Compensation and Planning for the Future

Compensation and Planning for the Future

Presented by:

Ann Bares E. James (Jim) Brennan

Laura Schroeder

August 18, 2011

Today’s Presenters

Ann Bares Managing Partner, Altura Consulting Group Compensation Café Founder & Editor

E. James (Jim) Brennan Senior Associate, ERI Economic Research Compensation Café Contributor

Laura Schroeder Global Talent Specialist, Workday Compensation Café Contributor

The Story Research Tells Us

Ann Bares Managing Partner, Altura Consulting Group

2012 Salary Increase Budgets Employee Group WorldatWork Hay Group ERI

Hourly Nonexempt 2.9%

3.0% 2.6%

Salaried Nonexempt 2.9%

3.0% 2.8%

Salaried Exempt 2.9%

3.0% 2.9%

Officers/Executives 2.9%

3.0% 3.0%

Steady as She Goes… Sources: WorldatWork 2011/2012 Salary Increase Budget Survey, Hay Group’s U.S. Database (7/11 Press Release), ERI 2012 Salary Increase Survey

2012 Salary Structure Adjustments

Employee Group WorldatWork Hay Group ERI

Hourly Nonexempt 1.9%

-- 1.4%

Salaried Nonexempt 1.9%

-- 1.5%

Salaried Exempt 1.9%

-- 1.6%

Officers/Executives 2.9%

-- 1.7%

…Playing a Little Catch-Up? Sources: WorldatWork 2011/2012 Salary Increase Budget Survey, Hay Group’s U.S. Database (7/11 Press Release), ERI 2012 Salary Increase Survey

Another More Chaotic Reality

The General Salary Program Picture

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2006 2007 2008 2009 2010 2011 2012

Salary increases Structure adjustments

Sources: WorldatWork 2011/2012 Salary Increase Budget Survey

Put in Larger Economic Context

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2006 2007 2008 2009 2010 2011 2012

Salary increases Structure adjustments CPI Unemployment


With an Interesting Twist

The State of Variable Pay

2006 2007 2008 2009 2010 2011

% of organizations using variable pay

79% 80% 81% 80% 80% 79%

The percent of organizations using variable pay hovering

around 80%


Most Popular Programs/Practices

Program 2009 2010 2011

Employee referral bonus 66% 55% 62%

Sign-on/hiring bonus 64% 50% 62%

Market adjustments to base salary 37% 35% 60%

Program 2009 2010 2011

Spot bonus 39% 36% 48%

Non-cash recognition -- 38% 41%

Top Three

Next Two

Making Compensation Planning Dynamic

E. James (Jim) Brennan Senior Associate ERI Economic Research

Budgeting Principles

•  Fixed budget = guaranteed expense •  Human enterprises, dynamic treatments

P P P P P P

1.  Anticipate your market situation 2.  Target Midpoints or Job Values

•  study your market ratios •  analyze your compa-ratios •  define your closure needs

3.  Plan action steps to •  minimize residual risk exposures •  remedy shortfalls over time •  protect key talent

Timing of Increases

•  Simultaneous (Focal) •  Variable (Anniversary)

Expect Variations

•  Prepare A B C budgets •  Randomness is lumpy •  Human reality is rarely neat, smooth or

symmetrical •  Ready, aim, fire, score, adjust, repeat

Compensation 2.0 Five Trends That Will Change

How We Think About Compensation

Laura Schroeder Global Talent Specialist Workday

5 Trends in Compensation

1.  Evolving Role of Salary Surveys 2.  A New Kind of Workforce 3.  Flexible Compensation 4.  New Business Priorities 5.  Growing Demand for Transparency

Evolving Role of Salary Surveys

•  Hard to get reliable non-US information •  Jobs are evolving – new jobs, ‘hybrid’ jobs •  Growing emphasis on total rewards

A New Kind of Workforce

•  Global, contingent, multi-generational, flexible, virtual

•  Different locations, priorities, work styles •  Growing demand for cost and performance

analysis

Flexible Compensation

•  Compensation should support your strategic workforce goals

•  Your compensation processes should be as dynamic as your workforce

•  Once a year performance and compensation review may not cut it

New Business Priorities

•  Business priorities that shaped current compensation have changed

•  It’s a good time to analyze whether business priorities match what is actually rewarded

•  Everyone should have an incentive to perform as an individual as well a stake in overall company performance

Growing Demand for Transparency

•  Clear communication – and a bit of positive spin – can make the difference between resentment and gratitude

•  Be honest about your total rewards offering •  Total rewards statement to showcase your

real investment in people

Questions and (Hopefully)

Answers