survey for reward mgmt

7/29/2019 survey for reward mgmt

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CreatingaSustainable

RewardsandTalentManagementModel

Resultsofthe2010GlobalTalentManagementandRewardsStudy


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TableofContents

ExecutiveSummary 2

TheBusinessContext 3

TheCurrentLandscapeofRewardsand

TalentManagement 10

TalentManagementStrategyandEmphasis 14

PromotingEffectiveTalentManagementThrough

EmphasisandConsistency 16

GlobalConsistency 17

Organization-WideJobEvaluation

andJobLeveling 18

ImplicationsoftheCurrentLandscapeofRewards

andTalentManagement 20

AbouttheSurvey 22

KeyTerms 23

FeaturedFigures

Figure5.Employersrecognizesomeoftheadverse

impactsofcostcutting 6

Figure6.Employersfailtorecognizetheimpact

ofchangestoemployeewell-beingontheirability

toattractemployees 6

Figure12.EuropeanandBraziliancompaniesreport

greatestmeritdifferentiationnodifferencesin

differentiationbyrmperformance 12

Figure14.VerylittledifferentiationofSTIacross

regions,nancialperformancegroups 14

Figure16:Organizationsthatincreasetheir

emphasisonaspectsoftalentmanagementare

morelikelytondthemveryeffective 16

Figure19:Globalconsistencyhelpscompanies

becomemoreeffectiveintheirotherprograms 19

Figure20:Pay,bonusesandtrainingbudgetsare

theprogramsorganizationsaremostlikelyto

changeifeconomicorbusinessconditionschange

substantiallyineitherdirection 20

2010

Global Talent Management and

Rewards Survey Report


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2 towerswatson.com

Companies were aced with a number o challenges

during the economic crisis and needed to:

Cut costs and manage any subsequent costincreases

Reduce the rate o increase in the value o

total rewards, oten to levels where the real or

absolute value o total rewards declined or many

employees

Reevaluate their business strategies

Now, as we emerge rom the recession, companies

ace additional challenges and need to:

Develop new leadership competencies or theirexecutives

Respond to increasing demands by employees or

security, stability and opportunity that are difcult

to satisy

Conront the complexities caused by a lack o

career advancement opportunities or top talent

and employees with critical skills

Going orward, in order to attract, retain and engage

their employees, organizations need to think about

developing a sustainable employee value proposition

one that is exible enough to be vital throughout

the economic cycle. Employers can take manyspecifc steps to improve their reward and talent

management programs by:

Dierentiating rewards between top perormers

and average perormers

Developing a ormal employee value proposition

and communicating it to employees

Introducing organization-wide consistency in

reward and talent management programs

Developing business-centered leadership

competencies that support their strategy

Increasing their emphasis on perormance

management, leadership, and employee learning

and development

ExecutiveSummary

Reward and talent management programs at most organizations share common objectives: to attract,retain, motivate and develop employees, and to create alignment between employee actions and the

behaviors required to support the employers business strategy. In periods o relatively stable business

growth, organizations typically rely on minor, adaptive changes to their reward and talent management

programs in order to better meet these objectives. But the recent fnancial crisis and subsequent

recession have orced organizations out o their business as usual mode, both rom a strategic

perspective and in the way they design and manage their reward and talent management programs.

Figure1.Economicconditionsvarydramaticallyaroundtheglobe*

Representative list of countries in our survey

AnnualEconomicGrowth

Country 2010P 2011F Unemploymentrate

China 9.9% 8.3% 9.6%

India 7.9% 8.1% 10.7%

Japan 3.1% 1.7% 5.2%

Singapore 8.4% 4.5% 2.2%

U.K. 1.2% 1.8% 7.9%

Germany 1.9% 1.6% 7.7%

Ireland 0.4% 1.2% 13.7%

Spain 0.5% 0.4% 19.9%

Brazil 6.3% 4.5% 7.5%

Canada 3.5% 2.9% 8.1%

U.S. 3.1% 2.9% 9.5%

*Source: The Economist

P = projected

F = orecast


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2010 Global Talent Management and Rewards Survey Repo

Global and Regional EconomicConditions

Following the global fnancial crisis o 20072008and the ensuing recession that occurred in many

countries, we may be at a point o inection. China,

India and Brazil are experiencing strong economic

growth, while Spain and Ireland continue to suer

through economic contractions with double-digit

unemployment rates. Still, other countries and

regions, such as the U.S., most o Europe, Canada

and Japan, are somewhere in between growing in

the frst hal o 2010, but acing uneven growth and

a slow, uncertain economic recovery.

Cost Cutting and Cost Management as

a Reaction to the Global RecessionOrganizations immediate reaction to the fnancial

crisis and subsequent recession was to reeze or

reduce labor costs through hiring and salary reezes,

layos, reduced bonuses and restrictions on

overtime. However, there were regional dierences

in the nature and extent o these actions. In Europe

and the U.S., where the recession was the deepest,

companies were more aggressive, with over 60% o

U.S. companies taking our or more cost-cutting

actions. In China and India, which saw economic

slowdowns but not outright recessions,

organizations aced less cost pressure andconsequently were much less likely to cut costs,

reeze salaries or lay o employees.

Companies orward-looking business and human

resource strategies show a similar picture. Almost

one-quarter o respondents globally report that

workorce reductions will be an element o theirstrategy over the next three years reecting their

concern over uture economic conditions. European

organizations are most likely to make workorce

reductions (35% o respondents), but in China and

India, where attraction and retention pressures

remain high, only 6% o respondents expect layos.

This uneven economic recovery will require global

organizations to establish targeted, exible talent

and reward strategies.

The Impact on Global and Local LaborMarkets and Employee Expectations

The business climate aects the supply and demand

o talent along with employers ability to attract and

retain employees. Globally, only 25% o frms are

having difculty attracting employees generally, but

our out o fve respondents in Asia and Brazil and

one o every two in the U.S., Spain and Ireland

report difculty attracting critical-skill employees.

Even in relatively sot economies, top talent is in

short supply.

Organizations in most regions report having less

difculty retaining employees than they do attracting

them. This may reect employee reluctance to leave

their current employer in uncertain business conditions.

In Towers Watsons 2010 Global Workorce Study,

Figure2.Companiesindifferentregionstookdifferentapproachestocostcuttingandcostmanagementduringtherecession

Global

China/

India

OtherAsia

Pacic

Ireland/

Spain

Other

Europe Brazil Canada U.S.

Hiring reezes 64% 45% 60% 80% 72% 77% 61% 66%

Salary reezes 55% 28% 53% 67% 60% 58% 54% 61%

Layos, redundancies, reductions in

orce, etc.51% 12% 32% 57% 56% 47% 57% 74%

Reduced bonuses 36% 42% 46% 31% 36% 17% 23% 41%

Restrictions on overtime 33% 14% 26% 27% 41% 52% 26% 44%

Total number o actions taken (mean) 3.6 2.5 3.2 3.6 4.0 3.2 3.4 4.5

% o respondents taking at least our

actions44% 22% 34% 47% 52% 37% 40% 61%

% o respondents expecting to

undertake workorce reductions over

the next three years

23% 6% 21% 38% 33% 14% 21% 24%

The Business Context


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4 towerswatson.com

nearly hal o employees indicated they either have

no plans to leave their current employer or plan to

stay with their employer until they retire.

Economic conditions also drive changes in the value

o total rewards. In Asia and Brazil, almost 70% o

organizations report that the real value o cash

compensation and total rewards has increased

or managers and hourly employees alike over both

the past fve-year and 10-year periods. These

organizations have increased the real value o their

rewards in order to remain competitive in rapidly

growing economies with tight labor markets. In

Europe, roughly 70% o organizations report that the

real value o cash and total rewards has increased

or managers over the past 10 years, but ewer

European organizations report real increases in

rewards over the past fve years reecting the

economic reversal in 20082009 and current

economic uncertainty. The experience in Canada

indicates a much smaller change, perhaps as a

result o Canadas relatively healthy fnancial

services and natural resources industries.

The numbers in the U.S. are stark by comparison:

Only 40% o all U.S. organizations report an increase

in the real value o rewards or managers over the

past fve years. The real value o wages and rewards

at most U.S. frms has been at or declined. Trends

or hourly employees reect the same underlying

phenomena as those or proessional/managerial

employees, but hourly employees are even less

likely to have experienced an increase in the real

value o their total rewards.

Figure3.Attractionandretentiondifcultiesvarysignicantlybyregion

Global

China/

India

OtherAsia

Pacic

Ireland/

Spain

Other

Europe Brazil Canada U.S.

Critical-skillemployees

problems attracting 65% 84% 78% 49% 62% 81% 61% 52%

problems retaining 49% 81% 69% 29% 44% 65% 35% 31%

Top-performingemployees



High-potentialemployees



Allemployees



Figure4.Fewerorganizationsreporttherealvalueofrewardshasincreasedoverthepastveyearsthanoverthepast10years

Managers HourlyEmployees

TotalCash TotalRewards TotalCash TotalRewards

Past10

years

Pastve

years

Past10

years

Pastve

years

Past10

years

Pastve

years

Past10

years

Pastve

years

All 63%* 55% 68% 58% 58% 48% 62% 53%

China/India 71% 68% 72% 67% 69% 64% 70% 64%

Other Asia 69% 69% 72% 72% 66% 63% 66% 66%

Ireland/Spain 73% 52% 76% 59% 71% 48% 74% 55%

Other Europe 68% 52% 73% 55% 52% 38% 57% 44%

Brazil 59% 62% 64% 70% 59% 61% 61% 64%

Canada 65% 58% 72% 64% 59% 49% 66% 58%

U.S. 51% 38% 56% 41% 43% 32% 49% 35%

*The percentage o organizations where the real, ination-adjusted value o total cash (salary plus bonus) or total rewards (total cash plus total value o employer-provided benefts) has increased rom 2000

or 2005 to 2010.


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This organization engineered a series o layos

in early 2009. Since then, fnancial results have

improved; however, next years projections are

uncertain. I the economy slows, and demand

or its services decreases, the company plans

to undertake additional layos.

Predictably, previous cost-cutting actions have

increased the remaining employees workloads.

Stas are stretched thin; i business improves,

the organization will need to hire more sta.

Managers are especially concerned about

retaining top-perorming and high-potential

employees because there have been ewer

advancement opportunities since the layos.

Meanwhile, other organizations have been

actively recruiting these employees, and a ew

top perormers have already let, citing the

potential opportunities and increased security

and stability elsewhere. Still, resources remain

tight, so any actions the company takes will

have to pay or themselves.

To address these issues, Towers Watson

recommended the ollowing actions:

Review this years merit increases and

bonus payouts, reducing payouts to

those employees who only partially meet

expectations in order to increase the

available pool or top perormers and high-

potential employees.

Provide fnancial recognition awards to

employees who identiy new ways to

improve processes, cross-sell products to

existing customers, save money, develop

new products or otherwise contribute to

the organizations bottom line. Leverage

nonfnancial recognition broadly to drive

employee engagement.

Review opportunities to implement a

retention bonus program with a multiyear

time horizon or selected high-potential and

top-perorming employees. Payout wouldbe contingent on business and employee

perormance, ensuring that the program

eectively pays or itsel.

Re-recruit high-potential employees by

communicating how they are viewed by senior

leadership and holding career development

discussions. Emphasize on-the-job experiences

and identiy at least two or three possible

opportunities or developmental rotations or

other stretch assignments that align with the

employees interests and career aspirations.

Given the companys lean stafng model,assess whether the organizations best and

brightest talent is aligned with its most

strategic and pivotal roles. Consider rotating

high-potential employees out o businesses with

low growth to those expected to grow more this

year or to those where turnaround eorts will

provide signifcant growth opportunities. Create

a process to ensure successul transition o

employees who rotate into new roles.

CaseStudy

Coming Back From Layofs



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6 towerswatson.com

The more cost-cutting actions employers have taken,the more likely they are to recognize the impact o

those cuts on employee engagement levels and other

indicators o employee well-being. Nevertheless,

while declines in employee engagement oten have

an adverse business impact, respondents in our

survey do not believe their cost-cutting actions

have adversely aected quality, customer service,

employee productivity or willingness to take risks,

regardless o how many cost-cutting actions they

have taken.

Cost-cutting actions may have aected the drivers

o employee attraction and retention. Organizationsrecognize the importance o base pay, challenging

work, career advancement opportunities and their

reputation in attracting employees. The cost-cutting

and cost management actions employers have taken

have had signifcant negative impacts in each o

these areas. While employers acknowledged the

impact o their actions on employee well-being, they

have not made the connection between well-being-

related items such as a convenient work location,

exible scheduling and time o and an

employees decision to join a frm.

Employers and employees agree that compensation

and advancement opportunities are important

actors in both attracting and retaining employees.

However, employers underestimate the importance

o employee security both now and in retirement

and well-being when employees evaluate whether

or not to leave their current organization. With many

employees eeling more responsible or managing

their careers and retirement, they are increasingly

Figure5.Employersrecognizesomeoftheadverseimpacts

ofcostcutting

All

Employers

#ofcost-cuttingactionstaken

12

actions

34

actions

5ormore

actions

Increased workloads or

employees61%* 45% 67% 79%

Employees ability to manage

their levels o work-related

stress

53% 36% 57% 72%

Overall employee engagement 50% 35% 52% 70%

Employees ability to have a

healthy balance between work

and their personal lives

50% 37% 54% 65%

Productivity 28% 16% 29% 45%

Willingness to take risks/try

new things

25% 16% 28% 35%

Quality/customer service 22% 12% 21% 37%

Institutional knowledge

(o core processes, prior

business cycles, etc.)

20% 9% 19% 34%

*The percentages o respondents who indicate that their cost-cutting actions have had an adverse impact in that area

Figure6.Employersfailtorecognizetheimpactofchangestoemployeewell-beingontheirabilitytoattractemployees

Ranking* EmployerView EmployeeView

1 Competitive base pay Competitive base pay

2 Reputation o the organization as a great place to work Challenging work

3 Challenging work Convenient work location

4 The business/industry o the organization Opportunities or career advancement

5 Opportunities to learn new skills Vacation/holiday/paid time o

6 Opportunities or career advancement Reputation o the organization as a great place to work

7 Organization's fnancial health Flexible schedule

*Ranking represents the requency the item was selected as one o the top fve reasons an employee would join their frm, rom a list o 26 items. Employee data come rom the

2010 Towers Watson Global Workorce Study.

While employers acknowledged

the impact o their actions on

employee well-being, they

have not made the connectionbetween well-being-related

items and an employees decision

to join a rm.


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likely to be inuenced by job oers that include a(better) pension, greater job security, better work/lie

balance or more exible work arrangements.

Cost cutting and other changes have created a

gap between the employee value proposition (EVP)

companies oer and the EVP employees are

seeking. Employees are looking or job security and

stability, opportunities to earn substantially higher

levels o compensation, and opportunities or

development and advancement, which they eel

are unavailable in their current organization. Many

employers confrm that these intrinsic and extrinsic

rewards are unavailable. Wide gaps between whatemployees want and what they believe is attainable

can lead to disenchantment with their current

employer, an unwillingness to give discretionary

eort on the job and retention risk.

Figure7.Employersunderestimatetheimpactofpensions,jobsecurityandmoreexibleworkarrangementson

employeesdecisionswhetherornottoleavetheirorganization

Increased

compensation

Availabilityof/

betterpension

Greaterjob

security

Improved

work/life

balance

Greatercareer

advancement

opportunity

Moreexible

workhours

All

Employee 91% 86% 86% 85% 84% 82%

Employer 88% 30% 43% 66% 87% 48%

Gap 2% 56% 42% 20% 3% 34%

Asia

Employee 91% 89% 90% 88% 88% 86%

Employer 94% 28% 47% 61% 90% 43%

Gap 3% 61% 43% 27% 2% 43%

Brazil

Employee 90% 86% 84% 87% 89% 83%

Employer 93% 31% 44% 66% 89% 36%

Gap 3% 55% 40% 21% 0% 47%

Canada

Employee 91% 88% 82% 84% 82% 81%

Employer 85% 23% 35% 59% 83% 50%

Gap 6% 65% 47% 25% 1% 31%

Europe

Employee 89% 83% 82% 82% 81% 78%

Employer 87% 26% 38% 69% 88% 49%

Gap 2% 57% 44% 13% 7% 29%

U.S.

Employee 94% 86% 87% 86% 81% 80%

Employer 83% 37% 48% 70% 83% 56%

Gap 10% 49% 39% 15% 2% 24%

The percentage o employees or employers responding to a moderate or great extent: How would receiving each o the ollowing rom a new employer inuence your/your employees decision to leave yo

current organization?

Gaps are the dierence between employee and employer percentages, and may not add up due to rounding.


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8 towerswatson.com

In growing economies with tight labor markets (e.g.,

Brazil and much o Asia), the attraction/retention

impact o these EVP gaps threatens companies

ability to realize both immediate and long-term growth

opportunities. Organizations in the U.S., Europe

and Canada ace similar EVP gaps, but continuing

economic uncertainty in these markets means that

these EVP gaps pose greater short-term business

risks through their negative impact on employee

engagement levels, perormance and willingness to

exert discretionary eort, rather than through their

impact on attraction and retention. In the long term,

however, these EVP gaps will have a similar impact

on these companies ability to attract, retain and

develop key talent, and deliver sustained business

perormance. Although companies everywhere ace

similar EVP gaps, organizations in aster-growing

economies such as Brazil, China and India are

more likely to devote additional resources to close

these gaps because o their greater urgency than

organizations in Europe, Canada and the U.S.

The economic crisis dramatically changed the

business environment, causing organizations to

ocus on short-term cost-cutting actions that

resulted in EVP gaps. As economic and businessconditions improve, employers are restoring some

o the losses in reward programs and addressing

their EVP. They are also rethinking their long-term

business, talent and reward strategies, developing

greater integration and consistency within and

between programs, and prioritizing their investments.

These changes are reected in the current

landscape o talent and reward programs.

Figure8.Employeesperceiveasignicantgapbetweenwhatisimportanttothemintheirjobandwhatisavailablein

theircurrentorganization

Region

Asecureand

stableposition

Substantially

higherlevelsof

compensation

Opportunityto

rapidlydevelopmy

skillsandabilities

Awiderangeof

jobsandwork

experiences

Opportunityto

developinnovative

products/services

All

Important* 76% 72% 68% 60% 51%

Achievable** 51% 31% 39% 39% 29%

Gap 26% 41% 29% 21% 21%

Employer View*** 54% 26% 44% 45% 42%

Asia

Important 69% 73% 74% 71% 60%

Achievable 48% 37% 44% 45% 36%

Gap 21% 37% 31% 25% 24%

Employer View 60% 37% 49% 50% 41%

Brazil

Important 74% 74% 75% 47% 65%

Achievable 59% 50% 57% 41% 48%

Gap 15% 25% 19% 6% 17%

Employer View 23% 20% 38% 24% 48%

Canada

Important 87% 76% 66% 63% 43%

Achievable 59% 27% 37% 41% 22%

Gap 28% 49% 29% 22% 21%

Employer View 57% 20% 43% 49% 34%

Europe

Important 76% 68% 65% 54% 47%

Achievable 49% 27% 37% 32% 26%

Gap 27% 41% 29% 21% 20%

Employer View 56% 22% 54% 46% 51%

U.S.

Important 87% 74% 62% 55% 39%

Achievable 53% 22% 33% 37% 18%

Gap 34% 51% 29% 19% 21%

Employer View 54% 23% 33% 42% 39%

*The percentage o employees responding avorably to item: To what extent is each o the ollowing important to you in your most-preerred work situation?

**The percentage o employees responding avorably to item: To what extent is each o the ollowing achievable within your current organization?

***The percentage o employers responding avorably to item: To what extent is each o the ollowing available to proessional/managerial employees at your organization?


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CaseStudy

Outgrowing a Decentralized Approachto HR Management

This company has grown rapidly over the past

10 years, developing new products and

expanding geographically. Regional leaders have

operated with autonomy as long as they

delivered strong revenue growth. But recent

results in Asia have been below expectations.

And high-perorming managers, who were

promoted quickly, have struggled to adjust to

their new responsibilities even as the company

has been challenged to backfll their positions.

Managing talent globally is being hindered by a

variety o actors. Transerring people rom one

region to another has been difcult; managers

are reluctant to release key employees, and the

workers themselves do not see any connection

between the proposed rotations and advancement

(in their view, advancement means moving up

the hierarchy or greater pay). There is a clear

lack o global talent management inrastructure

and technology. In addition, leadership

expectations, cultural norms and perormance

expectations are not consistent across countriesor business units. Furthermore, the high starting

salaries and large salary increases necessary

to attract and retain talent in ast-growing

markets have created internal equity and

governance issues.

Moving rom a decentralized to a centralized

approach, which represents a major undertaking,

is critical or this organizations uture success.

Towers Watson suggested that the SVP o HR

plan a series o change initiatives, starting with

the organizations employee value proposition

(EVP) and proceeding through design,

implementation and ongoing measurement.

Over time, most o the ollowing recommendations

could or should be implemented:

Obtain the support and involvement o the

CEO and executive team as sponsors or what

will represent a signifcant change in the way

the organization manages its human capital.

Create a global team to develop a ormal,

organization-wide EVP and total rewards and

talent management strategy that align reward

and talent programs with the companys

business drivers and human capital strategy.

Inventory all reward and talent programs

(by region, business unit, etc.), evaluate

their eectiveness, and identiy any required

improvements or new programs. Map the

change initiatives across a multiyear plan toensure ocus and prioritization o resources.

Identiy talent groups most critical to the

organizations continued success. Assess the

drivers o engagement or these key talent

segments, and ensure the human capital

strategy and EVP are credible, distinctive

and compelling in the markets where this

organization competes or talent.

Review the job-leveling models used across

the frm and establish a single, globally

consistent leveling protocol. This protocol

should be used to level all jobs, with the

resulting ramework serving as a oundation

or all reward and talent management designs.

Conduct competitive market analyses and

develop locally competitive salary ranges or

each level to help ensure pay is equitable

and sufcient, but not overly competitive with

the external market. Establish a calendar

or a recurring review o competitive market

practices and pay levels.

Build an organization-wide core competency

model that translates the companys mission

and values into behavioral expectations or

all employees. Embed the competencies and

behaviors throughout the organizations talent

programs and practices.

Adopt a global perormance management

process and compensation administration

guidelines, establishing policies or delivering

pay on the basis o perormance, market

competitiveness, internal equity and

development o required competencies.


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10 towerswatson.com

Formalizing and Communicating theEmployee Value Proposition

Regardless o how it is developed or defned, and

whether it is articulated explicitly or remains implicit,

every organization has an EVP, and some develop

several EVPs that are inconsistent with each other.

Only 34% o organizations report having an EVP that

they have articulated, documented and communicated.

The other two-thirds say theirs is implicit and has

evolved over time. Organizations in Asia and Brazil,

where attraction and retention challenges are

greatest, and top-perorming companies in general

are the most likely to have a ormal EVP.

The EVP can be a powerul tool or attracting, retaining

and engaging employees. Organizations are also using

the EVP to improve the alignment within HR programs

and between HR programs and the organizations

business and its brand. Better alignment between

the EVP and the brand can lead to improved

employee line o sight, encouraging employees to

adopt those behaviors that will deliver on the brand

promise, including superior customer service.

The EVP is a powerul management tool when it is used

and communicated eectively. Among organizations

that oer competitive rewards, improving

communication o those rewards can have a greater

impact on employee satisaction and at ar lowercost than additional investments in making the

rewards richer. Companies that have a ormal EVP

are nearly our times as likely to communicate their

existing EVP eectively and are twice as likely to

align their EVP with what they stand or in the

marketplace. When an organization ormalizes its

EVP, that EVP is more likely to become a stable,

uniying experience within the company.

While it is oten necessary to modiy the EVP or

use in dierent locations or or dierent employee

segments, it is better to do so within a stable,

common ramework that is aligned with theorganizations strategy and has been eectively

communicated. Organizations with a ormal EVP are

less likely to have changed their EVP recently or to

expect to change it over the next three years.

Figure9.High-performingorganizationsaremorelikely

tohaveaformalEVP

HaveaFormalEVP

All 34%

Asia 39%

Brazil 53%

Canada 25%

Europe 35%

U.S. 25%

High-perorming organizations 42%

Average-perorming organizations 32%

Organizations perorming below their peers 28%

Figure10.OrganizationsformalizetheirEVPinordertopromoteeffectivealignment

All Asia Brazil Canada Europe U.S.

To improve alignment o HR processes, programs and administration

with business objectives, brand and each other81% 78% 90% 84% 82% 79%

To establish employer brand or talent/attraction 73% 73% 60% 81% 75% 76%

To set and manage employee expectations 65% 63% 48% 65% 72% 73%

To support/drive change management 59% 59% 58% 38% 67% 63%To acilitate communication with prospective employees 50% 48% 44% 59% 47% 55%

The Current Landscape o Rewardsand Talent Management


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2010 Global Talent Management and Rewards Survey Repor

Rewards

Base pay is the oundation or attracting and

retaining employees. However, in many organizations,

the real value o base pay has been at or the past

fve years. Many organizations have also reduced

bonuses and instituted salary reezes in the past

two years to cut or manage costs. Moving orward,

it will be critical or organizations to align employer

and employee interests in order to attract and retain

employees with required skills in a cost-eective way.

Merit

There are signifcant dierences in both the size

o merit increase budgets as well as individual

salary increases by region. Employees who met

perormance expectations received an average base

pay increase o 8.8% in China and India, but only

1.6% in Ireland and Spain. Similarly, there are

dierences in the merit increases companies

provide to employees who ar exceed expectations

top perormers versus average perormers.

The greatest percentage dierentiation is ound in

Europe and Brazil. In Europe, organizations with

lower to average merit increase budgets are making

it a priority to give signifcantly larger increases to

top perormers, reecting their difculties attracting

or retaining top perormers. In Brazil, where labor

markets are tighter and salary increase budgets are

larger, organizations are limiting merit increases or

average perormers in order to give top perormers

increases that are more than three times as large.

Dierentiation is lower in Asia and North America,

where organizations give top perormers merit

increases that are twice as large as the increases

or average perormers. Low-perorming companies

are not dierentiating merit increases to a

signifcantly greater extent than top-perorming

companies, awarding comparable merit increases

to employees who only partially meet expectations.

Figure11.OrganizationswithaformalEVPcommunicateitmoreeffectively,

andachievebetterstabilityandalignment

EVP

Informal Formal

Organization does a good job communicating its existing EVP* 19% 74%

Organizations EVP is clear ly aligned with what we stand or in

the marketplace 37% 81%

Organization has signifcantly changed its EVP in light o the

recent economic changes 20% 28%

Organization is going to change its EVP signifcantly over the

next three years38% 23%

Organization varies EVP by:**

Location 34% 14%

Business Unit 35% 19%

Job Level 46% 29%

Top Perormers 46% 28%

High Potentials 43% 27%

*The percentage o respondents who have an inormal/ormal EVP who agree with the statement

**The percentage o respondents who have an inormal/ormal EVP who vary that EVP by location, business unit, etc.

Financially high-perorming

companies are the most likelyto have a ormal EVP.


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12 towerswatson.com

Short-TermIncentives

Amid increasing profts and shareholder returns,

the average projected short-term incentive (STI)

unding level in most regions or the current year

is approximately the same percentage as or the

most recently completed year, as many organizations

have increased perormance targets. The two

exceptions are Canada, where payouts are expected

to decrease by 12 percentage points, and the U.S.,

where payouts are expected to increase by nine

percentage points. Companies that have

outperormed their peers are increasing their

perormance targets or this year, while poor

perormers are decreasing theirs. As a result,

high-perorming companies have lower expected

payouts this year than last, while low perormers

expect their payouts to increase.

Companies have maintained signifcant levels o

dierentiation between top-perorming employees

and average employees. The average dierence is

approximately 1.5 times greater. There is no

signifcant dierence between high-perorming

companies and low-perorming companies in the

ratio o STI payouts to top perormers relative to

average perormers. Poorly perorming companies

are providing the same relative dierentiation as

high-perorming companies rather than allocating a

larger share o their relatively scarce resources to

top perormers and less to others.

Figure12.EuropeanandBraziliancompaniesreportgreatestmeritdifferentiation

nodifferencesindifferentiationbyrmperformance

EmployeeRating

Didnotmeetexpectations

Partiallymetexpectations

Metexpectations

Exceededexpectations

Farexceededexpectations

Differentiationratio*

China/India 0.7% 3.5% 8.8% 12.6% 17.7% 202%

Other Asian countries 0.4% 1.6% 4.0% 5.8% 8.0% 202%

Ireland/Spain 0.2% 0.7% 1.6% 3.0% 5.1% 317%

Other European countries 0.1% 0.8% 2.7% 4.5% 7.0% 261%

Brazil 0.7% 1.3% 4.1% 7.6% 10.9% 264%

Canada 0.2% 1.1% 2.8% 4.0% 5.6% 197%

U.S. 0.1% 0.9% 2.5% 3.6% 5.0% 199%

Top-Perorming Companies 0.4% 1.5% 3.7% 5.6% 8.1% 217%

Average-Perorming Companies 0.3% 1.3% 3.7% 5.6% 8.0% 216%

Low-Perorming Companies 0.3% 1.7% 3.7% 5.6% 8.2% 219%

*Dierentiation ratio is the ratio o the increase in merit pay or employees who ar exceeded expectations divided by the increase or employees who met expectations.

Figure13.STIfundingisholdingsteadyinmostregions

Mostrecently

completedyear* CurrentYear

China/India 89% 85%

Other Asian countries 82% 82%

Ireland/Spain 72% 73%

Other European countries 76% 80%

Brazil 77% 88%

Canada 102% 90%

U.S. 83% 92%

Top-perorming companies 98% 91%

Average-perorming companies 83% 86%

Low-perorming companies 59% 72%

*Percentages are the actual payouts o STI relative to targeted levels at beginning o the year.

Companies that have

outperormed their peers

are increasing their STI

perormance targets or thisyear, while poor perormers

are decreasing theirs.


15/28


CaseStudy

Integration Following a Merger

These two organizations merged shortly beore

the 2008 fnancial crisis. Each targeted

customers in dierent market segments and

dierent stages in the value chain, and each

had been highly proftable. To maintain ocus

with minimal disruption in a rapidly changing

marketplace, the merged organizations CEO

decided to allow each legacy entity to continue

operating as a relatively independent business

unit rather than pursue an aggressiveintegration plan.

However, the global recession brought two years

o poor perormance or both organizations, and

in early 2010, the incumbent CEO retired. The

incoming CEOs mandate was to deliver the

synergies that had been promised at the time o

the merger, including cross-selling the companys

entire portolio o products and leveraging

economies o scale across the combined entity.

Given the new organizational mandate, the two

SVPs o HR started to outline the needs and

potential challenges o integrating the legacy

businesses. The two companies cultures were

very dierent; one was hierarchical and

structured, the other inormal and at. And their

reward and talent management philosophies

were also very dierent. Not surprisingly, there

was a great deal o anxiety among employees

about the upcoming changes, as employees

had become accustomed to business as

usual during the years immediately ollowing

the merger. The SVPs were particularly

concerned about retention risks among those

high-potential employees needed to help the

company return to growth.

To overcome these challenges, Towers Watson

suggested the organization establish task

orces with the ollowing accountabilities:

Assess the two cultures to understand

dierences in expectations and day-to-day

operating assumptions between the two.

Using these insights, plan and execute a top

team alignment session to defne new values

and guiding principles or the combined entity.

Conduct a series o pulse surveys to identiy,

monitor and manage employee engagement

issues throughout the integration process.

Segment and analyze the data or key employeepopulations, and leverage the data to start

building the employee value proposition.

Review the career ramework, job leveling,

compensation and benefts, and corporate

titling programs o both business units, and

recommend new designs or the integrated

organization. Ensure these recommendations

align with the employee engagement fndings,

articulate a vision o the desired-state

employee experience and establish a road

map or achieving it.

Formalize a high-potential employee program

that meets the needs o the integrated

organization. Communicate to managers

expectations or engaging and retaining high-

potential employees.

Review the companys incentive and

recognition programs, and ensure that the

metrics and rewarded behaviors support

the organizations business and cultural

objectives (e.g., working across the two

legacy businesses and cross-selling).

Create organizational and unctional

competency profles or the combined

organization. Embed these profles in all

talent processes to ensure that they are

ully operational.

Select and monitor business and employee

engagement metrics to track progress toward

the desired-state culture, business results

and employee experience.


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14 towerswatson.com

Organizations have ocused on risk management

and cost reductions over the past two years. But

as economic and business conditions improve,

employers have begun to restore some o the

previous cuts in rewards and to address gaps in

their EVP. They are also addressing the long-term

impact o the changing conditions by modiying their

business and talent management strategies, and

adjusting their talent programs accordingly. Like the

economic and business conditions that made thesechanges necessary, these adjustments vary

signifcantly by region.

Asia Growth and Innovation

Organizations in Asia plan to grow by expanding into

new markets and introducing new products and

services. These organizations report that creativity

and innovation is a key competency or executives

to be successul. Expansion into new markets

requires additional talent at all levels. Since labor

markets are tight, organizations place a premium on

developing people requiring executives to promoteemployee development, investing in the internal

talent pipeline and talent acquisition, and emphasizing

developing new leaders with new competencies.

Brazil New Markets and New Skills

Organizations in Brazil plan to grow by expanding

into new markets, requiring new leaders with

dierent competencies. Brazilian organizations

expect executives to help develop talent with these

new skills, but due to the urgency, emphasize

buying talent over investing in building their

internal pipeline. Nevertheless, organizations in

Brazil indicate that going orward they are more

likely to increase their emphasis on leadership

development, employee learning and succession

management in order to sustain this push.

Canada Emphasizing Efciency

Organizations in Canada are more likely to stress

improving efciency o operations. Executives are

required to be results-oriented frst and visionaries

second. Since efcient operations oten require a

highly experienced workorce with deep expertise in

the organizations methods, Canadian organizations

emphasize long-term career development and

advancement through clearly defned career paths

to support this strategy.

Europe Continued Emphasis onCost Reductions and Value

European organizations emphasize strategic

cost reductions, but they are also shiting their

competitive strategy to emphasize innovation and

customer service. Given the importance o cost

reduction among European organizations, managing

the talent supply chain is critical to their success.

Figure14.VerylittledifferentiationofSTIacrossregions,nancialperformancegroups

Didnotmeet

expectations

Partiallymet

expectations

Met

expectations

Exceeded

expectations

Farexceeded

expectations

Differentiation

ratio*

China/India 16% 52% 97% 123% 151% 155%

Other Asian countries 18% 52% 97% 126% 155% 161%

Ireland/Spain 10% 47% 82% 101% 125% 154%

Other Europe countries 13% 54% 96% 120% 146% 153%

Brazil 19% 56% 99% 120% 141% 143%

Canada 13% 58% 99% 118% 141% 143%

U.S. 15% 54% 97% 115% 134% 139%

Top-perorming companies 20% 57% 102% 122% 142% 140%

Average-perorming companies 15% 55% 95% 118% 144% 151%

Low-perorming companies 8% 43% 84% 112% 137% 163%

*Dierentiation Ratio is the ratio o the STI payout as a percentage o target or employees who ar exceeded expectations divided by the STI payout as a percentage o target or employees who met expectations

Talent Management Strategyand Emphasis


17/28


Figure15.Economicandbusinessconditionscauseorganizationsindifferentregionstoemphasizedifferentbusinessandtalent

managementstrategiesandexecutivecompetencies

GlobalFindings

BusinessStrategy* ExecutiveCompetencies** StrategicTalentManagementPriorities***

Focused primarily on growth

Shiting away rom competing based on

image or reputation

Shiting toward competing by developing

innovative products and services

Results orientation

Strategic vision

Change leadership

Ensuring readiness o talent or critical roles

Increasing the investment in building the internal

pipeline o talent

Creating more movement, rotation and development

opportunities or talent

RegionalVariationFromGlobalFindings

BusinessStrategy ExecutiveCompetencies StrategicTalentManagementPriorities

Asia Grow through product and market

expansion

Compete by developing innovative

products and services

Creativity and innovation

Knowing the business

Developing people

Increase investment in talent pipeline and acquiring

new talent

Europe More ocus on expense reduction to

supplement growth


products and services and improving

customer service

Knowing the business

Inspiring and motivating

others

Creating movement/rotation or development

without increasing the investment in the internalpipeline

Brazil Revenue growth through market

expansion

Developing people Developing next generation o leaders with new

competencies

Acquisition o new talent

Less emphasis on investing in internal pipeline/

ensuring readiness o existing talent

Canada Less growth-ocused than other regions,

increasing emphasis on efciency o

operations

Same as global Less emphasis on acquisition o new talent

U.S. Supplementing growth with M&A activity


products and services

Knowing the business Emphasis on ensuring readiness o critical talent

*Business strategy represents the organizations business strategy and the dierentiating actors the organization has traditionally competed on or expects to compete on.

**Executive competencies are the most requently selected competencies that are necessar y or executives to be eective.

***Strategic talent management priorities are based on the percentage o frms that indicated this area was one o the top three talent implications o their organizations strategic priorities.

Although they are less likely to increase their

investment in the internal pipeline, they still need

to create movement and rotation in order to develop

leaders who know the business. European

organizations also expect executives to inspire and

motivate employees perhaps as a way to spur

innovation and customer service.

U.S. Growth Through Innovationand M&As

Organizations in the U.S. plan to grow, but they are

more likely than organizations in other regions to

accomplish this through merger and acquisition

(M&A) activity. Successul mergers require executives

to have a deep expertise and knowledge o their

business. In the U.S., ensuring the readiness o

critical talent is the number one talent management

priority. Organizations are emphasizing leadership

development, career paths and succession

management, but not by creating movement or talent

rotations. This may reect the relative importance o

developing deep technical expertise rather than

broader experience in organizations in the U.S.

In addition to implementing the right talent management

strategies and setting the right priorities, it is critical

or companies to deliver programs eectively.

Eectiveness is oten a unction o eort emphasis

and investment and consistency or alignment.


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16 towerswatson.com

Although most organizations have increased their

emphasis on talent management over the past three

years, they recognize that they still need to improvetheir talent management programs. Even those

talent management programs that are considered

most eective specifcally, employee learning

and development, and perormance management

are rated as very eective by less than 30% o

organizations. Employers are signifcantly more likely

to report being more eective on a particular aspect

o talent management when they have increased

their emphasis in that area.

On a global basis, organizations are most likely to

increase their emphasis in three areas over the next

three years: leadership, succession planning and

career pathing. Given todays economic conditions,

the skills and competencies that leaders require

have changed, reecting the new behaviors that are

needed or organizations to compete successully.

Organizations are addressing this need by investing in

leadership development programs, emphasizing new

executive competencies around creating a strategic

vision, change leadership skills to implement these

new strategies and a results orientation to deliver on

them. Organizations are also working to develop new

leadership assessment tools around these executive

competencies. These tools will be used to assessthe new leadership competencies and to identiy the

development needs o leaders who, in some cases, are

required to make signifcant jumps in role complexity

to meet the changing needs o the business.

Employers and employees alike recognize the

importance o career pathing and succession

management, but employers are less eective in

these areas. Eective succession management

is a tool or reducing human capital risks and loss

o institutional knowledge associated with employee

turnover, and is vital to preparing leaders or

signifcant jumps in complexity as they move up

the hierarchy. Developing career paths and plans

helps organizations direct employee development

to those areas that will prepare them or

advancement opportunities and build deeper skill

sets. Together, career paths and plans and

succession management all help ensure the

organization continues to develop the top talent and

critical-skill employees needed or success.

Figure16.Organizationsthatincreasetheiremphasisonaspectsoftalentmanagementaremorelikelyto

ndthemveryeffective

%increasingemphasisover

pastthree

years*

%veryeffective**

All

Companyemphasisoverpastthreeyears

Increased Decreased Ratio

Perormance management 54% 28% 31% 17% 1.8

Leadership development 54% 24% 35% 2% 17.5

Employee learning and development 48% 29% 38% 9% 4.2

Leadership assessment 47% 23% 33% 6% 5.5

Succession management 46% 17% 24% 3% 8.0

Coaching and mentoring 45% 15% 22% 3% 7.3

Competency models and architecture 43% 16% 24% 4% 6.0

Career pathing and planning 42% 10% 15% 0% n.a.

Manager perormance 41% 16% 25% 0% n.a.

Critical role identifcation 39% 21% 32% 4% 8.0

Onboarding/induction into new roles 38% 17% 28% 7% 4.0

Talent movement/rotations 34% 12% 23% 3% 7.7

Workorce planning 33% 14% 25% 8% 3.1

Team eectiveness and development 29% 14% 26% 5% 5.2

*Percentage o companies that indicated they increased their emphasis on this area o talent management over the past three years.

**Percentage o respondents that indicated that their organizations increased or decreased their emphasis in this area o talent management over the past three years who rated their organizations as

very eective in this area. Gap equals the dierences in eectiveness between the organizations that increased or decreased their emphasis in that area.

Promoting Efective Talent ManagementThrough Emphasis and Consistency


19/28


Todays increasingly global organizations are

balancing the need or local variation in reward and

talent management practices with the benefts o

global consistency. The key business drivers behind

the decision to establish global consistency in

reward and talent management programs are:

Alignment. Competing globally requires a cascade

rom organizational business imperatives, to the

EVP and total rewards strategy, and ultimately to

rewards and talent management program design.

Governance. Regulation and increasing complexity

require organizations to improve their risk

management, decision-making and knowledge-

sharing abilities.

CostManagement. Globalization, competition

and economic conditions are placing pressure onmargins, increasing the need to manage human

capital costs.

Efciency. Globally consistent programs are

easier to administer, acilitate quick and accurate

reporting and analysis, and allow companies to

leverage investments in technology.

Quality. Global scale allows or the development

o compensation and talent management centers

o excellence.

TalentMobility. Leveraging a global workorce

helps to get the right people to the right places at

the right time.

Complexity. Managing the employees o a global

organization requires a more sophisticated

inrastructure (e.g., technology).

Becoming Globally Consistent Where to Start

Multinational organizations are more likely todevelop consistent programs or top management,

particularly in the areas o perormance

management, succession planning, leadership

development and incentive programs. These

companies also have globally consistent

perormance management and STI programs or

other employees, but not succession management

programs. Instead, they develop globally consistent

competency models, job leveling or job evaluation

(hereater, job leveling), and base pay programs.

These programs are oundational, enabling

organizations to develop global consistency in other

talent management and reward areas.

Figure17.Thepatternofglobalconsistencyvariesbyjoblevel

GlobalFirms*

Topmanagement Otheremployee

Long-term incentives 84% 50%

Perormance management 76% 70%

Succession management 75% 38%

Short-term incentives 72% 61%

Leadership development 69% 42%

Competency models/architecture 66% 59%

Job leveling or job evaluation 66% 58%Base pay 61% 56%

Workorce planning 58% 47%

Career pathing and planning 57% 42%

*Percentage o frms where this program exists in two or more countries that indicate the program design is globally

consistent

Global Consistency


20/28

18 towerswatson.com

Nearly 70% o all organizations report having an

organization-wide job-leveling program; among those

that do not, most plan to implement one over the

next two years. In light o the recent changes at

organizations, over one-third o those that have a

consistent job-leveling program plan to review it

this year, mostly or talent management reasons.

Organizations with consistent job-leveling programs

are more consistent in other areas as well. There is

a strong connection between globally consistent job

leveling and consistency in career pathing, the way

work gets done, how work is evaluated and how

employees are rewarded (Figure 18).

Although organizations give low ratings to the

eectiveness o their talent management programs,

organizations with globally consistent programs are

more eective. There is a strong relationship between

global consistency and eectiveness in talent

rotations, career development and advancement.

When companies have a globally consistent job-

leveling system in place, it provides a ramework and

starting point or greater alignment and integration

o talent management programs in general, leading

to improved eectiveness (Figure 19).

Organizations need to develop a reward and talent

management strategy that is agile enough to

support robust growth, but is sustainable and

scalable in a downturn. Some programs such assalary increase and training budgets are exible,

and organizations can readily adjust their spending

based on economic and business conditions.

Other programs are less exible: Organizations

are unlikely to reverse trends on increasing health

premiums or employees or to change their

retirement contributions, and they are biased toward

renewed hiring over layos (Figure 20).

Figure18.Organization-widejob-levelingorjobevaluationprogramsmakeestablishingothergloballyconsistent

programsmorelikely

Havegloballyconsistent

broad-basedjobleveling

Donothavegloballyconsistent

broad-basedjobleveling

Topmanagement Otheremployees Topmanagement Otheremployees

Long-term incentives 93% 58% 73% 43%

Perormance management 93% 93% 60% 52%

Succession management 88% 53% 71% 28%

Short-term incentives 88% 79% 61% 51%

Competency models and competency architecture 88% 88% 48% 38%

Leadership development 86% 60% 58% 24%

Base pay 84% 83% 46% 43%

Job design 78% 80% 25% 19%

Workorce planning 78% 78% 39% 26%

Employee learning and development 75% 77% 38% 33%

Career pathing and planning 75% 68% 32% 26%

Recruiting/selection 74% 78% 36% 33%

Recognition programs 59% 74% 24% 32%

Sales compensation 49% 71% 24% 35%

*Percentage o companies that have/dont have a globally consistent job-leveling or job evaluation program or employees other than top management that say their other programs are globally consistent or

top management/other employees

Organization-Wide Job Evaluationand Job Leveling


21/28


Companies that anticipate ongoing volatility in the economy and

labor market should develop and communicate an EVP that will

be efective in any economic environment.

Figure19.Globalconsistencyhelpscompaniesbecomemoreeffectiveintheirotherprograms

Program

Havegloballyconsistentbroad-basedjobleveling*

Donothavegloballyconsistentbroad-basedjobleveling Difference

Leadership assessment 34% 15% 19%

Leadership development 31% 18% 13%

Competency models/architecture 23% 9% 14%

Employee learning and development 36% 21% 15%

Workorce planning 20% 11% 9%

Talent movement/rotations 18% 10% 8%

Critical role identifcation 30% 16% 14%

Perormance management 37% 25% 12%

*Numbers represent percentage o respondents who report their program being somewhat or very eective.


22/28

20 towerswatson.com

Organizations need to ocus on the basics, those

elements o the EVP that are attractive to all

employee segments, including:

Competitive base pay

Challenging work

Career advancement opportunities

Convenient work location

Vacation or paid time o

Employers need to be competitive in these areas in

order to attract, retain and engage employees. As

market conditions improve, organizations need to

spend their resources more eectively to improve

their return on investment in rewards and talent

management. Companies can become more eective

with reward and talent management programs by:

Formalizingandcommunicatingasustainable

EVP. Companies that anticipate ongoing volatility

in the economy and labor markets should develop

and communicate an EVP that will be eective

in any economic environment. The EVP should

be sustainable in terms o company investment

in rewards and talent management programs,

and address the elements o the deal that are

most important to employees. Organizations thatdevelop an eective EVP and communicate it well

are more successul. The process provides insight

into what employees value, rather than trying to

be all things to all people. Organizations need

to pick their spots, ocusing on top perormers,

critical-skill employees and high potentials, and

designing and delivering on what is important to

them.Jettison things that dont matter and that

dont have an attractive ROI.

Figure20.Pay,bonusesandtrainingbudgetsaretheprogramsorganizationsaremostlikelytochangeif

economicorbusinessconditionschangesubstantiallyineitherdirection

Overthenext12months,whichactionsisyourorganizationmostlikelytotakeifithas:

tocutcosts? additionalfundstospendonlaborcosts?

Program Top3 Program Top3

Reduce pay increases 78% Increase salary budget 69%

Reduce budgets or training and development

programs54% Hire more people 54%

Reduce or eliminate bonuses 57% Increase bonus opportunities 49%

Lay o employees 41%Increase budget or training and development

programs55%

Increase health care premiums that

employees pay18%

Increase investment in better equipment or

employees27%

Reduce employee hours, e.g., urloughs,

reduced workweek13% Increase bonus eligibility 14%

Reduce contribution to retirement programs 8% Increase contributions to retirement programs 7%

Reduce number o days o paid time o or

vacation6%

Reduce health care premiums that employees pay 4%

Increase number o days o paid time o or vacation 2%

Implications o the Current Landscape oRewards and Talent Management


23/28


Developingglobalconsistencyacrossregionsandlevelswithinaprogram. Organizations are

becoming more globally consistent in how they

develop and manage talent and reward programs.

By doing this, organizations are discovering

they can be more successul in the overall

eectiveness o these programs.

Developingconsistencybetweenrewardand

talentmanagementprogramsthroughan

integratedrewardandtalentmanagement

framework. Global job-leveling programs create

a common ramework or managing talent

and rewards. For example, creating career

advancement opportunities through requent job

rotations in order to help employees develop is

eective when employees and managers together

have a clear vision o career paths and job leveling

through the process.

Differentiatingrewardsbasedonemployeesperformance. Most organizations dierentiate

merit increases and bonus payouts, but fnancially

poor-perorming organizations need to ensure that

their top perormers receive more ully unded

awards, even i it means that below-average

perormers do not receive a bonus.

Pickingsolutionsthatarerightforthe

organizationinitssetting. There are no silver

bullets, but organizations are seeing results in

the places where they are focusing their efforts.

Companies that have increased their emphasis on

aspects o reward and talent management over

the past three years report being more eective in

those areas. Organizations need to increase their

emphasis on areas that support achievement o

their business and talent management strategies.


24/28

22 towerswatson.com

About the SurveyIn May and June o 2010, Towers Watson conducted

a survey o 1,176 human resource proessionals

with responsibilities in compensation and benefts or

talent management. These participants completed a

survey questionnaire covering such topics as general

business inormation and strategy, reward program

governance and design, cost management and

rewards, employee engagement, employee value

proposition, attraction and retention, and talent

management. The respondents come rom a broad

cross section geographically:

DistributionofRespondentsbyRegion

Respondents were predominantly international

and global organizations (58%) rather than

domestic (42%):

DistributionofOrganizationsbyType

Respondents were o various sizes, rangingrom less than 2,000 employees to well over

20,000 employees:

DistributionofRespondentsbyFirmSize

I28% Asia

I24% Europe

I 8% Brazil

I 40% North America

28%

24%8%

40%

I42% Domestic

I 23% International

I 35% Global

42%

35%

23%

31% Over 10,00017% 5,00010,00017% 2,000500035% Less than 2,000

35% 31%

17%17%


25/28


Respondents came rom a broad cross section o industries:

DistributionofRespondentsbyIndustry

Industry Number %oftotal

Manuacturing 163 14%

Financial Services, Excluding Insurance 150 13%High Technology 124 11%

Financial Services Insurance 91 8%

Proessional and Business Services 90 8%

Communications 58 5%

Health Care, Excluding Pharmaceuticals 56 5%

Retail 52 4%

Food and Beverage 51 4%

Health Care Pharmaceuticals 51 4%

Energy 50 4%

Property and Construction 42 4%

Automobiles and Transportation Equipment 40 3%

Transportation 35 3%

Wholesale 30 3%

Natural Resources 22 2%

Utilities 18 2%

Tourism and Leisure 14 1%

Aerospace and Deense 13 1%

Education 13 1%

Government 10 1%

Charities and Nonproft 3 0%

Key Terms

High-performingorganizations: This report dierentiates

between fnancially high- and low-perorming companies

based on sel-reported responses to the question,

How well did your total organization perorm fnancially

compared with other frms in your industryduring the

past year? Respondents were given fve choices, ranging

rom substantially below peer group to substantially

above peer group. Companies that identifed themselves

as substantially above peer group are high-perorming

organizations, while those that said their perormance was

slightly above peer group or about the same as peer

group were considered average perorming. Companies

that said their perormance was below that o their peerswere characterized as low-perorming organizations.

Critical-skillemployees: Critical-skill employees are those

who possess the skills the organization needs most to

compete eectively now.

Top-performingemployees: Top-perorming employees

are those whose perormance was rated ar exceeds

expectations (i.e., in the top 10%) by their supervisor

in their most recent perormance review.

Employeevalueproposition: The EVP articulates the array

o programs, practices and work experiences that shape

employee attitudes and behaviors in the workplace. The

intention o the EVP is to defne an employment experience

that rallies employees around the organizations brand,

mission and values. The EVP captures both the employer

and employee views.

Globalrms: Global frms are companies that have

signifcant operations (majority o unctions represented)

on three or more continents.

Internationalrms: International frms are companies that

have multiunction operations across an entire region or in

several countries on dierent continents. Domesticrms: Domestic frms are companies that have

the majority o operations in their home country. They mainly

supply the domestic market and may have small operations

with one or two unctions represented in other countries.


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24 towerswatson.com

About WorldatWorkThe Total Rewards Association

WorldatWork (www.worldatwork.org) is a global human resources

association ocused on compensation, benefts, work-lie and

integrated total rewards to attract, motivate and retain a talented

workorce. Founded in 1955, WorldatWork provides a network

o nearly 30,000 members in more than 100 countries with

training, certifcation, research, conerences and community.

It has ofces in Scottsdale, Arizona and Washington, D.C.


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About Towers WatsonTowers Watson is a leading global proessional servicescompany that helps organizations improve perormance through

eective people, risk and fnancial management. With 14,000

associates around the world, we oer solutions in the areas

o employee benefts, talent management, rewards, and risk and

capital management.

survey for reward mgmt

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