SMART-LINK CONSULTANCY

REMUNERATION AND REWARDS SUMMIT

2014

PREMIER HOTEL OR TAMBO

CHARLES COTTER

11 JUNE 2014 (DAY 1)

INTRODUCTION AND INTRODUCTORY ACTIVITY (DIAGNOSIS)

WORKSHOP A: STRATEGIC TOTAL REWARDS MANAGEMENT (STORM)

WORKSHOP B: UTILIZING STORM TO ATTRACT AND RETAIN THE BEST TALENT

WORKSHOP C: UTILIZING STORM TO ENGAGE AND MOTIVATE EMPLOYEES TO ACHIEVE IMPROVED LEVELS OF PRODUCTIVITY

WORKSHOP D: BENCHMARKING, MEASURING AND EVALUATING THE IMPACT OF STORM

WORKSHOP OVERVIEW (DAY 1)

Refer to pages 6-19 of the Delegate hand-out

Definition of Rewards Management

Objective of Rewards Management

Types of rewards

The components of Total Rewards

The evolution of Rewards Management

Best Practice Rewards Management

INTRODUCTION

TYPES OF REWARDS

THE EVOLUTION OF REWARDS MANAGEMENT

BEST PRACTICE REWARDS MANAGEMENT PRINCIPLES

#1 Your organization offers competitive and market-related (above market-related) remuneration packages to employees (prospective employees).

#2 Your organization adequately and accurately recognizes the knowledge, skills, competencies and experience of employees and rewards them accordingly.

#3 Your organization applies fairness in methods, procedures and practices for compensating, recognizing and rewarding employee contributions.

#4 Your organization applies equitable methods, procedures and practices for compensating, recognizing and rewarding employee contributions.

#5 Your organization promotes transparency through sharing information about their compensation practices, pay rates criteria and how they are determined – especially at the managerial and executive levels.

DIAGNOSIS OF CURRENT REWARDS MANAGEMENT PRACTICES

#6 Your organization applies consistency (standardization) in the allocation of remuneration and rewards e.g. performance bonuses and incentives etc., thereby serving as a retention and motivation mechanism.

#7 Your organization’s applies objectivity throughout the performance management process, as the pre-cursor and chief determinant of performance bonuses.

#8 Your organization has an efficient, user-friendly and stream-lined job evaluation and job grading process.

#9 The value of remuneration and rewards offered by your organization is affordable (feasible) promoting business sustainability and continuity.

#10 Your organizations’ rewards system is effective in that to directly contributes to and enables the achievement of business management goals e.g. higher levels of retention, productivity and performance.

DIAGNOSIS OF CURRENT REWARDS MANAGEMENT PRACTICES

Contextual introduction to STORM

The strategic imperative of Rewards Management

Defining the fundamental concepts

Creating/Developing a reward strategy

Implementing Strategic Rewards Management

WORKSHOP A: STRATEGIC TOTAL REWARDS MANAGEMENT (STORM)

An effective total rewards strategy enables organizations to deliver the right amount of rewards, to the right people, at the right time, for the right reason.

Best Fit vs. Best Practice vs. Hybrid (integration)

Reward strategies must be anchored in business reality to be effective. Which means linking it to your business strategy, the needs of your employees as well as your organization.

“Effective reward is about finding the right reward programs for the strategic direction of your business.” (Tom McMullen)

Appropriate Total Rewards Framework

CONTEXTUAL INTRODUCTION TO STORM

“Effective reward is about finding the right reward programs for the strategic direction of your business.” (Tom McMullen)

Strategic reward management involves the formulation and implementation of an equitable reward system that is congruent with the organization’s strategic objectives.

The reward system must be congruent with the management style and other organizational systems, in particular, communication and decision-making. (Lawler)

To be effective, a total rewards package must tie together the organizational strategy, workforce strategy, and HR strategy.  Total rewards should align each employee with the organizational objectives.

THE STRATEGIC IMPERATIVE OF REWARDS MANAGEMENT

Strategic reward is based on the design and implementation of long-term reward policies and practices to closely support and advance business or organizational objectives as well as employee aspirations.

The concept of total reward encompasses all aspects of work that are valued by employees, including elements such as learning and development opportunities and/or an attractive working environment, in addition to the wider pay and benefits package.

Links between strategic and total reward

DEFINING THE FUNDAMENTAL CONCEPTS

COMPONENTS OF TOTAL REWARD STRATEGY

Holistic

Best fit

Integrative

Strategic

People-centred

Customized

Distinctive 

Evolutionary

CHARACTERISTICS OF TOTAL REWARD SYSTEM

Advantages/Benefits:

Economic: Creates affordable and sustainable costs

Financial: Generates maximum return on the reward program investment

Strategic and Performance-related: Connects with the business strategy to create a high performance culture

Reputational: Supports the employment brand

BUILDING A BUSINESS CASE FOR STORM

Costs/drawbacks:

Management: Managerial apathy

Cultural: Organizational cultural resistance and readiness

Provision: The supply of resource-constrained rewards (across the board)

Weighting: Attempting to measure the comparative value of certain rewards

BUILDING A BUSINESS CASE FOR STORM

Step 1: Define the context and issues (environmental analysis)

Step 2: Set the total reward strategy (guiding principles and reward priorities)

Step 3: Set reward change agenda (status quo relative to desired end state)

Step 4: Implementation overview

Step 5: Design individual plans

Step 6: Implement

Step 7: Measure and manage

Outcome: A cohesive and comprehensive reward strategy that is both value-oriented and cost-effective and aligned with the organization's business strategy.

CREATING/DEVELOPING A REWARD STRATEGY (7-STEP PROCESS)

Develop a business case for Strategic Total Rewards Management (STORM). Do the benefits outweigh the costs? Justify and motivate your viewpoint.

SYNDICATE GROUP LEARNING ACTIVITY 1

Total Rewards Statement (TRS)

Strategic Talent Attraction:

Employee Value Proposition (EVP)

Employer Branding

WORKSHOP B: UTILIZING STORM TO ATTRACT AND RETAIN THE

BEST TALENT

TRS PROCESS FLOW

Organizations need to communicate the total rewards provided to each individual employee, demonstrating the organization's investment in ensuring employees are competitively rewarded for their skills, contribution and performance.

The rewards package that you provide to your employees is among your organization's most significant investments.

Total reward statements may help reduce turnover and increase retention rates

A Total reward statement provides employees with a personalized document that communicates the overall value of their financial rewards such as base pay, incentives and employee benefits.

Total reward statements can also be used to reinforce the communication of less tangible benefits such as work/life programs, learning and development and flexible work arrangements.

TOTAL REWARDS STATEMENTS (TRS) – RATIONALE AND VALUE

To attract, motivate and retain employees.

Differentiation: To reinforce your brand and set yourself apart from other organizations.

Raise awareness and appreciation by focusing attention on the benefits you offer.

To reduce the cost of benefits administration by providing an employee self-service tool that results in fewer phone calls thereby enabling HR to focus on more strategic initiatives.

OBJECTIVES OF TRS

BENEFITS OF TRS

Objective: Magnetically attracting the “Cream of the Crop”

Objective: Facilitating an optimal Person-Environment (P-E) fit

Strategy: Developing, articulating and advocating of a compelling Employee Value Proposition (EVP)

Strategy: Employer Branding – (re) positioning as an “Employer of Choice”

STRATEGIC TALENT ATTRACTING

A resourcing strategy is concerned with shaping what an organization has to offer to people to join and stay in the organization. (Armstrong, 2011)

EVP is a statement of what an organization will provide for people that they will value - why the total work experience at their organization is superior to that at other organizations.

The EVP is an employee-centered approach that is aligned to existing, integrated workforce planning strategies because it has been informed by existing employees and the external target audience.

Key Selling Points (KSP): Host of financial and non-financial benefits

Non-financial benefits:

The attractiveness of the organization Responsibility – corporate conduct, ethics and CSR/CSI Respect – diversity and inclusiveness Work-life balance Opportunities for personal and professional growth

EMPLOYEE VALUE PROPOSITION (EVP)

COMPONENTS OF VIABLE EVP

HISTORICAL EVP’S

“At Campbell Arnott’s, we are committed to attracting a diverse group of talented employees and providing all our team members with development opportunities and a culture in which they can flourish.”

CONTEMPORARY EXAMPLE: CAMPBELL ARNOTT’S

Unique Selling Points (USP) - Employer brand that is unique and special

Creation of a Brand image of the organization for prospective employees

Influenced by the reputation of the organization

Creating an Employer Branding strategy

EMPLOYER BRANDING

Analyze what ideal (preferred) applicants need and want

Establish how far core values of the organization support the creation of an attractive brand and ensure these are inculcated into organizational value system

Define the features of the employer brand on the basis of examination and review of each of the areas that affect the perception of people e.g. quality of management

Benchmark the approaches of top performing companies as a means of improvement

Pragmatic approach: be honest and realistic

CREATING AN EMPLOYER BRANDING STRATEGY

THE LINK BETWEEN TALENT ATTRACTION AND EMPLOYEE ENGAGEMENT

For a defined organization, craft and develop the following key statements as a form of attracting and retaining top talent:

Total Rewards Statement (TRS)

Employee Value Proposition

Employer brand

SYNDICATE GROUP LEARNING ACTIVITY 2

Employee motivation

Recognition and praise

Employee Engagement

WORKSHOP C: UTILIZING STORM TO ENGAGE AND MOTIVATE EMPLOYEES TO

ACHIEVE IMPROVED LEVELS OF PRODUCTIVITY

“INSIDE JOB” - A motive is an inner drive, stimulus or incentive to satisfy a human need of some kind.

“CUSTOMIZATION” - People differ from one another and no one has the same needs so people will be motivated differently. “Different strokes for different folks.”

“CITIZEN KANE” – Employees who experience a heightened sense of emotional connection with the organization, demonstrate higher levels of motivation.

“MONEY MYTH” – “financial rewards are more of a mover than a motivator”

CONVENTIONAL WISDOM REGARDING MOTIVATION – FACT OR FICTION?

Business Leaders and Managers need to transform from applying Compliance-driven (extrinsic) motivational strategies to Commitment-driven (intrinsic) strategies

Business Leaders and Managers need to adopt a targeted (rifle) approach and not a hit and miss (shotgun) approach to employee motivation – “one size fits all” is inappropriate

Business Leaders and Managers need to transform employees into associates (sense of ownership) and brand/company ambassadors

Business Leaders and Managers need to develop a bouquet of recognition-oriented strategies and de-emphasize the value of monetary rewards

MANAGEMENT LESSON – CONVENTIONAL WISDOM REGARDING MOTIVATION

WHAT MOTIVATES EMPLOYEES?

#1 Job and Organizational Cultural Fit

#2 Conducive Work Environment

#3 Policies, procedures and work practices

#4 Trust and Relationship Management

#5 Meaningful Work and Responsible Tasks

DIAGNOSE CURRENT LEVELS OF MOTIVATION - GENERIC

MOTIVATIONAL STRATEGIES

#6 Participatory Management and Leadership practices

#7 Performance Feedback and Recognition

#8 Customized Rewards

#9 Career, Learning and Development opportunities

#10 Employee Engagement

DIAGNOSE CURRENT LEVELS OF MOTIVATION - GENERIC MOTIVATIONAL

STRATEGIES

Only 18% of employees are satisfied with their jobs

Only 10% of employees look forward to going to work everyday

70% of the workforce are more motivated by (favour) non-monetary rewards

79% of employees who resign cite a lack of appreciation as the main reason

Only 12% of employees actually leave for more money

MOTIVATION – INTERESTING STATISTICS

20% of employees are actively seeking new jobs

83% of executives and 84% of employees rank having engaged and motivated employees as the top factor that substantially contributes to a company’s success

There is a correlation between employees who say they are “happy at work” and feel “valued by their company,” and those who say their organization has a clearly articulated and lived culture

MOTIVATION – INTERESTING STATISTICS

MOTIVATIONAL APPROACHES

CARROT STICK

EMPLOYEE

MANAGER

(WORK) ENVIRONMENT

3 KEY COMPONENTS OF MOTIVATION

EMPLOYEE

ENVIRONMENT

MANAGER

PERCEPTUAL GAP

FUN

OPPORTUNITIES FOR GROWTH

RECOGNITION

EMPLOYEE ENGAGEMENT

ESCALATING MOTIVATION TO THE F-O-R-E

90% of employees find a fun working environment very/extremely motivating

Collegial working relations - 80% of employees value working for people that they like

Technology-enabled Gamification - 70% of Forbes Global 2000 companies are using gamified platforms as a way to boost employee engagement, retention, and revenues

Objective: Design an “Industrial Playground”

Conducive and Positive Work Environment

Celebrating work success and creating corporate “Rituals”

FUN

Retention - 76% of employees cited opportunities for growth were the top reason why they stayed in organizations. In every age and demographic category, opportunities for growth were more of a motivating reason to stay in an organization than pay increases

Managers should apply a strengths-based approach to employee development

Establish a Learning Organization, climate and culture

Learning, Development and Empowerment Opportunities

Career Development and Advancement

Mentoring and Coaching

Creativity and Innovation through Action Learning

Collaboration

OPPORTUNITIES FOR GROWTH

40% of employees who do not meaningfully feel recognized will not go above and beyond their formal work responsibilities to get the job done. 86% of those who feel recognized will.

83% of employees cited recognition for contributions is more fulfilling than rewards and gifts.

Type of recognition matters – 68% favoured individual above team-based recognition; 88% found recognition from their managers as very/extremely motivating and 76% found praise from peers as very/extremely motivating.

Recognition strategies

RECOGNITION - STATISTICS

RECOGNITION - STATISTICS

Create a Fabulous Work Environment with Praise

Employees Need Praise

What Praise Can Give Employers

How to Give Praise

THE POWER OF PRAISE AND RECOGNITION

Engagement happens when people are committed to their work and the organization and motivated to achieve high levels of performance

Engaged employees at work are positive, interested in and even excited about their jobs and are prepared to put discretionary effort into their work beyond the minimum to get it done

Say

Stay

Strive

DEFINING EMPLOYEE ENGAGEMENT

The Global Assessment Trends Report (GATR) (2013 Global Assessment Trends Report - SHL.com) identifies the top priorities for HR globally as follows: Engagement and retention (55%)

71% of employees are disengaged

Highly engaged employees are 26% more productive than disengaged employees

Companies earned 13% greater total returns for shareholders over a 5-year financial period

90% of leaders think an engagement strategy will impact business success

Only 40% of the workforce knew about their company’s goals, strategies and tactics

EMPLOYEE ENGAGEMENT – INTERESTING STATISTICS

71% of employees are disengaged:

45% are not engaged

26% are actively disengaged

29% of the workforce are engaged

CURRENT DEGREE OF EMPLOYEE ENGAGEMENT

Engaged29%

Not Engaged45%

Ac-tively dis-en-

gaged 26%

THE VALUE OF EMPLOYEE ENGAGEMENT

According to Gallup (2013), employers can reap the following benefits of an engaged workforce:

202% better performance$11 billion is lost annually due to employee turnover Direct correlation to 9 key business performance

indicators

BENEFITS OF EMPLOYEE ENGAGEMENT

Are employees COMMITTED to the organization?

Are employees proud to work for the organization – company/brand ambassadors? CITIZEN

Do employees put forth extra/discretionary effort to help the organization and their colleagues achieve business objectives? COMRADE

Are employees enthusiastic and passionate about their work/jobs? CREATOR

Are employees CONNECTED (intellectually and emotionally) to their work/jobs – offer value add?

MEASUREMENT OF EMPLOYEE ENGAGEMENT - 5c INDICATORS

According to Dale Carnegie research:

Relationship with the immediate supervisor

Senior Leadership’s ability to lead the company and communicate its goals

Organizational Pride - vision of organization and corporate social responsibility

KEY DRIVERS OF EMPLOYEE ENGAGEMENT

Work

People

Opportunities

Total rewards

Company practices

Quality of Work Life

KEY DRIVERS OF EMPLOYEE ENGAGEMENT

According to Gallup (2013), three (3) strategies to accelerate employee engagement are:

Select the Right People and Managers

Develop employees’ strengths

Enhance employees’ well-being

STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT

According to Armstrong (2011), the five (5) strategies to enhance employee engagement are:

The work itself

The work environment

Leadership

Opportunities for personal growth

Opportunities to contribute

STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT

According to Dale Carnegie research:

Senior managers must articulate the company vision in a clear and compelling way

Senior managers need to define organizational goals and objectives in realistic, clear and attainable manner

Leaders should project a positive manner with employees, and be accessible

Leaders should ensure that employees understand how their role contributes to the overall company success

Senior leaders should create a climate of trust and encourage managers to demonstrate that they care about employees (on personal level)

LEADERSHIP STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT

According to Dale Carnegie research:

Managers should determine how each employee’s personal motivators align with organizational goals

Managers should praise publicly, reprimand privately and coach team members who demonstrate disengaged behaviour

Employees should be encouraged to communicate clearly and provide input into the company vision

Direct managers should foster healthy relationships with employees

Senior leadership should continuously demonstrate that employees have an impact on their work environment

Managers should show that employees are valued as true contributors, giving them a sense of empowerment

STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT

According to Gallup (2013) research, the best organizations deeply integrate employee engagement into the following four areas:

Strategy and Leadership Philosophy

Accountability and Performance

Communication and Knowledge Management

Development and on-going Learning Opportunities

BEST PRACTICE EMPLOYEE ENGAGEMENT

Describe which motivational strategies can be applied in your organization to reward employees and boost performance and productivity.

Describe which employee engagement strategies can be applied in your organization to enhance retention and productivity levels.

SYNDICATE GROUP LEARNING ACTIVITY 3

Benchmarking STORM

Annual STORM reviews

Best practice guidelines and principles

WORKSHOP D: BENCHMARKING, MEASURING AND EVALUATING THE

IMPACT OF STORM

Question: How do you know if your rewards program is offering the right levels of total remuneration to recruit and retain staff?

Benchmarking offers a useful tool to answer this question. Benchmarking aims at improving performance - a search that never ends. Therefore, benchmarking is not a single action but a continuous, cyclical process.

Performance Assessment

Performance Improvement

BENCHMARKING

P-D-C-A BENCHMARKING CYCLE

REMUNERATION REVIEW PROCESS

A clear, executable remuneration philosophy aligned with business strategy

Employee-centricity

Investment in front-line manager capability

Well thought-through decision-support data and tools

A continual process, not a one-off project 

5 KEY FOCUS FOR STRONG REMUNERATION EXECUTION (AON HEWITT)

Review your programs and rewards frequently to keep them aligned with corporate goals as well as employee expectations.

Measure the effectiveness and impact of your reward and recognition programmes.

Create a performance measurement framework so you can measure the impact of your reward and recognition programme.

Track the performance metrics that form the basis of your reward structure and conduct surveys to gain qualitative feedback from employees and supervisors.

24% of participants do not measure reward and recognition programme success.

Measure your reward and recognition programme impact and improve based on your results.

EVALUATION GUIDELINES

METHODS FOR MEASURING REWARD AND RECOGNITION PROGRAMME SUCCESS

Explain the best practice methods and process that your organization will apply in the benchmarking, reviewing and measuring of your Strategic Total Rewards Strategy.

SYNDICATE GROUP LEARNING ACTIVITY 4

Key points

Questions

SUMMARY

CHARLES COTTER

084 562 9446

charlescot@polka.co.za

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TWITTER: Charles_Cotter

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