The
Next Generation:
Total
Rewards &
Practitioner
October 2006
Ryan Johnson
Director, Information Development and Public Affairs
WorldatWork

A little about my roles at the Association

And … a little about WorldatWork
The WorldatWork Evolution
1955
1958
1963
2000
Ohio Wage
Midwest
American
& Salary
Association
Compensation
Association
Compensation
Association
WorldatWork
Vision
Vision
Vision
Vision
Pay & job
Pay & job
Education &
The global knowledge
valuation
valuation
certification of
and information leader
in Ohio
in Midwest
compensation
in employee rewards to
professionals in
improve organizational
the USA
performance
Current WorldatWork
Member Demographics
Functional Area
5%
All HR Functions
5% 2%
Compensation Only
39%
19%
Compensation &
Benefits
Benefits
HR Specialty
30%
A Non-HR Function
Three Topics Today…
The Theoretical

The Next Generation of Total Rewards
The Tangible

The Next Generation Total Rewards Professional
The Tactical

The Three “Secret” WorldatWork Member Benefits
That You Need to Take Advantage Of
Part 1: The Theoretical
The Next Generation of
Total Rewards
The New WorldatWork Model
The Evolution of Rewards
Pay
Total
Compensation Compensation
• Base salary
• Base salary
• Position
description
• Variable pay
• Base and
variable pay
• Incentives
• Equity
• Job evaluation
• Executive equity
• Incentives
• Benefits
Total
Rewards
• Compensation
• Benefits
• Work-life
• Performance and
recognition
• Development
and career
opportunities
Total Rewards Model 2000 – 05
Methodology of the New Model

WorldatWork Strategy Committee

Two years of discussion

Focus groups, surveys, depth interviews

Model had numerous iterations

Approved by Board of Directors, 10/05
The 2006 WorldatWork
Total Rewards Model
Why a New Model?

Evolution of the term “total rewards”

Evolution in our membership

Body of knowledge is being built
What Do You Call It?

More than 90% (combined) in our Sept.
2005 member survey said their
organization talks about …

“Total Rewards”

“Total Compensation” or

“Compensation and Benefits”
Evolution of Total Rewards Concept
Q: “How does your company define ‘total rewards’?”
56% comp, LTI, retirement, health care and welfare
(‘everything with a measurable financial value’)
21% all financial rewards plus ‘quality of life’
11% all financial and non-financial factors affecting
employee’s experience, including job deployment
10% comp, LTI, and other cash based items
1%
other
Source: Deloitte 2006 Employee Rewards Survey
Evolution of Total Rewards Concept
Q: “Which of the following best describes how your company
manages ‘total rewards’ (as you defined it previous question)?”
37%
Concept is of interest, but no significant action taken
29%
Comp, benefits and related functions work together on this
concept and have a total rewards policy
22%
Comp, benefits and related functions have discussed the
concept and are considering further steps
8%
We have a total rewards function that actively manages all
rewards components as an integrated whole
4%
Concept is not of interest to us at this time
Source: Deloitte 2006 Employee Rewards Survey
But still highly aspirational…

Do health care cost increases enter into
salary budget discussions?

73%
“No”

19%
“Yes, some impact”

8%
“Yes, major impact recent years”
Source: WorldatWork.org Quick Question, July 2006 (n=218)
But there is also some good news…
Just a few of the companies who now have
employees with “total rewards” in their title…
Sun Microsystems
Johnson & Johnson
H&R Block
State Farm Ins.
Target Corporation
Heinz
Verizon
Burger King
FedEx
Qualcomm
Pitney Bowes
BP
Blue Cross & Blue Shield
The Gap
Children’s Healthcare System Northrop Grumman
Making the Model Tangible

This model will be the basis for the
association’s:

Website and database organization

Magazine content

Research agenda

A tool for you, academics, and anyone
else interested in Total Rewards

We know that integration is the hardest
part… The University of Notre Dame
Where is the TR leverage today?

Which of the 5 elements is your biggest
differentiator as an employer?

32%
Benefits

23%
Work-Life

18%
Development & Career Ops

17%
Compensation

10%
Performance & Recognition
Source: WorldatWork.org Quick Question, Sept 2006 (n=387)
Section 2: Tangible
The Next Generation
of Professional
What Your Peers Think
What Does Success Look Like for
Today’s Compensation Professional?

Is it really simply advanced technical
competence?
Fact: Compensation is interacting
with higher-level functions.
“More interaction with CFO”
53%
“More …with Comp Committee”
53%
“More …with CEO”
51%
“More …with legal”
47%
Source: 2005 WorldatWork Survey “Changing Role of Compensation”
Fact: What is valued and required of
compensation professionals is changing.
“More strategic thinking required”
76%
“More understanding of company”
61%
“More project management required”
52%
“More business case development”
51%
“More exec. presentations required”
47%
Source: 2005 WorldatWork Survey “Changing Role of Compensation”
Total Rewards / Compensation
Professional Success Profile

Question: Is there a “success profile”
for a compensation/total rewards
practitioner today?

Results from 22 senior level practitioner
interviews
Company 1

Understand the business

High personal integrity

Knowledge and comfort with global
economics and marketplace

Ability to be flexible

Do more with less
Company 2

Cultivate relationships: finance, legal, tax and HR

Knowledge of global labor/environ. trends

Honed analytical skills for financial analysis and
to support complex decision making

Ability to consult, negotiate and sell

Creative thinking

Strong communication and facilitation skills

Think holistically

Be able to get over it
Company 3

Understand changing demographics and
what will motivate employees in the future

Understand the business and impact of
rewards decisions on the business

Understand corporate governance

Be creative, push the envelope

Make principle-based decisions
Company 4

Know the business of your company

Accounting principles and selected areas of law

Find comfort in an ever-changing landscape

Creativity is highly valued

Attention to detail is more important than ever

Decisions, policies and practices must be well
thought-out and documented
Company 5

Understand your business

Integrity

Financial acumen

Explain complex ideas in simple ways

Know your audience and custom-build

Strong writing skills

Commitment

Guts and Thick Skin
Company 6

Study the implications of globalization

Understand psychology and create or
study data about employee preference

Understand accounting and implications of
C&B decisions on the business

Vendor management
Company 7

Comp staff will increasingly come and go
from other areas of company

Consulting skills

Ethics and integrity

Keys to becoming a leader:

IQ, EQ, experience, potential
Company 8

See beyond the market data

See beyond the programs to objectives

Global forces will change the way
business is conducted in U.S.

Need to understand and work with finance
Company 9

Know business purposes and premises

Think and act with very long time horizon

Study interplay between design, tax,
accounting, SEC, and ext. environment

Know how compensation is leveraged just
like a plant, or a marketing cost

Know that your programs are no longer
invisible outside of the company
Company 10

Bias for action/results orientation

Lead change

Business and functional expertise

Candor, challenge, feedback

Interpersonal skills

Savvy, street smarts

Maturity and adoptability
IMPORTANCE
Leadership
Managerial
Technical
Individual
Contributor
People
Manager
Director /
Vice President
Ten Key Takeaways
1.
Technical competence is foundational
2.
Knowledge of the business is as important
as your compensation/TR skills
3.
Know how to get things done
4.
Communication/team skills are essential
5.
Have and build a personal network of
external peers
Ten Key Takeaways
6.
Know the organizational culture
7.
Working knowledge of all areas of rewards
8.
Be able to do more with less
9.
Stay abreast of industry trends and new
company practices and products
10.
Bottom line: Constantly add value
Section 3: The Tactical
The Three Biggest Secrets
of WorldatWork Membership
That You Need to Take
Advantage Of
#1
33rd Annual Salary Budget Survey

N=2,700+ across N. America

Published August 1

2006: 3.8% across all ee categories and
includes merit, general and COLA

1981: 10.5%

2007 projected: 3.9%

Current CPI is 3.5%
33rd Annual Salary Budget Survey

First Time Ever: Metro Area Data

Data for both Dallas and Houston

Dallas
3.8% (’06)
3.8% (proj. ’07)

Houston 3.7% (‘06)
3.9% (proj. ’07)

The survey also contains: 2006 and 2007
actual and projected merit, general/cola, total
increase and months between increases for
four employee categories
33rd Annual Salary Budget Survey


Most Prevalent Attract + Retain Programs:

Sign-on/Hiring Bonus
69%

Spot Bonus
45%

Retention Bonus
35%

Part Time w/ Benefits
28%
Variable Pay Usage: 79%
Source: Salary Budget Survey, WorldatWork 2006
#2
New Survey Search tool

Most common question into our
Knowledge Center

Online, multiple category searchable
directory of more than 800 surveys

Launched August 1

First month: more than 2,000 searches
#3
HQ Library

Database with 20,000 documents

Knowledge Services
knowledgecenter@worldatwork.org

On-site Library at HQ
One Final Thought…
What would happen if senior
management in every company
viewed employee rewards as an
investment to be managed, rather
than a cost to be controlled?
Questions?
Ryan Johnson
Director of Information Development and Public Affairs
WorldatWork
Direct: 480-905-5986
Email: rjohnson@worldatwork.org