survey for reward mgmt
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CreatingaSustainable
RewardsandTalentManagementModel
Resultsofthe2010GlobalTalentManagementandRewardsStudy
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TableofContents
ExecutiveSummary 2
TheBusinessContext 3
TheCurrentLandscapeofRewardsand
TalentManagement 10
TalentManagementStrategyandEmphasis 14
PromotingEffectiveTalentManagementThrough
EmphasisandConsistency 16
GlobalConsistency 17
Organization-WideJobEvaluation
andJobLeveling 18
ImplicationsoftheCurrentLandscapeofRewards
andTalentManagement 20
AbouttheSurvey 22
KeyTerms 23
FeaturedFigures
Figure5.Employersrecognizesomeoftheadverse
impactsofcostcutting 6
Figure6.Employersfailtorecognizetheimpact
ofchangestoemployeewell-beingontheirability
toattractemployees 6
Figure12.EuropeanandBraziliancompaniesreport
greatestmeritdifferentiationnodifferencesin
differentiationbyrmperformance 12
Figure14.VerylittledifferentiationofSTIacross
regions,nancialperformancegroups 14
Figure16:Organizationsthatincreasetheir
emphasisonaspectsoftalentmanagementare
morelikelytondthemveryeffective 16
Figure19:Globalconsistencyhelpscompanies
becomemoreeffectiveintheirotherprograms 19
Figure20:Pay,bonusesandtrainingbudgetsare
theprogramsorganizationsaremostlikelyto
changeifeconomicorbusinessconditionschange
substantiallyineitherdirection 20
2010
Global Talent Management and
Rewards Survey Report
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Companies were aced with a number o challenges
during the economic crisis and needed to:
Cut costs and manage any subsequent costincreases
Reduce the rate o increase in the value o
total rewards, oten to levels where the real or
absolute value o total rewards declined or many
employees
Reevaluate their business strategies
Now, as we emerge rom the recession, companies
ace additional challenges and need to:
Develop new leadership competencies or theirexecutives
Respond to increasing demands by employees or
security, stability and opportunity that are difcult
to satisy
Conront the complexities caused by a lack o
career advancement opportunities or top talent
and employees with critical skills
Going orward, in order to attract, retain and engage
their employees, organizations need to think about
developing a sustainable employee value proposition
one that is exible enough to be vital throughout
the economic cycle. Employers can take manyspecifc steps to improve their reward and talent
management programs by:
Dierentiating rewards between top perormers
and average perormers
Developing a ormal employee value proposition
and communicating it to employees
Introducing organization-wide consistency in
reward and talent management programs
Developing business-centered leadership
competencies that support their strategy
Increasing their emphasis on perormance
management, leadership, and employee learning
and development
ExecutiveSummary
Reward and talent management programs at most organizations share common objectives: to attract,retain, motivate and develop employees, and to create alignment between employee actions and the
behaviors required to support the employers business strategy. In periods o relatively stable business
growth, organizations typically rely on minor, adaptive changes to their reward and talent management
programs in order to better meet these objectives. But the recent fnancial crisis and subsequent
recession have orced organizations out o their business as usual mode, both rom a strategic
perspective and in the way they design and manage their reward and talent management programs.
Figure1.Economicconditionsvarydramaticallyaroundtheglobe*
Representative list of countries in our survey
AnnualEconomicGrowth
Country 2010P 2011F Unemploymentrate
China 9.9% 8.3% 9.6%
India 7.9% 8.1% 10.7%
Japan 3.1% 1.7% 5.2%
Singapore 8.4% 4.5% 2.2%
U.K. 1.2% 1.8% 7.9%
Germany 1.9% 1.6% 7.7%
Ireland 0.4% 1.2% 13.7%
Spain 0.5% 0.4% 19.9%
Brazil 6.3% 4.5% 7.5%
Canada 3.5% 2.9% 8.1%
U.S. 3.1% 2.9% 9.5%
*Source: The Economist
P = projected
F = orecast
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2010 Global Talent Management and Rewards Survey Repo
Global and Regional EconomicConditions
Following the global fnancial crisis o 20072008and the ensuing recession that occurred in many
countries, we may be at a point o inection. China,
India and Brazil are experiencing strong economic
growth, while Spain and Ireland continue to suer
through economic contractions with double-digit
unemployment rates. Still, other countries and
regions, such as the U.S., most o Europe, Canada
and Japan, are somewhere in between growing in
the frst hal o 2010, but acing uneven growth and
a slow, uncertain economic recovery.
Cost Cutting and Cost Management as
a Reaction to the Global RecessionOrganizations immediate reaction to the fnancial
crisis and subsequent recession was to reeze or
reduce labor costs through hiring and salary reezes,
layos, reduced bonuses and restrictions on
overtime. However, there were regional dierences
in the nature and extent o these actions. In Europe
and the U.S., where the recession was the deepest,
companies were more aggressive, with over 60% o
U.S. companies taking our or more cost-cutting
actions. In China and India, which saw economic
slowdowns but not outright recessions,
organizations aced less cost pressure andconsequently were much less likely to cut costs,
reeze salaries or lay o employees.
Companies orward-looking business and human
resource strategies show a similar picture. Almost
one-quarter o respondents globally report that
workorce reductions will be an element o theirstrategy over the next three years reecting their
concern over uture economic conditions. European
organizations are most likely to make workorce
reductions (35% o respondents), but in China and
India, where attraction and retention pressures
remain high, only 6% o respondents expect layos.
This uneven economic recovery will require global
organizations to establish targeted, exible talent
and reward strategies.
The Impact on Global and Local LaborMarkets and Employee Expectations
The business climate aects the supply and demand
o talent along with employers ability to attract and
retain employees. Globally, only 25% o frms are
having difculty attracting employees generally, but
our out o fve respondents in Asia and Brazil and
one o every two in the U.S., Spain and Ireland
report difculty attracting critical-skill employees.
Even in relatively sot economies, top talent is in
short supply.
Organizations in most regions report having less
difculty retaining employees than they do attracting
them. This may reect employee reluctance to leave
their current employer in uncertain business conditions.
In Towers Watsons 2010 Global Workorce Study,
Figure2.Companiesindifferentregionstookdifferentapproachestocostcuttingandcostmanagementduringtherecession
Global
China/
India
OtherAsia
Pacic
Ireland/
Spain
Other
Europe Brazil Canada U.S.
Hiring reezes 64% 45% 60% 80% 72% 77% 61% 66%
Salary reezes 55% 28% 53% 67% 60% 58% 54% 61%
Layos, redundancies, reductions in
orce, etc.51% 12% 32% 57% 56% 47% 57% 74%
Reduced bonuses 36% 42% 46% 31% 36% 17% 23% 41%
Restrictions on overtime 33% 14% 26% 27% 41% 52% 26% 44%
Total number o actions taken (mean) 3.6 2.5 3.2 3.6 4.0 3.2 3.4 4.5
% o respondents taking at least our
actions44% 22% 34% 47% 52% 37% 40% 61%
% o respondents expecting to
undertake workorce reductions over
the next three years
23% 6% 21% 38% 33% 14% 21% 24%
The Business Context
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nearly hal o employees indicated they either have
no plans to leave their current employer or plan to
stay with their employer until they retire.
Economic conditions also drive changes in the value
o total rewards. In Asia and Brazil, almost 70% o
organizations report that the real value o cash
compensation and total rewards has increased
or managers and hourly employees alike over both
the past fve-year and 10-year periods. These
organizations have increased the real value o their
rewards in order to remain competitive in rapidly
growing economies with tight labor markets. In
Europe, roughly 70% o organizations report that the
real value o cash and total rewards has increased
or managers over the past 10 years, but ewer
European organizations report real increases in
rewards over the past fve years reecting the
economic reversal in 20082009 and current
economic uncertainty. The experience in Canada
indicates a much smaller change, perhaps as a
result o Canadas relatively healthy fnancial
services and natural resources industries.
The numbers in the U.S. are stark by comparison:
Only 40% o all U.S. organizations report an increase
in the real value o rewards or managers over the
past fve years. The real value o wages and rewards
at most U.S. frms has been at or declined. Trends
or hourly employees reect the same underlying
phenomena as those or proessional/managerial
employees, but hourly employees are even less
likely to have experienced an increase in the real
value o their total rewards.
Figure3.Attractionandretentiondifcultiesvarysignicantlybyregion
Global
China/
India
OtherAsia
Pacic
Ireland/
Spain
Other
Europe Brazil Canada U.S.
Critical-skillemployees
problems attracting 65% 84% 78% 49% 62% 81% 61% 52%
problems retaining 49% 81% 69% 29% 44% 65% 35% 31%
Top-performingemployees
problems attracting 61% 76% 71% 52% 67% 69% 57% 45%
problems retaining 45% 77% 63% 22% 41% 67% 35% 25%
High-potentialemployees
problems attracting 56% 68% 70% 47% 58% 67% 54% 40%
problems retaining 45% 75% 60% 29% 43% 64% 38% 25%
Allemployees
problems attracting 25% 36% 41% 22% 19% 30% 22% 15%
problems retaining 21% 39% 39% 14% 12% 26% 12% 11%
Figure4.Fewerorganizationsreporttherealvalueofrewardshasincreasedoverthepastveyearsthanoverthepast10years
Managers HourlyEmployees
TotalCash TotalRewards TotalCash TotalRewards
Past10
years
Pastve
years
Past10
years
Pastve
years
Past10
years
Pastve
years
Past10
years
Pastve
years
All 63%* 55% 68% 58% 58% 48% 62% 53%
China/India 71% 68% 72% 67% 69% 64% 70% 64%
Other Asia 69% 69% 72% 72% 66% 63% 66% 66%
Ireland/Spain 73% 52% 76% 59% 71% 48% 74% 55%
Other Europe 68% 52% 73% 55% 52% 38% 57% 44%
Brazil 59% 62% 64% 70% 59% 61% 61% 64%
Canada 65% 58% 72% 64% 59% 49% 66% 58%
U.S. 51% 38% 56% 41% 43% 32% 49% 35%
*The percentage o organizations where the real, ination-adjusted value o total cash (salary plus bonus) or total rewards (total cash plus total value o employer-provided benefts) has increased rom 2000
or 2005 to 2010.
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This organization engineered a series o layos
in early 2009. Since then, fnancial results have
improved; however, next years projections are
uncertain. I the economy slows, and demand
or its services decreases, the company plans
to undertake additional layos.
Predictably, previous cost-cutting actions have
increased the remaining employees workloads.
Stas are stretched thin; i business improves,
the organization will need to hire more sta.
Managers are especially concerned about
retaining top-perorming and high-potential
employees because there have been ewer
advancement opportunities since the layos.
Meanwhile, other organizations have been
actively recruiting these employees, and a ew
top perormers have already let, citing the
potential opportunities and increased security
and stability elsewhere. Still, resources remain
tight, so any actions the company takes will
have to pay or themselves.
To address these issues, Towers Watson
recommended the ollowing actions:
Review this years merit increases and
bonus payouts, reducing payouts to
those employees who only partially meet
expectations in order to increase the
available pool or top perormers and high-
potential employees.
Provide fnancial recognition awards to
employees who identiy new ways to
improve processes, cross-sell products to
existing customers, save money, develop
new products or otherwise contribute to
the organizations bottom line. Leverage
nonfnancial recognition broadly to drive
employee engagement.
Review opportunities to implement a
retention bonus program with a multiyear
time horizon or selected high-potential and
top-perorming employees. Payout wouldbe contingent on business and employee
perormance, ensuring that the program
eectively pays or itsel.
Re-recruit high-potential employees by
communicating how they are viewed by senior
leadership and holding career development
discussions. Emphasize on-the-job experiences
and identiy at least two or three possible
opportunities or developmental rotations or
other stretch assignments that align with the
employees interests and career aspirations.
Given the companys lean stafng model,assess whether the organizations best and
brightest talent is aligned with its most
strategic and pivotal roles. Consider rotating
high-potential employees out o businesses with
low growth to those expected to grow more this
year or to those where turnaround eorts will
provide signifcant growth opportunities. Create
a process to ensure successul transition o
employees who rotate into new roles.
CaseStudy
Coming Back From Layofs
2010 Global Talent Management and Rewards Survey Repo
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The more cost-cutting actions employers have taken,the more likely they are to recognize the impact o
those cuts on employee engagement levels and other
indicators o employee well-being. Nevertheless,
while declines in employee engagement oten have
an adverse business impact, respondents in our
survey do not believe their cost-cutting actions
have adversely aected quality, customer service,
employee productivity or willingness to take risks,
regardless o how many cost-cutting actions they
have taken.
Cost-cutting actions may have aected the drivers
o employee attraction and retention. Organizationsrecognize the importance o base pay, challenging
work, career advancement opportunities and their
reputation in attracting employees. The cost-cutting
and cost management actions employers have taken
have had signifcant negative impacts in each o
these areas. While employers acknowledged the
impact o their actions on employee well-being, they
have not made the connection between well-being-
related items such as a convenient work location,
exible scheduling and time o and an
employees decision to join a frm.
Employers and employees agree that compensation
and advancement opportunities are important
actors in both attracting and retaining employees.
However, employers underestimate the importance
o employee security both now and in retirement
and well-being when employees evaluate whether
or not to leave their current organization. With many
employees eeling more responsible or managing
their careers and retirement, they are increasingly
Figure5.Employersrecognizesomeoftheadverseimpacts
ofcostcutting
All
Employers
#ofcost-cuttingactionstaken
12
actions
34
actions
5ormore
actions
Increased workloads or
employees61%* 45% 67% 79%
Employees ability to manage
their levels o work-related
stress
53% 36% 57% 72%
Overall employee engagement 50% 35% 52% 70%
Employees ability to have a
healthy balance between work
and their personal lives
50% 37% 54% 65%
Productivity 28% 16% 29% 45%
Willingness to take risks/try
new things
25% 16% 28% 35%
Quality/customer service 22% 12% 21% 37%
Institutional knowledge
(o core processes, prior
business cycles, etc.)
20% 9% 19% 34%
*The percentages o respondents who indicate that their cost-cutting actions have had an adverse impact in that area
Figure6.Employersfailtorecognizetheimpactofchangestoemployeewell-beingontheirabilitytoattractemployees
Ranking* EmployerView EmployeeView
1 Competitive base pay Competitive base pay
2 Reputation o the organization as a great place to work Challenging work
3 Challenging work Convenient work location
4 The business/industry o the organization Opportunities or career advancement
5 Opportunities to learn new skills Vacation/holiday/paid time o
6 Opportunities or career advancement Reputation o the organization as a great place to work
7 Organization's fnancial health Flexible schedule
*Ranking represents the requency the item was selected as one o the top fve reasons an employee would join their frm, rom a list o 26 items. Employee data come rom the
2010 Towers Watson Global Workorce Study.
While employers acknowledged
the impact o their actions on
employee well-being, they
have not made the connectionbetween well-being-related
items and an employees decision
to join a rm.
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2010 Global Talent Management and Rewards Survey Repo
likely to be inuenced by job oers that include a(better) pension, greater job security, better work/lie
balance or more exible work arrangements.
Cost cutting and other changes have created a
gap between the employee value proposition (EVP)
companies oer and the EVP employees are
seeking. Employees are looking or job security and
stability, opportunities to earn substantially higher
levels o compensation, and opportunities or
development and advancement, which they eel
are unavailable in their current organization. Many
employers confrm that these intrinsic and extrinsic
rewards are unavailable. Wide gaps between whatemployees want and what they believe is attainable
can lead to disenchantment with their current
employer, an unwillingness to give discretionary
eort on the job and retention risk.
Figure7.Employersunderestimatetheimpactofpensions,jobsecurityandmoreexibleworkarrangementson
employeesdecisionswhetherornottoleavetheirorganization
Increased
compensation
Availabilityof/
betterpension
Greaterjob
security
Improved
work/life
balance
Greatercareer
advancement
opportunity
Moreexible
workhours
All
Employee 91% 86% 86% 85% 84% 82%
Employer 88% 30% 43% 66% 87% 48%
Gap 2% 56% 42% 20% 3% 34%
Asia
Employee 91% 89% 90% 88% 88% 86%
Employer 94% 28% 47% 61% 90% 43%
Gap 3% 61% 43% 27% 2% 43%
Brazil
Employee 90% 86% 84% 87% 89% 83%
Employer 93% 31% 44% 66% 89% 36%
Gap 3% 55% 40% 21% 0% 47%
Canada
Employee 91% 88% 82% 84% 82% 81%
Employer 85% 23% 35% 59% 83% 50%
Gap 6% 65% 47% 25% 1% 31%
Europe
Employee 89% 83% 82% 82% 81% 78%
Employer 87% 26% 38% 69% 88% 49%
Gap 2% 57% 44% 13% 7% 29%
U.S.
Employee 94% 86% 87% 86% 81% 80%
Employer 83% 37% 48% 70% 83% 56%
Gap 10% 49% 39% 15% 2% 24%
The percentage o employees or employers responding to a moderate or great extent: How would receiving each o the ollowing rom a new employer inuence your/your employees decision to leave yo
current organization?
Gaps are the dierence between employee and employer percentages, and may not add up due to rounding.
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In growing economies with tight labor markets (e.g.,
Brazil and much o Asia), the attraction/retention
impact o these EVP gaps threatens companies
ability to realize both immediate and long-term growth
opportunities. Organizations in the U.S., Europe
and Canada ace similar EVP gaps, but continuing
economic uncertainty in these markets means that
these EVP gaps pose greater short-term business
risks through their negative impact on employee
engagement levels, perormance and willingness to
exert discretionary eort, rather than through their
impact on attraction and retention. In the long term,
however, these EVP gaps will have a similar impact
on these companies ability to attract, retain and
develop key talent, and deliver sustained business
perormance. Although companies everywhere ace
similar EVP gaps, organizations in aster-growing
economies such as Brazil, China and India are
more likely to devote additional resources to close
these gaps because o their greater urgency than
organizations in Europe, Canada and the U.S.
The economic crisis dramatically changed the
business environment, causing organizations to
ocus on short-term cost-cutting actions that
resulted in EVP gaps. As economic and businessconditions improve, employers are restoring some
o the losses in reward programs and addressing
their EVP. They are also rethinking their long-term
business, talent and reward strategies, developing
greater integration and consistency within and
between programs, and prioritizing their investments.
These changes are reected in the current
landscape o talent and reward programs.
Figure8.Employeesperceiveasignicantgapbetweenwhatisimportanttothemintheirjobandwhatisavailablein
theircurrentorganization
Region
Asecureand
stableposition
Substantially
higherlevelsof
compensation
Opportunityto
rapidlydevelopmy
skillsandabilities
Awiderangeof
jobsandwork
experiences
Opportunityto
developinnovative
products/services
All
Important* 76% 72% 68% 60% 51%
Achievable** 51% 31% 39% 39% 29%
Gap 26% 41% 29% 21% 21%
Employer View*** 54% 26% 44% 45% 42%
Asia
Important 69% 73% 74% 71% 60%
Achievable 48% 37% 44% 45% 36%
Gap 21% 37% 31% 25% 24%
Employer View 60% 37% 49% 50% 41%
Brazil
Important 74% 74% 75% 47% 65%
Achievable 59% 50% 57% 41% 48%
Gap 15% 25% 19% 6% 17%
Employer View 23% 20% 38% 24% 48%
Canada
Important 87% 76% 66% 63% 43%
Achievable 59% 27% 37% 41% 22%
Gap 28% 49% 29% 22% 21%
Employer View 57% 20% 43% 49% 34%
Europe
Important 76% 68% 65% 54% 47%
Achievable 49% 27% 37% 32% 26%
Gap 27% 41% 29% 21% 20%
Employer View 56% 22% 54% 46% 51%
U.S.
Important 87% 74% 62% 55% 39%
Achievable 53% 22% 33% 37% 18%
Gap 34% 51% 29% 19% 21%
Employer View 54% 23% 33% 42% 39%
*The percentage o employees responding avorably to item: To what extent is each o the ollowing important to you in your most-preerred work situation?
**The percentage o employees responding avorably to item: To what extent is each o the ollowing achievable within your current organization?
***The percentage o employers responding avorably to item: To what extent is each o the ollowing available to proessional/managerial employees at your organization?
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CaseStudy
Outgrowing a Decentralized Approachto HR Management
This company has grown rapidly over the past
10 years, developing new products and
expanding geographically. Regional leaders have
operated with autonomy as long as they
delivered strong revenue growth. But recent
results in Asia have been below expectations.
And high-perorming managers, who were
promoted quickly, have struggled to adjust to
their new responsibilities even as the company
has been challenged to backfll their positions.
Managing talent globally is being hindered by a
variety o actors. Transerring people rom one
region to another has been difcult; managers
are reluctant to release key employees, and the
workers themselves do not see any connection
between the proposed rotations and advancement
(in their view, advancement means moving up
the hierarchy or greater pay). There is a clear
lack o global talent management inrastructure
and technology. In addition, leadership
expectations, cultural norms and perormance
expectations are not consistent across countriesor business units. Furthermore, the high starting
salaries and large salary increases necessary
to attract and retain talent in ast-growing
markets have created internal equity and
governance issues.
Moving rom a decentralized to a centralized
approach, which represents a major undertaking,
is critical or this organizations uture success.
Towers Watson suggested that the SVP o HR
plan a series o change initiatives, starting with
the organizations employee value proposition
(EVP) and proceeding through design,
implementation and ongoing measurement.
Over time, most o the ollowing recommendations
could or should be implemented:
Obtain the support and involvement o the
CEO and executive team as sponsors or what
will represent a signifcant change in the way
the organization manages its human capital.
Create a global team to develop a ormal,
organization-wide EVP and total rewards and
talent management strategy that align reward
and talent programs with the companys
business drivers and human capital strategy.
Inventory all reward and talent programs
(by region, business unit, etc.), evaluate
their eectiveness, and identiy any required
improvements or new programs. Map the
change initiatives across a multiyear plan toensure ocus and prioritization o resources.
Identiy talent groups most critical to the
organizations continued success. Assess the
drivers o engagement or these key talent
segments, and ensure the human capital
strategy and EVP are credible, distinctive
and compelling in the markets where this
organization competes or talent.
Review the job-leveling models used across
the frm and establish a single, globally
consistent leveling protocol. This protocol
should be used to level all jobs, with the
resulting ramework serving as a oundation
or all reward and talent management designs.
Conduct competitive market analyses and
develop locally competitive salary ranges or
each level to help ensure pay is equitable
and sufcient, but not overly competitive with
the external market. Establish a calendar
or a recurring review o competitive market
practices and pay levels.
Build an organization-wide core competency
model that translates the companys mission
and values into behavioral expectations or
all employees. Embed the competencies and
behaviors throughout the organizations talent
programs and practices.
Adopt a global perormance management
process and compensation administration
guidelines, establishing policies or delivering
pay on the basis o perormance, market
competitiveness, internal equity and
development o required competencies.
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Formalizing and Communicating theEmployee Value Proposition
Regardless o how it is developed or defned, and
whether it is articulated explicitly or remains implicit,
every organization has an EVP, and some develop
several EVPs that are inconsistent with each other.
Only 34% o organizations report having an EVP that
they have articulated, documented and communicated.
The other two-thirds say theirs is implicit and has
evolved over time. Organizations in Asia and Brazil,
where attraction and retention challenges are
greatest, and top-perorming companies in general
are the most likely to have a ormal EVP.
The EVP can be a powerul tool or attracting, retaining
and engaging employees. Organizations are also using
the EVP to improve the alignment within HR programs
and between HR programs and the organizations
business and its brand. Better alignment between
the EVP and the brand can lead to improved
employee line o sight, encouraging employees to
adopt those behaviors that will deliver on the brand
promise, including superior customer service.
The EVP is a powerul management tool when it is used
and communicated eectively. Among organizations
that oer competitive rewards, improving
communication o those rewards can have a greater
impact on employee satisaction and at ar lowercost than additional investments in making the
rewards richer. Companies that have a ormal EVP
are nearly our times as likely to communicate their
existing EVP eectively and are twice as likely to
align their EVP with what they stand or in the
marketplace. When an organization ormalizes its
EVP, that EVP is more likely to become a stable,
uniying experience within the company.
While it is oten necessary to modiy the EVP or
use in dierent locations or or dierent employee
segments, it is better to do so within a stable,
common ramework that is aligned with theorganizations strategy and has been eectively
communicated. Organizations with a ormal EVP are
less likely to have changed their EVP recently or to
expect to change it over the next three years.
Figure9.High-performingorganizationsaremorelikely
tohaveaformalEVP
HaveaFormalEVP
All 34%
Asia 39%
Brazil 53%
Canada 25%
Europe 35%
U.S. 25%
High-perorming organizations 42%
Average-perorming organizations 32%
Organizations perorming below their peers 28%
Figure10.OrganizationsformalizetheirEVPinordertopromoteeffectivealignment
All Asia Brazil Canada Europe U.S.
To improve alignment o HR processes, programs and administration
with business objectives, brand and each other81% 78% 90% 84% 82% 79%
To establish employer brand or talent/attraction 73% 73% 60% 81% 75% 76%
To set and manage employee expectations 65% 63% 48% 65% 72% 73%
To support/drive change management 59% 59% 58% 38% 67% 63%To acilitate communication with prospective employees 50% 48% 44% 59% 47% 55%
The Current Landscape o Rewardsand Talent Management
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Rewards
Base pay is the oundation or attracting and
retaining employees. However, in many organizations,
the real value o base pay has been at or the past
fve years. Many organizations have also reduced
bonuses and instituted salary reezes in the past
two years to cut or manage costs. Moving orward,
it will be critical or organizations to align employer
and employee interests in order to attract and retain
employees with required skills in a cost-eective way.
Merit
There are signifcant dierences in both the size
o merit increase budgets as well as individual
salary increases by region. Employees who met
perormance expectations received an average base
pay increase o 8.8% in China and India, but only
1.6% in Ireland and Spain. Similarly, there are
dierences in the merit increases companies
provide to employees who ar exceed expectations
top perormers versus average perormers.
The greatest percentage dierentiation is ound in
Europe and Brazil. In Europe, organizations with
lower to average merit increase budgets are making
it a priority to give signifcantly larger increases to
top perormers, reecting their difculties attracting
or retaining top perormers. In Brazil, where labor
markets are tighter and salary increase budgets are
larger, organizations are limiting merit increases or
average perormers in order to give top perormers
increases that are more than three times as large.
Dierentiation is lower in Asia and North America,
where organizations give top perormers merit
increases that are twice as large as the increases
or average perormers. Low-perorming companies
are not dierentiating merit increases to a
signifcantly greater extent than top-perorming
companies, awarding comparable merit increases
to employees who only partially meet expectations.
Figure11.OrganizationswithaformalEVPcommunicateitmoreeffectively,
andachievebetterstabilityandalignment
EVP
Informal Formal
Organization does a good job communicating its existing EVP* 19% 74%
Organizations EVP is clear ly aligned with what we stand or in
the marketplace 37% 81%
Organization has signifcantly changed its EVP in light o the
recent economic changes 20% 28%
Organization is going to change its EVP signifcantly over the
next three years38% 23%
Organization varies EVP by:**
Location 34% 14%
Business Unit 35% 19%
Job Level 46% 29%
Top Perormers 46% 28%
High Potentials 43% 27%
*The percentage o respondents who have an inormal/ormal EVP who agree with the statement
**The percentage o respondents who have an inormal/ormal EVP who vary that EVP by location, business unit, etc.
Financially high-perorming
companies are the most likelyto have a ormal EVP.
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Short-TermIncentives
Amid increasing profts and shareholder returns,
the average projected short-term incentive (STI)
unding level in most regions or the current year
is approximately the same percentage as or the
most recently completed year, as many organizations
have increased perormance targets. The two
exceptions are Canada, where payouts are expected
to decrease by 12 percentage points, and the U.S.,
where payouts are expected to increase by nine
percentage points. Companies that have
outperormed their peers are increasing their
perormance targets or this year, while poor
perormers are decreasing theirs. As a result,
high-perorming companies have lower expected
payouts this year than last, while low perormers
expect their payouts to increase.
Companies have maintained signifcant levels o
dierentiation between top-perorming employees
and average employees. The average dierence is
approximately 1.5 times greater. There is no
signifcant dierence between high-perorming
companies and low-perorming companies in the
ratio o STI payouts to top perormers relative to
average perormers. Poorly perorming companies
are providing the same relative dierentiation as
high-perorming companies rather than allocating a
larger share o their relatively scarce resources to
top perormers and less to others.
Figure12.EuropeanandBraziliancompaniesreportgreatestmeritdifferentiation
nodifferencesindifferentiationbyrmperformance
EmployeeRating
Didnotmeetexpectations
Partiallymetexpectations
Metexpectations
Exceededexpectations
Farexceededexpectations
Differentiationratio*
China/India 0.7% 3.5% 8.8% 12.6% 17.7% 202%
Other Asian countries 0.4% 1.6% 4.0% 5.8% 8.0% 202%
Ireland/Spain 0.2% 0.7% 1.6% 3.0% 5.1% 317%
Other European countries 0.1% 0.8% 2.7% 4.5% 7.0% 261%
Brazil 0.7% 1.3% 4.1% 7.6% 10.9% 264%
Canada 0.2% 1.1% 2.8% 4.0% 5.6% 197%
U.S. 0.1% 0.9% 2.5% 3.6% 5.0% 199%
Top-Perorming Companies 0.4% 1.5% 3.7% 5.6% 8.1% 217%
Average-Perorming Companies 0.3% 1.3% 3.7% 5.6% 8.0% 216%
Low-Perorming Companies 0.3% 1.7% 3.7% 5.6% 8.2% 219%
*Dierentiation ratio is the ratio o the increase in merit pay or employees who ar exceeded expectations divided by the increase or employees who met expectations.
Figure13.STIfundingisholdingsteadyinmostregions
Mostrecently
completedyear* CurrentYear
China/India 89% 85%
Other Asian countries 82% 82%
Ireland/Spain 72% 73%
Other European countries 76% 80%
Brazil 77% 88%
Canada 102% 90%
U.S. 83% 92%
Top-perorming companies 98% 91%
Average-perorming companies 83% 86%
Low-perorming companies 59% 72%
*Percentages are the actual payouts o STI relative to targeted levels at beginning o the year.
Companies that have
outperormed their peers
are increasing their STI
perormance targets or thisyear, while poor perormers
are decreasing theirs.
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CaseStudy
Integration Following a Merger
These two organizations merged shortly beore
the 2008 fnancial crisis. Each targeted
customers in dierent market segments and
dierent stages in the value chain, and each
had been highly proftable. To maintain ocus
with minimal disruption in a rapidly changing
marketplace, the merged organizations CEO
decided to allow each legacy entity to continue
operating as a relatively independent business
unit rather than pursue an aggressiveintegration plan.
However, the global recession brought two years
o poor perormance or both organizations, and
in early 2010, the incumbent CEO retired. The
incoming CEOs mandate was to deliver the
synergies that had been promised at the time o
the merger, including cross-selling the companys
entire portolio o products and leveraging
economies o scale across the combined entity.
Given the new organizational mandate, the two
SVPs o HR started to outline the needs and
potential challenges o integrating the legacy
businesses. The two companies cultures were
very dierent; one was hierarchical and
structured, the other inormal and at. And their
reward and talent management philosophies
were also very dierent. Not surprisingly, there
was a great deal o anxiety among employees
about the upcoming changes, as employees
had become accustomed to business as
usual during the years immediately ollowing
the merger. The SVPs were particularly
concerned about retention risks among those
high-potential employees needed to help the
company return to growth.
To overcome these challenges, Towers Watson
suggested the organization establish task
orces with the ollowing accountabilities:
Assess the two cultures to understand
dierences in expectations and day-to-day
operating assumptions between the two.
Using these insights, plan and execute a top
team alignment session to defne new values
and guiding principles or the combined entity.
Conduct a series o pulse surveys to identiy,
monitor and manage employee engagement
issues throughout the integration process.
Segment and analyze the data or key employeepopulations, and leverage the data to start
building the employee value proposition.
Review the career ramework, job leveling,
compensation and benefts, and corporate
titling programs o both business units, and
recommend new designs or the integrated
organization. Ensure these recommendations
align with the employee engagement fndings,
articulate a vision o the desired-state
employee experience and establish a road
map or achieving it.
Formalize a high-potential employee program
that meets the needs o the integrated
organization. Communicate to managers
expectations or engaging and retaining high-
potential employees.
Review the companys incentive and
recognition programs, and ensure that the
metrics and rewarded behaviors support
the organizations business and cultural
objectives (e.g., working across the two
legacy businesses and cross-selling).
Create organizational and unctional
competency profles or the combined
organization. Embed these profles in all
talent processes to ensure that they are
ully operational.
Select and monitor business and employee
engagement metrics to track progress toward
the desired-state culture, business results
and employee experience.
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Organizations have ocused on risk management
and cost reductions over the past two years. But
as economic and business conditions improve,
employers have begun to restore some o the
previous cuts in rewards and to address gaps in
their EVP. They are also addressing the long-term
impact o the changing conditions by modiying their
business and talent management strategies, and
adjusting their talent programs accordingly. Like the
economic and business conditions that made thesechanges necessary, these adjustments vary
signifcantly by region.
Asia Growth and Innovation
Organizations in Asia plan to grow by expanding into
new markets and introducing new products and
services. These organizations report that creativity
and innovation is a key competency or executives
to be successul. Expansion into new markets
requires additional talent at all levels. Since labor
markets are tight, organizations place a premium on
developing people requiring executives to promoteemployee development, investing in the internal
talent pipeline and talent acquisition, and emphasizing
developing new leaders with new competencies.
Brazil New Markets and New Skills
Organizations in Brazil plan to grow by expanding
into new markets, requiring new leaders with
dierent competencies. Brazilian organizations
expect executives to help develop talent with these
new skills, but due to the urgency, emphasize
buying talent over investing in building their
internal pipeline. Nevertheless, organizations in
Brazil indicate that going orward they are more
likely to increase their emphasis on leadership
development, employee learning and succession
management in order to sustain this push.
Canada Emphasizing Efciency
Organizations in Canada are more likely to stress
improving efciency o operations. Executives are
required to be results-oriented frst and visionaries
second. Since efcient operations oten require a
highly experienced workorce with deep expertise in
the organizations methods, Canadian organizations
emphasize long-term career development and
advancement through clearly defned career paths
to support this strategy.
Europe Continued Emphasis onCost Reductions and Value
European organizations emphasize strategic
cost reductions, but they are also shiting their
competitive strategy to emphasize innovation and
customer service. Given the importance o cost
reduction among European organizations, managing
the talent supply chain is critical to their success.
Figure14.VerylittledifferentiationofSTIacrossregions,nancialperformancegroups
Didnotmeet
expectations
Partiallymet
expectations
Met
expectations
Exceeded
expectations
Farexceeded
expectations
Differentiation
ratio*
China/India 16% 52% 97% 123% 151% 155%
Other Asian countries 18% 52% 97% 126% 155% 161%
Ireland/Spain 10% 47% 82% 101% 125% 154%
Other Europe countries 13% 54% 96% 120% 146% 153%
Brazil 19% 56% 99% 120% 141% 143%
Canada 13% 58% 99% 118% 141% 143%
U.S. 15% 54% 97% 115% 134% 139%
Top-perorming companies 20% 57% 102% 122% 142% 140%
Average-perorming companies 15% 55% 95% 118% 144% 151%
Low-perorming companies 8% 43% 84% 112% 137% 163%
*Dierentiation Ratio is the ratio o the STI payout as a percentage o target or employees who ar exceeded expectations divided by the STI payout as a percentage o target or employees who met expectations
Talent Management Strategyand Emphasis
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Figure15.Economicandbusinessconditionscauseorganizationsindifferentregionstoemphasizedifferentbusinessandtalent
managementstrategiesandexecutivecompetencies
GlobalFindings
BusinessStrategy* ExecutiveCompetencies** StrategicTalentManagementPriorities***
Focused primarily on growth
Shiting away rom competing based on
image or reputation
Shiting toward competing by developing
innovative products and services
Results orientation
Strategic vision
Change leadership
Ensuring readiness o talent or critical roles
Increasing the investment in building the internal
pipeline o talent
Creating more movement, rotation and development
opportunities or talent
RegionalVariationFromGlobalFindings
BusinessStrategy ExecutiveCompetencies StrategicTalentManagementPriorities
Asia Grow through product and market
expansion
Compete by developing innovative
products and services
Creativity and innovation
Knowing the business
Developing people
Increase investment in talent pipeline and acquiring
new talent
Europe More ocus on expense reduction to
supplement growth
Compete by developing innovative
products and services and improving
customer service
Knowing the business
Inspiring and motivating
others
Creating movement/rotation or development
without increasing the investment in the internalpipeline
Brazil Revenue growth through market
expansion
Developing people Developing next generation o leaders with new
competencies
Acquisition o new talent
Less emphasis on investing in internal pipeline/
ensuring readiness o existing talent
Canada Less growth-ocused than other regions,
increasing emphasis on efciency o
operations
Same as global Less emphasis on acquisition o new talent
U.S. Supplementing growth with M&A activity
Compete by developing innovative
products and services
Knowing the business Emphasis on ensuring readiness o critical talent
*Business strategy represents the organizations business strategy and the dierentiating actors the organization has traditionally competed on or expects to compete on.
**Executive competencies are the most requently selected competencies that are necessar y or executives to be eective.
***Strategic talent management priorities are based on the percentage o frms that indicated this area was one o the top three talent implications o their organizations strategic priorities.
Although they are less likely to increase their
investment in the internal pipeline, they still need
to create movement and rotation in order to develop
leaders who know the business. European
organizations also expect executives to inspire and
motivate employees perhaps as a way to spur
innovation and customer service.
U.S. Growth Through Innovationand M&As
Organizations in the U.S. plan to grow, but they are
more likely than organizations in other regions to
accomplish this through merger and acquisition
(M&A) activity. Successul mergers require executives
to have a deep expertise and knowledge o their
business. In the U.S., ensuring the readiness o
critical talent is the number one talent management
priority. Organizations are emphasizing leadership
development, career paths and succession
management, but not by creating movement or talent
rotations. This may reect the relative importance o
developing deep technical expertise rather than
broader experience in organizations in the U.S.
In addition to implementing the right talent management
strategies and setting the right priorities, it is critical
or companies to deliver programs eectively.
Eectiveness is oten a unction o eort emphasis
and investment and consistency or alignment.
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Although most organizations have increased their
emphasis on talent management over the past three
years, they recognize that they still need to improvetheir talent management programs. Even those
talent management programs that are considered
most eective specifcally, employee learning
and development, and perormance management
are rated as very eective by less than 30% o
organizations. Employers are signifcantly more likely
to report being more eective on a particular aspect
o talent management when they have increased
their emphasis in that area.
On a global basis, organizations are most likely to
increase their emphasis in three areas over the next
three years: leadership, succession planning and
career pathing. Given todays economic conditions,
the skills and competencies that leaders require
have changed, reecting the new behaviors that are
needed or organizations to compete successully.
Organizations are addressing this need by investing in
leadership development programs, emphasizing new
executive competencies around creating a strategic
vision, change leadership skills to implement these
new strategies and a results orientation to deliver on
them. Organizations are also working to develop new
leadership assessment tools around these executive
competencies. These tools will be used to assessthe new leadership competencies and to identiy the
development needs o leaders who, in some cases, are
required to make signifcant jumps in role complexity
to meet the changing needs o the business.
Employers and employees alike recognize the
importance o career pathing and succession
management, but employers are less eective in
these areas. Eective succession management
is a tool or reducing human capital risks and loss
o institutional knowledge associated with employee
turnover, and is vital to preparing leaders or
signifcant jumps in complexity as they move up
the hierarchy. Developing career paths and plans
helps organizations direct employee development
to those areas that will prepare them or
advancement opportunities and build deeper skill
sets. Together, career paths and plans and
succession management all help ensure the
organization continues to develop the top talent and
critical-skill employees needed or success.
Figure16.Organizationsthatincreasetheiremphasisonaspectsoftalentmanagementaremorelikelyto
ndthemveryeffective
%increasingemphasisover
pastthree
years*
%veryeffective**
All
Companyemphasisoverpastthreeyears
Increased Decreased Ratio
Perormance management 54% 28% 31% 17% 1.8
Leadership development 54% 24% 35% 2% 17.5
Employee learning and development 48% 29% 38% 9% 4.2
Leadership assessment 47% 23% 33% 6% 5.5
Succession management 46% 17% 24% 3% 8.0
Coaching and mentoring 45% 15% 22% 3% 7.3
Competency models and architecture 43% 16% 24% 4% 6.0
Career pathing and planning 42% 10% 15% 0% n.a.
Manager perormance 41% 16% 25% 0% n.a.
Critical role identifcation 39% 21% 32% 4% 8.0
Onboarding/induction into new roles 38% 17% 28% 7% 4.0
Talent movement/rotations 34% 12% 23% 3% 7.7
Workorce planning 33% 14% 25% 8% 3.1
Team eectiveness and development 29% 14% 26% 5% 5.2
*Percentage o companies that indicated they increased their emphasis on this area o talent management over the past three years.
**Percentage o respondents that indicated that their organizations increased or decreased their emphasis in this area o talent management over the past three years who rated their organizations as
very eective in this area. Gap equals the dierences in eectiveness between the organizations that increased or decreased their emphasis in that area.
Promoting Efective Talent ManagementThrough Emphasis and Consistency
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Todays increasingly global organizations are
balancing the need or local variation in reward and
talent management practices with the benefts o
global consistency. The key business drivers behind
the decision to establish global consistency in
reward and talent management programs are:
Alignment. Competing globally requires a cascade
rom organizational business imperatives, to the
EVP and total rewards strategy, and ultimately to
rewards and talent management program design.
Governance. Regulation and increasing complexity
require organizations to improve their risk
management, decision-making and knowledge-
sharing abilities.
CostManagement. Globalization, competition
and economic conditions are placing pressure onmargins, increasing the need to manage human
capital costs.
Efciency. Globally consistent programs are
easier to administer, acilitate quick and accurate
reporting and analysis, and allow companies to
leverage investments in technology.
Quality. Global scale allows or the development
o compensation and talent management centers
o excellence.
TalentMobility. Leveraging a global workorce
helps to get the right people to the right places at
the right time.
Complexity. Managing the employees o a global
organization requires a more sophisticated
inrastructure (e.g., technology).
Becoming Globally Consistent Where to Start
Multinational organizations are more likely todevelop consistent programs or top management,
particularly in the areas o perormance
management, succession planning, leadership
development and incentive programs. These
companies also have globally consistent
perormance management and STI programs or
other employees, but not succession management
programs. Instead, they develop globally consistent
competency models, job leveling or job evaluation
(hereater, job leveling), and base pay programs.
These programs are oundational, enabling
organizations to develop global consistency in other
talent management and reward areas.
Figure17.Thepatternofglobalconsistencyvariesbyjoblevel
GlobalFirms*
Topmanagement Otheremployee
Long-term incentives 84% 50%
Perormance management 76% 70%
Succession management 75% 38%
Short-term incentives 72% 61%
Leadership development 69% 42%
Competency models/architecture 66% 59%
Job leveling or job evaluation 66% 58%Base pay 61% 56%
Workorce planning 58% 47%
Career pathing and planning 57% 42%
*Percentage o frms where this program exists in two or more countries that indicate the program design is globally
consistent
Global Consistency
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Nearly 70% o all organizations report having an
organization-wide job-leveling program; among those
that do not, most plan to implement one over the
next two years. In light o the recent changes at
organizations, over one-third o those that have a
consistent job-leveling program plan to review it
this year, mostly or talent management reasons.
Organizations with consistent job-leveling programs
are more consistent in other areas as well. There is
a strong connection between globally consistent job
leveling and consistency in career pathing, the way
work gets done, how work is evaluated and how
employees are rewarded (Figure 18).
Although organizations give low ratings to the
eectiveness o their talent management programs,
organizations with globally consistent programs are
more eective. There is a strong relationship between
global consistency and eectiveness in talent
rotations, career development and advancement.
When companies have a globally consistent job-
leveling system in place, it provides a ramework and
starting point or greater alignment and integration
o talent management programs in general, leading
to improved eectiveness (Figure 19).
Organizations need to develop a reward and talent
management strategy that is agile enough to
support robust growth, but is sustainable and
scalable in a downturn. Some programs such assalary increase and training budgets are exible,
and organizations can readily adjust their spending
based on economic and business conditions.
Other programs are less exible: Organizations
are unlikely to reverse trends on increasing health
premiums or employees or to change their
retirement contributions, and they are biased toward
renewed hiring over layos (Figure 20).
Figure18.Organization-widejob-levelingorjobevaluationprogramsmakeestablishingothergloballyconsistent
programsmorelikely
Havegloballyconsistent
broad-basedjobleveling
Donothavegloballyconsistent
broad-basedjobleveling
Topmanagement Otheremployees Topmanagement Otheremployees
Long-term incentives 93% 58% 73% 43%
Perormance management 93% 93% 60% 52%
Succession management 88% 53% 71% 28%
Short-term incentives 88% 79% 61% 51%
Competency models and competency architecture 88% 88% 48% 38%
Leadership development 86% 60% 58% 24%
Base pay 84% 83% 46% 43%
Job design 78% 80% 25% 19%
Workorce planning 78% 78% 39% 26%
Employee learning and development 75% 77% 38% 33%
Career pathing and planning 75% 68% 32% 26%
Recruiting/selection 74% 78% 36% 33%
Recognition programs 59% 74% 24% 32%
Sales compensation 49% 71% 24% 35%
*Percentage o companies that have/dont have a globally consistent job-leveling or job evaluation program or employees other than top management that say their other programs are globally consistent or
top management/other employees
Organization-Wide Job Evaluationand Job Leveling
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Companies that anticipate ongoing volatility in the economy and
labor market should develop and communicate an EVP that will
be efective in any economic environment.
Figure19.Globalconsistencyhelpscompaniesbecomemoreeffectiveintheirotherprograms
Program
Havegloballyconsistentbroad-basedjobleveling*
Donothavegloballyconsistentbroad-basedjobleveling Difference
Leadership assessment 34% 15% 19%
Leadership development 31% 18% 13%
Competency models/architecture 23% 9% 14%
Employee learning and development 36% 21% 15%
Workorce planning 20% 11% 9%
Talent movement/rotations 18% 10% 8%
Critical role identifcation 30% 16% 14%
Perormance management 37% 25% 12%
*Numbers represent percentage o respondents who report their program being somewhat or very eective.
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Organizations need to ocus on the basics, those
elements o the EVP that are attractive to all
employee segments, including:
Competitive base pay
Challenging work
Career advancement opportunities
Convenient work location
Vacation or paid time o
Employers need to be competitive in these areas in
order to attract, retain and engage employees. As
market conditions improve, organizations need to
spend their resources more eectively to improve
their return on investment in rewards and talent
management. Companies can become more eective
with reward and talent management programs by:
Formalizingandcommunicatingasustainable
EVP. Companies that anticipate ongoing volatility
in the economy and labor markets should develop
and communicate an EVP that will be eective
in any economic environment. The EVP should
be sustainable in terms o company investment
in rewards and talent management programs,
and address the elements o the deal that are
most important to employees. Organizations thatdevelop an eective EVP and communicate it well
are more successul. The process provides insight
into what employees value, rather than trying to
be all things to all people. Organizations need
to pick their spots, ocusing on top perormers,
critical-skill employees and high potentials, and
designing and delivering on what is important to
them.Jettison things that dont matter and that
dont have an attractive ROI.
Figure20.Pay,bonusesandtrainingbudgetsaretheprogramsorganizationsaremostlikelytochangeif
economicorbusinessconditionschangesubstantiallyineitherdirection
Overthenext12months,whichactionsisyourorganizationmostlikelytotakeifithas:
tocutcosts? additionalfundstospendonlaborcosts?
Program Top3 Program Top3
Reduce pay increases 78% Increase salary budget 69%
Reduce budgets or training and development
programs54% Hire more people 54%
Reduce or eliminate bonuses 57% Increase bonus opportunities 49%
Lay o employees 41%Increase budget or training and development
programs55%
Increase health care premiums that
employees pay18%
Increase investment in better equipment or
employees27%
Reduce employee hours, e.g., urloughs,
reduced workweek13% Increase bonus eligibility 14%
Reduce contribution to retirement programs 8% Increase contributions to retirement programs 7%
Reduce number o days o paid time o or
vacation6%
Reduce health care premiums that employees pay 4%
Increase number o days o paid time o or vacation 2%
Implications o the Current Landscape oRewards and Talent Management
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Developingglobalconsistencyacrossregionsandlevelswithinaprogram. Organizations are
becoming more globally consistent in how they
develop and manage talent and reward programs.
By doing this, organizations are discovering
they can be more successul in the overall
eectiveness o these programs.
Developingconsistencybetweenrewardand
talentmanagementprogramsthroughan
integratedrewardandtalentmanagement
framework. Global job-leveling programs create
a common ramework or managing talent
and rewards. For example, creating career
advancement opportunities through requent job
rotations in order to help employees develop is
eective when employees and managers together
have a clear vision o career paths and job leveling
through the process.
Differentiatingrewardsbasedonemployeesperformance. Most organizations dierentiate
merit increases and bonus payouts, but fnancially
poor-perorming organizations need to ensure that
their top perormers receive more ully unded
awards, even i it means that below-average
perormers do not receive a bonus.
Pickingsolutionsthatarerightforthe
organizationinitssetting. There are no silver
bullets, but organizations are seeing results in
the places where they are focusing their efforts.
Companies that have increased their emphasis on
aspects o reward and talent management over
the past three years report being more eective in
those areas. Organizations need to increase their
emphasis on areas that support achievement o
their business and talent management strategies.
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About the SurveyIn May and June o 2010, Towers Watson conducted
a survey o 1,176 human resource proessionals
with responsibilities in compensation and benefts or
talent management. These participants completed a
survey questionnaire covering such topics as general
business inormation and strategy, reward program
governance and design, cost management and
rewards, employee engagement, employee value
proposition, attraction and retention, and talent
management. The respondents come rom a broad
cross section geographically:
DistributionofRespondentsbyRegion
Respondents were predominantly international
and global organizations (58%) rather than
domestic (42%):
DistributionofOrganizationsbyType
Respondents were o various sizes, rangingrom less than 2,000 employees to well over
20,000 employees:
DistributionofRespondentsbyFirmSize
I28% Asia
I24% Europe
I 8% Brazil
I 40% North America
28%
24%8%
40%
I42% Domestic
I 23% International
I 35% Global
42%
35%
23%
31% Over 10,00017% 5,00010,00017% 2,000500035% Less than 2,000
35% 31%
17%17%
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Respondents came rom a broad cross section o industries:
DistributionofRespondentsbyIndustry
Industry Number %oftotal
Manuacturing 163 14%
Financial Services, Excluding Insurance 150 13%High Technology 124 11%
Financial Services Insurance 91 8%
Proessional and Business Services 90 8%
Communications 58 5%
Health Care, Excluding Pharmaceuticals 56 5%
Retail 52 4%
Food and Beverage 51 4%
Health Care Pharmaceuticals 51 4%
Energy 50 4%
Property and Construction 42 4%
Automobiles and Transportation Equipment 40 3%
Transportation 35 3%
Wholesale 30 3%
Natural Resources 22 2%
Utilities 18 2%
Tourism and Leisure 14 1%
Aerospace and Deense 13 1%
Education 13 1%
Government 10 1%
Charities and Nonproft 3 0%
Key Terms
High-performingorganizations: This report dierentiates
between fnancially high- and low-perorming companies
based on sel-reported responses to the question,
How well did your total organization perorm fnancially
compared with other frms in your industryduring the
past year? Respondents were given fve choices, ranging
rom substantially below peer group to substantially
above peer group. Companies that identifed themselves
as substantially above peer group are high-perorming
organizations, while those that said their perormance was
slightly above peer group or about the same as peer
group were considered average perorming. Companies
that said their perormance was below that o their peerswere characterized as low-perorming organizations.
Critical-skillemployees: Critical-skill employees are those
who possess the skills the organization needs most to
compete eectively now.
Top-performingemployees: Top-perorming employees
are those whose perormance was rated ar exceeds
expectations (i.e., in the top 10%) by their supervisor
in their most recent perormance review.
Employeevalueproposition: The EVP articulates the array
o programs, practices and work experiences that shape
employee attitudes and behaviors in the workplace. The
intention o the EVP is to defne an employment experience
that rallies employees around the organizations brand,
mission and values. The EVP captures both the employer
and employee views.
Globalrms: Global frms are companies that have
signifcant operations (majority o unctions represented)
on three or more continents.
Internationalrms: International frms are companies that
have multiunction operations across an entire region or in
several countries on dierent continents. Domesticrms: Domestic frms are companies that have
the majority o operations in their home country. They mainly
supply the domestic market and may have small operations
with one or two unctions represented in other countries.
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About WorldatWorkThe Total Rewards Association
WorldatWork (www.worldatwork.org) is a global human resources
association ocused on compensation, benefts, work-lie and
integrated total rewards to attract, motivate and retain a talented
workorce. Founded in 1955, WorldatWork provides a network
o nearly 30,000 members in more than 100 countries with
training, certifcation, research, conerences and community.
It has ofces in Scottsdale, Arizona and Washington, D.C.
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About Towers WatsonTowers Watson is a leading global proessional servicescompany that helps organizations improve perormance through
eective people, risk and fnancial management. With 14,000
associates around the world, we oer solutions in the areas
o employee benefts, talent management, rewards, and risk and
capital management.
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