SHAPE YOUR TOTAL REWARDS STRATEGY

Mercer

China

Not Peer Reviewed

MERCER 1

MERCER

Amy Zhang

C&B Director

CONSULTING • OUTSOURCING • INVESTMENT

Small Change on Business Card

Mercer Consulting (China) Ltd.Room 4301, Hong Kong New World Tower300 Huaihai Zhong RoadShanghai 200021, PRCDirect +86 21 6103 5500Fax +86 21 6350 8120amy.zhang@mercer.comwww.mercer.com

Amy Zhang

Total RewardsDirector

TALENT • HEALTH • RETIREMENT • INVESTMENT

Mercer Consulting (China) Ltd.Room 4301, K11 Building300 Huaihai Zhong RoadShanghai 200021, PRCDirect +86 21 6103 5500Fax +86 21 6350 8120amy.zhang@mercer.comwww.mercer.com

MERCER

63%59%

44%40%

35%

Attracting key talents Retaining highperformers

Increasing competitiveadvantage

Improving employeeengagement

Enhancing financialperformance

Data source：Mercer China Total Rewards Survey

Drivers of Total Rewards Strategy

3

For employees, improved engagementFor employers, increased performance

MERCER 4

Top five most effective rewardsprograms in attracting talents

Top five most effective rewardsprograms in retaining talents

1

2

3

4

5

Base salary

Short – term incentive

Career development

Guaranteed allowance

Work environment

What Are Talents Looking for?

Data source：Mercer China Total Rewards Survey

Career development

Base salary

Short – term incentive

Training opportunities

Work environment

MERCER

2015 would tell us more

5

MERCER

Four Dimensions of Total Rewards

Total

RewardsBenefits Work & Life Balance

Career Development

Compensation ATTRACT

MOTIVATE

RETAIN

6Communication

MERCER7

Total Rewards FrameworkHolistic: Determining the right mix

EMPLOYEE

My value today My financial security andprotection

My future value My quality of life

EMPLOYER

Time off

Workplace flexibility

Commuter programs

Workplace facilities andperquisites

… …

Time off

Workplace flexibility

Commuter programs

Workplace facilities andperquisites

… …

Compensation Careers Work/LifePay BenefitsBase pay

Short-term incentives

Long-term incentives

Allowances

Deferred compensation

… …

Career opportunity andpath

Job rotation

Leadership program

Talent development

… …

Career opportunity andpath

Job rotation

Leadership program

Talent development

… …

Social securities

Health care program

Life & medical insurance

Housing

Retirement

… …

Benefits

8

COMPENSATION

MERCER

14%

10%

8%

7%

54%

52%

46%

40%

22%

26%

28%

26%

7%

10%

15%

19%

3%

2%

4%

9%

Blue Collar

Professional

Management

Executives

CompensationMarket positioning of total cash

< P50 = P50 P50 – P75 P75 >P75

9Data source：Mercer China Total Rewards Survey

MERCER 10

Retention Bonus

＜

Eligibility

Plan Type

Budget

Retain Period

Vesting Schedule

RetentionBonus

MERCER 11

Other Cash-based Allowances

Haze Allowance CEO Award

Patent Award

12

BENEFITS

MERCER

11%

8%

10%

15%

80%

85%

83%

79%

8%

7%

7%

6%

Blue Collar

Professional

Management

Executives

Above Market In Line With Market Below Market

BenefitsMarket positioning of benefits

13Data source：Mercer China Total Rewards Survey

MERCER 14

“Innovation distinguishes

between a leader and a follower”

—— Steve Jobs

MERCER

ModularPlan

ModularPlan

2-3 packageswith similar

budget

2-3 packageswith similar

budget

Choose one ofthose packagesChoose one ofthose packages

Low flexibility;easy to

administrate

Low flexibility;easy to

administrate

Core PlusOption

Core PlusOption

One core planOne core plan

Up/downgradebased on the

core plan

Up/downgradebased on the

core plan

High flexibility;very popular

High flexibility;very popular

FreeChoice

FreeChoiceChoose any

benefits basedon needs

Choose anybenefits based

on needs

Choose benefitsitems freely

Choose benefitsitems freely

More randomand risky, hard to

administrate

More randomand risky, hard to

administrate

15

Flexible Benefits

MERCER 16

Wellness Programs

EAP Health CoachingFinanceSeminar

DiseaseManagement

HRA

MERCER

Qualitative Analysis

17

Quantitative Analysis

Detailed Breakdown Per BenefitTotal Benefits Annual LeaveTime Loss

0

2,000

4,000

6,000

8,000

10,000

A B You C D E0

500

1,000

1,500

2,000

2,500

A B You E C D0

500

1,000

1,500

A B You D C E

Upper Quartile Median Lower Quartile

Benefits Valuation

• Annual leave In line with market

• Risk insurance Above the market

• Retirement benefits Below the market 80%You are on top of

of other competitors

3rdYou ranks at

in the peer group

18

CAREER DEVELOPMENT

MERCER 19

1

2

3

4

Leadership development

Job rotation

Education assistance

Mentorship program

Typical Career Development Programs

5 Overseas relocation

6Partnership

20

WORK / LIFE BALANCE

MERCER

AnnualParty/Dinner

Outing SportsActivities

FlexibleWorkingTime

FamilyDay

93% 56% 44%

FridayEarly Home 47%

Work fromHome 46%

Data source: 2014 Mercer Benefit Survey – 1st tier cities

Work / Life BalanceMarket prevalence

21

MERCER 22

Other Innovative Work / Life Balance

23

COMMUNICATION

MERCER

38%35% 35%

18%15%

Emphasis oncompensation only

Intergrated totalrewards

communication

Communicaterewards programs

independently

Do very littlecommunication ofrewards program

Emphasis onBenefits only

Types of Communication Strategy

24Data source：Mercer China Total Rewards Survey

MERCER

Individualmeeting

Employeegroup meeting Email Document

Effective Communication Channels

25

Social Media Video

We used to use……

Now we use these more…….

Online PortalHandy Material

MERCER26

Total Rewards StatementEmpowering your employees

MERCER

27

INFORM

• Newsletters• Executive announcements• Bulletin boards/Memos• Video

LEAD

• Leaders exhibit desiredbehaviors

• Accountabilities clearly defined

LISTEN

• Employee surveys• Focus groups• Hotline/ suggestion box• Q&As

INVOLVE

• Access to feedback and discusswith manager

• Involvement in decision-making

Build

awareness

andunderstanding

Build

learningand

behaviorchange

Organisation influencing individual

Individual influencing organisation

Mercer Effective Communication ModelLILITM

LILITM

MERCER 28

Wrap Up

Gather marketinformation

Attract & retainkey talents Communication

1

2

3

1

2

3

1

2

3

Know the trends

Know the bestpractice

Know the competitorsUnderstandemployees’ needs

Effective channels

Various communicationmaterials

Communicate from top todown consistently

Define key talents

Delivercompetitivepackages

MERCER 29

Compensation Benefits

CareerDevelopment

Work/LifeBalance

MERCER 30

What’s new?Compensation Benefits

CareerDevelopment

Work/LifeBalance

MERCER 31

When to collect data? April

When to close the submission? June 30

When to deliver the report September 30

Survey Schedule

SCHEDULE

MERCER 32

整体报酬：酸甜苦辣的相逢酸 甜 苦 辣

薪酬

福利

职业发展

工作生

活平衡

美世咨询总监——李桦嵩 Michael Li