PowerPoint Presentation · W I L L C R E AT E G R E AT E R P R E S S U R E O N R E T I R E M E N T...

3/8/2016

1

H E A L T H W E A L T H C A R E E R

TO TAL R E WAR DS 2 0 2 0 W H AT T O E X P E C T I N

T H E N E X T F I V E Y E A R S

Mary Ann Sardone, Atlanta

Lia Santos, Atlanta

March 11, 2016

© MERCER 2016 1

T O D A Y ’ S D I S C U S S I O N

External Factors Influencing Total Rewards – Mary Ann Sardone

Your Thoughts About the Future – Lia Santos

How Will Organizations Respond? – Lia Santos

What You Can Do to Prepare to Manage Total Rewards in 2020 – Mary Ann Sardone

Call to Action – Mary Ann Sardone

© MERCER 2016 2

© MERCER 2016 2

EXTERNAL FACTORS

INFLUENCING TOTAL

REWARDS

3/8/2016

2

© MERCER 2016 3

E X T E R N A L F A C T O R S I N F L U E N C I N G T O T A L R E W A R D S

A G I N G P O P U L A T I O N : W E A R E L I V I N G L O N G E R W H I C H

W I L L C R E A T E G R E A T E R P R E S S U R E O N R E T I R E M E N T

A N D S O C I A L P R O G R A M S

Source: United Nations – Population Division

65.9

42.3

78 67.5

82.7 74.4

MORE DEVELOPED REGIONS LESS DEVELOPED REGIONS

LIFE EXPECTANCY AT BIRTH 1950-1955

2010-2015

2045-2050

© MERCER 2016 4


A G I N G P O P U L A T I O N : S E N I O R S A R E W O R K I N G

L O N G E R I N T H E U S A

Source: US Social Security Administration

AGES 65-69 1980 2010

MEN 20% 26%

WOMEN 13% 23%

AGES 70-74 1980 2010

MEN 12% 16%

WOMEN 6% 12%

L A B O R F O R C E PA R T I C I PAT I O N R AT E

© MERCER 2016 5


M U L T I P L E G E N E R A T I O N S : M A N A G I N G D I F F E R E N T

S E G M E N T S R E Q U I R E S S E N S I T I V I T Y T O V A R Y I N G

G E N E R A T I O N A L N E E D S

Source: PEW Research Center.

GENERATION 2015 % OF

WORKFORCE ATTRIBUTE

Silents

(Born 1928-45)

2% Company loyalty…Dependable & Respectful

“Same company forever

Baby Boomers

(Born 1946-64)

29% Live to work…Loyal & Idealistic

“Office face time”

Gen X

(Born 1965-1980)

34% Work to live…Resourceful & Cynical

“Work should not define life”

Millennials

(Born 1981-1997)

35% Work my way…Entitled & Impatient

“Own careers, meaningful work”

3/8/2016

3

© MERCER 2016 6


M U L T I P L E G E N E R A T I O N S : I N C R E A S I N G D E S I R E F O R

B E N E F I T S C H O I C E A M O N G U S E M P L O Y E E S

Source: Mercer 2015 Inside Employee Minds Survey.

GENERATION PERCENT OF EMPLOYEES WANTING TO

REDUCE/INCREASE VALUE OF SOME BENEFITS

Silents

Baby Boomers

Gen X

Millennials

38%

48%

59%

70%

© MERCER 2016 7

Y O U N G E M P L O Y E E S D R I V I N G T H E ‘ H A P P Y B U T

L E A V I N G ’ T R E N D

EMPLOYEES AGREE WITH THE FOLLOWING: ALL

EES

DIFFERENCE:

MILLENNIALS

Promotions are generally given to the most qualified employees in my organization 43% +11

I trust senior management in my organization to communicate honestly 48% +9

Managers in my organization demonstrate concern for the well-being of employees 51% +9

I believe that I have sufficient opportunity for growth and development in my organization 51% +9

I would recommend my organization to others as a good place to work 58% +6

At the present time, I am seriously considering leaving my organization 37% +7

Source: Mercer 2015 Inside Employee Minds North America Survey

© MERCER 2016 8


H E A L T H C A R E : C U R R E N T T R E N D I N T H E U S A I S

U N S U S T A I N A B L E

Source: Mercer’s National Survey of Employer-Sponsored Health Plans.

8.0%

-1.1%

2.1% 2.5%

0.2%

6.1%

7.3%

8.1%

11.2%

14.7%

10.1%

7.5%

6.1% 6.1% 6.1% 6.3%

5.5%

6.9%

6.1%

4.1%

2.1%

3.9%

4.6%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Annual change in total health benefit cost per employee

W orkers' earnings

Overall inflat ion

Projected

3/8/2016

4

© MERCER 2016 9


R E T I R E M E N T : T R A D I T I O N A L P E N S I O N P L A N S I N T H E

U S A A R E F R O M A B Y G O N E E R A

Source: US Department of Labor.

PA R T I C I PAT I O N I N E M P L O Y E R R E T I R E M E N T P L A N S B Y T Y P E

( 1 9 7 9 - 2 0 11 )

7%

31%

DC PLANS

3%

28%

DB PLANS

© MERCER 2016 10


C O M P E N S A T I O N : I N C O M E G R O W T H D I V E R G E N C E I N

T H E U S A I S C A U S I N G S O C I A L U N R E S T A N D M I N I M U M

W A G E P R E S S U R E

Source: US Bureau of Labor Statistics and Economic Policy Institute.

TOTAL COMPENSATI ON GROW TH 1985- 2013

97%

MACHINE

OPERATOR

142% ACCOUNTANT

913% CEO

© MERCER 2016 11


U N I O N I Z A T I O N : T H E N E W B A R G A I N I N G A G E N D A I N

T H E U S A C A L L S F O R A L I V I N G W A G E A N D

C O R P O R A T E W E A L T H S H A R I N G

Source: US Bureau of Labor Statistics.

UNION MEMBERSHIP

33% 1955

11% 2014

3/8/2016

5

© MERCER 2016 12


D I V E R S I T Y : F U T U R E W O R K F O R C E W I L L B E L E S S

H O M O G E N O U S I N T H E U S A

Source: The National Center for Public Policy and Higher Education.

82%

10% 6%

1980

63% 13%

17%

6%

2020

D I V E R S I T Y O F W O R K I N G A G E P O P U L AT I O N

( 2 5 - 6 4 )

2%

© MERCER 2016 13


G L O B A L I Z A T I O N : T H E R E I S M O R E N E E D F O R G L O B A L

W O R K F O R C E M A N A G E M E N T A S W O R K I N G A G E

P O P U L A T I O N C O R R E L A T E S W I T H G D P A N D M I D D L E

C L A S S G R O W T H

Source: World Bank.

Working Age

Population

(15-64): 1985

through 2013 0%

USA

+20%

MEXICO

+15%

BRAZIL

-2%

UK

+13%

EGYPT

+9%

POLAND

+16%

CHINA

-9%

JAPAN

+29%

VIETNAM

+2%

AUSTRALIA

© MERCER 2016 14


G L O B A L I Z A T I O N : M A N A G I N G A G L O B A L W O R K F O R C E

R E Q U I R E S U N D E R S T A N D I N G C U L T U R A L

D I F F E R E N C E S

Source: Mercer’s What’s Working Survey (between 2,000 and 2,400 respondents per country)

USA UK China

Rank 1

Rank 2

Rank 3

Brazil Germany India

Rank 4

Rank 5

Rank 6

Base pay

Retirement savings/

pension plan

Type of work

Career advancement

Base pay

Training opportunit ies

Base pay

Type of work

Bonus / other incenti ves

Base pay

Type of work


Career advancement

Base pay

Supplemental retirement

savings plan

Career advancement

Base pay



Type of work Flexible work

schedule

Retirement savings/

pension plan Type of work

Low health care costs


Working for respectab le organizat ion


Flexible work schedule

Health insurance with broad coverage


Supplemental medical

insurance coverage



Paid time off Flexible work

schedule


3/8/2016

6

© MERCER 2016 15


G L O B A L I Z A T I O N : M A N A G I N G P A Y R E Q U I R E S

U N D E R S T A N D I N G O F L O C A L P A Y P R A C T I C E S , F O R

E X A M P L E , E X P E R I E N C E D P R O F E S S I O N A L S

Source: Mercer's Total Remuneration Surveys (TRS) and Structure of Salaries Around the World Report.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Base Salary Guaranteed Allowances

Variable Bonus & Commission Long-term Incentives

Benefits

CHINA

INDIA

GERMANY

UNITED KINGDOM

BRAZIL

UNITED STATES

© MERCER 2016 16


T E C H N O L O G Y : A P P S P R O V I D E A N E W I N S T A N T W A Y

T O S T A Y I N F O R M E D

RECOGNITION

NETWORKING

PAY

CULTURE

© MERCER 2016 17

EMPLOYERS THAT ALLOW PROFESSION ALS TO TELECOMMUTE


T E C H N O L O G Y : W O R K E N V I R O N M E N T S A R E T A K I N G

O N A N E W F L E X I B I L I T Y I N T H E U S A

Source: Mercer’s 1999 and 2014 Total Rewards Studies.

30% 1999

70% 2014

3/8/2016

7

© MERCER 2016 18


A C T I V I S T I N V E S T O R S : C O N T I N U E D P R E S S U R E O N

C O R P O R A T E R E S U L T S R E Q U I R E S R E T H I N K I N G T O T A L

R E W A R D S

BILL ACKMAN CARL ICAHN

© MERCER 2016 19

© MERCER 2016 19

YOUR THOU GHTS ABOUT

THE FUTURE

© MERCER 2016 20

Y O U R T H O U G H T S A B O U T T H E F U T U R E

T R U E O R F A L S E ?

BY 1. Total Rewards will be customized for each employee.

2. Employees will have more risk through incentive compensation.

3. Employer sponsored benefits will become more prominent.

4. Organizations will reduce training and development

expenditures.

5. Healthcare will primarily be provided through government

programs.

6. The workforce will have more contingent workers than today.

7. Performance management ratings will have disappeared.

8. Increased workplace flexibility will be the norm: hours, pays, etc.

9. All pay will be transparent.

10. Pay disparity between haves and have-nots will have decreased.

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAMQjRw&url=http://www.fairfaxchoralsociety.org/shop/barnes-noble-booksellers-9-00/&ei=0WIlVcSfHob3sAWC5YO4Bg&bvm=bv.90237346,d.b2w&psig=AFQjCNGyXoi9yyJyJqoQrY67aF1SuX9nZw&ust=1428599889529926

3/8/2016

8

© MERCER 2016 21

© MERCER 2016 21

HOW W ILL

ORGANIZ AT IONS

RESPOND?

© MERCER 2016 22

H O W W I L L O R G A N I Z A T I O N S R E S P O N D ?

C O N T I N U E D L A B O R F O R C E R A T I O N A L I Z A T I O N

PRE-1880 1880-1980

INDUSTRIAL

REVOLUTION

TODAY

THE FREE AGENT

• Independent

• Self-sufficient

• Apprentice model

• Big is better

• Asset-based

• Standard processes

• Small is nimble

• Knowledge-based

• Decentralized reward

system with individual

accountability

T H E artisan

T H E

employee T H E

free agent

© MERCER 2016 23


T A L E O F T W O W O R K F O R C E S : C O R E V S . C O N T I N G E N T

COMPANY

CONTINGENT

WORKERS

FREE AGENTS,

CONTRACTORS

CORE

WORKERS

NURTURED,

INDIVIDUAL

ACCOUNTABILITY

3/8/2016

9

© MERCER 2016 24


T H O U G H T F U L R E S P O N S E S : P E R S O N A L I Z E D E V P F O R

C O R E W O R K E R S

2020

Standardize Individualize

2015 YESTERDAY

Core employees viewed as

crucial for success

Confusion about employment

relationship Hire to retire

Individual accountability

for benefits, careers and workplace

Transactional employment

relationship Paternalistic

Personalized rewards

reflecting global cultures and multi-generations

Limited rewards flexibility One-size-fits-all

© MERCER 2016 25


P R O G R E S S I V E E M P L O Y E E R E L A T I O N S

2020

Authoritative Participatory

2015 YESTERDAY

Employees as volunteers Employees as necessary evil Employees as fungible

Anything goes Business casual Formal dress code

Universal paid time off Limited attendance flexibility Rigid attendance policies

Pay arrangements are open

similar to proxy statement disclosures

Apps provide an opportunity

for pay comparisons Pay is secret

Work and play over 24/7:

employee determines place and time

Broad-band allows work to

be conducted outside of the employer site

Work is performed at the

employer site

Unions support lack of

living wages

Unions on the continued

decline

Union prominent for major

employers

© MERCER 2016 26


C O M P E N S A T I O N F O R T H E N E W W O R L D O R D E R

2020

Internally-based Externally-based

2015 YESTERDAY

Employees as business

partners Employees desire fixed pay Limited employee risk

Market pay within global

levels

Market pay becomes

common practice

Base pay linked to internal

equity (job evaluation)

Fixed pay is at P25-50 with

P50+ coming from variable cash / equity compensation

Most organizations target

pay between P25-P75 Pay positioning is at market

Significant variable pay

opportunity is the norm

Most organizations offer

variable pay

Variable pay is limited to

executives and sales

3/8/2016

10

© MERCER 2016 27


D O - I T - Y O U R S E L F B E N E F I T S

2020

Company risk Employee risk

2015 YESTERDAY

Individual accountability

through self management

Organization role continues

to decline Paternalistic

Organizations provide

group purchasing power

Cost shifting and

abandonment of employee benefits

Organization provided health

care, retirement, etc.

401(k) plans with and

without employer match Defined contribution

Defined benefit pension

plans

Self health management Hit or miss health

engagement

Employees are passive

health recipients

© MERCER 2016 28


A C T I V E T A L E N T M A N A G E M E N T

2020

Passive talent management Aggressive talent management

2015 YESTERDAY

Constant struggle to retain

skills and millennials Labor markets tightening Unlimited supply of talent

Continuous training and

development to support EVP

Buy experienced talent New hire training

Well defined lattice career

growth

Career progression being

defined Hierarchical career path

Frequent performance

assessments with annual ratings

Healthy experimentation Annual performance

management process

Leadership is multi-cultural Global mobility is

encouraged

Leadership reflects home

country

© MERCER 2016 29


D I V E R S I T Y A N D P A Y E Q U I T Y A R E R E A L I T I E S

2020

Good idea Mandatory practices

2015 YESTERDAY

Employers match the multi-

cultures that they serve

Organizations struggle to

meet goals

Diversity goals in most

organizations

Analytics drives good

decision making Experimentation is rampant

Employers don’t know how to

develop diverse talent

Pay fairness is assured

through analytics

Pay inequality is a leadership

concern Pay equity is afterthought

3/8/2016

11

© MERCER 2016 30

© MERCER 2016 30

W HAT YOU CAN DO TO

PREPARE TO M ANAGE

TOTAL REWARDS IN 2020

© MERCER 2016 31

W H A T Y O U C A N D O T O P R E P A R E T O M A N A G E T O T A L

R E W A R D S I N 2 0 2 0

M U L T I P L E P E R S P E C T I V E S : T H I N K H O L I S T I C A L L Y

EMPLOYER

PERSPECTIVE

Compensation Benefits Careers W ork/Life

EMPLOYEE

PERSPECTIVE

My value today My f inancial security

and protect ion My future value My quality of life

© MERCER 2016 32

Imp

ort

an

ce

Higher

Lower

Satisfaction Lower Higher

W H A T Y O U C A N D O T O P R E P A R E T O M A N A G E

T O T A L R E W A R D S I N 2 0 2 0

E M P L O Y E E P R E F E R E N C E S : U N D E R S T A N D I N G

I M P O R T A N C E V S S A T I S F A C T I O N

401k plan

Medical Cvg

Vacation

Pension

Flexible Work Arrgmnts

STD/LTD

Dental Cvg Sick Days

Life Insurance Retiree Medical

Wellness Progs Educ Asst

Financial Educ

3/8/2016

12

© MERCER 2016 33


R E W A R D S I N 2 0 2 0

S E G M E N T A T I O N : T A I L O R I N G P R O G R A M S T O

B U S I N E S S A N D W O R K F O R C E N E E D S

JOB LEVEL

PERFORMANCE

RATING

GEOGRAPHY

JOB FAMILY

GENERATION

BUSINESS MODEL

/ LIFE CYCLE

YESTERDAY 2015

2020

© MERCER 2016 34


R E W A R D S I N 2 0 2 0

D E C I S I O N M A K I N G : M O V I N G F R O M “ I T H I N K ” T O “ I

K N O W ”

LESS

POWERFUL

MORE

POWERFUL measurement continuum

Anecdotes

Reactive Checks

Ongoing Reports

Benchmarks

Correlat ions

Simulat ions and

Forecast ing

Predict ive / Causal

Modeling

© MERCER 2016 35

HEAD COUNT

Current Manpower

Predicted Future Headcount

Future Demand


R E W A R D S I N 2 0 2 0

W O R K F O R C E P L A N N I N G : A N T I C I P A T I N G T H E F U T U R E

FUTURE GAPS – SUPPLY AND DEMAND

3/8/2016

13

© MERCER 2016 36


R E W A R D S I N 2 0 2 0

W O R K F O R C E P L A N N I N G : U N D E R S T A N D I N G T H E

I N T E R N A L L A B O R M A R K E T

Total Hires Total Exits

100 136 Support Staff

500 300 Professional

150 50 Manager

30 12 Director

8 7 Executive

20

60

180

50

© MERCER 2016 37

CURRENT

ROLE

FUTURE OPPORTUNITIES

G RO UP

D

G RO UP

F

G RO UP

G

G RO UP

B

G RO UP

E

ROLE

PROFILE

G RO UP

A

ROLE

PROFILE

G RO UP

C

ROLE

PROFILE

D E V E L O P I N G A T O T A L R E W A R D S 2 0 2 0 S T R A T E G Y

C A R E E R P A T H S : P R O V I D E C L A R I T Y A R O U N D

P R O G R E S S I O N O P P O R T U N I T I E S

© MERCER 2016 38

• What does or should differentiate it from

competing employment opportunities?

• How do employees place VALUE on the current rewards

package?

• What are the labor and related rewards environments in which the COMPANY COMPETES?

• How do they influence or constrain rewards practices that the company may wish to adopt?

• What are workforce needs in terms of structure, behavior, capabilities

and performance?

• How should the rewards programs be designed

and delivered in order to secure those workforce

OUTCOMES?

• Can the rewards programs designed to support the desired strategy be provided at an AFFORDABLE and SUSTAINABLE cost?

• If not, how should they be modified to be financially viable?

C O S T P E R S P E C T IV E

E MP L O YE R P E R S P E C T IV E

E MP L O YE E P E R S P E C T IV E

E X T E R N A L P E R S P E C T IV E

D E V E L O P I N G A T O T A L R E W A R D S 2 0 2 0 S T R A T E G Y

T H E R I G H T Q U E S T I O N S

3/8/2016

14

© MERCER 2016 39

Compensation Benefits Careers

BASE PAY ANNUAL

INCENTIVES

LONG-TERM

INCENTIVES

GROUP

BENEFITS RETIREMENT PERQUISITES

PERFORMANCE

MANAGEMENT

WORK/LIFE

BALANCE

WORKFORCE

PLANNING/

CAREER

PATHING

ROLE OF

REWARD

ELEMENT

Attract and

retain;

reward

building

skills

Reward

individual,

business unit

and corporate

performance

Link to

shareholder

value creation

Personal risk

management

Wealth

accumulation

Tax

efficiency

Goal setting/

accountability

Compelling

place to work

Adequate

supply of

talent

COMPETITIVE

POSITIONING

25th

percentile

Base + STI =

75th percentile

Base + STI +

LTI = 90th

percentile

Leading

edge design;

50th

percentile

50th

percentile

Market

practices

Support “build”

talent strategy

Environment

difficult to

match by

competitors

Balance pay

and benefits

with career

opportunities

IMPACT OF

POSITIONING

Risk

tolerance

Performance

orientation

Rewards long-

term growth

Desirable

employer

Facilitate

orderly

retirement

Employment

brand

Focused

efforts

Attraction and

retention of

qualified staff

Support

“build” talent

strategy

METRICS

Acceptance

rate

turnover;

appropriate

skills

Business

results

Stock price

growth

Cost and

value

delivered

Retirement

income

adequacy;

financial

management

Cost;

commitment

index

Scorecard

results

Commitment

index;

turnover

Percentage

of outside

hires


R E W A R D S I N 2 0 2 0

D E V E L O P I N G A T O T A L R E W A R D S S T R A T E G Y :

S A M P L E B L U E P R I N T

© MERCER 2016 40

© MERCER 2016 40

CALL TO ACTION

© MERCER 2016 41

C A L L T O A C T I O N

W H A T C A N Y O U D O ?

> Approach the future of Total Rewards based on ability to influence desired

outcomes in terms of retention, engagement, productivity and results.

> Make holistic decisions based on your specific situation, considering pay,

benefits, careers, and work/life.

> Utilize fact-based predictive modeling decision making.

> Go beyond what others are doing – company-specific best fit vs. best

practices.

> Focus on people, the last frontier for building a sustained competitive

advantage.

> Communicate what is important.

> Define Total Rewards program governance to ensure consistent

application of policies and procedures.

PowerPoint Presentation · W I L L C R E AT E G R E AT E R P R E S S U R E O N R E T I R E M E N T...

Documents

Transcript of PowerPoint Presentation · W I L L C R E AT E G R E AT E R P R E S S U R E O N R E T I R E M E N T...