HR Professional - April/May 2008 - (Page 18)

C OM P E N S AT ION TRENDS IN REWARDS STRATEGIES hen it comes to employee rewards strategies for their workforces, Mercer’s 2007 Total Rewards SnapShot survey indicates that the most pressing challenges for employers are attracting and retaining the right talent. Eighty-eight per cent rank attraction and retention as very important, followed closely by the challenges of engaging employees (76 per cent) and keeping rewards costs affordable and sustainable (74 per cent). The survey, now in its sixth year, includes responses from more than 580 companies across Canada and the U.S. The findings also indicate that the primary areas where employers plan to boost investment over the next 12 months are shifting toward noncash elements such as training opportunities, career development and management, noncash recognition and work/ life balance. In 2008, almost half of the respondents (46 per cent) are planning to spend more money on training, and just more than half (51 per cent) plan to spend more on career development. Investments in salaries, long-term incentives and benefits will remain largely stable. BY IAIN MORRIS W weaker alignment have not changed their rewards strategy in the same timeframe. Allocation External benchmarking (95 per cent), cost (91 per cent) and alignment with business strategy (89 per cent) are the top three inputs used to make decisions about pay. Similar approaches are used for making beneﬁts decisions, with best practices also playing a role. When making career development investments, the drivers are employee surveys (75 per cent), alignment with business strategy (74 per cent) and cost (50 per cent). Buy or build? There is an increasing commitment to build talent internally, particularly in mature economies, and in speciﬁc job functions such as operations (47 per cent), customer service (38 per cent) and senior management (38 per cent). A buy strategy is seen more in areas where hot skills may be more in demand, such as law and information technology. Putting the findings to work: • Align reward strategy with business strategy • Segment rewards to different employee populations • Use internal and external approaches when making decisions about reward investments • View rewards holistically and emphasize the features your employees, and prospective employees, value the most • Invest in career development and noncash rewards • Build talent internally Always remember to communicate the big picture to your employees, which includes compensation, benefits and career opportunities. Make sure the money you spend is understood and valued. An investment in employee communications can pay huge dividends in increasing the perceived value of your company’s rewards program. Iain Morris (Iain.Morris@mercer.com) is a principal in human capital with Mercer in Toronto. Segmentation Organizations are segmenting their workforce and offering different rewards for different employee groups. The most common criteria to segment the workforce is job level, followed by geographic location and business or product line. Alignment Not surprisingly, the survey shows a direct relationship between how often companies change their total rewards strategy and their alignment with the business strategy. Of the organizations indicating their full alignment, 78 per cent made changes to their rewards approach in the last three years. At the same time, 60 per cent of organizations with a 18 A p r i l / M a y 2 0 0 8 HR P R OF E S S I ON A L

Table of Contents Feed for the Digital Edition of HR Professional - April/May 2008

HR Professional - April/May 2008 Contents Editor's Letter Contributors Leadership Matters By the Numbers On the Web Careers World Watch Accounting Health & Safety Foreign Professionals Management Office Life Legal Compensation Web 2.0 @ Work Talent Management Systems On Message Strategy HR 101 Interview With Colin Mackay Off the Shelf The Last Word

HR Professional - April/May 2008

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