13 th annual illinois hr conference & exposition august 7, 2012 presented by karen vujtech,...
TRANSCRIPT
13th Annual Illinois HR Conference & Exposition
August 7, 2012
Presented byKaren Vujtech, SPHR, GPHRBob Fulton, SPHR, CCA, CEBSThe Walker Alliance www.walkeralliance.com
Aligning Total Rewards With Your Business Strategy
Defining Total RewardsBeyond just the financials to include all
aspects of the work environmentIntrinsic part of the organization's strategic
direction
Compensation (direct, cash)
Development Opportunities
Benefits (indirect) Personal Growth
Location Work Variety
Flexibility Work Importance
Social Interaction Authority/Control/Autonomy
Status/Recognition Work Load
Advancement Work Conditions August 7, 20122
Today’s AgendaBuilding a Strategically Aligned Total
Rewards Strategy Assess: business strategy and
current programs and policiesDevelop: Total Rewards philosophy;
design or redesign programs/policesExecute: implementation and
communicationEvaluate: measure outcomes;
interpret findings
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Assess: Business StrategyVision –what we seek to becomeMission – why we existValues - what is important to the
organization in terms of behavior and culture
Philosophy – guiding principlesStrategy – the long-term ways through
which we will achieve our mission/visionOperational plans – the way we bring
the strategies alive for the organization
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Assess: Tools and ProcessKnow/understand your business’s
strategic planConduct a SWOT Analysis of current
Total Rewards offerings vs. business strategy, long and short-term goals and objectives
Identify gaps between business strategy and total rewards practices, programs and policies (gap analysis)
Use Framework of Foundation and Performance awards to assist analyses
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Assess: Framework of Foundation and Performance Awards
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Assess: Key QuestionsWhich of the practices/programs are
currently used?Which ones are most important to the
overall organization in achieving business strategy and remaining competitive?
Which are the most/least effective in supporting the mission, strategy and culture?
Which programs/practices are important to specific employee groups, i.e., executives, sales, technical professionals, service, operational, etc.; new hires; high potentials?
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Assess: Key Questions (continued)Where does the company spend the
most money?Where does the company spend most
time and effort?Does the application of some programs
overlap or interfere with others?Are there any common themes that
should exist across all programs?
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Using a Balanced Scorecard as Planning/Evaluation Tool
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Total Rewards Strategy Alignment: The Business CaseSummarize all of the
information/data received Include statistics on usage, cost, perceived value ( management and employees)
Identify how/if/where existing programs and practices add value and support business strategy
Propose the new Total Rewards Strategy alignment August 7, 201210
Total Rewards Strategy Alignment: The Business CaseAnalyze and define gaps between existing
programs and proposed new TR strategyMake recommendation(s) for:
Next steps (design, redesign, elimination)PrioritizationTimingCost
Propose new Total Rewards Philosophy Statement
Obtain approval to move forward
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Develop: Total Rewards Philosophy StatementCreate a statement of your guiding
principles for determining and delivering total rewards in your organization:
A reward strategy should articulate in simple but powerful terms how the company will invest its resources, reinforce its core principles and values, and create a competitive advantage.
Provides a framework for aligning rewards with business objectives
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Sample Total Rewards Philosophy Statement
To achieve our company's mission and vision, we must attract, motivate and develop highly qualified and dedicated employees. Our Company provides competitive rewards to its employees with flexibility to address diverse and changing business and employment environments. This philosophyApplies to all employeesIncludes cash and non-cash rewards,
benefits, recognition and developmentIs market competitiveStresses open communication and
education
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Design/Redesign: Project Team Process Review all TR practices/programs for fit and impact on
business strategy Identify which programs should:
Be retained Be retained with changesBe recommended for elimination
Based on feedback from Top Management, set Priorities Develop business case for the recommendations; Consider how changes will affect:Employee growth/developmentAbility to attract and retain employeesCost structure/preliminary ROI for recommended
changes
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Design/Redesign: Project Team ProcessEstablish Team of Key Stakeholders for
Oversight Team: Owners and ChampionsResponsible for managing the Big
Picture Create Project teams to address TR
component areas:CompensationBenefitsGrowth and DevelopmentRecognition and Work EnvironmentAugust 7, 201215
Design/Redesign: TR Area Project TeamsProposed design/design changesAssure alignment with overall TR
strategyTest with focus groups, include HRPropose evaluation measures and
metricsCreate a business case and ROI for
all recommendations
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Execution: Implementing StrategyDetermine necessary resources and timelines for implementation
Assess and address implementation and plan rollout considerations
Recalibrate with management, and with impacted groups
Create a defined communication plan
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Execution: Determine ResourcesWhat is required to implement and
support each program area:Financial, personnel, systemsConsider financial constraints and business limitations
Will you use the same design team or a separate team of implementers?
How can we build on prior successful implementations? August 7, 201218
Execution: Implementation IssuesCritical questions for implementation:
Which SBUs, groups, functions, or departments are affected?
What systems modifications or installations are required to move forward?
What specific data tracking and reporting needs will each program area require?
What type of ongoing administrative support is necessary?
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Execution: Feasibility AnalysisSome rewards components may
require a more in-depth evaluation and/or trial period before full implementationWhat is the business ready for?What needs to be tested and tried?How can implementation be best achieved without significant disruptions?
Think about this in the same way as many IT implementations – parallel systems, staging
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Feasibility Analysis: ExampleExample: large food manufacturing
company was considering implementing gainsharing as part of overall rewards strategy
Met with senior leadership to explain the foundational aspects of this type of program
Prepared a feasibility analysis examining relevant company issues August 7, 201221
Feasibility Analysis: ExampleBefore making the decision, we helped them to
examine a number of critical factors, including:Culture: Cost/quality/safety/service
philosophy is firmly rooted in the company’s method of work
Demographic: Minimal issues with employee complaints, and with current pay levels
Performance: Effective systems in place to measure performance
Communication: Willing to share business information (operational, financial) with employees
August 7, 201222
Execution: Communication PlanQuestions to consider in communicating
strategy:What are the critical messages?What are the typical channels of
communication?Which formats are employees used to?Who do employees trust to convey these
messages?How can you create support and buy-in with
key business leaders, natural champions, and skeptics?
How do you drive active rather than passive communications? August 7, 201223
Evaluation: Business ValueDefining & measuring outcomes, metrics and ROI
Strategic HR considerations: how does the TR strategy addressEmployee engagement or satisfaction?
Recruitment & retention?Performance effectiveness?
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Evaluation: MetricsMetrics can be developed to
measure the effectiveness of your TR strategy by linking expected outcomes with actual results
Every component of the TR strategy should have some sort of measured ROIThis is normally addressed in the Execution phase
Work with your CFO and with HR staff to define
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Using a Balanced Scorecard as Planning/Evaluation Tool
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Evaluation: MetricsTotal Rewards strategy metrics can
include:Number of employees who have
access to career/TR/work online administration site
Decreased turnover or increased candidate acceptance of offers
Significant difference in pay relative to performance
Increased participation is specific work/life or retirement programs
Lower benefit costs from selective usage by those who need a particular benefit program
August 7, 201227
Example: Pay for PerformanceIf your company has a pay for
performance philosophy, this can be the place to start the evaluation process
For most companies, pay for performance is a throw-away phrase that keeps leadership thinking that the TR program working effectively
How is it working for your company?
How do you know?
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Final ThoughtsAligning all Total Rewards components with
business strategy can improve business results and customer satisfaction while improving employee engagement and satisfaction.
Total Rewards is more than just compensation and benefits
Compensation (direct, cash)
Development Opportunities
Benefits (indirect) Personal Growth
Location Work Variety
Flexibility Work Importance
Social Interaction Authority/Control/Autonomy
Status/Recognition Work Load
Advancement Work ConditionsAugust 7, 201229
Final Thoughts Follow all the Steps:
Assess: business strategy and current programs and policies
Develop: Total Rewards philosophy; design or redesign programs/polices
Execute: implementation and communication
Evaluate: measure outcomes; interpret findings August 7, 201230
Final ThoughtsYou’re not finished!
Periodically review TR components for alignmentEvery 3 years to make sure still aligned with business strategy
After merger, acquisition, restructuring
Due to regulatory or legal changes
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Karen Vujtech, SPHR, GPHR
Total Rewards Consulting, [email protected]
Robert Fulton, SPHR, CCP, CEBSThe Pathfinders Group, [email protected]
www.walkeralliance.com
August 7, 2012