Unlocking the Potential of Total Rewards - · PDF fileUnlocking the Potential of Total Rewards ... DLF Centre Court Sector-42, ... creating a robust and consistent selection process

India • Volume 2 • Issue 3

Unlocking the Potential of

Total RewardsGetting More from Less The New Sales Mantra in the

Pharma Sector

04

High-Tech Industry Hardwiring Total Rewards Strategies

– John Radford

20

Transforming the Compensation Paradigm

– Ashok Ramchandran

35

what’s inside

04 2009

coveR sToRy

14Unlocking the Potential of Total Rewards

Getting More from LessThe New Sales Mantra in the Pharma Sector

04Total Rewards for Deal Success09 High-Tech IndustryHardwiring Total Rewards Strategies – John Radford

20

“Double-Digit Increase, Again? Where is the Money?!”27Slow Growth Impacting Salary Increase in India?Salary Increase Survey

32

Transforming the Compensation Paradigm– Ashok Ramchandran

35Survey Calendar38

Success in Total Rewards will require foresight – the ability to accurately forecast workforce trends, emerging competitive practices, potential regulatory changes, and the future wants and needs of talented workers.

editors

Shilpa Khanna

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Sushil Bhasin

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Total Rewards Quarterly is published

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Copyright © 2012 Aon Hewitt

Total Rewards QuarterlyIndia • Volume 2 • Issue 3

www.aonhewitt.com/india

sandeep chaudhary

Partner,

Talent and Rewards,

Aon Hewitt

For more information, please write to us

at [email protected]

While majority of the CeOs remain pessimistic about the economy and expect only a moderate recovery, investments in talent continue. We have just concluded phase one of the Salary Increase Survey with participation from over 500 organizations. I was honestly surprised to see the 2013 projected increase of 10.6%, only marginally lower than the 2012 actuals. Given the slowdown, this is a bold stance by India Inc. and I’m sure will reignite the debate on the sustainability of double-digit increases.

Also, we are seeing that while the market trend is important, organizations are more closely aligned to their business performance and their commitment to investors. The focus needs to be on lead indicators like growth and distinctive value creation, rather than the lag indicators, where we start to manage salaries to make up for margins.

Having said that, we are seeing some definite shift in how the business and HR leaders are thinking about rewards. First is on the expectation of an annual salary revision for senior management; given that our fixed pay levels for executives are getting closer to the global pay line, and a lot is left to be desired on its performance alignment, it is almost necessary for organizations to reset expectations. Second is improving the perception of compensation without necessarily investing hard dollars. Organizations are beginning to manage rewards as a portfolio, as opposed to a program, maximizing individual choice and finding ways to differentiate. Our cover story, ‘Unlocking the Potential of Total Rewards’ brings to you our research and point of view on the future direction of Total Rewards.

I feel privileged to bring to you the views of Ashok Ramchandran, Director – Human Resources, Vodafone India Limited as he talks to us about the challenges in making rewards work in the relentlessly competitive telecom sector.

And finally, we have none other than John Radford himself, sharing deep insights on the multiple facets of managing rewards in the hi-tech sector.

I close this edition in the hope that the current slew of reforms is only the beginning of times to come. I hope you enjoy the read and look forward to receiving your comments and feedback.

India • Volume 2 • Issue 3TotalRewards QUARTeRLy

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With rapid increase in volumes on one side and commensurate increase in employee sizes and compensation budgets on the other, the Indian pharmaceutical industry is going through a unique growth challenge rarely faced by organizations in other parts of the world. With 70% of India’s population residing in rural areas, pharma companies have an enormous opportunity but also a bag of challenges. Unlike the fast moving consumer goods (FMCG)business, reach is not the only success factor here.

Getting More from LessThe New Sales Mantra in the Pharma Sector

Availability of doctors, healthcare infrastructure, in addition to affordability, are essential components for driving sales. Companies are thinking out-of-the-box to achieve the first-mover advantage, with doctors and sales force playing a critical role in meeting this growth agenda. The industry, therefore, presents an exciting case study for sales management, and the focus of our study was to identify how the sales force is being aligned to drive growth in this industry.

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agenda setting and execution of the joint field work, sales planning and customer segmentation, following on the development goals of the MR, meeting key opinion leaders (KOLs), driving business development, partnering with distributors, equipping the team to deliver even in his/her absence are key aspects of the line manager’s role. MRs are a rich source of first hand market data through their interactions with doctors and chemists/stockists. It is the role of the first line manager to guide the team to capture and analyze this data, and incorporate the same while making decisions in terms of customer segmentation, selling strategy, product launches and promotional activities. The expectations from the first line manager role, therefore, are very high and this role is indeed the game changer. At the managerial level, companies are focusing on growing talent from within the organization and emphasize on both performance and potential of the individual. The ratio of internal to external hire at the first line manager level is 75:25, and this further tilts to 85:15 at the regional manager level. This provides career opportunities to bright medical representatives. A critical determinant of performance is consistent target achievement for at least two years, and the potential is measured through behavioral assessment either by means of behavioral interviews or assessment centers, which consists of a battery of exercises to assess desired behaviors. One of the leading global pharma organizations assesses all medical reps, who have completed two years of successful performance, and classifies the MR pool in terms of ready-to-move immediately, in one year or in two years, stating the development needs for each of these classifications. At the field force level, companies are focusing on creating a robust and consistent selection process and yet something which is easy and quick to implement. The selection process includes a technical screening test which comprises product knowledge and aptitude. This helps in filtering the right quality of talent to the next stage, which consists of a field interview followed by a corporate interview.

Sales departments in pharma companies are looking at ways to penetrate the market and reach the bottom of the pyramid targeting not just doctors but also end customers through various offerings, creating awareness, identifying patients, improving diagnosis and providing support. Companies are expanding their sales force, and the expectation from them to perform and deliver is enormous. Along with rapid growth in top line, companies are focused on bottom line growth as well, which puts pressure to make the most out of the existing resources including the sales force. The sales force in this industry typically consists of a medical representative (MR) or a territory business manager (TBM), who is the feet on street and reports to the area business manager (ABM). An ABM manages a team of anywhere from 6-10 MRs and reports to the regional business manager (RBM), who acts like a mini CeO for the region. There are some unique challenges in managing this structure. Firstly, there is a need for skilled resources at all levels. The MR, who is at the bottom of the sales hierarchy, interacts with the more knowledgeable customer (physician). Hence, it is important to hire the right talent and invest time in orienting them to the company processes, and provide training on products and customer interaction. Secondly, this sector is plagued with 25-30% attrition at the field force level, which increases costs, adversely impacting sales, and puts further pressure on talent selection and retention. Thirdly, a few organizations have unionized field representatives, while in others, they are hired on contractor’s books to keep costs down, which makes it difficult to drive a cohesive sales strategy. Given this backdrop, we conducted a study on sales force effectiveness in the pharmaceutical industry to understand how companies are managing their sales force and making them more productive. The study covered various elements including sales force structure and manning norms, recruitment and capability building, performance measures, incentives and productivity metrics. In this article, we will share the key learnings from the study with respect to having the right talent, tracking the right measures and focusing on productivity.

Having the Right TalentThe interplay between the field force representative and the first line manager is an important factor in determining the achievement of sales targets. Objective

At the managerial level, companies are focusing on growing talent from within the organization. The ratio of internal to external hire at the first line manager level is 75:25, and this further tilts to 85:15 at the regional manager level.


05

Induction program for the field force is gaining a lot of significance. Organizations have started investing time and effort in conducting on-the-job induction at the field as well as corporate induction. This helps in aligning new recruits to the larger organization, equipping them with the requisite product and technical knowledge, and enhancing their speed, to perform in the market. This also, helps in addressing attrition to some extent. One of the leading global pharma organizations has a comprehensive induction program which consists of three stages as described below.

Illustration of a detailed induction program in one of the leading

multinational pharmaceutical firms in India.

Source: Aon Hewitt 2012 Study: Sales Force Effectiveness in the Pharma Sector

Measuring the Right Metrics Performance of the sales force is an important determinant of business success. Across sales-intensive industries, companies set targets which are either top-down or bottom-up or a combination of both these processes.

Achievement against targets is the key measure of performance across all levels. Sales roles at the managerial level end up being aggregators of sales achieved by the team below. Organizations are focusing on innovative ways of measuring sales force performance and ensuring that there are specific measures at each level. The study revealed interesting findings in the area of performance measures for various sales roles. While target versus achievement remained as the most prevailing metric across organizations, it did not capture the real potential of the organization. Companies are also focusing on field metrics which are more effort-based. This includes metrics like ‘physician call average’ for MRs and joint field work days for first line and second line managers. These metrics vary across organizations and therapy lines. The market norm on these metrics is as follows:

Field Metrics for Sales Roles


There is a wide range in the expected call average depending on the nature of products, it typically being higher for Primary business and lower for Speciality divisions. Organizations classify the relevant doctor population into various target segments and determine the frequency in which the field force is required to meet them. This varies from as high as once a week to once a month. The parameters that are used for arriving at the desired frequency include current contribution and business potential from the doctor, profile of the patients and prescription audit. Companies are incentivizing MRs and ABMs, not on call average alone, but also on achieving the desired frequency with each doctor. The other field metric that organizations track is the number of days that the manager needs to spend in the field along with the MR. Joint field work between the MR and the first line manager is an important element of the

“90% of the new employees make their decision to stay at a company within the first six months, hence, the first foundation piece becomes most vital and engaging. Our induction program is an honest approach to increase employee productivity and engagement with the organization.”

Pankaj N GursahaniDirector – Sales TrainingAstraZeneca

www.aonhewitt.com/india06

Companies focusing on innovative measures like coaching, balanced team performance, KOL coverage are more productive as well. This reinforces the belief that investment in people will reap higher results.

sales process. Organizations are encouraging managers to conduct agenda-driven rather than routine/ad hoc joint field work. The agenda should focus on KOLs to be covered, products to be focused on, in-clinic effectiveness, development plan for the MR, and follow up from the last joint field work. In some organizations, the field days are as high as 22 days in a month, which hardly leaves any time for analysis of business data and future planning. Companies have also started focusing on non-sales measures like development and coaching of teams, balanced team performance as indicators of performance. Organizations, who measure this, believe that the role of a manager is to coach and develop the team through joint field work and focused interventions which will lead to successful performance. Another interesting revelation was that while key opinion leader connect was an important strategy for most companies, not too many organizations tracked their coverage separately. What is also interesting to know is that companies focusing on innovative measures like coaching, balanced team performance, KOL coverage are more productive as well. This reinforces the belief that investment in people will reap higher results.

Most Frequently Occurring Metrics in Pharma Organizations at Various Levels


Focusing on Productivity Sales force productivity is a much talked about subject and there are innumerable metrics that can be tracked to measure productivity. The measures could range from return on investment on sales activities, compensation cost of sales, to per salesperson contribution. While there is a need to maximize return on sales force investment, not too many organizations are tracking productivity of sales force as a key metric in their business scorecard. Through the sales force effectiveness study, we tried to capture one of the most representative metrics which is contribution per salesperson. This includes the field force as well as the first and second line managers. The study aimed at identifying this magic number from various players in the pharmaceutical industry which is shared in the table below.

Business Unit Annual Revenue Per Sales Employee (` lacs) Average

Primary 34-46 41

Speciality 34-52 42

Super Speciality 61-97 78


We observe that the ranges for Primary and Speciality business are similar. While organizations have these two as separate business units, the way they operate is similar, leading to equivalent levels of productivity. It is the Super Speciality business where we observe a distinction in the way they operate in terms of nature of products, customer targeting, medium of promotion, talent profile and split of sales employees across levels which contribute to higher levels of productivity per person. Further probing reveals that in all the three business segments, organizations with higher productivity have

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07

a less fragmented geographic structure than the peers. There are lesser number of regions. Instead of dividing the entire geography into 8-9 regions, it is divided into 4-5 regions. This results in lesser administrative and operational responsibilities at the national sales manager level, thereby resulting in higher time for core activities like planning and selling. It also results in flexibility and adaptability of the organization to respond to the changing market needs. A deeper analysis into the productivity ratios of the Super Speciality segments reveals that there is an inflection point in terms of size of the Super Speciality division, above which the companies enjoy higher revenues per sales employee. This essentially means that post the achievement of a certain size, the productivity ratio increases on an exponential basis. The increase in productivity is due to advantages of larger portfolio size, marketing efficiency and portfolio diversification. This also implies a higher stability in the long-term performance of the business segment.

Conclusion and Way ForwardThere are numerous growth opportunities in this sector in terms of reach, rural penetration and high-end products. Sales forces in various organizations are competing with each other to capitalize on these opportunities. Managing effective sales teams is the key to success in the marketplace. With companies moving towards leaner sales structures to bring decision making closer to the sales operation and at the same time, targeting higher reach, the span of control for the first line managers is likely to increase. While organizations desire to have an optimal

Divya Mehta Senior Consultant,

Aon Hewitt, India

For more information, please write to us at

[email protected]

Given the criticality and challenges of the first line manager’s role, it is extremely important for organizations to equip this role. There is a need to invest in building their analytical skills, business acumen, leadership and coaching skills.

span of control of about 7-8, the actual span of control stretches to 9-10 in many pockets. Given the criticality and challenges of this role, it is extremely important for organizations to equip this role by leveraging technology and investing in building their managerial capability. There is a need to invest in building their analytical skills, business acumen, leadership and coaching skills. enhancing their managerial capability will also address attrition issues at the field force level to a great extent. There is also a need to create a mindset of efficiency and productivity within the sales team, especially when there are significant pressures on the bottom line. There needs to be focus around not just call average but also quality of conversations and achieving desired customer targeting. Rapid growth in the sector has led to suboptimal investment and attention towards developing middle management capability and leadership pipeline. There is a challenge of having the right talent at the right time and at the right cost. The sector is observed to have one of the highest salary increases to the tune of 13-14%. even during the slowdown, when most industries were giving single-digit increases, the pharmaceutical industry continued to give double-digit salary increases to employees, remaining mostly insulated from the slowdown. Growth, coupled with competition, is leading to increasing costs of attracting and retaining talent. The rising employee cost is putting pressure on companies to closely monitor and enhance employee productivity. Sales force productivity is going to be an area of increasing focus in the coming years. Getting more from less is the new sales mantra for the pharmaceutical sector.

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The past decade has seen unprecedented M&A activity globally. Our research indicates that we are at the beginning of another boom cycle (the last one peaked in 2007). In fact, as per published research, the first quarter of 2011 witnessed the highest M&A activity (~USD 800 billion) since 2007 and if, as likely, sustained at the same level,

will surpass the 2007 level this year. Another key shift we have observed is that upto 25% of the total deal flow is now in Asia Pacific (APAC) or from APAC firms. This trend is projected to strengthen in the near future with a bias towards increased inbound activity by MNCs (87% firms indicated increased APAC M&A activity) and outbound

Total Rewards for Deal Success

TotalRewards QUARTeRLyIndia • Volume 2 • Issue 3 09

M&A activity by Asian corporations. That is a significant indicator of the levels of M&A activity and the complexity that firms coming into, or APAC firms acquiring outside, will face given their relative inexperience with M&A and integration challenges. Couple this with the increasing trend of integration being a stated strategy for many M&A deals, and it creates a perfect storm of challenges that can risk both the short and long-term success of these deals. As the global focus on inorganic growth continues, it is interesting to examine some of the key people and human capital factors that can influence the realization of the deal objectives and synergies in a transaction. In a research that was recently conducted by Aon Hewitt across 103 global companies, the Number One factor that assumed importance in the minds of acquiring companies was 'Total Rewards'. In conjunction with the retention of key leadership and talent, Total Rewards is a critical aspect in the valuation and realization of deal synergies.

Highest Amount of Time Invested in Due Diligence

Source: Aon Hewitt

We also looked at the difference in practices and execution between the self-confessed 'overachievers' and 'underachievers' on deal success which throws light on some interesting facts. As an example, the design and execution of the rewards packages for key talent and leaders can often

determine the likelihood of their retention in the new organization. With nearly three quarters (71%) of organizations providing a retention package to targeted employees in the acquired firm, 57% of these companies continue to lose critical employees at the same or a higher rate than the non-critical staff. Given these rates of key talent loss, it is easy to understand that less than 50% of the deals have successful outcomes, and they actually realize the deal objectives and synergy targets that were originally forecasted. Total Rewards is typically defined as the package of monetary and non-monetary elements of value delivered to employees to drive performance. Though, for the purpose of the study, Total Rewards was defined as compensation and benefits programs only, excluding levers such as organization culture, work environment, etc.

Core 'DNA' Elements that Firms Need to Embed from a Total Rewards PerspectiveOur research shows that traditional elements of rewards pay benefits, and stock awards are no longer the differentiating factors for organizations. And with employee trust and engagement at a low, focusing on the total 'package' of pay and rewards, and not just pay, provides acquiring companies with a more compelling platform to engage and retain key talent. In the context of a merger deal, there is an even greater opportunity and need to address Total Rewards

While companies continue to struggle with achieving deal objectives and synergy targets, our research continues to show that a rigorous and systemic approach to addressing these areas with human capital levers over the course of a deal can be a tipping point for success.


– both for incumbent employees and new employees from the acquired organization. It is insightful to note that even with Total Rewards cited as a top human capital lever of deal success, only half of the companies indicated their Total Rewards initiatives as effective. It’s clear that opportunity exists for better leverage of a Total Rewards lever during deals. There was a clear distinction in the Total Rewards strategy of overachievers versus underachievers. In fact, the research corroborated this by demonstrating the ability of overachievers to retain critical talent at a rate of two and a half times (2.5 times) higher than that of underachievers due to rigorous focus on Total Rewards amongst other aspects. So, what are these 'DNA' strands that a firm should weave into its M&A strategy?

'DNA' Strand No. 1: Overachievers are More Laser-Focused on Key Total Rewards Liabilities While Doing Due DiligenceThere is a wide range of human capital considerations in due diligence. It includes the review of leadership and key talent, assessment of Total Rewards liabilities and comparability of designs, cultural analysis and assessment of compliance. However, overachievers not only spend a higher amount of time on Total Rewards liabilities and costs in due diligence, they are laser-focused on specific liabilities during this phase. As opposed to evenly spreading their efforts across Total Rewards elements in due diligence, overachievers also put additional efforts against (a) employment contracts as well as change in control and severance agreements; (b) executive compensation; (c) executive benefits/perquisites; and (d) defined benefits retirement plans. These areas are the most likely to create Total Rewards liabilities, and overachievers give them the appropriate extra effort to ensure that their deal model has captured these liabilities and costs.

'DNA' Strand No. 2: Overachievers Look at Total Rewards in the AggregateIncreasingly, leading companies are managing Total Rewards as an integrated portfolio and in alignment with the broader employee value proposition. When we examined overachievers and underachievers, we found that overachievers consider Total Rewards in the aggregate when negotiating the purchase agreement and determining their go-forward Total Rewards approach.

Source: Aon Hewitt

For example, 67% of overachievers most often agree in a purchase agreement to provide compensation and benefits that are substantially similar in the aggregate to the existing target company plans for a stated period after closing (compared to 50% of underachievers). They are also more likely to require this commitment for their employees in a divestiture situation (69% of overachievers versus 41% of underachievers). Further, 63% of overachievers, compared to 34% of underachievers, consider design changes 'across all Total Rewards programs on a holistic basis' when integrating acquired organizations.

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In conjunction with retention of key leadership and talent, Total Rewards is a critical aspect in the valuation and realization of deal synergies. Its criticality is underscored through the due diligence and integration phases of any transaction.

11India • Volume 2 • Issue 3TotalRewards QUARTeRLy

'DNA' Strand No. 3: Overachievers Make Performance-based Retention a Key Element of Total Rewards in AcquisitionsOrganizations haven’t lost sight of the importance of leaders and critical talent in driving deal success. In fact, respondents to our study indicate a strong commitment to retaining key employees with 70% of them always using personal communications and/or conversations with acquirer leaders in these efforts and 71% typically providing a retention package to acquired employees. Perhaps, equally important, 66% of all respondents identified addressing and implementing retention plans as one of the top three actions in Total Rewards, contributing most significantly to acquisition success.

Key Employee Retention Methods

Source: Aon Hewitt

One striking finding from the study results is the basis for payment of retention incentives. years ago, the payment of retention incentives was almost invariably based on the passage of time-stay with the combined organization for a period of time. The data now shows that at almost all levels of the organization, retention incentives include some element of post closing performance or achievement of deal objectives as a partial basis for payment. What drives the success of overachievers is how they structure their retention package. Not only do overachievers tend to develop a special retention vehicle using a mix of cash and stock above the individual contributor level, and uniformly pay retention within 1-3 years (and not beyond), they also measure their success more deeply in the organization – below the executive level with a combination of time and achievement of post closing metrics.

'DNA' Strand No. 4: Overachievers are More Equipped, More Focused and More EffectiveOverachievers ensure they have capable and adequate resources (internal or external) to support Total Rewards during the lifecycle of a deal and drive their effective execution. While most organizations in our study indicate relevant experience in different aspects of Total Rewards in both acquisitions and divestitures, 72% characterize capabilities to address the Total Rewards challenges in M&A as 'inexperienced' or 'building capability.' In our study, overachievers not only indicated higher levels of relevant experience for negotiating Total Rewards approaches when compared to underachievers, they were more than twice as effective at executing these initiatives in transactions. Perhaps, more importantly, overachiever organizations were most effective at retention planning, addressing retirement benefits, and addressing executive compensation plans – all consistent with the areas of focus in due diligence provided in 'DNA' Strand No. 1.

The Emerging Market PerspectiveThe DNA elements outlined are critical for and very applicable to emerging markets like India and China as well. But, there are nuances that are pronounced due to the dynamic nature of these markets. Let’s examine a few of the emerging market 'DNA' strands. Firstly, retention of talent in emerging markets is even more critical, given the severe talent crunch and rising cost of talent. An interesting insight is that the most successful

66% of all respondents identified addressing and implementing retention plans as one of the top three actions in Total Rewards, contributing most significantly to acquisition success.


Jaidev MurtiSenior Consultant – M&A Solutions,

Aon Hewitt, India

Sharad VishvanathPrincipal – M&A Solutions,

Aon Hewitt, India

For more information, please write to us at [email protected]

firms look equally closely at the 'mighty middle' or solid performers rather than just high performers or key talent. This results in two specific strategies. One, their retention strategies have to also focus on the non-cash lever of 'career and growth' without which pure cash-based retention levers can easily be bought out in the market especially if the talent is disengaged with the merger story. Two, successful firms will have an articulated retention strategy and fanatical execution for the larger ~50% of their solid performer population as well because attrition at any level can be crippling for the growth strategy which is inevitably a key rationale for the deal. Secondly, our research indicates that in deals involving family owned businesses in emerging markets, successful firms spend a lot more time and give more attention to rewards compliance and liability issues than in normal deals. This is critical as sometimes the 'operating in the grey area' factor for such targets can have significant compliance and monetary consequences. Thirdly, in emerging markets, executive compensation design though not always complex, is very important, given the leadership talent crisis in these markets (Aon Hewitt research predicts a 75% shortfall of leaders in these markets). Thus, successful firms who are overachievers, spend a lot of time in the design of executive compensation with sometimes granular details.

In SummaryOur research clearly illustrates the strategic importance of Total Rewards as a critical aspect of M&A activity. By being able to identify material liabilities in due diligence and drive better retention of employees through Total Rewards designs and retention packages, Overachievers have a clear advantage over their counterparts.

Our research indicates that in deals involving family owned businesses in emerging markets, successful firms spend a lot more time and give more attention to rewards compliance and liability issues than in normal deals.

In a nutshell, Overachievers are simply better at managing their money. Saving it in due diligence through liability identification and in integration through holistic, performance-driven, cost-based designs. They also spend it through well-designed, timely stay-and-play retention approaches. This leads to a retention rate and transaction success for Overachievers, that is materially higher than that of their competitors.

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Aon Hewitt 2012 Total Rewards Survey

Unlocking the Potential of

Total Rewards


Say it is critical But actually Do

Total Rewards often represents one of the largest investments that an organization makes. But, for most organizations, the return on that investment is disappointing to say the least. Consider that 60% of companies surveyed described their engagement levels as low and two-thirds indicated that the trend in engagement is holding steady or trending downward. Other research confirms that engagement is critically low and that churn, even amongst top performers, is high.

Total Rewards Priorities: High Aspirations but Mediocre Execution

88%Align Total Rewards with Business Strategy

56%

87%Have a Total Rewards Strategy in Place

25%

41%Manage Total Rewards as a Portfolio

9%

33% Use Total Rewards as a Differentiator 10%

46%Gather Facts to Drive Total Rewards Decisions

37%

37% Gather Input from employees 28%

24% Be an Innovator or early Adopter 19%

50%Differentiate Total Rewards for Performance

28%

73%Communicate Total Rewards effectively

49%

Source: Aon Hewitt 2012 Total Rewards Survey

So, how does such a promising concept like Total Rewards produce such poor results? The survey sheds some light on that question. The answer seems to lie in how companies execute or fail to execute on their approach to Total Rewards. There are three key issues:1. No Map (No clear link to business strategy or desired

outcomes) – Nearly 80% of survey respondents indicate that it is critical to align Total Rewards strategy with business strategy; only 51% are doing so and 75% of companies do not have a strategy for managing Total Rewards. It is as though most firms have chosen a destination but are navigating without a map.

2. No Compass (Failure to rely on hard data and metrics) – Only 42% of companies feel it is critical to gather facts to drive decisions on Total Rewards, and only 33% are doing so. The lack of sound fact base for decision making in Total Rewards likely

employers have seen the potential of Total Rewards for many years. each year, they invest vast sums on their Total Rewards programs to induce talented people to join their organization, to perform at levels that produce outcomes the employer is seeking, and to remain with the organization for as long as they continue to deliver results. But, are organizations reaping a sufficient return on this investment? Aon Hewitt recently conducted a survey to gather data about organizational priorities including current and future direction of their Total Rewards programs and to identify areas requiring additional focus. Interest in the survey was high, with nearly 750 organizations participating. In this article, we present a summary of the survey findings and Aon Hewitt’s analysis and recommendations for employers seeking to fully realize the potential of their Total Rewards programs. Overall, the survey results suggest there is much room for improvement in how employers manage their Total Rewards programs. The responses also point to a number of areas where employers, who want to raise their game can do so. Practices of high performing organizations point the way towards some of the initial steps and some more advanced actions employers can take to improve the return they are getting on their Total Rewards spend.

High Aspirations, Mediocre Execution, Poor OutcomesThe scope and breadth of Total Rewards leads to high expectations and aspirations. Survey results show that many business leaders and HR practitioners believe that when Total Rewards are properly aligned, designed, and delivered, the impact on individual engagement and organizational performance can be significant. Consequently, there is great interest in finding ways to unlock the potential that Total Rewards offers as a management tool. However, many organizations struggle to find the right combination. The survey results confirm that aspirations for Total Rewards are high, and that few are fully realizing them: 41% of participants say they want to be managing

Total Rewards as a portfolio or package; however, slightly less than 10% are doing this today

One-third of companies surveyed want to see their Total Rewards as a differentiator, but only 10% say they are there today

One-quarter of survey respondents want to be early adopters and innovators in Total Rewards, but again, only 10% say they are there today

COVeRstory


represents a root cause for the low return on investment in this area.

3. No Radar/Sonar (Not listening to employees or asking leaders) – While one-third of the survey respondents say it is critical to gather data from employees to manage Total Rewards, only one-quarter are doing so. This explains why roughly half of the survey respondents report that they do not have reliable data on the rewards preferences of their high performing and high-value employees and they do not understand how employee preferences differ in key geographies.

In sum, the survey points to widely shared high aspirations for Total Rewards programs and fairly widespread mediocre execution leading to generally poor outcomes and results.

Are High Performing Companies Doing Anything Differently? If we dig a little deeper, we find that some organizations are getting better results. The question is: Are they doing anything differently in their approach to Total Rewards that others might learn from?

The survey results do show two major similarities between high performing companies – 'the best' and 'the rest':1. Both groups identified that the same programs are

most important for attracting and retaining talent. 2. Both groups also identified similar planned investment

re-allocations in Total Rewards programs.

So, they are focused on the same programs and shifting their investments in similar ways. However, survey results show that high performing organizations do five things differently than 'the rest'. Specifically, they 1. Articulate clearer strategies and different goals:

Whereas the data indicates consistency across

companies in terms of program importance and likely re-allocations, the first key differentiator of high performers is strategy and focus. High performing companies declare Total Rewards as an area of focus and clearly articulate a Total Rewards strategy at almost twice the rate of other sampled organizations.


2. Balance more inputs for decision making: We also see a difference in how high performing organizations inform their Total Rewards decisions once they have a strategy. Across the board, high performers are using more data inputs. They balance multiple inputs that include business alignment, competitive position, cost and compliance. Further, attention to program alignment with business performance is the dominant differentiator between high performing companies and 'the rest'.


Who are the high performers? For this study, we identified 'high performing' organizations, as those that achieve the highest levels of:1 Revenue against objectives.2 Innovation.3 High employee engagement.

Using this definition, we found 150 organizations in our study sample, representing approximately 20% of the total number of participating organizations. Those that did not meet all three criteria are identified as 'the rest'.


High performing companies are almost 50% more likely than 'the rest' to look at cost versus business objectives rather than only cost versus budget. This might be viewed as a signal that 'the best' are looking at Total Rewards expenditure as an investment that is expected to help generate a result rather than simply as a cost.

achieve better operational efficiency, M&A success, customer service and delivery of quality products/services than other organizations. There are many reasons why this may be the case (including correlation of these outcomes with our high performing criteria), but in our sample of high performing companies, we see strong patterns in how they articulate a Total Rewards strategy, gather input, deliver programs, and measure success relative to alignment with the business. It stands to reason that companies that focus on business alignment in Total Rewards design would see better business outcomes.


3. Connect to the business and employees: While most companies seem to be declaring similar directions in planned investments, the high performers are simply executing better. There are three areas of focus when it comes to execution: Aligning programs with business objectives, being innovative and flexible, and communicating effectively. A key differentiator for high performing companies is that they use business alignment as input into Total Rewards strategy and decisions. Logically, one would hope that high performers, in fact, achieve better alignment between Total Rewards programs and the business relative to other companies. Indeed, this is what we found.

4. Define effectiveness differently: employee engagement is the single most common measure used by high performing companies to evaluate the effectiveness of their Total Rewards programs. The most common metric among 'the rest' is cost versus budget. High performing companies use a cost lens, too, to evaluate Total Rewards. Interestingly, though, they are almost 50% more likely than 'the rest' to look at cost versus business objectives (while the rest are more likely to look at cost versus budget). This might be viewed as a signal that 'the best' are looking at Total Rewards expenditure as an 'investment' that is expected to help generate a result rather than simply as a cost. Can the desire to measure return on investment be far behind?

Use of Total Rewards Success Metrics


5. Enjoy better human resource outcomes: We find that high performing organizations outperform 'the rest' of survey respondents on important business and human capital outcomes. High performing organizations

COVeRstory


Consequences are CostlyThe survey results identified three major consequences for companies that do not manage Total Rewards effectively:1. Missing valuable input from employees, which may

lead to lower engagement and higher turnover.2. Missing opportunities to manage Total Rewards as a

portfolio, which may lead to higher costs and lower effectiveness, and

3. Introducing unnecessary risk into their Total Rewards approach.

This last point is often overlooked, even though, failure to identify and properly manage risk relating to Total Rewards can lead to damaging an organization’s brand, loss of customers and a reduced ability to attract and retain employees. expanding the evaluation of Total Rewards programs to include efficiency, effectiveness and exposure to risk alongside competitiveness, cost and compliance, is one way companies can begin to find ways to improve the return on their Total Rewards investment.

Much Change is DesiredThe survey results show that these high aspirations and poor execution combine to produce a situation where much change is desired. Among survey respondents, 93% say they believe some change will be required in their Total Rewards in order to meet their business and workforce needs with 38% indicating that significant change will be needed. Survey results suggest progress normally occurs in three sequential phases: 1. Catching up – For many companies, the

activity around Total Rewards is likely to involve addressing some basic needs, such as putting a Total Rewards strategy in place, aligning leaders to the direction set for Total Rewards, addressing organizational structure and cultural issues.

2. Moving forward – Survey results suggest that many employers would like to make shifts in how they design and administer their Total Rewards programs. Total Rewards optimization and managing rewards as a process are likely to play key roles here.

3. Pulling ahead – A further testament to the perceived potential and high aspirations that respondents associate with Total Rewards is revealed in the following two facts. First, while 10% of the respondents currently see their Total Rewards as a differentiator for their organization, 33% want to. Similarly, while 10% of respondents describe their organizations as an 'early adopter' of leading edge Total Rewards concepts, 25% want to be seen this way.

Furthermore, survey results suggest that organizations with a sound foundation already in place will be creating competitive advantage by focusing on differentiation and innovation in their Total Rewards.

Shifts in Design of Total Rewards Program Respondents Expectto See Less...

Respondents Expect to See More...

Decentralized approaches to rewards

Centralized approaches to rewards

One-size-fits-all approaches to rewards

Customized rewards programs

Rewards being managed element by element

Rewards being managed as a portfolio

No choice offered Individual choice

Same rewards for all Differentiated rewards based on performance

Rewards linked to company-wide results

Rewards tied to individual performance

Rewards based on results and effort

Rewards based on results only

Company bearing cost and risk in rewards programs

employee bearing cost and risk in rewards programs

'Need to know' mentality driving communication

Open communication about rewards


How can Organizations Pull Ahead? The Way Forward is ClearCharting a course forward involves addressing what are seen as the main impediments to change. Survey results suggest several barriers need to be overcome with respect

Organizations with a sound foundation already in place will be creating competitive advantage by focusing on differentiation and innovation in their Total Rewards.


COVeRstory

to the Total Rewards program: little or no awareness of Total Rewards objectives, leaders not being aligned, organization structure, cultural barriers, budget constraints, HR structure, governance and decision rights, HR resource constraints, global framework and local application. The good news is that except for budget constraints, HR owns most of these barriers and is therefore in a leadership position to drive the Total Rewards agenda.

Call to ActionTaken together, these results are a call to action. Survey findings suggest that organizations should:1. Create the map – Clearly articulate a Total Rewards

strategy, if they are among the 75% of companies currently managing this significant expense without an overarching plan for doing so.

2. Check the compass – Set direction and align leaders using a solid fact base that, of course, includes information on cost, competitiveness and compliance, but also includes metrics that cover efficiency, effectiveness and exposure to risk.

3. Check the radar and sonar – Before setting off, listen to the voice of employees (and prospective employees) and gather inputs from leaders. Total Rewards programs are supposed to help attract, retain and motivate key talent. How can you be sure to do that without first understanding, in great detail, what it is that key talent actually wants? Total Rewards also ought to support business strategy in a way that reinforces the leadership’s desired operating style.

Understanding these two perspectives – employees and leaders – requires actively gathering their input in a systemic, quantifiable manner so that it can be rechecked and recalibrated as required over time.

4. Start the journey – Rebalance the rewards package using a portfolio approach. One of the most stunning survey findings is that 41% of companies want to be managing Total Rewards as a portfolio, but only 9% are doing so today. This 'knowing-doing gap' must be clearly understood and addressed if your organization wants to achieve breakthrough results with its Total Rewards.

5. Don’t forget your telescope. Finally, changes must be introduced and their impact measured and evaluated in a manner that drives subsequent interventions and improvements. Total Rewards must be managed as a system, using a six sigma type methodology. Measurement is often retrospective, but leading organizations will find telescopes that allow them to look ahead to find new and innovative ways to approach Total Rewards while avoiding the unintended consequences from changes they have adopted.

Success will require foresight – the ability to accurately forecast workforce trends, emerging competitive practices, potential regulatory changes, and the future wants and needs of talented workers. The survey data will help to describe the nature of the terrain and the course to be followed to arrive at more effective Total Rewards programs. Wherever possible, we have tried to peek over the horizon and to offer some advice on what might be coming so that those who are on the lookout can navigate their way to success.

Several barriers need to be overcome with respect to the Total Rewards program: little or no awareness of Total Reward objectives, organization structure, cultural barriers, budget constraints, etc.The good news is that, HR owns most of these barriers and is therefore, in a leadership position to drive the Total Rewards agenda.

Richard G KantorPartner – Human Capital,

Aon Hewitt


[email protected]


High-Tech Industry

John Radford Founder, Radford

Hardwiring Total Rewards Strategies


Q. What in your view are the top three Hr challenges for global It firms today, as they continue to face a gloomy macroeconomic environment?A. While the challenges facing global economic growth persist – the eurozone crisis, a weaker US recovery, and a slowdown in China – the outlook has stabilized. In the US, some estimates actually show a slight increase over the next 12 months. emerging markets for IT spending is USD 1.22 trillion or 31% of the total IT spending. Coming to the HRchallenges, in my view: Talent remains the top issue at

most technology companies around the world – both attracting and retaining talent. With more pressure to manage costs and profit performance, ensuring you have hired the best talent at an appropriate wage that can grow with the company and reach higher levels of performance, is critical. We continue to ask employees to stretch their skills and take on more work, which can challenge engagement and commitment

The second would be development, which is directly linked to the issue of talent management. As costs get tighter, and expenses have to be managed, companies need to find creative ways to provide new and challenging opportunities for top talent and emerging talent. This means low-cost investment, on-the-job training, rotational assignment, interesting project work, development of new skills and capabilities

And the third would be career planning and flexible staffing for the many employees that have

seen their retirement plans change with the economic environment. That means, people are staying in the workforce longer, leading to less upward mobility for high performing and emerging talent. Finding innovative ways to create flexible work arrangements and creating multi-year retirement transitions to enhance the knowledge transfer will be critical. In a tough economy, companies frequently pull back on flexible staffing and remote staff due to productivity concerns. In our view, it is during these times that you can use these tools to the maximum advantage since staff are less mobile and likely to have a higher concern about remaining employed, albeit, in a manner that fits their broader career planning goals

Q. How are rewards strategies changing in response to the economic environment? Are you seeing them evolve differently for emerging economies like India and China as against the Us and the UK? A. These changes are less market-specific and more company-specific since many technology companies have an overall global compensation philosophy and approach. That said, it is clear that there remains a concern in the emerging and growth markets that cash compensation, both salary and bonuses, are rising at a higher rate due to market conditions and macroeconomics. This is leading companies to focus more of their total compensation spend in the form of cash than long-term or equity incentives. With growth slowing in the US, and staff oriented towards equity, we

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John Radford co-founded Radford in 1975 and led the firm to a premier market position as the top compensation survey provider for the technology industries. After nearly 20 years at Radford, he accepted the top compensation position at Cisco Systems, where, over the next eight years, he implemented some of the most recognized and leading compensation and HR-related programs in the field. John rejoined Radford in 2002 as the Senior Vice President. His primary responsibilities include the overall management of the Global Life Sciences Survey and the management of the company's Strategic Steering Committees. He is also a regular speaker on a wide variety of compensation topics.


have seen a move away from stock options to full-value shares to avoid the underwater option issues that are a by-product of volatile markets. Companies are always looking to balance the needs of a global philosophy with regional or local market needs, not to mention to optimize the tax benefits that are delivered via various forms of compensation. Having said that, it is clear that technology companies prefer to increase the focus on pay for performance, rather than entitlements, which supports the underlying tenants of the sector globally.

Q. What is your view on the extent of regulation that has been introduced, for top executive compensation. Do you think increased regulation will lead to better governance? A. First, it’s interesting to note that much of the regulation adopted in the US after 2008 remains a work-in-progress. Aside from Say-

on-pay, which is certainly a huge development, the SeC is still working through the implementation of hundreds of Dodd-Frank rules, both related and unrelated to executive compensation and governance. As such, it is difficult to say at this particular moment whether the new regulatory regime is actually working. We really need another year or two for a full check-up. And of course, before then, we have a Presidential election looming, which could potentially result in a dramatic change of direction in the overall regulatory environment. It’s an interesting state of affairs to say the least. Still, with all that said, the big event of the last few years is clearly Say-on-pay. Like it or not, Say-on-pay is having an effect on the way US companies think about executive compensation and governance. Whether Say-on-pay ultimately creates better long-term links between pay and performance

remains to be tested, but the process of having votes (annually for many companies) is forcing corporate leaders to become more aware of shareholder concerns and to more actively engage in a discussion with their major shareholders. At the very least, we believe, direct communication between shareholders and companies is beginning to boom. Forward-thinking companies are now much more aggressive about going directly to shareholders to share their side of the compensation story, and congruently, shareholders are getting more transparent about their desires. In some ways, Say-on-pay is forcing companies and shareholders to work more closely together, and that certainly seems to be a good thing. Conversely, there is still a danger. Say-on-pay votes can be abused, for example, as a referendum on non-compensation-related issues or to express displeasure for short-term dips in performance when a company might be doing very well over the long-term. This issue was raised at the beginning of the Say-on-pay debate, and I believe, it remains unresolved to a degree. However, I think all sides understand this concern, and will continue to work together to ensure Say-on-pay votes remain focused on the core issues at hand – executive compensation and governance.

Q. How have the roles and priorities of compensation committees evolved in response to this changing environment? What in your opinion should be their key focus areas? A. After the introduction of Sarbanes-Oxley Act in 2004, the roles and responsibilities of audit committees were greatly expanded. As a result,


We can’t stress enough on the simplicity imperative. Companies with complex plans have sales representatives fussing over calculations they can’t understand, losing trust in the system, and ultimately not selling.

committees. Again, reviewing these issues on an annual basis will likely become a part of most compensation committee agendas

Seeking new ways to improve alignment between shareholder value creation and executive compensation – Ultimately, the focus of most compensation committees today is seeking new ways to not only align shareholder and executive interests, but to truly align shareholder and executive outcomes. For example, at Radford, we’ve witnessed a significant increase in the adoption of performance-based equity awards, particularly awards tied to relative total shareholder return (TSR) metrics. These developments all point to compensation committees trying to tighten the relationship between pay and performance

Compensation risk management – Finally, compensation committees are required to certify that their compensation plans do not result in excessive risk taking. This review is typically undertaken by the management, with the oversight of the compensation committee, and not just for executive compensation plans, but for all pay plans

Q. What in your opinion are the key success factors that organizations should bear in mind to ensure effectiveness of their sales compensation plans?A. If the goal is growing the top line, then, the key success factors are focus and clarity. First, ensuring jobs are focused on markets and customers that can best provide the company profitable growth; and second, motivating employees

time commitments (and pay) for audit committee members rose and continue to do so. The same can be said for compensation committees after Dodd-Frank, and in any country where Say-on-pay was recently adopted for that matter. Serving on a compensation committee is an increasingly challenging task, requiring more time and expertise than ever before, and members have also taken on more personal risk and reputational risk. In short, the compensation committee is the new audit committee. In light of Dodd-Frank and Say-on-pay, compensation committees in the US are increasingly focused on several core tasks (beyond their traditional work of setting executive pay and overall compensation strategy): Providing oversight of the

Say-on-pay process – This includes monitoring how compensation programs are described and communicated, responding to shareholder inquiries (perhaps even acting as direct spokespersons for compensation programs). For most companies, monitoring Say-on-pay results, trends and response tactics is now an annual task

Greater emphasis on committee and consultant independence – As a part of Dodd-Frank, the SeC recently released new rules governing the compensation committee independence and the process by which compensation committees assess compensation advisor independence. At least in the near term, getting up-to-speed on these new requirements and implementing any needed policy changes will be a focus for many compensation

through compensation plans that are simple, competitive and aligned with the selling strategy. Tactically, this means customer segmentation, job role definition, process refinement, and sales compensation re-alignment with company objectives (checking the eligibility criteria, target pay levels, pay mix, performance measures, pay delivery mechanics and quotas). But overall, we can’t stress enough on the simplicity imperative. Companies with complex plans have sales representatives fussing over calculations they can’t understand, losing trust in the system, and ultimately not selling.

Q. the hi-tech sector in India is beginning to experiment with new models of workforce management like 'virtual work arrangements', personalized rewards in the form of 'flexible benefits', etc. to cater to the growing diversity in employee expectations. How successful have these practices been around the globe in helping organizations attract and retain the right talent?A. Flexible benefits plans have been in the US for some time, since there are limited government programs to provide healthcare coverage. These

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programs have helped companies better communicate and manage the total value proposition to employees and to give employees more choice in their benefits investment. For most companies, this has also helped them manage costs more effectively. So, there is a view that this has been effective in driving behavior change and improving the overall satisfaction of the plans through employee choice. Flexible work arrangements have been used at various times as companies seek to manage life transitions, including part time work arrangements, work from home or remote staff, and job sharing. In growth times, where supply and demand for talent are tight, these are competitive advantages to be used. In markets, where supply outstrips demand, and there is concern on worker productivity, we see these plans get scaled back. Our view is that, with the changing workforce demographics, the use of mobile technology and other social forces, that provide more choice, within a well-defined policy can only serve to help employee engagement, and the attraction and retention of staff. If you go back to the top

three priorities at companies, this is a great employment differentiator and can help on many levels.

Q. the wage inflation and increasing competition from countries in the region has brought forward the debate on India's eroding competitive advantage as far as cost arbitrage is concerned. What in your opinion is the unique value proposition that India can capitalize on?A. India has great potential to maintain a competitive advantage, but not from labor cost arbitrage alone. While several years ago India was chiefly viewed as a low-cost destination for IT outsourcing, double-digit salary increases have propelled wages in the technology sector to a level of parity with other emerging markets – and for highly skilled professionals and management in particular, India wages are moving closer to the levels in advanced economies as well. This puts pressure on organizations in India, as elsewhere, to improve the performance of its employees, i.e. not just to try to hold down wage increases, but to improve the productivity of its labor force. When you’re in a rapid growth mode, as India has been, it’s natural to try to hire as quickly as possible to fill the employee pipeline. But, when growth slows down a bit to what might be more sustainable (and rational, some would say!) levels, then the emphasis switches to the quality of that labor, not just quantity. That’s when the emphasis shifts to employee training, career development, performance management and other measures of HR effectiveness. To be sustainable, wage gains need to be associated with increases in productivity.

For more information, please write to

us at [email protected]

It is true that as companies continue their globalization trend unabated, they are expanding not only in India, but throughout the world. Not just the markets they sell to, but where they set up their manufacturing, product development, and service and support operations and the staff to support them. We recently looked at the employee locations of a group of 50 of the largest US headquartered technology companies in the Radford survey and found that two-thirds of their employees are based outside the US. While the number of locations has certainly increased with many companies entering or continuing to build a presence in emerging markets such as Brazil, Malaysia, Philippines, Vietnam, Mexico, South Africa, Romania and Bulgaria – this may be for local language requirement or to better serve the local market. But still, a major portion – 10% of their global workforce is in India. And we don’t see that changing dramatically. With its large source of IT talent and the commitment of technology companies in the creation and modernization of data and R&D centers in India, we think that India will remain very important for the IT sector.

With the changing workforce demographics, the use of mobile technology and other social forces, that provide more choice, can only serve to help employee engagement.


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'Total Rewards statements' TRsemployers have seen the potential of Total Rewards for many years. each year, they invest vast sums on their Total Rewards programs. But are organizations really reaping the return on their investments? Aon Hewitt can help Quantify and define the full value of your Total Rewards programs Communicate them in a clear, concise and consistent manner Innovate and differentiate your programs for a sustainable competitive edge

Introducing 'Total Rewards statements' TRs An online employee portal that can consolidate in one convenient platform – the full value of Total Rewards, details of relevant policies and programs, essential employee profile and career history, calculators to model future wealth creation, make flexible benefits choices and much more.

If you are a Head of Compensation or Head of HR of an organization in India, the article title is a question that you are likely to be grappling with. The deteriorating economic environment, reducing pace of growth and rising inflation have put immense pressure on margins. Double-digit salary increases, which were a given in the past, are now being scrutinized and questioned. Pay competitiveness, which was the central focus of the pay budget discussion is no longer a sufficient premise for budget approvals.

Until recently, projected salary increase data, market salary benchmarks, individual compa-ratios and attrition data, coupled with feedback from employee engagement surveys, would be enough to get most budget proposals signed off. While this might have worked in the past, it seems out of place in the current scenario. HR is now expected to go beyond and find solutions to fund the proposed increases with an additional dimension of manning and productivity.

“Double-Digit Increase, Again? Where is the Money?!”

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It needs to work closely with the business units to come up with more tangible wage proposals to assist effective decision taking. Simply put, they need to come up with business proposals and not just budget proposals. No CeO or compensation committee will reduce or rationalize salaries, if they can see that HR is running a productive shop as compared to the best in the industry. This discussion probably sounds a bit utopian without credible data to understand market dynamics. While getting the right market benchmarks on productivity is critical, what’s even more important is to understand your own data in the right context. After all, no two organizations are the same, and without the right context, the entire exercise will be futile. We have recently worked with 12 prominent organizations in the consumer industry to collect and analyze some interesting trends in manning and productivity. The study involved collecting detailed information around headcount and payroll costs across 10 levels, 14 functions and multiple sub functions. We analyzed various business metrics at an overall organization and functional level. The study is complete in all aspects. The only caveat is that the data collected is for white collar employees only. While the study has immense benefits for participating organizations, the insights are good food for thought for the industry at large.

Does It Pay to Track and Manage Payroll Costs?Payroll costs are the biggest line item in an HR budget, hence, it should not come as a surprise that managing payroll costs efficiently will yield tangible results. Payroll cost as a percentage of revenue in consumer companies is at 4.6% at the median and the same payroll cost as a percentage of profits [Profit After Tax (PAT)] is at 50.3% at the median.

Total Payroll Cost as a Percentage of Revenue

Parameter P50

Payroll Cost as a Percentage of Revenue 4.6%

Payroll Cost as a Percentage of PAT 50.3%

Source: Aon Hewitt FMCG Manpower and Productivity Study 2012

P50 – Median or 50th Percentile

While the number seems relatively small when compared to the revenue of the organization, it seems

much bigger when compared to profits. It certainly provides an opportunity for organizations to optimize this line item and add directly to the bottom line. While most organizations seem to be tracking this information from a financial reporting perspective, only a handful were looking at underlying factors that were influencing this metric. Fewer still looked at it as an ‘HR metric’. It’s no surprise then, that those organizations (mostly Indian promoter-led organizations) that were not only tracking this information regularly, but also had this metric as a part of the HR dashboard, have fared better in terms of managing their payroll costs.

Is the Pyramid Making Sense?One of the important parameters to optimize payroll cost is to study headcount and corresponding payroll costs across levels of management. An analysis of headcount distribution for organizations across levels of management shows that at the median, about 75% of the organization is in front line roles, followed by almost 16% at the junior management. Only 10.7% of the headcount comprises middle management and above.

Headcount Distribution by Management Levels

Headcount P10 P50 P90

Top Management 0.1% 0.5% 0.9%

Senior Management 1.4% 2.2% 3.0%

Middle Management 4.9% 8.0% 9.7%

Junior Management 11.3% 15.9% 32.1%

Front Line 57.2% 74.4% 81.7%


P10 – 10th Percentile, P50 – Median or 50th Percentile, P90 – 90th Percentile

HR is now expected to find solutions to fund the proposed salary increases with an additional dimension of manning and productivity. It needs to work closely with the business units to come up with more tangible wage proposals.


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However, when we evaluate payroll cost distribution by levels of management, at the median, 37% of the payroll cost is attributed to front line, 23% to junior management and 40% to middle management and above.

Payroll Cost Distribution by Management Levels

Payroll Costs P10 P50 P90

Top Management 3% 8% 11%

Senior Management 10% 13% 16%

Middle Management 17% 22% 24%

Junior Management 18% 23% 31%

Front Line 22% 37% 44%



This amounts to approximately 10% of the headcount contributing to 40% of the payroll cost and 75% of the headcount contributing to only 37% of the payroll cost. Clearly, if one wants to manage payroll costs better, the focus should lie in making middle management and above more efficient. An analysis of headcount across different levels of management throws up a wide range across organizations. There are various reasons for the differing distribution of headcount, but interestingly, for many organizations, it has evolved by default rather than by design. Mature organizations that have had operations in India for a long period of time, seem to be experiencing a bulge at certain levels. One of the reasons for this trend is that they have low attrition coupled with a slower pace of progression, that has led to roles being manned by more experienced profiles, and hence, a higher payroll cost. We also tried to evaluate if shared services setup or technology enhancement throw up different pyramids or leaner structures. Unfortunately, there were no conclusive trends, perhaps because these are early days or perhaps companies are shying away from taking tough calls.

Are Heavy Corporate Functions an Overhead that is Best Avoided?Corporate functions define the strategy and provide a governance mechanism for any organization, while non-corporate functions are meant to manage on-the-ground execution. It will certainly help to evaluate how heavy or lean corporate functions influence the payroll cost.

On the payroll cost analysis, corporate ranges from 21% to 52%, while on headcounts, it ranges from 5% to 22%. Considering that payroll cost is a function of both headcount and pay competitiveness, you will notice that despite headcount percentage contributions being similar for two organizations; their payroll cost percentage is higher/lower depending on pay competitiveness.

Corporate Headcount and Payroll Cost


On analysis of corporate versus non-corporate ratio along with levels of management, we found that organizations that have a high level of front line staff are the ones that have leaner corporate ratios. It appears that companies that have a clear intent to beef up their front line are the ones who are conscious about ensuring a lean corporate structure. We also tried to evaluate if this phenomena has any correlation with the size of the organization and we could not come with any. In fact, organizations of similar size and similar growth projections have very different corporate to non-corporate ratios. Clearly, organizations can do a lot to make their pyramids and mix of corporate versus front line much more efficient and optimize payroll costs.

What is the Ideal Mix of Core Versus Support Functions?One of the most commonly evaluated ratios has always been the tooth-to-tail ratio. Organizations want to ensure that the maximum skew of headcount is towards the core functions and the support functions are rationalized as much as possible.


We have considered the CeO’s office, sales, marketing, operations, R&D and supply chain as core functions; finance, HR, procurement, IT, administration, legal and corporate communications as support functions. In this ratio, there is very little deviation between organizations. The core functions on headcount seem to contribute to about 83% of the organization with a positive/negative deviation of just about 2-3% from the median. The payroll cost also shows a similar trend of a median of 76% with a deviation of about 2% (positive and negative).

Distribution of Headcount and Payroll Cost of Core and Support Functions



All organizations seem to be tracking and managing this metrics (also called tooth-to-tail ratio) very closely and hence, the payroll cost deviation seems to be primarily caused by different spreads in the levels of management and corporate/non-corporate mix. Following is a quick snapshot of how consumer organizations are splitting their headcount across various functions.

Distribution of Headcount Across Functions

Headcount P10 P50 P90

Sales 40.3% 52.2% 60.6%

Marketing 2.1% 2.8% 4.1%

Operations 12.5% 21.3% 29.0%

Finance 6.5% 8.2% 9.1%

Human Resources 1.9% 3.6% 5.0%

Research & Development

1.1% 2.7% 5.6%

Supply Chain 2.0% 5.1% 6.2%

Procurement 0.6% 1.7% 4.1%

Information Technology

0.1% 1.4% 2.4%

Administration 0.1% 0.3% 0.8%



Maximum deviations exist in information technology, administration, R&D and procurement functions. These deviations are on account of shared services or outsourced model of operations, especially in IT and administration. Organizations that depend on commodity procurement as a core driver of their product profitability seem to have enhanced procurement functions. The deviation in operations is due to reliance on contract manufacturing models in organizations.

Deep Dive Into the One Function that Gets Maximum Attention (Sales)Sales function is one of the most tangible of all functions, other than perhaps operations. It has extremely quantifiable outputs to achieve and hence, it is also the one which has the maximum number of metrics to measure its efficiency.

All organizations seem to be tracking and managing the tooth-to-tail ratio very closely and hence, the payroll cost deviation seems to be primarily caused by different spreads in the levels of management and corporate/non-corporate mix.


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For the consumer industry, some of the common metrics are stated below:

Sales Force Effectiveness Metrics

Parameter P50

Revenue Per Sales employee (` cr.) 4.37

Revenue Per Branch Manager (` cr.) 708

Revenue Per Region Sales Manager (` cr.) 180

Revenue Per Area Sales Manager (` cr.) 47

Revenue Per Sales executive/Officer (` cr.) 8



Considering that all consumer organizations are in similar business, one would expect that these sales force effectiveness ratios will probably cluster around a specific number. However, we notice a huge range across all the parameters – the range is as much as double of the median at the higher percentiles, and more than half of the median at the lower percentiles. When we correlated sales corporate headcount percentage with revenue per front line (sales executive/sales officer), we found that the two are very strongly correlated (.85).

Correlation Between Sales Corporate Headcount and Revenue Per Front Line Sales (Officer and Executive)


While it is difficult to conclusively understand what’s driving this strong correlation, we are tempted to hypothesize that there are different distribution and outsourced manning models which explain this swing in ratios. We believe that we need to do more research and perhaps compare specific organizations to this ratio and

Pay will no longer be just a function of market positioning but will also depend on how efficiently the role performs its job.

come up with organization-specific answers that will explain this better.

Parting RemarksThis analysis has certainly proved that there is enough and more opportunity within consumer organizations to optimize their payroll costs. Factors such as the organization pyramid, corporate to non-corporate and function-specific ratios, if managed well, could contribute substantially to managing payroll costs and running an efficient shop. For individual organizations, what will be even more interesting is to evaluate these ratios and numbers along with compensation competitiveness. It will pave the way for creating a business case for paying individual roles much higher or lower than the market depending on the productivity. Pay will no longer be just a function of market positioning but will also depend on how efficiently the role performs its job. The next time HR is asked why double-digit salary increases, HR will not just have a proposal to ask for budgets but will have a business case backed with avenues to fund such increases. All this, while making the organizations much more efficient.

Pratik RathoreDirector – Consulting,

Aon Hewitt, India


[email protected]


Brand India has taken a hit in the last two years on account of slowing growth and political roadblocks with the downside risk increasing due to a deepening eurozone crisis, a depreciating rupee and a plethora of regulatory issues and policy hurdles. While the other BRICs have slowed too, India's growth performance in 2011-12 was the worst in the past nine years and a repeat of that in 2012-13 will make it two years in a row. The months to come will determine if the big bang reforms recently announced by the government revive the growth or political inactions keep the economy in status quo. evidently though, the uncertain economic environment is beginning to have a moderating impact on India Inc’s confidence and business outlook. As reflected in Aon Hewitt’s Global Salary Increase Survey 2012-13, organizations are taking a cautious stance on fixed compensation increments and seem to be in a wait and watch mode. The average actual increase for 2012, as reported by 550+ organizations in the recently concluded Annual Salary Increase Survey ranged from 7.5% to 12.8 % across sectors and closed at an all India average of 10.9%. Most sectors have revised downwards from their earlier projections, keeping a tight rein on salary increases. In line with the somber mood of the industry, the projections for 2013 are even more conservative with the

all India average at 10.6% and some sectors reporting projections between 7-9%. While the slowdown is evident from the relatively lower numbers, business leaders and HR professionals are cautiously optimistic and did not report plans for salary freeze for 2013 (barring 1% of the participating organizations). Also, in comparison to other BRIC countries, India still continues to top the charts followed by China (9.3% projected for 2013).

Average Salary Increase – BRIC Countries

Mixed Industry Sentiments As cost pressures intensify and the concerns about the slowdown begin to spill over into the workplace, there

Slow Growth ImpactingSalary Increase in India?Salary Increase Survey


are some industries which still seem to have a glimmer of hope and posted optimistic compensation spend for 2013. The mainstay sectors like manufacturing, consumer, chemicals, life sciences and engineering continue to ride the bandwagon with higher salary increases between 11-13% (Actual 2012 and projected for 2013). The life sciences sector seems to be a recession-proof industry. The growth drivers in this sector largely revolve around increased investments, greater penetration in Tier II and below cities, increased R&D investments and export revenues due to presence in the generics space. Overall, the industry outlook for this segment is buoyant as is reflected in the last two years salary increase numbers which have ranged between 12-14% with projections for the next year in the same range. The FMCG sector has been growing at 12-15% annually for the best part of the last decade and is likely to remain at these levels. Increasing input and logistics costs, a depreciating rupee and new packaging norms, however, are pinching organizations in this sector. Organizations are focusing on new product launches and innovations as they enter and expand into newer categories to garner market share. Overall, the sector seems to be somewhat immune to the gloomy mood of the economy and reported a 12% average projected salary increase for 2013. While the July estimates of HSBC India Manufacturing Purchasing Managers Index signal a slowdown in growth for the manufacturing sector with the slowest pace of expansion in the last eight months, the industry has been fairly resilient to the economic slowdown in the last 2-3 years by virtue of it being heavily reliant on the domestic economy. The sector has seen stable increases in the range of 12-13% over the last two years with projections for 2013 slightly down at 11.3%.

Engineering design organizations in India have braved the economic upheaval with the sector witnessing a CAGR of 12% since 2008. The organizations have invested significantly to strengthen their customer outreach and build engineering capacity and capability across new and existing verticals. Salary increases for this sector have been amongst the highest in the last two years with the next year projections closing at an average of 12%. However, in comparison, the banking sector has seen a sharp dip in salary increase numbers from the earlier years. The projected average increase for the sector is 8.6% for 2013 with local banks being 1-2% higher than MNC banks. There is a tightening of variable payouts with many senior and top management executives actually seeing a dip in their bonus payouts or an increased amount being deferred as compared to previous years. Investment banks are still facing pressures from global economies especially europe and are very conservative with both hiring and salary increases. The increases in this sector are almost negligible with scaling down of teams being a clear trend. AMCs have witnessed a decline in the salary increase numbers in 2012 and the mood for 2013 is similar. While some Indian firms have offered double-digit increases, MNC firms were in the range of 6-7%. The variable pay pools have shrunk for most firms and are expected to shrink further in 2013 unless there is a surge in the earnings. Insurance sector has seen a steady drop in the salary increase numbers since 2010-11. From a healthy 11% average increase, the insurance companies have dropped to single-digit of 9.5% for 2013. Business challenges remain and have been compounded by the constant regulatory impact. Another sector which has shown a steep decline in salary increase over 2011 numbers is the energy sector. The power sector, in particular, is projecting a cautious 8% increase for 2013, due to multiple challenges and regulatory issues that have recently surfaced. Infrastructure has always been a key sector for gauging development in a country. While the sector has got some boost from the government in Fy2012, it continues to be challenged by suboptimal spend allocation, slow approval process, shortage of skilled manpower and limited risk mitigation mechanisms. The crippling growth is reflected in the sharp decline of the 2012 average and 2013 projected number reported at around 7.5% in comparison to 2011 which stood at 14.4%. Telecommunication sector continues to face challenges on account of changes in the regulatory and

The banking sector has seen a dip in salary increase numbers from the earlier years. There is also a tightening of variable payouts with many senior executives seeing a dip in their bonus payouts or an increased amount being deferred as compared to previous years.

PeRSPeCTIVe


policy framework. As of now, the sector has adopted a cautious stance with a 10.4% average salary increase across levels in 2012 and a flat growth projected for 2013. Hi-Tech and ITeS sector organizations are focusing on rationalizing their overall costs, to which employee costs is a significant contributor. The salary projections for the next year clearly show a trend with key players starting to optimize their wage bills. The industry has projected an average increase of 10.5% across levels for 2013 down from 12-13% in 2011.

Conclusion Amidst mixed industry sentiments, one common theme that emerged, was the need to reward employees in line with industry and business performance. The HR fraternity today, more than ever, is laying strong emphasis on future focused talent management and is keeping a close eye on workforce productivity, costs and performance. As organizations prepare to buffer their key talent, the next few months will decide the fate of India Inc. and if and when it gets weighed down by the rising uncertainty.

Average Salary Increase Percentage – 2013 (Projected)

Data Sources Assocham, IBEF, CRISIL, Cygnus, Aon Hewitt Research Aon Hewitt 25th Global Annual Salary Increase Survey 2012

About Aon Hewitt’s 2012-13 Global Salary Increase SurveyAon Hewitt concluded its 25th Annual Global Salary Increase Survey recently. The survey measures actual and projected salary increases and compensation practices for five specific employee levels – top executive/senior management, middle management, junior manager/supervisor/professional, clerical/admin/technical staff and manual workforce. Information used in this report was collected during the period of July 2012 to August 2012. The survey spans over 100 markets. India saw a participation of 590 organizations across 17 industry and 20 sub industry classifications. Please write to us at [email protected] to obtain your copy of the survey results.

As organizations prepare to buffer their key talent, the next few months will decide the fate of India Inc. and if and when it gets weighed down by the rising uncertainty.

Sukanya SinghSenior Consultant – Research and Insights,

Aon Hewitt, India

For more information, please write to us at [email protected]

Sreemoyee GuptaSenior Consultant, Rewards Consulting,

Aon Hewitt, India


As Director of Human Resources at Vodafone, Ashok is responsible for driving organization effectiveness and change, learning and capability development, talent management and resourcing, creating a performance culture and ensuring a safe place to work through health, safety and well-being initiatives. As a member of the top management, he plays an important role in providing a strategic direction to building the employment brand for the company. Over his career spanning almost 25 years, Ashok has worked in leadership positions in Tata AIG Life Insurance, Tata AIG General Insurance, GE Countrywide Consumer Services and Asian Paints.

Transforming the Compensation

Paradigm

Q. While factors like low teledensity, broadband penetration and new technologies continue to fuel opportunities for the telecom sector, it also continues to battle the challenges of increasing competition and costs. What according to you are the top talent-related priorities or challenges that emerge from this dynamic environment? A. The developments in the sector are indeed fast paced and complex in many ways. The sector is hungry for differentiation, and the market forces will ensure that the best win. These challenging times are terrific opportunities for bright talent to build strong careers. Building strong

THeIntervIeW

Ashok Ramchandran Director – Human Resources,

Vodafone India Limited

commercial capability in the front line leaders, building new age capabilities and timely attraction of top talent are key priorities, as is creating an enabling environment that allows ideas to flow through the organization with speed and simplicity, and where the power of empowerment is unleashed into results. We need leaders who can foster that kind of culture.

Q. In this fiercely competitive talent market, how does vodafone differentiate itself? What is your 'unique' value proposition to current and prospective employees?


A. At Vodafone, we provide a culture where appropriate risk taking is encouraged, and where the opportunity to impact and create is shaped by the aspiration of our employees. While winning and results are a focus for sure, so is learning and experiencing. That makes a big difference to how we approach life. We look for people who are willing to stretch and learn, and consequently contribute and make a difference. We necessarily look for strong leaders who are shapers, and who can mould teams along the journey. Careers are ultimately an outcome of the cultural fabric and individual aspirations, in the context of opportunities that successful companies provide. elements of fairness and transparency are strong foundations for trust, and though intangible, are the things for which people join and stay with us.

Q. How would you define the key elements of your total rewards strategy? A. Our Total Rewards strategy aims at attraction and retention of talent, and clearly allows strong differentiators/multipliers for company and individual performance levels. The foundation of good rewards has to be a robust performance process and we strive for that. We have elements of regular assessment through the year, both quantitative as well as of qualitative/leadership aspects. Over a period of time, our sales incentive plans have been honed to provide significant value and enhancement opportunities for our front line teams across various functions. Our revenue generators enjoy the challenging assignments

that are on offer, and we ensure that we recognize their stretch and delivery in good measure. We tend to differentiate strongly, and transparently. For example, our constant review of sales incentive framework and strong performance analytics, have delivered superior business results in driving data sales and profitable customer acquisition. Similarly, our annual bonus plans are designed to generate internal business competitiveness in our federal circle structure while aligning to overall business priorities. At senior levels, we provide long-term accretion opportunities, which are also performance and potential differentiated. We also see careers as the only way to enhance the rewards potential for individuals. And that belief lies at the foundation of our strategy. That provides a fabric, as well as a perspective of builders and shapers, rather than rush-retain efforts.

Q. the ratio of top management to entry level pay in India is perhaps the highest in the world. We have recently seen organizations having chosen to freeze top management salaries.How would you react to that both from an Hr leader's point of view and in context to vodafone's executive compensation strategy? A. We see that these days movement of senior management talent across geographical boundaries has increased manifold and hence, the increasing impact on executive compensation. While it’s good for Indian talent, we need to judiciously balance local economic and labor market realities. Our top management rewards strategy is to be competitive, and

allow for senior leaders to focus on the big impacts on hand. The emerging trend is to have the top management pay structured for the long-term, while at other levels, including the entry level, ensure that the pay provides better annual increase opportunities. These annual opportunities will also however, in the future, move towards having a larger allocation to performance-based variable pay. The element of pay at risk at senior levels will continue to be high. At the executive level, the theme is to have variable pay plans recognize performance and long-term retention that is linked to talent evaluation and long-term business results.

Q. the telecom sector has been reasonably leveraged on long-term incentive plans. Has the recent economic environment, both locally and globally, led to a rethink due to reduced wealth creation opportunities for employees?A. I believe the sector provides a fair balance of rewards, duly weighted for enterprise level and individual performance risk, long-term needs as well as for attraction from other sectors. All wealth creation opportunities will be in proportion to the impact created, and to the ability and resilience of professionals to build. The building of success has to come through in good times as well as, importantly, in tough times. Our rewards philosophy addresses that.

Q. organizations are currently struggling with ensuring that the perceived value of their programs is enhanced. How successful has vodafone been in ensuring effective and relevant communication of rewards programs to its diverse employee population?


THeIntervIeW

respond – adequate flexibility can be built, as needed, to attract and retain great talent, but on the base of strong processes. This is crucial for building credible and successful organizations.

Q. there has been significant debate in the media and in the boardroom on the sustainability of our 'double-digit' salary increases. How do you see this panning out for the telecom sector and for vodafone in particular? A. The sustainability ofdouble-digit increases is clearly over. Salary increases will vary over time, but for sure, will attend well to the high performers and key skills. It is important to sustain the growth and the success of the company, and our approach needs to reflect not only motivational aspects of the exercise, but also good governance and a reflection of times ahead. The money effect apart, a rewards process is also a behavior modification process. Hence, variable and risk pay will be the focus, while Total Rewards, including the classic 'fixed' pay, will remain fair and competitive.

Q. Compensation is perhaps the single largest cost item for most service organizations and yet the most poorly tracked in terms of returns from the investment. How do you assess the effectiveness of the rewards programs at vodafone? A. While lag indicators like attrition are useful to review the retention aspects of our rewards strategy, the real focus is on ensuring that we derive the best from the investments we make in our people. In my view, it is not only a matter of salary increases, but also what you do with the base, that accounts for good rewards management.

Focus on timely action on the cost of poor performance also drives effectiveness and allows good people to take up successful roles. We measure this. We carry good coaching processes and endeavor to help our people succeed. We drive a fair yet sharp process of performance management. Clearly, we like continuous high performance and reward accordingly.

Q. We are seeing a growing interest in the area of health and wellness initiatives in India to ensure a productive workforce. Do you see this as becoming an integral part of the employee offering? A. The aspects of health, wellness and let me add safety is becoming very important. employees, current and prospective want a good balance of catering to their personal priorities and delivering at work. The theme has become ‘responsible care’. This builds culture. At Vodafone, we have strong streams of encouraging a balance, though I must confess, this is a challenge on the best of days. Further, we are the first and maybe the only telecom company to have taken it on ourselves to drive safety across all our touchpoints, both employees and other associates too. All of them espouse our seven absolute safety rules, including a consequences process. Our families are entitled to get us back safe, every day. Ultimately, safety, like wellness and health, is in the mind, and it needs to drop in well!

A. Good question. We focus a lot on communication – regularly and in a transparent manner. People need to know and experience fairness. We see employees move away from mere opportunism, in the face of the equally strong and compelling communication on careers as a theme, with rewards being an outcome of that. Our periodic roadshows with all employees allow us to take stock of the morale of our teams, as do lag indicators like attrition percentages. We respond to changing times, and the HR team and the leadership have a clear imperative to do so proactively. Last couple of years, we have been on a journey of opening the compensation black box and making business managers partner with us in the science and value of rewards decisions. It has been perceived as a great trust builder and increased the feeling of transparency and objectivity.

Q. the telecom sector has gone through its cycle of being in its formative stage where getting the right talent mattered more than setting the right processes and policies and one saw extremely high and inconsistent compensation practices. Have you seen that change over the last few years? A. you are right about the evolution of the sector. For many years in the past, the focus was on complete individual-based flexibility and consequently, inconsistencies. We are now deeply in the stage of strong processes and practices. Change, when managed proactively and over time, leads to lasting results. Patterns are changing in role definitions, levels and banding, and consequently, rewards patterns. Organizations need to be nimble to




India Banking Forum Study May-OctoberA platform for all major Indian and MNC banks to come together to share and benchmark their positions, levels, functions and sub functions across the industry.

Capital Markets Forum Study April-SeptemberA benchmark study conducted for large MNCs and Indian institutional securities firms covering equity capital markets, debt capital markets and investment banking job families.

Investment Management Forum Study June-OctoberA flagship study in the asset management sector covering key job families like fund management and sales.

Private Banking Forum Study June-SeptemberA study covering large Indian and MNC private wealth management organizations covering benchmark key roles across functions.

Life Insurance Forum Study September-JanuaryA study of the largest life insurance players in India covering positions across all channels of distribution and key corporate functions.

Retail Broking Forum Study October-JanuaryA study covering Indian and MNC retail brokerage organizations to benchmark positions across sales, PMS and other functions.

Private Equity Forum Study October-JanuaryA study of private equity players covering key positions across fund management roles.

NBFC Forum Study November-MarchA study of large NBFCs covering levels and positions across sales and support.

McLagan – Banking & Financial Services Insights

SURVeyCAlenDAr

FMCG Manpower and Productivity Study January-MayThe study provides credible benchmark data on manpower productivity. It looks at the return on compensation spend, while comparing productivity trends, headcount and payroll cost allocations, etc.

Best Managed Boards SurveyJanuary-JuneThis survey in conjunction with BSE, NSE, SEBI and Mint is focused on identifying the best practices in corporate and board governance in India.

Short-Term International Assignment Study February-MarchThe study focuses on capturing policies and practices as well as daily allowances paid for short-term international assignments.

Salary Increase SurveyPhase I: June-September Phase 2: November-FebruaryOne of the most exhaustive studies in the area of performance and rewards in India.

Executive Compensation Study September-JanuaryThe study provides organizations with access to rich analysis of data and practices in executive compensation.

India Telecom ForumOctober-FebruaryOne of the flagship studies in the telecom sector that captures cash and benefits information across 170 positions.

Campus Compensation Study (CCS) October-DecemberThe study provides organizations with trends in compensation for MBAs and graduates from top business schools and engineering colleges across the country.

Skills Study May-AugustThis study provides benchmark information and best practices with regards to managing compensation for niche and differentiated skills in the IT and ITeS industry.

India Hotel Survey May-SeptemberThe study covers a comprehensive list of 200+ positions across 11 groups and 160+ properties. It analyzes differentials by city, locations and covers key business metrics.

India FMCG Forum June-DecemberThe forum brings together all major MNCs and Indian FMCG organizations to benchmark their positions, levels and benefits across the industry.

Hi-Tech/IT Industry Study June-SeptemberThe study provides robust and comprehensive information on cash compensation and industry trends across 180+ companies.

Indian Semiconductor and EDA Forum (ISEF) July-SeptemberThe forum brings together leading semiconductor and EDA companies to benchmark compensation and share salary increase trends, variable pay practices and key organizational metrices

SIAM Automobile Forum October-JanuaryA study of all auto manufacturing organizations covering compensation data across levels and functions of management. It also serves as a platform for sharing best practices.

Variable Pay Practices and Benefits Study October-JanuaryA comprehensive study for the IT and ITeS industry capturing 35+ policies and details on plan eligibility, entitlement, design and other policy features for 100+ organizations.

India Pharmaceutical Forum June-SeptemberThe forum brings together the key MNCs and Indian pharmaceutical organizations to benchmark their positions, levels and benefits across the industry.

Medical Technology Forum July-OctoberThe study covers leading organizations in the medical devices/technology domain providing robust and comprehensive information on cash compensation and industry trends.

Clinical Research Organization Forum October-JanuaryThe study covers leading organizations in the CRO/CRAM domain providing robust and comprehensive information on cash compensation and industry trends.

Retail Forum July-OctoberThe study covers leading organizations in the retail domain providing robust and comprehensive information on cash compensation and industry trends.

Power Sector Forum August-DecemberThe study covers leading organizations in the power and energy domain, providing robust and comprehensive information on cash compensation and industry trends.

ITeS Industry Study March-June and November-FebruaryA comprehensive study that covers 500+ positions across 60+ job families. The study includes detailed cash compensation and industry trends across domestic and international businesses.



Upcoming Insights


Managing salary reviews using multiple independent spreadsheets and numerous manual interventions doesn’t always provide the required levels of consistency and accuracy needed for this important HR function.

Aon Hewitt’s RemCentral is an Excel-based program that assists organizations to manage, automate and streamline their salary review process allowing HR teams to focus on the tasks that will significantly influence the success of the salary review.

RemCentral IndiaAon Hewitt’s Salary Review and Management Tool

Key benefits

• Cost-effective alternative to high-end dedicated solution software, but also to time-consuming manually-intensive processes

• Noadditionalsoftwareorchangestoyourorganization'sexistingsystemsare required because RemCentral is built on Microsoft excel. Whilst generic in nature, it can be customized to fit specific organizational processes and requirements

• Transparentandconsistentmethodology for reviewing salaries to ensure the equitable distribution of increases. RemCentral guides the salary review outcomes in accordance with your desired remuneration philosophy, for example to target increases to top performers within your organization

• Reducedpotentialforhumanerrors as RemCentral has been designed to consolidate data into one centralized master spreadsheet, to automatically sort, filter and export information into each reviewing manager's file, and then import it back again once recommendations have been made

• Real-timedatareporting to senior management and/or the board, to enhance the credibility and commercial focus of the HR team

• Easyandfastcreationofsalaryreviewletters, without the need to extract the data to another system

The Business case for change

Tool workflow

HR Manager

• Design Salary Structure • Run Payroll Simulations • Freeze Salary Increase Budgets • Salary Increase Implementation • Manager Sheets with Recommended Increases

• Generate Salary Review Letters • Management Approval on Salary Increase • Run Reporting and Analysis • Finalize Salary Increase • Receive Reviewed Manager Sheets

Contact us for a demo at [email protected]

For HR professionals to provide real functional expertise that is both strategic and leading-edge, they must hone their skills and capabilities. Aon Hewitt Learning center (AHLc) provides targeted courses in Human Capital Management for HR and non-HR professionals.

www.aonhewitt.com/india

To register, please contact: Vasanth Balachandhran at [email protected] orSriram Rajaram at [email protected]

The above sessions will run in tandem and participants can choose to attend either.

Upcoming courses.

Pay Range Design and Management ProgramTuesday, October 30, 2012

In this course, you will learn how to use market benchmarking results effectively to design a pay range that works for the organization and plan for an annual wage budgeting• Conduct an effective market benchmarking exercise• Understand the different types of salary structures and

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methodology• Understand the wage budgeting and distribution

process

Unlock Your Potential

short-Term Incentive DesignTuesday, October 30, 2012

In this course, you will learn how to design a bonus plan that drives the desired business results • Understand the various types of short-term bonus plans

and when they should be used• Selecting the right plan for your organization• Step-by-step process for designing an annual bonus plan

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Documents

Unlocking the Potential of Total Rewards - · PDF fileUnlocking the Potential of Total Rewards ... DLF Centre Court Sector-42, ... creating a robust and consistent selection process