The Total Reward Report: The definitive guide to next-generation reward practices

Abstract

All your most important questions answered

The Total Reward Report tackles all the key questions to help you see the issues clearly:

• What regulatory, social and political issues affect reward design and strategy?
• What are the current philosophies of reward and recognition for different levels of the workforce?
• What internal needs and pressures require us to rethink rewards?
• How can we ensure that rewards are aligned with strategic priorities?
• How do rewards help to build core business competencies, capabilities and performance to underpin competitive strength?
• What aspects of reward/compensation help to differentiate us from competitors?
• Where are best sources of total reward good practice?
• What gaps are revealed in our reward approaches compared with leading organisations?
• What issues are we trying to address by improving reward and compensation?
• What is best practice in planning and implementing a total reward strategy?
• What are the key roles and relationships in reward functions?
• What different kinds of reward capabilities, responsibilities and accountabilities are required?
• How are approaches to reward changing and why?
• What will organisations be doing differently in two-to-three years' time?

Asking the right questions is a start. But you also need answers that help you devise smart solutions. That' s where The Total Reward Report proves invaluable:

• Work environment and culture are taking on new significance for the rising generation. See how Google and others have rethought work for the web era.
• Pensions....how companies are tackling the death of the final salary pension plan, with examples from BAE and GlaxoSmithKline.
• Benefits.... Some companies find ingenious ways of delighting their staff, without breaking the bank, see Borders' free book scheme and other initiatives.
• Health and wellbeing....gyms plus health checks, doctors and dentists on site, advice and education on tap can result in up to three-times return on investment in lower absenteeism rates, as AstraZeneca, Worthington Industries and Colgate found.
• Engagement strategies....St Lukes, SC Johnson, Google are some of the companies that take an inclusive approach to rewards.
• Reward frameworks....innovative pay, benefits, personal development and working environment solutions at BT, RBS and Nationwide.
• Bonuses....how to structure bonus schemes that improve rather than undermine performance.
• Benchmarking cost and value....every company wants cost-effective solutions. Discover how benchmark surveys can help.
• Recognition....why a little recognition goes a long way for companies like SW Airlines, Unisys, and St Lukes.
• Promoting loyalty....what you can learn from best-employer league tables.

Table of Contents

Author Profile

Acknowledgments

Business Intelligence

Preface

Chapter 1: The New Context of Reward

• What you will learn from this chapter
• Introduction
  • 1999: a benchmark year
• The Ten Drivers of New Reward approaches and Practices
• Reward Issues and Challenges: Research Findings
  • World at Work studies
• Strategic Reward Shortcomings
• Further Issues
• Reward Issues and Challenges
  • Corporate and reward team agendas
  • Employees and employment
• The Challenges of Implementing Total Reward
• Performance, Reward and Culture
• Overview: Why Rethink Reward Strategy?
  • Potential advantages
  • Consequences of inaction
• Take the Self-Assessment Test
• References

Chapter 2: Engagement, Value Creation and the Human Dimension of Reward

• What you will learn from this chapter
• Introduction: People Make the Difference
• Interpretations and Connections
• How Companies Use Reward to Improve Performance
• The Business Case and Potential Pay-offs
  • Levels of engagement
  • What human capital management can deliver
• Implications for Practitioners
• Human Capital and Reward
  • Optimizing value through reward
  • Valuing human capital
  • How companies make the connection between reward and human capital
    • Case Report: Royal Bank of Scotland
    • Case Report: Federal Express
• Building Engagement into Reward
• Connecting Engagement with Reward
  • How companies implement engagement policies
    • Case Report: St Luke' s Communications
    • Case Report: Google
• The Value Proposition and Brand
  • Proposition and brand: simple questions
• What employees Want: Expert Views
  • How companies build and deploy their corporate value propositions
    • Case Report: Starbucks
    • Case Report: Richer Sounds
• Overview: Rethinking the Human Dimension of Reward
• The Key Challenges Summarized
• Take the Reward Human Dimension Self-Assessment Test
• References

Chapter 3: Developing Total Reward Strategy

• What you will learn in this chapter
• Introduction: The Scope of Total Reward
• The Difficulties Posed by Total Reward
• Reward Philosophy and Design
  • The need for reward philosophy
  • The link between reward and best-employer rating
  • Influences on reward philosophies and design
• The Importance of the Corporate Context for Reward
• How Companies are Tackling Reward Philosophy
  • Case Report: The Hartford Group
  • Case Report: Babcock and Wilcox
• Reward and Business Strategy
  • The essentials of well-designed reward strategies
• The Issue of Effectiveness
• How Companies and Experts Interpret Reward Strategy
  • Case Report: Office of Personnel Management
• Two Reward Strategy Models
  • The Star Model
  • Reward Strategy Roadmap
• Approaches to Total Reward
  • What total reward entails
  • Establishing the business case: the crucial first step
• How Companies and Consultancies Approach Total Reward
  • Case Report: Borders Group
• Institute and Consultancy Interpretations of Total Reward
• Overview
  • Potential advantages
  • Possible difficulties
• Take the Reward Strategy Self-Assessment Test
• References

Chapter 4: The Shift to Total remuneration

• What you will learn from this chapter
• Introduction: Rethinking the Financial Deal
• What' s New and What' s Emerging?
• The Potential Impact of Total Remuneration on Recruitment and Retention
• Remuneration, Cost and Competitiveness
  • Cost containment and shifts in remuneration
  • The emphasis on long-term, sustainable performance
• Strategic Remuneration Opportunities
• How Companies are Tackling Cost Issues
  • Case Report: Nationwide Building Society
  • Case Report: Aflac Inc
  • Case Report: Lincoln Electric
• Challenges in Total Remuneration Effectiveness
  • Pricing and ROI issues
  • Companies look to cover the cost of reward charges
• Creating an Edge in Remuneration Strategy
• Optimizing Total Remuneration Investments
  • Investment levels
  • Related costs
  • Competitiveness
• Criteria for Regular Effectiveness Reviews
• How Companies are Tackling Total Remuneration
  • Case Report: Cisco Systems
  • Case Report: Aflac Inc
• Emerging Priorities in Pay, Bonus and Benefits
  • Sifting out what matters most
  • Priorities for base and variable pay
  • Defining criteria for differential rewards
  • Priorities for bonus use: the experts' views
  • Priorities for benefits: the experts' views
• How Companies Tackle Pay, Bonus and Benefit Priorities
  • Case Report: Huntington Hospital
  • Case Report: Suncorp
• Overview: Total Remuneration Reviews
  • Strategic tune-up for pay
  • Total remuneration review
• Take the Total Remuneration Self-Assessment Test
• References

Chapter 5: Building a Performance-Reward Culture

• What you will learn in this chapter
• Introduction: The Changing Context of Performance
  • Your total reward and performance management checklist
• Expert Views on the Performance-Reward Focus
• Tapping into the Discretionary Effort Factor
  • Satisfaction, motivation and reward expectations
• Examples of Performance Cultures
• Enabling High Performance across the Enterprise
  • What high performance organizations do well
• Getting the Best from High Performers - and Others
  • The flow theory of engagement
• How Companies are Paying for and Recognizing Performance
  • Case Report: Payless ShoeSource
  • Case Report: Graniterock
• Improving and Aligning Performance Management with the Business
  • What performance management is all about
  • What good management performance looks like
• How Companies are Tackling Performance Management Issues
  • Case Report: Office of Personnel Management (OPM)
  • Case Report: Daimler Chrysler
• Performance Levers and Reinforcers - The Scope for Innovation
  • Extending the performance toolkit
  • The lever of motivation
  • Using recognition to raise performance
  • How companies use non-cash levers of performance
  • Case Report: Southwest Airlines
  • Case Report: PRC
• Overview
• Take the Performance-Reward Culture Self-Assessment Test
• References

Chapter 6: The Work Environment and Participation

• What you will learn in this chapter
• Introduction: The Emerging Psycho-social Work Environment
• Best Company Award Schemes
  • Great companies and best workplaces
  • Case Report: Colgate Palmolive Hellas
• Changing Work Practices
  • Trends in work-life balance and flexible working
• Trends and Issues in Health and Wellness
  • Emerging cost and complexity issues
• How Companies Tackle Work Practice Issues
  • Case Report: Melaleuca
  • Case Report: Google
• The Rise of Participative Cultures
  • How to build participation into the enterprise
• The Management of Total Reward in the Workplace
  • Manager effectiveness checklists
• How Companies are Building Workplace Participation
  • Case Report: Starbucks
  • Case Report: Cendant Car Rental
• Financial Participation and Education
  • Ownership and profit sharing
  • Education for wealth creation
• How Companies are Approaching Financial Participation
  • Case Report: Hypertherm
  • Case Report: Resources for Human Development (RHD)
• Overview
• Take the Work Environment and Participation Self-Assessment Test
• References

Chapter 7: The Situational Context of Reward

• What you will learn in this chapter
• Introduction: Corporate Situations that Affect Reward
• Effects of Globalization on Reward
  • Factors and challenges in global reward
  • Off-shoring and compensation models
• Factoring in Cultural Issues
• Impacts of Mergers and Acquisitions on Reward
  • Case Report: Verizon
• Reward Responses to Competitive Drivers
• The basics of productivity and skills
• The need to flex total reward to local conditions
• Case Report: Corning Inc
• Reward and the Customer Interface
• Reward as a Lever of Sales Force Effectiveness
• Innovation and Reward
  • The case for and against rewarding innovation
  • Case Report: Whirlpool
• Overview
• Take the Situational Context Self-Assessment test
• References

Chapter 8: Issues and Practices in Executive Compensation

• What you will learn in this chapter
• Introduction: Pressures Shaping Changes in Executive Reward
• Pressures for Change and Transparency
  • Influences on executive pay
  • Setting differential ratios for executive and staff pay
  • Focus on executive and organization performance
  • Cash-based performance targets
  • The use of strategic performance measurement systems
  • Governance-related issues and practices
• Board Roles in Executive Reward
  • Developments causing role change at board level
  • Chairman and non-executive director roles: issues and practices
• New Purpose and Work of Remuneration Committees
  • Insights into compensation committee practice
• The Use of Consultants
• Overview
• Take the Executive Reward Self-Assessment Test
• References

Chapter 9: Roles in Reward Strategy and Implementation

• What you will learn in this chapter
• Introduction: How Reward Roles are Changing
• Reward Leader and Team Roles
  • What reward leadership needs
  • Moving beyond compensation and benefits
  • The role of HR
• Challenges for the Head of Reward
• Reward Leader Capabilities in Case Study Organizations
• Reward Team Roles and Work
• How Case Organizations Define Roles and Responsibilities
  • Reward team structure
  • Reward team roles
  • Reward team success measures
  • Reward team attributes
  • Case Report: Cendant - Self-service Tool for Managers
• Relationships that Drive Reward
  • Working with senior managers
  • HR, reward and line collaboration
  • Helping managers deliver rewards
  • Case Report: BT
• Overview
  • Reward function staffing and pay level concerns
• Take the Reward Function Self-Assessment Test
• References

Chapter 10: The Future of Reward - An Overview

• What you will learn in this chapter
• The Future is Here - Now
  • Has reward change happened?
• Future Trends Impacting on Reward
  • Business drivers and reward roles
  • What change means for the reward function
  • The opportunities for reward transformation - and the barriers
• Future Agendas of Case Study Organizations
  • AstraZeneca' s education and communication agenda
  • Husky: formalizing recognition
  • Royal Bank of Scotland' s six-point programme
• How We See the Future of Reward
• Main Chapter Themes Summarized
• Trends Affecting Reward over the Next Three Years
• Take the Futures Self-Assessment Test
• References

• AstraZeneca in the UK
• BT
• HCA-HealthONE LLC
• Nationwide Building Society
• The Royal Bank of Scotland

• Exhibit 3.1: One framework used by the OPM.
• Exhibit 3.2: The Star Model: Lawler' s Notion of Fit
• Exhibit 3.3: How leading consultancies define Total Reward.

• Exhibit CS1: Seven key stages in the total reward transformation programme.

• Exhibit CS2: Total reward tools
• Exhibit CS3: Total reward sample statement

• Exhibit CS4: The Committed and Engaged Person framework