Report, effective July 2017.
Mercer believes the decrease is being driven primarily by Energy organizations adapting to new business environments and achieving sustainable cost reductions across their organizations, deemphasizing the need to focus cost reduction efforts on human capital, which is unsustainable in the long-term.
1.9%
2.9%
3.4%
2.8%
4.0%
5.0%
1.1%
1.6%
1.9%
1.1%
2.0%
2.9%
0.7%
0.9%
0.9%
0.9%
1.2%
1.5%
0.0%5.0%10.0%15.0%20.0%
N O N - E N E R G Y I N D U S T R I E S
2018 (Projected)20172016
17.2%
19.4%
18.7%
6.7%
19.4%
19.4%
9.0%
6.0%
5.2%
3.7%
5.2%
6.7%
3.7%
1.5%
2.2%
1.5%
3.0%
3.0%
0.0% 5.0% 10.0% 15.0% 20.0%
E N E R G Y O N L Y
2018 (Projected)20172016
Executive
Management
Professional (Sales)
Professional (Non-Sales)
Office / Clerical / Technical
Trades / Production / Service
Salary freezes were less prevalent in 2017, stemming primarily from a significant decrease in the Energy industry.
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P R O M O T I O N A L I N C R E A S E S O R G A N I Z AT I O N S C O N T I N U E T O B U D G E T S E PA R AT E LY
All averages exclude 00’s. Some data points may not be visible due to similar values in more than one employee group.
Source: 2017/2018 US Mercer Compensation Planning Report, effective July 2017.
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2013 2014 2015 2016 2017
P R O M O T I O N A L I N C R E A S E S ( A S % B A S E S A L A R Y ) F I V E - Y E A R T R E N D
Executive
Management
Professional (sales)
Professional (Non-Sales)
Office /Clerical/Technical
Trades/Production/Service
47% of organizations continue to budget separately for promotions slightly down from 50%, with the average promotional budget of 1.1% of payroll.
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P R O M O T I O N A L I N C R E A S E S P R O F E S S I O N A L S C A R E E R S T R E A M D I F F E R E N T I AT I O N
N=19,879 incs
EXPERT LEVEL 7% ($8.7K)
SPECIALIST LEVEL 10% ($9.6K)
SENIOR LEVEL 12% ($8.7K)
EXPERIENCED LEVEL 11% ($6.4K)
ENTRY LEVEL
PROMOTED TO
Promotional increase % ($)
PROMOTED TO
PROMOTED TO
PROMOTED TO
The median change in base salary for professional-level incumbents promoted to the next level ranges from 7–12%.
*Source: 2017 US Mercer Benchmark Database, effective March 1, 2017.
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B A S E S A L A R Y A D J U S T M E N T B Y P E R F O R M A N C E D I F F E R E N T I AT I O N C O N T I N U E S
Source: 2017/2018 US Mercer Compensation Planning Report, effective July 2017.
0.1%
1.0%
2.7%
3.7%
4.7%
0.2%
1.0%
2.6%
3.6%
4.5%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
LOWEST
LOW
MIDDLE
NEXT HIGHEST
HIGHEST
AV E R AG E I N C R E AS E
2017 Actual
2018 Projected
PE
RF
OR
MA
NC
E R
AT
ING
S
88% of organizations use individual performance to drive base salary.
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S A L A R Y S T R U C T U R E A D J U S T M E N T S
• Over the past five years, we’ve seen an increasing trend in organizations adjusting their salary structures – 66% did so in 2013 up to 73% in 2017. That trend is expected to plateau in 2018.
• At 2.4%, the average structure adjustment this year was slightly above 2016 levels and is projected to be similar in 2018 at 2.2% with differences most prominent by industry.
74% Of organizations plan to adjust their salary structure in 2018.
2.7% Salary structure adjustments for the Banking/Financial Services and Life Sciences sectors in 2017.
Source: 2017/2018 US Mercer Compensation Planning Report, effective July 2017.
2 0 1 7 A C T U A L
2.7%
2.2%
2.3%
2.2%
2.5%
2.1%
2.7%
2.3%
2.0%
2.2%
2.5%
2.4%
2.4%
2.3%
2.4%
0.0%1.0%2.0%3.0%
Transportation
Healthcare Services*
Services (Non-Financial)
Retail & Wholesale
Other Non-Manufacturing
Other Manufacturing
Mining & Metals
Logistics
Life Sciences
Insurance/Reinsurance
High Tech
Energy
Consumer Goods
Chemicals
Banking/Financial Services 2.4%
2.2%
2.3%
2.2%
2.3%
2.2%
2.5%
2.3%
2.0%
2.2%
2.2%
2.3%
2.2%
2.1%
2.6%
0 . 0 % 1 . 0 % 2 . 0 % 3 . 0 %
2 0 1 8 P R O J E C T E D
S T R U C T U R E A D J U S T M E N T S B Y I N D U S T R Y
*Healthcare Services is an industry sector and is included in the Services (Non-Financial) Industry Super Sector
83% of organizations reported having a formal salary structure.
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91% 90%
75% 72%
51% 51%
32% 30%
78% 77%
59% 58%
40% 40%
19% 17%
2016 2017 2016 2017 2016 2017 2016 2017
Executive Management Professional Para-professional
% Eligible % Receiving
S H O R T - T E R M I N C E N T I V E S B Y C A R E E R S T R E A M * E L I G I B I L I T Y A N D R E C E I V E R S H I P
2016: N=1,507,673 Incs 2017: N=1,580,947 Incs *Each year of historical analysis (2016) is taken in isolation.
Incentive eligibility and receivership declined slightly across career streams, except for professionals which was unchanged year over year.
*Source: 2017 US Mercer Benchmark Database, effective March 1, 2017.
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62% 61%
17% 17% 6% 6% 2% 2%
50% 50%
11% 10% 2% 2% 1% 1%
2016 2017 2016 2017 2016 2017 2016 2017
Executive Management Professional Para-professional
% Eligible % Receiving
L O N G - T E R M I N C E N T I V E S B Y C A R E E R S T R E A M * E L I G I B I L I T Y A N D R E C E I V E R S H I P
2016: N=1,507,673 Incs 2017: N=1,580,947 Incs *Each year of historical analysis (2016) is taken in isolation.
Long-term incentive eligibility and receivership remained constant across all career streams.
*Source: 2017 US Mercer Benchmark Database, effective March 1, 2017.
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LOOKING AHEAD TO 2018 TALENT AND REWARD TRENDS
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L O O K I N G A H E A D T O 2 0 1 8 K E Y T R E N D S T O F O L L O W
Ta k i n g a H o l i s t i c V i ew o f To t a l
R e w ar d s
D e s i g n i n g R e w ar d s f o r a
D i ve r s e Wo r k f o r c e
G e t t i ng t h e Va l u e O u t o f C a r e e r F r a m ew or ks
C O M P E N S A T I O N B E N E F I T S
C A R E E R S W E L L - B E I N G
P U R P O S E
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C O M P E N S A T I O N B E N E F I T S
C A R E E R S W E L L - B E I N G
P U R P O S E
L O O K I N G A H E A D T O 2 0 1 8 T A K I N G H O L I S T I C V I E W O F T O T A L R E W A R D S
Define the employee experience that will make the right talent want to join, stay and deliver their best performance
CONTRACTUAL
EXPERIENTIAL
EMOTIONAL
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Create staying power through a U N I Q U E proposition with purpose • Connect me to our company’s mission and vision • Provide me with meaningful and fulfilling work • Help me feel like I belong here
Provide a COMPETITIVE compensation and benefits offering
• Pay me fairly and competitively • Reward my contributions • Provide programs to manage my health and
wealth
Create a DIFFERENTIATED experience • Support me with my career journey • Provide me with flexibility to make work “work” for me • Help me manage my physical, financial and emotional
well-being
L O O K I N G A H E A D T O 2 0 1 8 T A K I N G H O L I S T I C V I E W O F T O T A L R E W A R D S
C O M P E N S AT I O N B E N E F I T S
C AR E E R S W E L L - B E I N G
P U R P O S E
Shift to total value for an individual
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L O O K I N G A H E A D T O 2 0 1 8 TA K I N G H O L I S T I C V I E W O F T O TA L R E W A R D S
WHAT TO FOCUS ON
Audit your full value proposition to identify areas of improvement or optimization
Identify what makes your value proposition unique and differentiated to maximize impact
Get the contractual pieces of compensation and benefits right so your differentiators will shine
C O M P E N S A T I O N B E N E F I T S
C A R E E R S W E L L - B E I N G
P U R P O S E
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L O O K I N G A H E A D T O 2 0 1 8 D E S I G N I N G R E W A R D S F O R A D I V E R S E W O R K F O R C E — W H AT I S A P E R S O N A ?
EMOTIONS
NEEDS
INTERESTS
ATTRIBUTE CATEGORIES
44
SPENDING/ WEALTH
COMMUNICATION PREFERENCES
PERSONAL DATA –
GENDER, AGE, ZIP
BABY BOOMERS
GEN Y
MILLENIALS
G E N E R A T I O N A L T H I N K I N G I S O N E D I M E N S I O N A L
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L O O K I N G A H E A D T O 2 0 1 8 D E S I G N I N G R E W A R D S F O R A D I V E R S E W O R K F O R C E
S T A R T E R S L O N G - T E R M L O Y A L S
U R B A N A M B I T I O N S S T R I V E R S M A N A G E R I A L
C O R E F R E E
A G E N T S
Location demographics
Employee demographics Needs Interests Behaviors Communicatio
n preferences
Creating Personas
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Cluster and Turnover Analytics
Preliminary Insights and Recommendations
Follow up Analysis (Conjoint / Focus Group)
Data Collection and Configuration L O O K I N G A H E A D T O 2 0 1 8
D E S I G N I N G R E W A R D S F O R A D I V E R S E W O R K F O R C E
M A N A G E R I A L C O R E : Diverse financial needs depending on life stage / circumstances and events, Retained by rewards (focus on incentive pay); Vacation and benefits are only marginally related to turnover; Focused on health maintenance with health coverage predicting retention
L O Y A L S – E A R L Y T O L O N G T E R M : Diverse financial needs, but foundation building is key Need flexibility – unscheduled leaves and short commute drive retention; Not contributing to HSA predicts turnover; Concerned with recognition and short term incentives (less with career progression)
J U S T S T A R T I N G , U R B A N A M B I T I O N S , S U B U R B A N R E A L I S T S , A N D T R A N S I T I O N S : Need help to manage budget, prepare for emergencies, affordable health care. Need growth and recognition; Overtime and pay growth are key retention drivers; Contributions to 401(k) signal retention
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Examine the patterns and behaviors of your workforce through personas
Create flexibility in your programs to meet their needs
L O O K I N G A H E A D T O 2 0 1 8 D E S I G N I N G R E W A R D S F O R A D I V E R S E W O R K F O R C E
WHAT TO FOCUS ON
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L O O K I N G A H E A D T O 2 0 1 8 N E X T P H A S E F O R C A R E E R F R A M E W O R K S
Companies responding to these issues:
− “The organization of our jobs is in complete chaos”
− “We’re about to implement/upgrade our HRIS system, and this will reveal just how bad our job data is”
− “Our levels across functions or geographies are vastly inconsistent”
− “Career paths and promotion criteria are nonexistent or at best confusing”
− We need functional excellence in strategic functions (e.g. IT, Finance, Sales)
− “We have little confidence in our rewards benchmarking”
− “We want to do more effective workforce planning”
− “We are struggling with title inflation”
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L O O K I N G A H E A D T O 2 0 1 8 C A R E E R F R A M E W O R K S … A W O R T H Y I N V E S T M E N T
When well-built, a career framework will deliver multiple measures of ROI:
Better efficiency and effectiveness of the
workforce
Stronger employee engagement, productivity,
and retention
Improved business performance
More precise talent investments and greater
career mobility
Increased customer satisfaction and retention
Improved resource alignment
Future preparedness and greater agility
More meaningful metrics
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L O O K I N G A H E A D T O 2 0 1 8 U N D E R S T A N D I N G T H E I N T E R C O N N E C T I O N S
Efficiency
Innovation
Customer Service
Sales Results
Turnover
Team Performance
Stock Prices
Employees’ satisfaction ratings explained 22% of the difference in turnover.
Customer focused retail stores demonstrated a 10% greater year over year sales increase.
Stock prices in high morale companies increased 16% in one year. Low morale companies only increased 3% in the same year.
An increase in employee attitudes was linked to 28 million dollars in revenue due to increased customer satisfaction.
National Weather Service meteorologists working on highly engaged teams were more accurate at predicting tornadoes.
Employees who felt supported by their bosses were significantly more intellectually invested in their work..
Engaged steel mill employees required 34% fewer labor hours to produce a ton of steel.
Source: Mercer | Sirota 5 year rolling normative database, representing responses from over 5 million employees, from over 200 companies across 14 major industries, with representing diverse populations from over 90 countries.
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L O O K I N G A H E A D T O 2 0 1 8 T H E E N G A G E M E N T C H A L L E N G E
Most understand its importance, but few are effectively driving it.
$$$ millions of dollars have been invested by organizations over the past 5 years2
90% of HR Professionals say their leaders recognize the value of Engagement1
No Change virtually no change in
engagement levels have been realized over that time period3
8 out of 10 organizations have a formal Engagement program of one form or another1
Only 52% feel their organization does a
good job taking action on Engagement data1
Just 5 out of 10 HR Professionals feel their leaders
know how to build a culture of Engagement1
Sources: 1. The DNA of Engagement Report, The Engagement Institute 2014; 2. Study by Bersin by Deloitte, 2014; 3. Studies from Mercer and Sirota 2014
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L O O K I N G A H E A D T O 2 0 1 8 W E N E E D A N E W A P P R O A C H T O E M P L O Y E E R E S E A R C H : H E L P I N G E M P L O Y E E S T H R I V E
• The “Employment Deal” is rapidly evolving (new expectations, frequent change, alternative work arrangements, etc..)
A strategic measurement program designed to yield the right amount of data and insights at the right levels.
• New technology allows for easier, more frequent measurement across the employee life-cycle
T H E N E W W A Y F O R W A R D
• Current approaches treat engagement merely as a ‘metric’ and aren’t linked to business outcomes
A focus on evidenced-based management and linking survey results to critical business outcomes.
A comprehensive approach to data utilization and action follow up at the leadership, HR, and manager level.
More effective integration of survey datasets with other forms of talent and organizational data.
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BUSINESS CHANGE TALENT COST AND EFFICIENCY WORKFORCE PLANNING
RESTRUCTURING Clarify how jobs relate to new
organizational vision and strategy
ATTRACTION & BRAND Enhance recruiting/talent brand by offering compelling career program
TECHNOLOGY/HRIS Enhance implementation and administration of new HRIS
OPTIMIZE RATIOS Ensure number of employees at
different levels/families/streams fit business needs
M&A
Integrate or align job/career structures from acquirer and
acquired organizations
DEVELOPMENT Promote enhanced skills and competencies by clarifying
level/job expectations
TITLE PROLIFERATION Consolidate narrow and
inconsistent job titles
DIVERSITY & INCLUSION Promote effective legal and
cultural treatment of workforce segments
MODERNIZATION
Update job titles, content, skills, or families to fit new business
requirements (driven by new vision/strategy)
RETENTION Show employees the
organization’s commitment to their career progression
TITLE INFLATION Ensure titles and associated rewards are justified by job
content/value
ANALYTICS Manage workforce structure and
movement by fact
FUNCTIONAL EXCELLENCE Upgrade performance and
professional pride in IT, Finance, HR, Sales or other functions
PROGRESSION Enable increased workforce
mobility, succession, and bench strength
COMPLIANCE Avoid legal risk associated with
FLSA or other labor laws
FUTURE WORKFORCE Project the future workforce more
systematically and rigorously
L O O K I N G A H E A D T O 2 0 1 8 W H AT O R G A N I Z AT I O N S D O …
…using the foundation of Career Frameworks
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L O O K I N G A H E A D T O 2 0 1 8 N E X T P H A S E F O R C A R E E R F R A M E W O R K S
WHAT TO FOCUS ON
Update job architecture for rapidly changing functions like technology and marketing to reflect the changing nature of work
Refine/update job architecture as a precursor to a HCM cloud implementation to insure data integrity
Create engaging communications that allow employees to explore opportunities made clearer with a Career Framework
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QUESTIONS?
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