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Speakers: Alison French, CCP, GRP Market Segment Leader, Compensation, IBM Deb Nielsen, CCP, GRP Director of Compensation Research, IBM Rena Rasch, Ph.D. Research Manager, IBM
Moderator: Ladan Nikravan Senior Editor, Workforce magazine
Total Rewards 'State of the Union': Top Trends, Challenges and Recommenda;ons for the Coming Year
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Ladan Nikravan Senior Editor Workforce magazine
Total Rewards 'State of the Union': Top Trends, Challenges and Recommenda;ons for the Coming Year
#WFwebinar
Alison French, CCP, GRP Market Segment Leader, Compensation IBM
Total Rewards 'State of the Union': Top Trends, Challenges and Recommenda;ons for the Coming Year
Deb Nielsen, CCP, GRP Director of Compensation Research IBM
Rena Rasch, Ph.D. Research Manager IBM
© 2013 IBM Corporation
IBM Smarter Workforce
Agenda
• Macro forces - The economy and legislative climate
• Trends and Forecasts - What are reward professionals doing this year?
• People Matters - What are employees and managers thinking about?
• What does all this mean for 2014?
9
© 2013 IBM Corporation
IBM Smarter Workforce
Top areas of concern
Source: Kenexa Compensation Outlook Survey, 2014 10
CONCERNS THAT MAY IMPACT COMPENSATION AND HIRING
53%
39%
38%
16%
10%
7%
43%
55%
57%
72%
76%
73%
4%
5%
5%
12%
13%
20%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Scarcity of talent
Regulatory changes
Broader economic conditions
Social networking
Unemployment rates
Outsourcing/Offshoring
More concernedNo changeLess concerned
© 2013 IBM Corporation
IBM Smarter Workforce
Big news…
Source: Kenexa National Salary Budget Survey, 2013
11
© 2013 IBM Corporation
IBM Smarter Workforce
Increase budgets in the U.S. have bottomed out in 2009. Though the rebound is yielding increase, salary budgets are still below the pre-recession levels
“For the first time since 1980, the U.S. rate of inflation is higher than the average total salary budget increase”
WorldatWork – August 2011
More on increase budgets
2008 2009 2010 2011 2012 2013 2014
Kenexa Compensation 3.0% 3.0% 3.0% 3.0%
IPAS 3.9% 1.1% 2.5% 3.2% 3.2% 3.0% 3.0%
Buck 2.9% 2.9% 2.7% 2.8% 3.0% 3.0%
Conference Board - - 2.5% 2.5% 3.0% 3.0% 3.0%
Mercer - - 2.7% 2.9% 2.9% 2.9% 2.9%
Towers Watson 3.4% 1.7% 2.8% 2.7% 2.8% 2.8% 2.9%
WorldatWork 3.8% 1.9% 2.8% 2.9% 3.0% 3.0% 3.0%
12
© 2013 IBM Corporation
IBM Smarter Workforce
Certain HOT Jobs continue to outpace the market, exceeding the overall market average of 9% in the 5 years
between 2007 and 2012
Hot jobs
Job Title Change Long Term Care Executive 27.1%
Certified Occupational Therapist Asst 25.7% Hardware Engineer III 20.3% Chemical Engineer III 19.4%
Staff Nurse - Surgical First Assistant 17.4% Nurse Practitioner 17.2%
Certified Nursing Assistant 16.4% Network Administrator 15.1% Software Engineer III 14.7%
Source: CompAnalyst benchmark database 13
© 2013 IBM Corporation
IBM Smarter Workforce
Job Title Change Accounts Receivable Manager 2.9%
Administrative Services Supervisor 1.5% Communications Representative III 2.1%
Facilities Manager 2.3% Financial Analyst II 4.7%
Mainframe Programmer II 2.9% PC Maintenance Technician II -6.5%
Others jobs aren’t so lucky, significantly lagging the 9% average over the last 5 years
Not-so-hot jobs
Source: CompAnalyst benchmark database
14
© 2013 IBM Corporation
IBM Smarter Workforce
15
Job openings and unemployment Pay for Performance: A Clear Signal for Retention and Engagement
© 2013 IBM Corporation
IBM Smarter Workforce
Attrition
© 2013 IBM Corporation
IBM Smarter Workforce
Economic environment concerns
§ Are we emerging from the economic down turn?
§ What kind of turnover might we face?
§ Will we be able to retain top performers?
17
© 2013 IBM Corporation
IBM Smarter Workforce
Department Of Labor budget
§ Hundreds of new enforcement staff have been added to the DOL
§ 2014 DOL budget – $12.1 Billion versus 2013 $ 12.0 Billion – Nearly $14 million to combat the misclassification of workers as
independent contractors – An additional $3.4 million for the Wage and Hour Division to
support greater enforcement of the Fair Labor Standards Act and the Family and Medical Leave Act
– An increase in 61 FTEs for WHD alone
18
© 2013 IBM Corporation
IBM Smarter Workforce
More regulatory concerns
§ Impacts of the Affordable Care Act as the employer mandate looms
§ Home health care exemption status change
§ OFCCP and EEOC are deploying more compliance resources with a focus on pay equity
§ Potential changes to overtime regulations
19
“I hereby direct you to propose revisions to modernize and streamline the existing overtime regulations.”
--President Barack Obama to Labor Secretary Perez, March 13, 2014
© 2013 IBM Corporation
IBM Smarter Workforce
Compensation Outlook 2014
20
© 2013 IBM Corporation
IBM Smarter Workforce
Reward program funding
PERCENT OF ORGS INCREASING FUNDING VERSUS PREVIOUS YEAR
23%
28%
37%
28%
23%
20%22%
24%25%
35%
22%
26%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2011 2012 2013 2014
PE
RC
EN
T O
F O
RG
AN
IZA
TIO
NS
Healthcare Merit Increases Bonus
PERCENT OF ORGS INCREASING EMPLOYEE SHARE OF HEALTHCARE COST
27%
43% 45%
15%
67%64%
51%
23%29% 44%
45%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2011 2012 2013 2014P
ER
CE
NT
OF
OR
GA
NIZ
AT
ION
S
Deductibles Employee Contributions Co-Pays/Co-Insurance
Source: Kenexa Compensation Outlook Survey, 2014 21
© 2013 IBM Corporation
IBM Smarter Workforce
Staffing
Source: Kenexa Compensation Outlook Survey, 2014 22
NET CHANGE IN STAFFING LEVELS, YEAR-OVER-YEAR
42%
44% 45% 45%49% 47%
37%35%30%
29%
25%27%
14%14% 15%
0%
10%
20%
30%
40%
50%
60%
2010 2011 2012 2013 2014
PERC
ENT
INDI
CATI
NG C
HANG
E
Increase No Change Decrease
© 2013 IBM Corporation
IBM Smarter Workforce
Reductions
Source: Kenexa Compensation Outlook Survey, 2014 23
47%
60%
27%
29% 29%
27%
0%
10%
20%
30%
40%
50%
60%
70%
2009 2010 2011 2012 2013 2014
% o
f res
pond
ents
indi
catin
g R
IF
© 2013 IBM Corporation
IBM Smarter Workforce
Will they stay or will they come?
Source: Kenexa Compensation Outlook Survey, 2014 24
71% 73%
15%16%
15% 11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Retaining high performers/critical functions Attracting quality new hires
UnpreparedNeutralPrepared
© 2013 IBM Corporation
IBM Smarter Workforce
Compensation challenges
§ Big data and analytics
§ Generational issues/baby boomer
retirement
§ Automation/Technology
§ Decentralization/remote workforce
§ Regulation
§ Skills scarcity
§ Economy/volatile markets
§ The influence of HR in
implementing change
§ Pay for performance
§ Modest merit and HR budgets 25
Prepared Neutral Unprepared Succession planning 45% 24% 30% Baby boomer retirement 35% 38% 27% Increasingly remote workforce 34% 39% 27% Engaging the next generation of workers 45% 29% 26% Automating Comp & HR processes 52% 24% 23% Leadership development 56% 23% 22% Social networking 45% 34% 21% HR analytics 52% 27% 21% Aligning pay with performance 61% 20% 19% Big data 37% 44% 19% Globalization 32% 51% 17% General employee engagement 64% 22% 14% Economic uncertainty 48% 41% 12% Containing healthcare costs 70% 23% 7%
© 2013 IBM Corporation
IBM Smarter Workforce
Compensation & communication
Source: Kenexa Compensation Outlook Survey, 2013 26
© 2013 IBM Corporation
IBM Smarter Workforce
Managers
Source: Kenexa Compensation Outlook Survey, 2013 27
© 2013 IBM Corporation
IBM Smarter Workforce
Executive compensation
§ European decisions relative to Say on Pay and new focus on how
much is too much
§ Say on Pay’s influence on the board of directors
§ Stronger executive pay disclosure
§ Better linkage of pay to performance
§ Shift from use of time to performance-based equity
§ Additional definitions of what annual pay means
§ Debates over peer group use
§ Passage of requirement to disclose ratio of CEO pay to average
employee
28
© 2013 IBM Corporation
IBM Smarter Workforce
How Managers and Employees Feel
29
© 2013 IBM Corporation
IBM Smarter Workforce
Pay fairness over time
Notes: WorkTrendsTM U.S. only. * Data were not collected in 2006, so mean across all years was used.
30
© 2013 IBM Corporation
IBM Smarter Workforce
Perception matters
Notes: WorkTrendsTM 2013 U.S. only. 31
© 2013 IBM Corporation
IBM Smarter Workforce
Drivers of fair pay
Notes: WorkTrendsTM 2013 U.S. only. 32
© 2013 IBM Corporation
IBM Smarter Workforce
Building belief in pay fairness
Notes: WorkTrendsTM 2013 U.S. only. Values are relative weights.
33
© 2013 IBM Corporation
IBM Smarter Workforce
Current perceptions
Notes: WorkTrendsTM 2013 U.S. only. 34
© 2013 IBM Corporation
IBM Smarter Workforce
Communication breakdown
Notes: WorkTrendsTM 2013 U.S. only. 35
© 2013 IBM Corporation
IBM Smarter Workforce
How well are raises and bonuses handled?
Notes: WorkTrendsTM 2013 U.S. only. 36
© 2013 IBM Corporation
IBM Smarter Workforce
How well raises and bonuses are handled impacts perceptions of pay fairness.
Notes: WorkTrendsTM 2013 U.S. only. 37
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