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Lasting relationshipsImproving Talent Retention with Performance and Reward

Management

JUNE 19, 2015 LE KINH LUAN

Reward and Retention

3 2015 Hay Group. All rights reserved

What is Total Reward?

COMMON EXAMPLES REWARD ELEMENTS DEFINITION

Work culture and climate

Leadership and direction

Career/ growth opportunities

Work/life balance

Job enablement

Recognition

Intangibles (typically

intrinsically valued)

Total reward

Cars

Clubs

DiscountsPerquisites / Perks

Total remuneration

Retirement

Health and welfare

Time off with pay

Statutory programsBenefits

Total compensation

Stock / equity

Performance shares Long-term incentives

Annual incentive

Bonus/spot awardsShort-term variable Total

cash Base salary

Hourly wage Base cash

Intangible

Tangible


Objectives of reward components

Component Objectives

Base Pay Recognize intrinsic value of job or individual;

Attract, retain and improve individual performance

Incentives Provide discretionary income;

Vehicle for capital accumulation

Benefits Recognize membership in the organization;

Provide protection and security

Recognition Drive organizational values;

Reinforce after-the-fact


Objectives of reward components

Component Objectives

Career/ growth

opportunities

Encourage development;

Increase motivation & productivity

Leadership and

direction

Provide clarity of company direction and objectives;

Drive employee performance

Work culture and

climate

Work/life balance

Provide performance-conducive workplace;

Bring job satisfaction & pride


Base

Pay

1950

Base Pay is King

Job-for-life mentality

Pay based on promotion

Base

Pay

1960

STI

Introduction of Variable Pay

Emphasis on market performance

Base

Pay

1970

STI

Increased Diversity

more alternative work arrangements

Base Pay

1980

STI

Performance Pressure

increasing performance orientation

increasing cost pressure

Base

Pay

1990

STI

LTI

Shareholder Value

focus on shareholders

mitigating the bias on isolated short-term focus

2000

Base

Pay

STI

LTI

Variable is King

Performance is everything

2010

Base

Pay

STI

LTI

BenefitsWorkLife

CompleteRewards

Rewardis morethan pay

Evolution of Rewards


Best value from employment cost

70

15

105

10

30

30

30

Base

Benefits

Incentives

Intangibles

Cost to

employer

Perceived value

to employee


Caring

Competitive base pay

Comprehensive benefits

Company-wide incentives

Work-life balanceFocus

on People

Low

Low

Focus on PerformanceHigh

Desired Mix of Remuneration Elements

High

Integrative

Competitive base pay plus benefits

Individual & team - based incentives

Robust performance-management system

Learning environment

Apathetic

Low base pay

Minimal benefits

Minimal training,

Limited communication

Demanding

Low base

Aggressive incentives

Rigid performance management targets

Performance and Retention


Performance management cycle

Frequency and quality of dialogue

Differentiation of Performance

Clarity of expectations

Dialogue

Dialogue

Team objectives, jobs, roles

Structure, culture &Organization goals

Strategy

Results


Different performance management stages

1. Focus on

performance

appraisal

More

sustainable

performance

2. Focus on

performance

management

3. Focus on strategy

alignment and

performance culture

Less

sustainable

performance

Dialogue

cycle

Financial metrics

Perform

ance xx

Reduce

Costs

Volume

Ave Price

ROCE

Image -

Intangibles

Grow

Revenue

COGS

SGA

Int. & Dep.

Tax

Brazil

US

Prod. mix

P1, P2,

IT assets

TONWC

Improve

P/E ratio

Strategic

Context

Performance

Model

DNA

Gap

Analysis

Alignment

of Systems


and their impact to employees

Focus and impact of performance management models

1. Focus on

performance

appraisal

More

sustainable

performance

2. Focus on

performance

management

3. Focus on strategy

alignment and

performance culture

Less

sustainable

performance

I need coaching to improve my

competencies and achieve the

objectives

I must meet

my targets

I am truly committed to

maximize my own, my

teams and my companys

performance


Performance management: Employee perspective

Employees are typically glad to put their focus/energy to what the

organization wants, if only they knew what that was!

Employees need and want feedback

Employees support what they help create

Employees are much more likely to achieve an objective if they have

been involved in setting it

To be acknowledged and rewarded for accomplished results


Performance management:Common challenges

Seen as an event vs. an ongoing process

Manager discomfort with coaching & feedback

Poor objectives / measures

Inflationary ratings and lack of differentiation

No discussion, then end of year surprises!

Purely HR driven. Viewed as a necessary-HR-evil

Seen as a process only used to fire people


Performance management: Review traps

Unplanned/unstructured

Based on gut feel

Focused on the person and not performance

Nasty surprises

Avoiding important issues

Tackling too many issues or dominated by one issue

Too little positive messages or praise

Destructive and personal criticism

Vague unhelpful feedback

Not enough listening and too much talking


Role of the Manager / Leader

Give attention

Give direction

Give trust

Give support Give guidance Give appreciation

Give direction


What the best companies do -Molding and mentoring

Source Hay Group Best Companies for Leadership Survey - 2013

Create opportunities at all levels for people to develop their leadership

capabilities

Actively managing a pool of successors for mission critical roles

Personally spending time coaching and mentoring others

Give extra consideration to the middle management pool, ensuring that the

emerging leadership pool can simultaneously focus on innovation and

operational excellence


What the best companies do -Rewarding strategically

While many companies still reward on results achieved, on hard

numbers now, not softer concepts like collaborating for a brighter

future, the best companies reinforce collaborative behaviors through

formal rewards and recognition programs

They reward operational excellence too, and are much more likely

than their peers to incentivize operational efficiency

Source Hay Group Best Companies for Leadership Survey - 2013


Contact:

Le Kinh Luan

[email protected]

Hay Group Vietnam

(84) 8 39141188

#Unit 1, Level 33 Bitexco Financial Tower,

2 Hai Trieu St., Ben Nghe Ward, Dist 1,

Ho Chi Minh City, Vietnam

www.haygroup.com/vn

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