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WORKFORCE METRICS SOLUTION2014 EMEA OVERVIEW12 November 2014
Tom Jacob, Senior PartnerDavid Elkjaer, Senior Associate
MERCER
Tom JacobSenior Partner
David ElkjaerSenior Associate
Global LeaderResearch & Insights ProductsPhiladelphia, United States
+1 215 982 4254
+ 45 45959624
Global LeaderWorkforce MetricsCopenhagen, Denmark
TODAY’S PRESENTERS
MERCER
AGENDA
SOLUTIONOVERVIEW
02EMEATRENDS
03
CASE STORY
04
INTRODUCTION
01
Q&A
05
SECTION 01
INTRODUCTIONWHAT ARE METRICS
MERCER
WHAT ARE WORKFORCE METRICS?
Track the workforce
WORKFORCEMETRICS
Strategically aligned to thebusiness
Business planning and problemidentification/solving
External comparison puts themetric in context
MERCER
WHAT ARE WORKFORCE METRICS?
AnecdotesReactiveChecks
OngoingReports
Benchmarks
Correlations
Simulationsand
Forecasting
Predictiveand CausalModelling
WorkforceMetricsSolution
SECTION 02
SOLUTION OVERVIEW
MERCER
SOLUTION OVERVIEWMETRICS COVERED
Span of Control Financial Metrics Workforce Structure
Workforce RetentionWorkforce Cost(New in 2014)
Functional Outsourcing(New in 2014)
MERCER
20125,088 organizations57 markets
20136,323 organizations64 markets
201412,600*organizations78*markets
*NOTE: Based on 2014 participation projection
SOLUTION OVERVIEWPARTICIPATION OVERVIEW
MERCER
78 COUNTRIES COVERED IN THE 2014 METRICS SURVEY
SOLUTION OVERVIEWPARTICIPATION IN SELECECTED COUNTRIES
326
1,145
392
227
270
177
126
231204
174
200168
1631,605* 243*
534*150
392*
211*
*NOTE: Based on 2014 participation projection
MERCER
EMEA PARTICIPANT DISTRIBUTION BY INDUSTRY AND HEADCOUNT GROUPING
SOLUTION OVERVIEWPARTICIPATION OVERVIEW – EMEA – 3,700
0 100 200 300 400 500 600 700 800 900
Consumer Goods
Other Durable Goods Manufacturing
Life Sciences
Other Non-Manufacturing
High-Tech
Other Non-Durable Goods Manufacturing
Transportation Equipment
Services (Non-Financial)
Energy
Retail & Wholesale
Financial Services
Insurance
Mining & Metals 20,000 <10,001 - 20,000
5,001 - 10,0001,001 - 5,000
501 - 1,000101 - 500< 100
MERCER 11
ONLINE DATA DELIVERY TOOLSAMPLE DASHBOARD
Includes 2012, 2013and 2014 data,enabling time seriesanalysis.
Detailed informationand formula on eachmetric.
Easily switch betweengraphs and tables.
MERCER 12
ONLINE DATA DELIVERY TOOLSAMPLE DASHBOARD
View the structure oforganizations usingMercer Internal LaborMarket Map
Detailed data on eachcareer level
Filter by industry, sizeand geography
SECTION 03
EMEA TRENDS
MERCER
FOR A SAME SAMPLE OF COMPANIES IN OUR DATABASE THE GRAPH BELOW SHOWS THE 2013 &2014 PRODUCTIVITY AND THE LINE REPRESENTS THE PERCENTAGE CHANGE.
14
EMEA TRENDSSAME SAMPLE – PRODUCTIVITY 2013 – 2014 TREND
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
0
100
200
300
400
500
600
700
800
2013 2014 Percent Change(Secondary Axis)
USD
(000
’s)
MERCER 15
EMEA TRENDSSAME SAMPLE – DRIVERS OF PRODUCTIVITY CHANGE
Productivity Headcount Revenue
Western Europe
Northern Europe
Southern Europe
Northern Africa
Middle East
Eastern Europe
10% -8% 1%
2% 3% 5%
-3% -1% -4%
--4% 13% 9%
--15% 19% 1%
--35% 9% -29%
MERCER
THE BUSINESS MODELS WITHIN SPECIFIC SUB-SECTORS, HERE IN CONSUMER GOODS, IMPACTSTHE PRODUCTIVITY, IN SOME CASES, TO A LARGER DEGREE THAN THE GEOGRAPHY.
16
EMEA TRENDSSAME SAMPLE – PRODUCTIVITY INDUSTRY TREND
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Consumer Goods - Other orCombination
Beverage & Tobacco Food
Northern Europe
Western Europe
Southern Europe
Eastern Europe
USD
(000
’s)
MERCER 17
Blue Collar
White Collar
Professional (Non-Sales)
Professional (Sales)
Management
Executive
Northern Europe Eastern Europe
19%
8%
17%
3%
24%
29%
9%
25%
23%
1%
11%
31%
EMEA TRENDSSAME SAMPLE – CONSUMER GOODS COMPARISON
• In Northern Europethe top two layersare significantlylarger than inEastern Europe.
• This Indicates thatthere is a largerpresence ofinternationalmanagement inNorthern Europe.
MERCER 18
Northern Europe Eastern Europe
EMEA TRENDSSAME SAMPLE – CONSUMER GOODS COMPARISON
Marketing and Sales
Operations
Logistics and Distribution
Finance
Human Resources
Product or Service Development 10%
5%
8%
35%
19%
3%
5%
20%
30%
31%
1%
1%31%
78%
94%
67%
42%
100%
41%
96%
100%
91%
80%
98%
StructureHas
Function StructureHas
Function
• The size of theoperations functionis not significantlydifferent.
• The proportion ofcompanies havingoperations is twiceas large in EasternEurope.
MERCER 19
EMEA TRENDSCORRELATION – PRODUCTIVITY AND COMPENSATION REVENUEPERCENT
Percent of Revenue Allocated to Compensation
Prod
uctiv
ityU
SD(‘0
00)
• Overall across the EMEAregion we see a significantcorrelation between thepercent allocated to totalcompensation andproductivity.
• This trend is evidentacross most industriesexcept, as an example,Retail & Wholesale wherethere is no correlation.
MERCER 20
EMEA TRENDSCORRELATION – VOLUNTARY TURNOVER AND SALARYINCREASE
• Analyzing the averagesalary increase rate andthe voluntary turnover perlevel gave no significantcorrelation, at the countrylevel, except for theProfessional Sales level.
• A question in thisconnection could be if theProfessional Sales level istypically more extrinsicallymotivated compared toother level.
Average Salary Increase
Volu
ntar
yTu
rnov
er
Professional – Sales
MERCER 21
EMEA TRENDSCORRELATION – VOLUNTARY TURNOVER AND REAL SALARYINCREASE
• Analyzing the average realsalary increase rate andthe voluntary turnover perlevel gave no significantcorrelation, at the countrylevel, except for theProfessional Sales level.
• A question in thisconnection could be if theProfessional Sales level istypically more extrinsicallymotivated compared toother level.
Average Salary Increase Minus Inflation
Volu
ntar
yTu
rnov
er
Professional – Sales
MERCER 22
EMEA TRENDSCORRELATION – VOLUNTARY TURNOVER AND SPAN OFCONTROL
• The organizational span ofcontrol, especiallymanagement, is a proxyfor how much individualsupervision eachprofessional receives.
• In this analysis weexamined how themanagement span ofcontrol correlated withvoluntary turnover for thesales professionals.
• Taking the average,across all industries, wefound a positivecorrelation.
Management Span of Control
Volu
ntar
yTu
rnov
er
Professional – Sales
SECTION 4
CASE STORY
MERCER
USING FACTS AND DATA TO UNDERSTAND YOUR ORGANIZATION
RetentionAn organization’sworkforce is theoutcome of threeinterrelated laborflows and theeffectiveness withwhich they aremanaged.
Attraction
WHO COMES INTOTHEORGANIZATION?
Development
HOW DO PEOPLEMOVE THROUGH THEORGANIZATION,THROUGH DIFFERENTASSIGNMENTS, JOBSAND LEVELS OFRESPONSIBILITY?
WHO IS STAYINGAND WHO ISLEAVING?
MERCER 25
CASE STORYBACKGROUND
A North American Pharmaceutical company is experiencing ahigh level of turnover within specific levels of theirorganization; they believe this is partially due to theirorganizational structure being misaligned to the typicalmarket structure and is too top heavy.
Analysis of how organizational turnover levelscompare to external market.
Based on structural information contained in metricsdatabase, analyze if overall structure is different thanmarket.
To see impact of structure and turnover levels, examinehow productivity levels and total compensation structurecompare to external market.
MERCER 26
CASE STORYTURNOVER & STRUCTURAL BENCHMARK
Blue Collar
White Collar
Professional (Non-Sales)
Professional (Sales)
Management
Executive
Total / Voluntary
Turnover
16% / 12%
10% / 5%
15% / 10%
20% / 15%
10% / 5%
4% / 2%
0% / 0%
Overall
Structure
12% / 8%
7% / 4%
12% / 7%
11% / 7%
13% / 9%
10% / 6%
8% / 4%
Total / Voluntary
TurnoverStructure
Company Benchmark
20%
8%
26%
16%
16%
33%
3%
10%
27%
5%
11%
30%
MERCER 27
CASE STORYCOMPENSATION DISTRIBUTION BENCHMARK
Blue Collar
White Collar
Professional (Non-Sales)
Professional (Sales)
Management
Executive
% of revenue spent ontotal compensation
Compensation Distribution Compensation Distribution
Company Benchmark
33%
6%
20%
28%
11%
33%
10%
6%
16%
24% 23%
15%
7%
19%
MERCER 28
CASE STORYPRODUCTIVITY BENCHMARK
The below shows the productivity in North America for the company in question, thePharmaceutical industry and the All Industries benchmark as a reference point.
The low productivity is a result of the bottle neck found in the organization and the highturnover on the professional (non-sales level).
590791 713
480697 616
Company Pharma All Industries Company Pharma All Industries
United States Canada
MERCER
Organizational structure is a driver of overall workforce cost andorganizational effectiveness.
Overall turnover figures can mask the differences between levels andfunctions where issues may exist.
Do not base your decision purely on external data but use it as an inputto make informed decisions.
Knowing the drivers of productivity change is key to understandingproductivity in your industry.
KEY MESSAGES
29
SECTION 5
Q&A
MERCER
Q&A
To ask a question, click on the Q&A button on the bottom right-hand side of your screen.
MERCER
ADDITIONAL RESOURCES
You can request the complimentary executive summary, requestaccess to the demo site, view a robo demo of the system, andmore! visit us at www.imercer.com/workforcemetrics
SECTION 6
APPENDIXMERCER TEAM BIOGRAPHIES
MERCER
TOM JACOBGLOBAL LEADER | RESEARCH & INSIGHTS PRODUCTS
Tom is a Senior Partner in the Information Solutions (IS) group of Mercer’s TalentDivision. He joined Mercer in 2003 and is based in Philadelphia.
Tom has served in a number of roles at Mercer all having in common the innovationand launch of new products and services. He presently serves as the global leader ofResearch & Insights products which includes Mercer’s industries and metricsinformation products.
Prior to joining Mercer, Tom was Vice President/Global Managing Director of HayInformation Services, Inc. at HayGroup Inc. He served at DRI/McGraw Hill as GroupVice President/General Manager of the DRI Energy Forecasting and Consulting Group,and GPU Service Corporation in the Corporate Planning Division.
Tom earned a bachelor’s degree in economics from LaSalle University, a masters ineconomics / econometrics from Temple ,and has completed doctoral studies inEconomics at Temple University. He presently serves as a Member of the EnterpriseManagement Consulting Practice Advisory Board for the Temple University Fox Schoolof Business. He has been a speaker throughout the world on various topics includingthe return on investment in Human Capital Programs, the Global Economic Outlook,and the factors which distinguish quality compensation and benefits surveys.
Tom JacobSenior PartnerPhiladelphia
MERCER
DAVID ELKJAERGLOBAL LEADER | WORKFORCE METRICS
David is the global workforce metrics product manager. He is responsible fordeveloping Mercer’s capabilities in providing relevant Human Capital (HC) metrics inorder to provide clients with an external perspective within the areas of workforcecomposition, C&B, HR functional metrics, recruitment and retention.
From a technology standpoint David is an expert in Mercer’s Workforce analytics tool,Mercer Analytics, which enables organizations to gain critical insight into theirworkforce and utilize Mercer’s expertise within the field. One of David’s key strengths isto look past the complexity of data and numbers to reach business critical insight.
His work at Mercer within workforce analytics and HC metrics also involves theoperational part of gathering workforce data from Mercer’s different surveys,performing analysis and placing the data within an organizational context to make itactionable for clients.
David studied Sociology at Copenhagen University. He specialized in quantitative andqualitative data analysis and design of surveys. He also focused on organizational andeconomic analysis.
David ElkjaerSenior AssociateCopenhagen