War for Talent

What do we want to pay for it?

Tom Dewaele

Reward Europe

June 2011

1

War for Talent is a fact!

2

War for Talent is a fact!

4

War for Talent is a fact!

5

What is a talent?

6

Ultimately, any organization’s performance

depends on its decision effectiveness.

Consistently

high performers

make good decisions

make them quickly

and execute them well.

War for Talent is a fact!

7

Reward & Talent together!

8

We need to

get/keep this

hughe talent in

whatever the

price may be

Sorry but this

will definitely

not fit our

reward policy

Talent Management Reward Management

Reward approach for talent

• One size fits all policies

• “Overall Average median positon in the total market”

• Very limited salary increases budgets

• Managing exceptions/police department

• Pay for (short-term) performance

We need much more flexibility in our

reward programms to attract and

retain our best talents

Talent Mgt Language

Consistently

demonstrates

outstanding

leadership

Consistently

demonstrates

leadership at the

expected level

Does not

demonstrate

leadership at the

expected level.

Fails to meet stretching

performance targets.

Consistently meets stretching

performance targets.

Consistently exceeds stretching

performance targets.

Reward Mgt Language

Media

n

80%

125%

90%

110%

Year 1 Year 2 Year 3 Year 4 Year 5 Base Variable Benefits

Base pay flexibility

Median

80%

125%

90%

110%

Year 1 Year 2 Year 3 Year 4 Year 5

Middle boxer

Green boxer

Yellow boxer

Red boxer

Key Jobs

Mid Career Recruit

STI: Pay for performance

• Strong differentiation tool

• Link to business results

• Link to individual targets

•

Different approaches possible!

Pay for performance: rigid

Team Company Individual

Entity SOTP IndividualKPIs

0-160%

X X

0-100% 0-100%

Pay for performance: rigid

• Simple

• Predictable

• Business link

• Performance driver

• Individual overperformance

• Management judgement

• Declining markets

• Zero bonus years

• Future Potential

Pay for performance: open

Target

Business Performance = Differentiation Factor

Individual

Performance =

PDP Rating

€ Bonus

€ Bonus

1 2 4 5 3

Business Performance

is relative

Individual Performance

is relative 16

17

Pay for performance: open

Pay for performance

• Management judgement

• Individual overperformance

• Reflecting business results

• Highering approach

• Future Potential

• Too complex

• Too flexible

• Management behavior

• Unpredictable

•

LTI: long term retention

Consistently exceeds

stretching performance

targets.

Consistently meets

stretching performance

targets.

Fails to meet stretching

performance targets.

WHAT

Consistently

demonstrates

outstanding

leadership

Consistently

demonstrates

leadership at the

expected level

Does not demonstrate

leadership at the

expected level.

HO

W

25 - 50% LTI 100 - 150% LTI 150 - 200% LTI

0 - 25% LTI 75 - 100% LTI 125 - 175% LTI

0% LTI 0 - 50% LTI 25 - 75% LTI

Total Reward positioning

Q4

Q3

Q2

Q1

Questions?