COVID-19 Rewards Wargame

Briefing - CEO Response

The CEO says …

“Thank you for your interesting ideas which have kick started the

cost saving process”

She would like to have more details on the exact numbers involved and how you will put your plan into practise

You will also need to create a communication plan for stakeholders to reassure them and persuade them to climb on board (A list of stakeholders follows)

The analyst community are keen to see we are making progress with the productivity gains promised by the Future of Work “Can you build that in too, please? “

The independent Remuneration Committee will be very interested on how any plans affect our Pay Equity policies and pledges

Stakeholders (company)

Global policy for above average salaries and benefits and good working conditions

HR surveys show support for the company across the board

Around 2/3 workforce are union members

There is a big difference in rates of reward for employees doing similar jobs in different global locations

There is demand for more technical, professional opportunities in emerging economies

Employees in developed economies are aware they must justify their much higher wages

Blue collar workers who went to work in the pandemic feel sensitive about their lower wages and status

Employees

Conscious of reputation for being highly ethical – but firm in the belief that ESG reputation delivers a payback in ROI and in attracting and retaining talent

But has committed to improve margin through structural cost savings

Conscious that improvements in margin will leave the exec compensation plan lagging further behind peer organisations delivering similar results

Executive Board

Partly in deference to political and societal pressure and partly to reduce costs, senior executive reward has been simplified and CEO and Exec pay is marginally low to market

Members reflect shareholders preference for traditional performance targets and incentives as a vital stimulus at all levels

From 2020, has a statutory obligation to ensure the business lives up to claims on pay equity and pay policy

High factory labour costs have been a risk for some time

Remuneration Committee

FTSE status means major UK institutions dominate (80%) and overseas (20%)

For many years Poltimore has provided long-term shareholders with reliable, modestly increasing dividend payments

Tension between activist and ethical shareholders over potential gains from deemphasising Environmental, Social and Governance factors and moving operations to high growth markets where employment costs are lower and environmental and sustainability standards are easier

Shareholders

Stakeholders (external)

• Loyal long term relationship

• Valued for bringing innovative new products to market

• Seen as fairly priced premium supplier of safe, effective and sustainable products

• Source of expertise and knowledge

Clients In developed economies, the growth of protest movements has put pressure on politicians to respond to social and economic problems that are increasingly linked to globalisation and inequality

Covid-19 has increased this pressure because politicians and society have become aware that the majority of high risk key worker jobs are low paid and low skill

Even in free market and business media there is talk about “levelling-up” and a new social contract that will put the spotlight on blue chip employers who set the benchmarks that influence the rest of society.

Government

• Loyal long term relationship

• Reliable payers

• Collaborative and non adversarial

• Good at passing beneficial innovation and knowhow down to suppliers

• Supportive of supplier business expansion

• Take an interest in supplier employee welfare

Suppliers

Future of Work & Reward

Like many global firms, Poltimore can make huge productivity

and cost saving gains through implementing new ideas on the

Future of Work and Reward

Future of Work & Reward

Employment

Permanent full-time employment will be replaced by

project based fixed term contracts

Hours will be flexible

Location will be flexible

Jobs & Skills

Technology is driving companies towards project-

based work in Agile teams

Rigid job definitions are being replaced by hybrid

skills across a team

Specific professional skills might not be required full-

time in the team

Workers might participate in multiple projects for

multiple employers

Skills have a spot market price that changes rapidly.

Constant skills upgrades are essential to maintaining

income

Gig economy practices are spreading to professional

work

Remote working removes geography as a factor in

sourcing workers. High skill white collar jobs can be

filled from low wage economies

AI is out-performing humans in some fundamental

tasks. Particularly pattern recognition. But humans

are essential for creative and idea based work

Reward

Reward is related to the skills and role performed by

specific individuals in specific projects at specific

time

Positions (including technical & professional) that do

not require physical presence will be placed via global

sourcing

Reward rates will reflect market prices for the position

Your rate is your grade

All reward is optional/flexible. The spread between

Salary, Bonus, Shares, Benefits and Retirement will

reflect the employees preference

Grades

Grade hierarchies are redundant

Rank, status and reward are contextual on the role

performed by individuals in specific projects at

specific time

There is no upwards only professional career grade

ladder

Latest technologies and automation complement self

managing teams, reducing need and effectiveness of

top down management.

Reward designed to incentivise increasing skill and

experience, not moving up the ladder

Employees receive a single ‘blue coin’ rate based on their skills and experience.

All non-core reward is optional/flexible.

Your rate is your grade

Reward profile

attribute Driven by

Job Select one from job

catalogue of

c15,000

Grade 1-10 assigned

driven by job

Country Select from 10

countries

Reward Framework

The freedom and flexibility of Future of Work appears to be in direct conflict with the orthodox, rigid, standardised, hierarchical Reward Framework where: every job has a grade, and employee reward is fixed by the benchmarked norms for their job in their country But, as Reward practitioners fully understand, this framework is far more theoretical than factual In reality, the variation by country and the need to match pay to secure candidates means that the framework is riddled with exceptions

Salary

Benefits

Bonus Short Term

Incentives

Shares Long Term

Incentives

Retirement

Employee

Project

Manager

Grade 4

Australia

Reward Administration

Local variations make it very hard to apply global policies or standard global adjustments to Reward In fact it is a massive challenge to administrate the basics

And although a huge effort was made to manage reward in the Workday HR system, many other systems are still needed to meet operational Reward needs Gathering data from and implementing changes back into these systems is complex. A simple request such as a Pay Equity audit covering all rewards for all employees in all countries is a manual process that takes months to complete Making changes across this landscape will be very challenging

Reward Administration Systems and Process

Total Reward Platform – Additional data on People Costs

But we are trialling a new Digital Total Reward Platform that automatically consolidates all reward data from these systems on a daily basis. This allows us to supply any cut of data you request. We are no longer restricted to relying on salary as a proxy. We can present total reward data at any level down to the individual employee (subject to data access rights)

• Total Costs

• Average Costs

• By Reward types

• By Grades

• By Functions

• By Countries

Reward Administration Systems

Total Reward Platform - functionality

The new Total Reward System holds all reward data for all employees in one place in realtime.

Key benefits in relation to change in Reward are:

1) Employee communication (push) – in the form of total reward statements

2) Employee communication (pull) – obtain sentiment from all employees on every individual reward item to inform future change

3) Employee choice – employee can choose how they want their total reward split between: salary, pension, benefits and shares

Reward Data & Future of Work

You have seen a summary of the “Future of Work” based on the literature and conference presentations we have made

We have shown the current state of our Reward tech infrastructure The variation by country and the large number of systems (that are not integrated) mean we are not easily able to administrate the Future of Work. At this stage it would require a huge manual effort In fact managing the current state is a huge manual effort

In the section below we have supplied more data on Reward, but it was only available because we have are trialling a new system This level of detail cannot be supplied on a monthly basis

Briefing on People Data Salary Only

In the first Move we provided these tables showing salary data by grade

Briefing on People Data

We can now provide tables showing Total Reward (not just salary) by grade across the whole company Salary is a smaller proportion of the total reward mix for higher grades

Is this split by grade what you expected?

Does this make a difference to

your proposals?

Briefing on People Data

Is this what you expected?

What are your first

impressions?

Any immediate ideas leap out?

Proposal

Please review and revise your original proposals to save 20% of people cost in the light of this additional data

Explain how you will communicate your plans to stakeholders, then identify who will

resist their adoption and explain how you will manage their objections

Intervention Savings Template – Example

Go to this link to submit your proposed intervention(s): https://bit.ly/2XUJmWF