MERCER 10 STEPS TO A TOTAL REWARD REVIEW BRIEFING PAPER
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1 10 STEPS TO A TOTAL REWARD REVIEW BRIEFING PAPER
2 Introduction to the Tool Kit Forward from Peter Vogt We are delighted to introduce you to the Nestlé Total Rewards Toolkit. The purpose of the Toolkit is to enable you, our valued Compensation and Benefits professionals, to support your businesses in gaining competitive advantage through structuring and communicating Total Rewards to your employees in a way that maximises employee engagement, enables us to attract and retain the best people and obtain maximum return on investment. So why have we developed this toolkit? As you know Total Rewards is a key strategic priority for Nestlé; our spend on total rewards represents a significant expense for each and every one of our Markets, and yet in the 2013 Global Nestlé and I survey, Recognition and Rewards received the lowest favourable response rate, of just 51% of employees. We know we have excellent Compensation and Benefits capability globally and that we offer a rich and compelling rewards proposition. The challenge that now faces us is to ensure that we tailor Rewards appropriately for our Markets and employee groups and communicate the full extent of that offering effectively. Nestlé s expectation is that every employee has a full understanding of the specific characteristics of Total Rewards and how they are established and maintained throughout the Group. This represents a fantastic opportunity for the HR function to demonstrate its strategic importance to Nestlé. This toolkit has been designed in partnership with the global HR consultancy, Mercer, and brings their experience and best practice methodologies in the field of assessing and communicating total rewards offerings. Through 10 clear steps the toolkit will enable you to review thoroughly the components of reward, cost efficiency, stakeholder opinions and market competitiveness. It will enable you to prioritise any changes to Total Rewards leading to excellence in the design and on-going management of truly world-class reward communication. This review will be challenging and many of the activities may be new to you. We have looked to make this toolkit as comprehensive as possible and included lessons from Mercer s experience. There is no right or wrong answer around your proposition, only that it meets the needs of your market. As such we would welcome any feedback or lessons you could share with other markets, and indeed we hope to create a real community of excellence in sharing your approaches and failures and successes with each other. Ultimately, however, we know you will rise to the challenge, and working through the toolkit will be personally and professionally rewarding. We estimate this project represents around 12 weeks of work and would like to have all Market s completed the review by December Please contact Michael Pos and your local Mercer representative if you have any questions. We wish you the very best of success with your Total Rewards Review. 1
3 This briefing book The ten questions There are 10 key critical questions that you need to consider in order to conduct a thorough review of Total Rewards. This briefing book outlines the objectives of each of these 10 questions and the process and methodology to undertake. Building momentum Know your customer Clarifying your market total rewards Communications planning for maximum impact 1. Why are we doing this? 3. What do leadership want? 7. How well is our Total Rewards proposition working? 9. What considerations are needed for communication? 2. How shall we do this? 4. What do employees value? 8. What needs to be done and how do we prioritise? 10. Communicating the business case for change 5. What are we spending? 6. How does this compare with the market? 2
4 Contents THE TEN STEPS Question Activity Page Building momentum 1. Why are we doing this? Build your business case 4 2. How shall we do this? Project Planning 6 Know your customer (context) 3. What do leadership want? HR & Management Perspectives 8 4. What do employees want? Employee research 9 5. What are we spending? Understanding your current costs How does this compare with the market? Market data gathering 11 Clarifying your market Total Rewards construct 7. How well is our Total Rewards proposition working? Summary and assessment What needs to be done and how do we prioritise? Identifying priorities for change 14 Communications 9. How do we successfully launch total rewards? Starting your communication Communicating the business case for change Obtaining resource for change 17 3
5 Section 1 Building Momentum Setting yourself up for success 4
6 Building Momentum 1. Why are we doing this? This section contains tools to help you with the review Become familiar with the 10 step process and the toolkit Understand the Nestlé business case behind the review, and assess the current integration of rewards in your market Conduct a brief stakeholder analysis to identify key people and groups who will be central to a successful review TOOLS Spend some time reviewing this Briefing Book and the example output report which will give you an understanding of the process and outputs of the review Re-familiarise yourself with the Total Rewards Policy using the interactive flipbook and Nestlé's background information to the toolkit assignment. Understand the business need for the review and consider the benefits for your market Identify the stakeholders who you will need to engage for a successful outcome ü Example output report, demonstrating how the review output report will look ü Nestlé Total Rewards Policy documents ü Summary of Nestlé business case for total rewards ü How integrated is your current strategy tool? ü Stakeholder analysis Ensure you are familiar and comfortable with the Total Rewards Strategy and methodology within this toolkit. It is worth spending half a day reviewing this paper and the draft outputs Be able to articulate the strategic importance of Total Rewards for Nestlé and the importance of conducting this review 5
7 Building Momentum 2. How shall we do this? This section contains tools to help you prepare for the review Plan your review including project timings, resources and your team Understand your starting point; the current total rewards offering Use the project tools to plan your project including timings of deliverables and resources. Use the stakeholder analysis to complete your RACI chart, identifying different roles and responsibilities Conduct an initial audit of your current Total Rewards offering within the Nestlé 5 boxes Check to see if you have a provision around Total Rewards in your existing HR People Plans. We expect many Markets will have an objective providing them with mandate to conduct the review. If not, you may choose to develop a business case specific to your market KEY TOOLS ü Sample project plan and RACI chart to edit ü Template to audit your current Total Rewards offer Project planning can save you time, help you plan resources and communication. It will also help you identify any competing priorities and plan the review accordingly Identifying the current total reward package is helpful as it will enable to you conduct a thorough gap analysis. Use the Russian market total reward audit as a case study to help you 6
8 Section 2 Know your customer The four key perspectives of a total reward review: EMPLOYER PERSPECTIVE What are workforce needs in terms of structure, behaviour, capabilities and performance? How should the rewards programs be designed and delivered in order to secure those workforce outcomes? COST PERSPECTIVE Can the rewards programs designed to support the desired strategy be provided at an affordable and sustainable cost If not, how should they be modified to be financially viable? EMPLOYEE PERSPECTIVE What creates a compelling place to work in the eyes of employees? What does or should differentiate it from competing employment opportunities? How do employees place value on the current rewards package? EXTERNAL PERSPECTIVE What are the labour and related rewards environments in which Nestlé competes? How do they influence or constrain rewards practices that the company may wish to adopt? 77
9 Know your customer 3. What do leadership want? This section contains tools that will provide outputs to the review Engage with Senior Business and HR Leadership to gain their views around the benefits and limitations of the current total rewards proposition and how it needs to be structured moving forward to support the business Review the Guiding Principles and ensure they relate appropriately to your Market Identify your key employee segments KEY TOOLS Business and HR leadership will provide critical insight into how well the current Total Rewards framework is supporting the business. Compensation and Benefits professionals will use the draft interview guide and form to conduct strategic interviews with the business. Use the leadership interviews to identify your critical employee groups, informed by the segmentation analysis Use the process to gain leadership engagement with the review and get buy-in from the business ü Draft Senior Interview Guide, with example questions ü Guidance for managing senior interviews, including tips from Mercer s experience ü Segmentation analysis Use your stakeholder management assessment to identify interviewees. Follow our tips around managing successful interviews, particularly around summarising key themes to enable quick analysis Asking leadership to commit to principles to inform design is helpful when reviewing your current offering and making any changes for the future Don t forget to put the summary into your Total Reward Review presentation as it will be important in conducting the gap analysis later in the process 8
10 Know your customer 4. What do employees want? This section contains tools that will provide outputs to the review Understanding what your employees know about the current rewards proposition, what they value, what they don t like, and what they would like introduced will be critical for your review The activity of asking them, engages them with the Total Rewards agenda and helps to build momentum with the programme The is a two stage process, as outlined in the Employee Research Guide tool: 1. Conduct an employee survey. Use the sample survey questions to discover employee preferences. 2. Schedule a number of employee focus groups to gain a more in depth understanding of employee preferences. Use the draft focus group structure and feedback template to capture your discussions. TOOLS ü Employee research guide ü Employee survey questions and guide ü Draft focus group structure ü Summary report template ü Mercer research - Inside Employee Minds and Mercer benefits research Keep in mind the employee segments that you have identified when arranging focus groups. By splitting employees by segment you should get more interesting debate Consider the guiding principles identified through the leadership interviews. Are employee preferences aligning with leadership feedback Use the summary report template and add the findings to the Total Reward Review presentation 9
11 Know your customer 5. What is your current spend on total rewards? This section contains tools that will provide outputs to the review Conduct some simple analytics to understand the cost effectiveness of the Total Rewards proposition. This includes quantifying the current and planned rewards spend; reviewing the pay mix and pay differential by performance rating. This is arguably the most challenging area of review as data may be difficult to obtain. Each Market will need to do some data aggregation and analysis to understand how much they currently spend on total rewards. Some markets will have the Cost Management Tool which will enable them to analyse costs by segment. If not, then use the template provided to aggregate and analyse whatever data you have access Finally, consider additional indirect costs. Were there any themes from the stakeholder analysis, such as time to fill vacancies rates, turnover rates, internal promotion rates etc TOOLS ü Analytics insights data list ü Analytics template ü Nestlé Salary Review tool and guidelines if required ü Familiarise yourself with the Nestlé Total Rewards Cost presentation We know that some of this data will be very challenging to find. Do not let this disrupt or delay your review. For the purposes of a Total Reward review the data does not need to be comprehensive, it needs to provide an indication of your costs structure to enable you to identify those costs which are wide of market practice Copy the outputs of your analytics into the output report as the cost analysis (however high level) is always useful when making a business case for changes to total rewards 10
12 Know your customer 6. What is standard market practice where you are? This section contains tools that will provide outputs to the review High level market review of your Total Reward offering to understand competitiveness and identify any areas of misalignment. Identify any issues with market competitiveness Follow a simple screen shot based guide to downloading your Comp 1-5 information and market data for each position class in your market from WIN Input findings into the analytics template to obtain high level compa-ratio analytics. Refer to Mercer WBEG to compare your benefits spend to the standard market practice TOOLS ü Guidance on gathering market data report to get you started ü Mercer WIN ü WBEG Review findings and copy the dashboards into your Output report We have developed a simple WIN download which will enable a quick and simple review by position class Consider which of your employee segments you need to assess through this process as this will need to be done through a separate analysis 11
13 Section 3 CLARIFYING YOUR MARKET TOTAL REWARDS Identify if anything needs to change, and prioritising actions 12
14 Clarifying your market total rewards construct 7. How well is our total rewards proposition working? This section contains tools that will provide outputs to the review Use all of the information gathered from the four perspectives to review your current offering against the guiding principles for your market. Consider whether your current approach is still optimal for your Market and employee segments Use the assessment templates to help you review in aggregate the employer and employee opinions, and costs and market analysis against your principles for reward design Refer to the Nestlé rewards materials which are linked to the site for more information around Nestlé policy. Mercer have also written a brief guide to principles behind excellence in design for each of the five components of total reward. Use this as a guide to help with your assessment if useful TOOLS ü Assessment templates to draw together insights ü Summary of design guidance for the 5 components of reward ü Nestlé rewards materials as a reference This stage requires a quick review of your findings against your aims. Consider with an open mind if there are any parts of your package which don t work, whether it is employee opinion, escalating costs or misalignment with the market Contact Michael Pos in central Compensation and Benefits to test your thinking and provide any alternative ideas: Michael.Pos@nestle.com Recognise that you may not need these elements to be perfect, the question is whether they are currently meeting your needs 13
15 Clarifying your market total rewards construct 8. What needs to be done and how do we prioritise? This section contains tools that will provide outputs to the review This is the final stage of the design review before you commence with the communications. This is a short exercise to help choose your key actions for change and prioritising This step will provide an output you can share with your leadership summarising next steps of the review Use the considerations paper to identify which changes to the reward package could be more simple or challenging. Complete the prioritisation matrix by asking yourself a number of questions and then review the scatter chart to see your recommended actions. These will be prioritised according to how easy they are to implement and how impactful this change will be on your overall total rewards proposition. TOOLS ü Considerations for transition planning ü Prioritisation matrix to help identify high impact low intervention changes Use the questions provided to help think through what could be done simply. Refer to your stakeholder analysis, are there any particular stakeholders that could make certain changes difficult (such as Unions) Add your prioritisation matrix to your total rewards review output document to conclude your analysis and recommendations. Contact Mercer if there are any red flag issues that you need support in redesigning Send your output to Michael Pos for review 14
16 Section 4 COMMUNICATIONS PLANNING FOR MAXIMUM IMPACT Release the power of simple, targeted and effective communications 15
17 Communications planning for maximum impact 9. What considerations are needed for communication? This section contains tools that will provide outputs to the review At this stage you will take the foundational steps necessary to build and execute an annual communication plan Set your objectives for your Total Rewards communication both related to individual communication campaigns and for the overall annual communication programme Document the context within C&B and the broader business, to ensure your communications are timely and not overshadowed by other issues Identify your stakeholders and your audiences, and determine whether you need to segment your communication for specific audiences Develop your key messages based on your objectives, the context, and your audiences TOOLS ü Objectives setting ü Context documentation ü Stakeholder identification ü Audience identification ü Segmentation decision making guide ü Key messages drafting Review all the work you have done so far to help you identify the objectives for your communication and the context for communicating Use your in-house communications team, Mercer or local experts to help with the review if required 16
18 Communications planning for maximum impact 10. Communicating the business case for change This section contains tools that will provide outputs to the review You already have your priority actions and your communications plan. This final step will be obtaining business buy-in for any investment you may require to bring about your desired changes Review your prioritised action plan and your communications strategy and articulate clearly your case for change and the resource requirements TOOLS ü Business case for change template Finalise your Total Rewards Review document to support any communication to the business Ensure you refer back to your stakeholder matrix and inform all key participants of the required changes, including the broader project team, HR leadership and Management who were interviewed GO AND MAKE THE CHANGE! 17
19 Mercer Limited is authorised and regulated by the Financial Conduct Authority Registered in England No Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU 18
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