1. Why is he worth 14 million per year? Photo by Jon Large
2. I am Ian Davidson B.Sc. MBA FCIPD MCIM Reward Specialist
More than twenty years in reward management 7 years as Head of
Reward at the investment banking arm of Commerzbank in London. I
write an influential reward blog at http://iandavidson.me And a
popular reward podcast at www.idavidson.podbean.com
Introduction
3. We are going to talk about What is reward in relation to
employment? Thinking about terminology The labour market
4. PracticeFrameworksThink
5. What is reward?
6. Why is it important? Key to successful execution of business
strategy Key to competitive advantage Key to an engaged workforce
Key to cost control
7. Philosophy of reward vs. compensation Reward for
contribution More positive Compensation for time Less positive
8. What does success in reward Look like?
9. A word about risk 0 10 20 30 40 50 60 70 80 90 Lack of
understanding by senior management of the reward process Issues
with Regulators over reward Levels of base salary insufficient to
recruit Levels of base salary insufficient to retain That X
maintains a non-discriminatory reward system Employees do not
understand reward offering Loss of reward knowledge Incorrect tax
payments Incorrect statutory deductions from pay US benefit
structure inappropriate C&B MIS not accurate Communications
with employees inaccurate or inappropriate Incorrect payment to
employees via payroll Insufficient consideration of global market
differences in reward Inappropriate (expensive, non-tax efficient)
Pension provision Poor relationship with Compensation Committee Mis
match between reward for employees vs. shareholders Reward offering
not competitive globally Employee share plans not compliant
Insufficient C&B vendor management leading to poor
service/expense/duplication Individual executive reward packages
not appropriate International assignments not compliant and
appropriate Salary benchmarking data not appropriate Accuracy of
financial data for C&B modelling and outputs Risk Map
Probability (1-10) Impact (1-10) Risk correlation multiplier Risk
Score
10. Is high pay 50,000 pa Or, 500,000pa?
11. In the beginning was supply and demand The labour
market
12. What is supply and demand? In microeconomics, supply and
demand is an economic model of price determination in a market. It
concludes that in a competitive market, the unit price for a
particular good will vary until it settles at a point where the
quantity demanded by consumers (at current price) will equal the
quantity supplied by producers (at current price), resulting in an
economic equilibrium for price and quantity.
13. 4 Basic laws of supply and demand The four basic laws of
supply and demand are:[1] If demand increases and supply remains
unchanged, a shortage occurs, leading to a higher equilibrium
price. If demand decreases and supply remains unchanged, a surplus
occurs, leading to a lower equilibrium price. If demand remains
unchanged and supply increases, a surplus occurs, leading to a
lower equilibrium price. If demand remains unchanged and supply
decreases, a shortage occurs, leading to a higher equilibrium
price
14. Perfect and imperfect markets Labour markets are very
imperfect!
15. Who are the market players?
16. Supply and demand in each segment and sub-segment are quite
different Segmentation Permanent & non permanent Skilled &
unskilled Professional and non- professional North & South East
Executive & non- executive Qualified & non qualified
17. Geographic Travel to work In walking distance Global
commuter
18. The flexible firm Contract part- time Contract full time
Core permanent part time Core Permanent Full time Zero hours Agency
staff Casual staffOutsourced services
19. Case study Investment banking Sectors Desks A generic title
Trader Exotic derivatives Soft commodity derivatives Credit
derivative swaps Emerging market equities Russian equity traders
Each of these segments has its own supply and demand
characteristics
20. Sources of supply Unemployed University/School leavers Job
movers Immigrants Armed forces leavers Returners to the labour
market (maternity etc)
21. Reward strategy follows HR strategy which follows Business
strategy
22. Reward strategy follows what the business wants to achieve
So, reward strategy is shaped around the business strategy Careful
thought about what the business wants to achieve with its human
resources What it is
23. Motor car manufacture competes on IT Company i.e. Microsoft
Product Innovation Creativity Integration with other
software/hardware Error free coding Time to market Strategic time
horizons short 6 months to a year Quality of build Price of car
Features of car Time to market Strategic time horizons long, three
to four years (although reducing) Different business
strategies
24. Motor car manufacturer IT company Rewarding creativity and
innovation Reward for high quality output Reward for individuals
and teams Reward for collaboration Share in longer term business
profitability Reward quality work Reward cost reduction Hourly paid
to work standards Breakdown of tasks in to small components (this
is changing) Individual and team pay rewarding immediate effort
Different Reward strategies Growing similarities between strategy
of motor car manufacture and IT company; yet the pay structures are
still quite different WHY?
25. Total Reward Management Quantitative Methods Job Analysis,
Documentation and Evaluation Base Pay Administration and Pay for
Performance Variable Pay Improving Performance with Variable Pay
International Remuneration An Overview of Global Rewards Strategic
Communication in Total Rewards Market Pricing Conducting a
Competitive Pay Analysis A potential agenda
26. Lies, dammed lies and statistics Challenge of Big data