Total reward investment optimization (TRiO) Are you getting the optimal return on your investment in total reward?
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Disclaimer
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What is total reward?
► Total reward is everything an employee receives and perceives as valuable
► Every element of reward can be categorized on two dimensions
► Organizations offer different types of total rewards: Individual
Experiential
Financial
Col
lect
ive
Source: Benefits & Compensation International, Kantor (2013)
► Access: the employer facilitates access to the reward (no cost)
► Basic: a that must be provided to compete for talent
► Contingent: a reward impacted by employee behavior or performance impacts how much
► Differentiator: the program(s) that create competitive advantage
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More productivity
More attention
Conflicting interests?
Less cost
More value
vs. Organization
Individual
vs.
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Are you guessing, or do you know?
27%
59%
14%
Cost 57%
43% Value 71%
26%
Preferences 3%
We know for all We are guessing We know for some
Source: EY survey of general industry companies (2014)
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With TRiO*, you can know
* Total reward investment optimization
Three simple steps:
Act
Ask
Analyze
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Ask
Option 1 Option 2
Salary increase 5% 4%
Annual bonus target 10% 12%
Mobile phone No Yes
Flexible work 9:00 a.m. – 5:00 p.m. Anytime between 8:00 a.m. – 8:00 p.m.
Work from home Once per week No
Which do you prefer?
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Analyze – “conjoint analysis”
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Analyze
1.2 billion combinations!
Combinations Decrease
- -- - -- - -- - -- - - - -- - -- - -- - - -- - --
0
0 0 0
0 0
Increase
+ ++
+ ++
+ ++
+ ++
+ ++
+ ++
+ ++
+ ++
+ ++
+ ++
+ ++
+ ++
+++
+++
+++
+++
+++
+++
+++
Levels
5 5 6 6 5 5 6 7 7 4 7 7
Attribute
1 2 3 4 5 6 7 8 9
10 11 12
Current package
Salary increase Bonus Shares
Development Pensions
Leave Cars
Technology Group discount Parental leave
Wellness Flex working
5
25
150
900
4,500
22,500
135,000
945,000
6,615,000
26,460,000 185,220,000
1,296,540,000
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Analyze
Relative importance by age
0%
20%
40%
60%
80%
100%
Annual bonus Life insurance Parental leave Work from home
<20 20-29 30-39 40-49 50-59 >=60
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Analyze
Return
Modern portfolio theory – “efficient frontier”
Risk
Portfolio A
Portfolio B
► Applied to total reward:
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Analyze
Return
Modern portfolio theory – “efficient frontier”
Risk
Portfolio A
Portfolio B
► Applied to total reward:
Value
Cost
Package A
Package B
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Act
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Problem
Source: EY survey of general industry companies (2014)
16%
84%
Yes
No
Is your reward strategy clear, compelling and data driven?
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Not conflicting interests
More productivity
More attention
Less cost
More value
vs Organization
Individual
vs and and
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Isn’t it time to stop guessing?
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