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1、Global and Local Remuneration Trends13 May 2019第1页，共53页。Growt_ & P_ofitThe worlds most successful companies have this one figured out第2页，共53页。Top 15 Reward TrendsEmployee EngagementTotal Reward ApproachRetention TrendsLinking Pay to PerformanceNew Long Term IncentivesNon-Financial RewardsGlobalisati

2、onGovernance More Flexibility and Reward preferencesSetting Non-Executive Director (NED) Pay Rewards for Creativity Dual Career Paths and Flat Structures (Broadbanding)Media Scrutiny HR, Reward and the Bottom lineBranding and EVP第3页，共53页。1. Employee EngagementEngagement第4页，共53页。Six Categories Drive

3、Employee EngagementPeople Senior Leadership Manager Coworkers People Focus CustomersTotal Rewards Pay Benefits RecognitionCompany Practices People/HR Practices Managing Performance Brand Alignment Organization Reputation Work TasksSense of AccomplishmentResourcesWork ProcessesWorkOpportunities Caree

4、r Opportunities Learning and DevelopmentQuality of Life Work/Life Balance Physical Work Environment第5页，共53页。Employee Engagement (cont.)The Big 5:Employee Engagement 1. Recognise and reward superior performance2. Establish a learning environment3. Create knowledge sharing4. Manage the culture of chan

5、ge5. Provide opportunities to grow and develop第6页，共53页。30% - 150% of annual salaryAccountant = R250,000 (median annual salary 2009)=R250,000 x R30%=R75,000Engagement and the Bottom Line 10 6 210 : 9Every 10% improvement in commitment can increase an employees effort level by 6%, which can improve an

6、 employees performance by 2% (10-6-2 rule).Every 10% improvement in commitment can decrease an employees probability of departure by 9% Source: Corporate Leadership Council, Driving Employee Performance and Retention through Engagement.第7页，共53页。TOTAL REWARDS STRATEGYRemunerationBenefitsWork-LifePerf

7、ormance & RecognitionDevelopment & Career OpportunitiesAttractMotivateRetainEmployeeSatisfaction & EngagementBusinessPerformance& ResultsBusinessStrategyHumanResourceStrategyOrganisationalCulture2. Total Reward ApproachREF: WW 2019第8页，共53页。Remuneration Definitions and TerminologyBase / Basic Salary+

8、 Long-term Incentive+ Short-term IncentiveTotal Earnings / Total Cost to Company+ Car Benefit+ Other Benefits+ Cost of employee benefitsGuaranteed Package / Total Guaranteed PackageVariable PayBase / Basic SalaryFixed PayTotal Remuneration/ Total Cost of EmploymentRolling Incentive第9页，共53页。Total Pac

9、kages concept continues to be a trendThere are few tax reasons for going this route, but many other advantages of doing soTotal Package ApproachMain ReasonEmployerEmployeeCost containment Flexibility 第10页，共53页。3. Retention TrendsRetention of critical skills and top executives is a top driver of remu

10、neration policy and strategyPeople join companies and leave bossesIt is all about engaging top talentOnce all the hygiene factors are sorted out, then one can turn to remunerationRemuneration is 25% of the stay decisionBUT, remuneration is the ticket to the game it has to be right第11页，共53页。Retention

11、 Remuneration OptionsMarket StanceRestraint of trade paymentSign-on bonuses/Retention bonusSign-on LoansRolling or banking of bonus incentives earnedFlexibilityPost retirement benefitsLong-term incentives (LTI)Short-term incentives (STI)Deferred compensation第12页，共53页。4. Linking Pay to PerformanceMov

12、ement away from discretionary bonus plans (determined by the Board after the fact) to target based plans (where specific performance requirements and contingent reward outcomes are set in advance)Targets are both quantitative and qualitativeNot just what was paid how did you earn it?第13页，共53页。Short

13、Term Target and Stretch Targets Percentages by LevelShort-term incentive payment trends as a % of guaranteed packageTitlePerformanceLower quartileMedian quartileUpper quartile90th quartileCEOOn target30%50%70%200%Stretch50%75%100%500%Top Executive Reporting level 1On target20%35%60%100%Stretch 35%60

14、%80%200%Senior Management Reporting level 2 On target15%25%50%75%Stretch25%50%70%100%Middle Management Reporting level 3On target 10%20%35%50%Stretch17%30%60%75%Advance Operational On target 5%10%15%20%Stretch10%15%25%35%Operational & Primary On target5%8.3%10%15%Stretch8.3%10%15%20%第14页，共53页。5. New

15、 Long Term IncentivesWith the introduction of AC 139/IFRS2, companies need to evaluate different share valuation models and select one that is most appropriate to their circumstancesAlthough AC139/IFRS2 does not prescribe share valuation models (nor offer more than cursory guidelines as to their app

16、lication), the onus regarding fair valuation rests squarely on the shoulders of the external auditor as part of the fiduciary responsibility to certify the fairness of the companys financial statementsSection 8C of the Income Tax Act第15页，共53页。Allocation Multiples for Employee Share Participation Sch

17、emesDecision making levelPaterson GradeRolesOptions as a multiple of guaranteed package Lower quartileMedianUpper quartile Strategic Intent F Upper Group CEO4X6X8XF LowerTop Executive Reporting level 12X4X7XStrategic ExecutionE UpperGeneral Manager Reporting level 21.5X3X5XE LowerSenior Management R

18、eporting level 31X2X3XMiddle Management E UpperReporting level 40.5X1X2X第16页，共53页。Options/Share as a Percentage of PackageDecision makingEligibilityPaterson GradeRolesOptions as a multiple guaranteed packageLower quartileMedian quartile Upper quartileTop Management, Strategic Intent90%F UpperGroup C

19、EO56%83%111%85%F LowerTop Executive - Reporting level 128%56%97%General Management, Strategic Execution80%E UpperGeneral Management Reporting level 221%42%69%Senior Management , Strategic Execution70%E LowerSenior Management Reporting level 314%28%42%Middle Management, professionally qualified and e

20、xperience specialists40%D UpperReporting level 47%14%28%第17页，共53页。6. Non-Financial Rewards Recognition Clearer career pathsDevelopment opportunities Job enrichment Tuition of choiceMentoring and coaching Internships Rotation and Learning第18页，共53页。lternatives to cash第19页，共53页。Your Total Rewards Inven

21、toryWork-Life Workplace Flexibility Paid and Unpaid Time offCommunity Involvement Flex-TimeMaternity/Paternity LeaveCommunity Volunteer ProgrammesTelecommutingAdoption LeaveMatching Gift ProgrammesAlternative Work SitesSabbaticalsShared Leave ProgrammesCompressed Work WeekDisaster Relief PlansJob Sh

22、aringSponsorship GrantsPart-Time EmploymentIn-Kind DonationsSeasonable Schedules第20页，共53页。Your Total Reward Inventory Work-Life (cont)Caring for dependents Dependent Care Reimbursement Accounts Dependent Care Reimbursement Travel-Related Expense Dependent Care Referral and Resources Services Depende

23、nt Care Discount Programmes or VouchersEmergency Dependent Care ServicesChildcare Subsidies On-Site Caregiver Support Groups On-Site Dependent Care Adoption Assistance Service After-School Care Programmes Scholarship Information Scholarships Privacy Rooms Holiday Camps & Activities Special Needs Chi

24、ldcare Disabled Adult Care Geriatric Counselling In-Home Assessments for Eldercare第21页，共53页。Your Total Reward Inventory Work-Life (cont.)Health and WellnessEmployee Assistance ProgrammesOnsite-Fitness Facilities Discounted Fitness Club RatesWeight Management ProgrammesSmoking Cessation AssistanceOn-

25、Site MassagesStress Management ProgrammesVoluntary Immunisation ClinicsHealth ScreeningsNutritional CounsellingOn-Site NurseBusiness Travel Health ServicesDisability Management Return to Work ProgrammesReproductive Health/Pregnancy Programmes24-Hour Nurse Line On-Site Work-Life Seminarse.g. Stress-R

26、eduction, Parenting, etc. Health Advocate 第22页，共53页。Your Total Reward InventoryWork-Life (cont.)Financial SupportVoluntary BenefitsCulture Change InitiativesFinancial PlanningLong Term Care Work RedesignAdoption ReimbursementAuto/Home InsuranceTeam EffectivenessTransit SubsidiesPet InsuranceDiversit

27、y/Inclusion InitiativesLegal InsuranceWomans Advancement InitiativesIdentity Theft Insurance Work Environment InitiativesEmployee DiscountsMultigenerational InitiativesConcierge Services 第23页，共53页。Your Total Reward Inventory Performance and RecognitionPerformanceRecognition 1 on 1 MeetingsService Aw

28、ardsPerformance ReviewsRetirement AwardsProject Completion/Team EvaluationsPeer Recognition RewardsPerformance Planning/Goal SettingSpot AwardsManagerial Recognition ProgrammesOrganisation-wide Recognition RewardsExceeding Performance RewardsEmployee of the month/year RewardsAppreciation Luncheons,

29、Outings, Formal EventsGoal-Specific Awards i.e. quality, cost-savingEmployee Suggestion Programmes第24页，共53页。Your Total Reward InventoryDevelopment and Career OpportunitiesLearning OpportunitiesCoaching/MentoringAdvancement OpportunitiesTuition Reimbursement Leadership TrainingInternshipsTuition Disc

30、ountsExposure to Resident ExpertsApprenticeshipsCorporate UniversitiesAccess to Information NetworksOverseas AssignmentsNew Technology TrainingFormal/Informal Mentoring ProgrammesJob Advancement/PromotionOn-the-Job TrainingInternal Job Postings Seminars and ConferencesCareer Ladders and PathwaysVirt

31、ual learningSuccession PlanningOn/Off Ramps through Career Lifecycles Job Rotations 第25页，共53页。 Remuneration Trends7. GlobalisationAct localThink Global第26页，共53页。Glopats want to know that:Their pay is competitiveThey will not be worse off (and that hardship is taken into account)Living standards are

32、upheldTheir purchasing power parity (PPP) index is upheldSufficient and adequate pension arrangements are made第27页，共53页。8. Governance More focus on independence of NEDsLearning to strike the balance between good governance and being too transparentThe question being asked is: “If we disclose all our

33、 remuneration data, schemes and how they operate, we are giving our competitive advantage away”King III implemented第28页，共53页。9. More Flexibility and Reward Preferences More flexible working arrangements for employees and the organisation Five year contracts with handsome “completion” bonuses are inc

34、reasingly popular in South Africa, and this approach serves several goals Reward preferences by Life Cycle, MBTI 第29页，共53页。Generations, now life cycle and RewardGenerationsVeterans (born before 1940Baby Boomers (1940-1960)Generation X (1960-1980)Generation Y (1980-2000)Reward practice what each gene

35、ration values from an organisation Extra days leave Sponsor education programs Recognition schemes Services for staff Challenging projects Flexibility Fun Workplaces Good Guaranteed packages and short-term incentives Non-financial incentives RewardMeaningful work “Grand Celebrations” 第30页，共53页。Why d

36、o we call the last long generation Y. I did not know, but a caricaturist explains it eloquently below.Learned something new!第31页，共53页。Personality type and reward preferenceNienaber & Bussin, 2009第32页，共53页。Reward categories influencing attraction, motivation and retention of employeesAttractRetainMot

37、ivateMonthly Salary/guaranteed remuneration73.5%19.7%9.8%Variable Pay5.4%22.1%29.7%Benefits3.1%7.0%1.8%Performance & career management8.9%27.0%34.3%Quality of work environment1.8%3.3%6.2%Work/home integration7.3%20.9%18.1%100%100%100%Nienaber & Bussin, 2009第33页，共53页。10. Setting Non Executive Directo

38、r (NED) PayShould they all earn the sameShould they get shares to align with agency theory?Should they get an incentive bonus to reward great decisions?The trend will be to differentiate NED pay 第34页，共53页。A typical NED Pay ModelOrganisation size, complexity, impact, strategic levelLower quartile/P25

39、Median quartile/P50Upper quartile/P7590th quartile/P90AR 900 000 R 1000 000R 1100 000R1200 000BR 700 000R 800 000R 900 000R 1000 000CR 500 000R 600 000R 700 000R 800 000DR 300 000R 400 000R 500 000R 600 000ER 100 000R 200 000R300 000R 400 000Knowledge ExperienceTrack RecordReputationExecutive Factor

40、s第35页，共53页。第36页，共53页。11. Rewards for Creativity If people bother to put forward suggestions, they should be recognised for this effortIf everyone gets into the habit of making a creative effort then, there will be valuable ideasIt is at least as important to motivate people who do not see themselves

41、 as creative to become creative, as it is just to choose already creative people第37页，共53页。Paying for This There is a wide range of payment plans ranging from:A pharmaceutical company is paying a maximum of R 10 000 per ideaAn FMCG pays R 500 000 for the best idea of the yearA consultancy lets you ch

42、oose your own rewardA bank pays R1m for the best idea第38页，共53页。12. Dual Career Paths and Flat Structures (Broadbanding) Broadbanding is hugely seductive to organisations who want to become HPOs (High performing organisations). The reason is that the million of hours spent doing job grading and fight

43、ing about miniscule changes in the job description leading to non-value-add-upgrades can now be spent on performance.第39页，共53页。SST - Dual Career Path Approach PATERSONSSTLINE Specialist F5 E4 D3 C Upper2 C Lower1 B1 A1TOP MANAGEMENTSNR. MNGTGROUP / FUNCTIONAL / ADVISORMIDDLE MNGTPROFESSIONALS/ SPECI

44、ALISTFIRST LINE SUPERVISORSTECHNICIAN / PRACTITIONERADVANCED OPERATIONALOPERATIONAL SKILLSPRIMARY SKILLSDESCRIPTIONSSI - Corporate strategic direction and policy sign-offSE - Translation of corporate direction into organisation planning & managementMP - Translation of organisation plans into functio

45、nal plans and best practice systemsSP - Optimizing a given system to achieve plansAO - Solving a range of technical problems within a recognized technical discipline through the appropriate use of toolsO - Routine application of industry specific tools and equipment which require training but not di

46、scipline apprenticeshipP - Routine task orientation using simple tools and equipment normally of a manual nature第40页，共53页。Retention - Skill CategoriesCritical Skills: Skills critical to sustain its business objectives. It is essential that these skills are in place to ensure business continuityScarc

47、e Skills: Determined by the demand and supply of a particular skill in the market. The situation changes over time when the skill pipeline facilitates more people acquiring this level of skillHigh Fliers: Consistently high performers as per performance standardsCore Staff: Employees who work in the

48、operational areasSupport Staff: Employees who work in non-core or support areas第41页，共53页。PATERSON BANDDESCRIPTERFTop managementEUGeneral ManagementELSenior management / SpecialistDUMiddle management / Senior ProfessionalDLManagement / ProfessionalCUSupervisory / Advanced OperationalCLTechnical / ope

49、rationalBUAdministrators/OperationalBLClericalABasic skillsGeneral/ ManagerSpecialists Professional“Phd”EngineerPrincipal EngineerSenior EngineerEngineerGraduate Engineer(Trainee)Resource/Technical ManagementEngineeringManagementTraditionalManagementCritical Skills第42页，共53页。P50MAXMIDMINScarce Skills

50、 cont. . . Employee AEmployee BEmployee C10% Scarce Skills Allowance Employees A, B and C all get an allowance calculated from the MIDPOINT of the salary scale irrespective of where they are paid relative to their peers第43页，共53页。Executive Pay too much or too little?13. Media Scrutiny第44页，共53页。Most C

51、ommon Determinants of PayOrganisation Size - turnover, number of employees, value of assetsOrganisation Performance - profitability, return on investment, value addedExecutive Specific Factors - Age, experience, tenure, career pathOrganisation Structure - Holding, subsidiary or single unit company, capital or labour intensiveJob or Position Specific Factors - level of decision making, consequence of error, organisation levelJob Complexity第45页，共53页。Considerations when choosing market comparators: Holding, subsidiary or