MERCER GLOBAL HR CONFERENCES
Asia HR Conference
N E W R E WAR D M O D E L S I N AN
AG I L E W O R K E N V I R O N M E N T
SEPTEMBER 18-19
Puneet Swani, Sr. Partner
Career Business Leader International Region, Mercer
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LIVING IN AN ERA OF DISRUPTION
M AC R O T R E N D S I M PAC T I N G T H E F U T U R E O F R E WAR D S
RESHAPING
O R G A N I Z AT I O N S
STRUCTURES
D I G I TA L I Z AT I O N
AND AI
WORKPLACE
FOR ME
EXTERNAL
SCRUTINY
More than 90% of
executives are planning
organizational redesigns
Technology is enabling the
digitalization of reward
programs, delivering better
experiences at lower costs
“Digital natives” are entering
the workforce, demanding
the consumer grade
experiences
Activist investors, media
and regulators are putting
increasing focus on pay
equity
Demanding A G I L I T Y in
reward systems
Changing C A P A B I L I T Y
needs from rewards
FLEXIBLE &
PERSONALIZED
reward solutions
T R A N S P A R E N C Y in
rewards decision making
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T H E E M P L O Y M E N T D E A L N E E D S T O S I G N I F I C A N T LY
CHANGE
ONLY 2 IN 5 EM PLOYEES BELIEVE THEIR COM PANY HAS A
COM PELLING AND DIFFERENTATED VALUE PROPOSITION*
CHANGING
DEMOGRAPHICS
WORKPLACE
FOR ME
FLEXIBLE
WORKING
GIG
ECONOMY
How can we ensure our
proposition resonates with
five generations
How can we meet
individuals evolving health,
wealth and career needs?
How do we create a culture
that enables people to
contribute under flexible
work arrangements?
What can we do to embrace
the rise of the free agent?
How can we translate our EVP into a Talent Experience Proposition?
* Mercer Global Talent Trends Study
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R E C E N T S T U D I E S C O N F I R M T H AT H R I S M O V I N G
C O M PA N I E S H AV E R E C O G N I Z E D T H AT A C H A N G E I S
NEEDED IN HOW EMPLOYEES ARE REWARDED
Change plans of HR organizations
Comments
% of companies require changes in HR
6
Leadership development
85
16
5
Talent review and succession
84
17
4
Career Management
80
20
3
Rewards
79
22
2
82
18
Workforce planning
1
Global mobility
73
Changes
required
28
No changes required or don’t know
• Different economic conditions, talent
expectations and availability
demand for changes within HR, with
at least 70% seeing changes
required in their talent processes
• Over 55% of organizations already
have a change plan determined and
28% are ready to implement these
plans within the next 12 months
Deep-Dive: Rewards
Changes approved to
implement within next 12
months
Change plan determined,
but resources not secured
Changes required, but no
plan
28%
27%
79%
24%
All values in % may not total 100 due to rounding.
Source: Mercer Research, Mercer “Future Proofing HR“
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T O TA L R E W A R D S S T R AT E G I E S A R E B E I N G M A I N LY
R E V I S E D T O B E T T E R AT T R A C T A N D R E TA I N TA L E N T
Change plans of Rewards
Comments
37%
Improvement in ability to attract/retain
29%
Change in strategy and management
Alignment to performance management
and/or other HR
Change in economic
environment
12%
8%
• As high quality talent becomes
scarce, the ability to better attract
and retain talent has become the
key reason for companies to revise
their Reward system
• With digitalization high on the
agenda, 29% of companies are
planning change to better support
their new company strategy and
management
• With the increased elimination of
performance ratings, 12% of firms
need to find a better way to align
performance management and
compensation & benefits
Source: Mercer Research, Mercer “Future ProofingHR“
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THE FOUNDATIONS OF HOW WE APPROACH REWARDS IS UNDER REVIEW
JOBS
vs
SKILLS
vs
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F O U R F U N D A M E N TA L C H A N G E S T O H O W W E D E L I V E R R E WA R D S
Technical first
Business first
Lag: Benchmarking
Lead: analytics and AI
Value jobs
Value
Standardized
Personalized
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REWARD FUNCTION EFFECTIVENESS
O R G A N I Z AT I O N S A R E R E S H A P I N G T H E I R O P E R AT I N G
MODELS TO ALIGN WITH EMERGING THEMES
GOVERNANCE
How will we distribute decision making responsibility and manage risks through authority and accountability checks?
S T R AT E G Y
TECHNOLOGY
ROLES
PROGRAMS &
POLICY
S E RV ICE DE LIV E RY
What activities are done in the Rewards function, versus through technology, partnership with other functions, or automation?
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K E Y S H I F T S AT W O R K
F O U R K E Y T H E M E S I M PAC T I N G TO TAL R E WAR D S
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CAREER FRAMEWORKS
REWARD OFFERINGS
REWARD PROCESSES
TALENT EXPERIENCE
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WORKFORCE STRUCTURE
THE FUTURE WORKFORCE WILL BE COMPOSED OF
VAR I O U S E M P L O Y M E N T M O D E L S
Impact on Talent Experience
Career Frameworks
• Shake traditional career
frameworks
Internal Talent
Alliances Network
Outsourcing / Talent
Leasing
Freelance / Talent
Platform
Human Machine
Interaction
Reward Processes
• Flexible and agile
• Benchmark compensation in
real-time
Reward Offerings
• New models
• Tailored to attract, retain and
engage external talent
Talent Experience
• Experiences for all talents
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O R G A N I Z AT I O N S
CHANGE FROM A HIERARCHICAL STRUCTURE TOWARDS
AN AG I L E O R G AN I Z AT I O N
Impact on Talent Experience
Career Frameworks
• Organization-agnostic Job
Architecture
• Flexible, yet robust Job Structure
Reward Processes
• Dynamic
• Focus on key events
Reward Offerings
• Diverse workforce needs
• Real-time, team-focused and
event-based
• One “internal talent marketplace”
• Driving innovation by fostering agility
Talent Experience
• Limited TR distinctive effects
Source: Mercer Research 2018, Oliver Wyman 2017
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INDIVIDUALS
M O V I N G F R O M T H E T R AD I T I O N A L E V P T O A TAL E N T
EXPERIENCE PROPOSITION (TEP)
Jobs will be changing within
the Future of Work, resulting
in a shift in skills and tasks
Jobs are being reconfigured
and a broader skillset will
become critical for success
The Future of Work will see
changing aspirations and
expectations of talents
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INDIVIDUALS
MOVING FROM THE TRADITIONAL EVP TO A TALENT EXPERIENCE PROPOSITION (TEP)
Impact on Talent Experience
Create staying power through a unique proposition with a
purpose
• Provide me with meaningful and fulfilling work that matters
• Make me contribute to a company that has a positive impact on
society
PURPOSE
CAREERS
COMPENSATION
WELL-BEING
BENEFITS
Create a differentiated experience
• Training and developing when I need it through
relevant platforms
• Help me manage my work-life integration and give me
flexibility
Provide an offering aligned with the market
and the individual needs
• I can personalize my rewards
• Provide me with a self-service benefits basket
Career Frameworks
• Limited TR distinctive effects
Reward Processes
• Extended personalization
Reward Offerings
• Focus stronger on overall wellbeing of employees
Talent Experience
• Talent Experience Proposition
• Rewards, culture and meaningful
work for internal & external talent
CULTURE
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H O W T O C R E AT E A C O M P E L L I N G E X P E R I E N C E ?
TA R G E T E D : B A S E D O N U N I Q U E N E E D S A N D D E S I R E S
Provides multiple
dynamic lenses to
evaluate programs
Employee
demographics
Location
demographic
s
Builds relevance
into all programs to
target investments
Needs
Interests
Foundation for a
personalized experience
Behaviors
Communicatio
n preferences
Sample Personas
S T AR T E R S
FREE
AG E N T S
LONG-TERM
L O Y AL S
STRIVERS
M AN AG E R I AL
CORE
C R E AT E A C O M P E L L I N G E X P E R I E N C E
S TA R T E R S : P E R S O N A S I N A C T I O N
FAMILY SIZE
Local
Foreigner
Male
Female
3
1
CAREER STAGE
Junior
CHARACTERISTICS
• Focuses on travelling and fun
• Enjoy flexibility in workplace
• Paying off student loan
• Keen on learning and
development opportunities
5
Senior
TARGETED ACTIONS
Opportunities to work overseas such
as international assignments
Flexible working hours such as flexi
time
Offering to pay for student loan
Offer education subsidies for MBA
and relevant courses
C R E AT E A C O M P E L L I N G E X P E R I E N C E
S I LV E R W O R K F O R C E : P E R S O N A S I N A C T I O N
FAMILY SIZE
Local
Foreigner
Male
Female
3
1
CAREER STAGE
Junior
CHARACTERISTICS
• Concerned about health
• Preparing for retirement
• Focuses on spending time
with self and love ones
5
Senior
TARGETED ACTIONS
Self-awareness of health and wellbeing through regular health check
up
Offer comprehensive and high
medical and insurance coverage
Educate on retirement through offering
financial literacy lessons
Flexible working arrangement such
as part time working arrangement
C R E AT E A C O M P E L L I N G E X P E R I E N C E
GIG WORKERS: PERSONAS IN ACTION
FAMILY SIZE
Local
Foreigner
Male
Female
1
3
5
CAREER: FREELANCER
TARGETED ACTIONS
CHARACTERISTICS
• Often left out of office activities
• Does not qualify for statutory retirement
and insurance benefit
• Often not entitled to the same amount of
benefits that other employees are
entitled to
Fostering networking opportunities through
invitation to broader company activities, for
example business and/or organization-wide
town halls, company dinner and dance
Cash allowance to compensate for
retirement & insurance
Offering voluntary health and wellness
benefits such as, providing access to on-site
gym, financial literacy talks, wellness events
and activities
R O L E S AR E E V O LV I N G
INCREASING EMPHASIS ON STRATEGIC PARTNERSHIP TO THE BUSINESS
TRANSACTIONAL ACTIVITIES
DECLINING1
S T R AT E G I C & A N A LY T I C A L
ACTIVITIES1
•
Market pricing using salary
surveys
•
Managing AI / Machine Learning
Tools
•
Participating in salary surveys
•
Predictive Modeling
•
Administering pay processes
•
•
Establishing or adjusting pay
bands
Manager training on pay
conversations
•
Transparency
Organizations are creating reward business partners to upskill managers and strategically
partner with HR & the business
Source: 2018 World @ Work Compensation Function of the Future Study
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E S TA B L I S H E D C O M PA N I E S M A K I N G T H E I R R E WA R D S M O R E A G I L E
COMPANIES REACTING WITH AN EVOLUTIONARY APPROACH TO THE TRENDS
Data driven segmentation
US based
tech firm*
Flexible Offerings (focus still on benefits)
Market Data Analysis
Smart Benefits
• Microsoft examined market data trends
to identify critical roles
and areas where most vulnerable
employees were
• Visa offers its employees in Europe their
core benefits plus a large employee
choice package of up to 1/4 to 1/3 of
their total rewards
• Action plans were defined where the
company needed to invest in order to
attract, motivate, engage, and
retain talent
• The employees can choose cash or
benefits from following types: protect,
live and save
Cluster Analysis
Flex Credit System for Benefits
• This tech company uses employee data
to create insights based on a cluster
and turnover analysis
• Oracle provides its employees with
• Derivation of actual employee needs
for certain clusters and developing
cluster specific packages and
communications
• Every employee has a certain budget
of flex points to select the suitable
packages (e.g. medical waiver credit,
dental plan, life insurance and telehealth
services)
flexible allocation of credits (“flex
points”) across their benefits offerings
Source: Mercer Research
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E S TA B L I S H E D C O M PA N I E S M A K I N G T H E I R R E WA R D S M O R E A G I L E
COMPANIES REACTING WITH AN EVOLUTIONARY APPROACH TO THE TRENDS
Change in Variable Compensation Systems
Improving Recognition and Workplaces
Bonus without individual component
Online Recognition Point System
• Bosch introduced a global
remuneration system to set a stronger
focus on longer-term targets
• KPMG runs in Canada a program which
allows employees at any level to
participate and recognize peers for a
job well done
• The variable pay is derived from
company and business units targets
• Rewards are points that can be redeem
for prizes like Apple iPad or
gift certificates
New profit participation
Workplace and Lifestyle as reward
• Infineon converted the individual bonus
share into the basic salary and the
new profit participation
• Leading tech companies focus on
competing through holistically
promoted EVP
• The new bonus is derived from Return
on Capital Employed, Free Cash Flow
and the business units result
• Providing their employees with perks
that optimize their employment
experience like unlimited sick leaves,
baby cash, bonuses for living within a
mile.
Source: Mercer Research
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SMALLER FIRMS HEADING INTO DIFFERENT DIRECTIONS
U T I L I Z I N G F L E X I B L E E N V I R O N M E N T S F O R I N N O V AT I O N
Emerging practices
New total rewards cultures
Travel Budget
Public compensation
• Airbnb offers new industry-specific
benefits to their staff that align with their
philosophy
• Buffer publishes the compensation
through its buffer salary calculator on the
website
• Employees annually receive $2,000 in
open travel budget to use on trips to
properties on their website
• Determinants for compensation
include base for the role, location,
family, journey, experience
Holidays Bonus
Workplace and Lifestyle as reward
• FullContact provides a reward of up to
$7,500 to each employee for taking
time off work
• At elbdudler colleagues collectively set
their salaries based on needs, market
value, company benchmark and revenue
• Requirements are using all vacation
days and not writing emails/ taking
phone calls during that time
• All salary decisions are public
knowledge within the company
Source: Mercer Research
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NEW REWARD MODELS IN AGILE WORK ENVIRONMENT
CAREER FRAMEWORKS
REWARD OFFERINGS
• Shift away from the traditional job
descriptions
• Changes in job evaluation and grading
• From a job-based framework to a skillbased framework
• Horizontal moves and flatter structures in
career frameworks
• New compensation and reward models for
all talent
• Focus on delivering above statutory
benefits for contingent workforce
• Flexible work model – integrating life and
work
• L&D to become key focus (of TR)
REWARD PROCESSES
• Rewards cycles changing to be agile and
adjust quickly to market benchmarks
• Technology-enabled flexible reward
processes
• Team-based reward processes
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TALENT EXPERIENCE
• A holistic experience that addresses the
individual needs of all talent
• Purpose-driven work that is aligned with
social and ethical values
• Well-being of talent is to become core
agenda for organizations
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