Survey points way in global war for talent

RETENTION

Survey points way in global war for talent

If companies are to compete successfully in the war for talent, they need to fully understand why employees choose to join or leave their organisations. This is one of the conclusions drawn from the findings of a recent survey from Watson Wyatt and WorldatWork looking at trends in strategic rewards in 22 countries.

Among the recommendations offered to companies to achieve this is the need to balance financial imperatives and employee reward preferences.

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One of the surprising things about the study is that it found more similarities among the regions than differences. Companies’ inability to fully understand why employees choose to join or leave employment was common across all regions, for example. Similarly, an underestimation of the importance of stress and work-life balance as contributors to employee attrition was also widespread.

Key findings

The pattern of findings across all regions included:

• The majority of employers have problems attracting critical-skill employees (70%) and top-performing employees (67%).
• Employers have an incomplete understanding of why employees join or leave their organisations. For example, employees rank stress as a top reason they would leave, but it is not even among the top five reasons cited by employers.
• When employees are satisfied with stress levels and work-life balance, they are more inclined to stay with their companies (86% versus 64%) and more likely to recommend them as places to work (88% versus 55%).
• Financially high-performing firms get performance management right. For example, their managers are much more likely to link organisational performance to rewards (51% versus 38% of low-performing organisations).
• Clearly setting expectations and delivering on the reward promise is a formula for a more engaged workforce.

Companies moving to holistic approach

The study says that: “To address attraction and retention issues, companies worldwide are moving toward a holistic, total rewards approach to managing their compensation, benefits, and career and environmental rewards.”

Taking a total rewards approach, the report says, suggests that companies are selectively investing in programmes they think will have the greatest combined effect, but they may not be achieving the desired return on these investments, with the authors warning that they must avoid certain pitfalls such as misguided investments not aligning with employee priorities and poor execution/implementation of changes.

Other findings

Some of the other findings of the survey included:

• Financially high-performing companies appear to have greater success at attracting and retaining these key employees than their low-performing counterparts.
• About half of companies say their managers do a good job at performance management.
• Companies are making more workers eligible to participate in incentive compensation programmes, although nearly a half of employers also raised the financial targets that must be met to earn those bonus rewards.

Recommendations

In order to address the problems associated with talent acquisition, employee engagement and staff turnover, the report offers a set of recommended areas employers need to focus on including:

• Workforce planning – organisations should anticipate the nature and quantity of talent they are likely to need given company growth, turnover and retirement projections. These projections, and knowledge of the supply and sources of such talent, will help companies improve their recruitment efforts.
• Understanding employee reward preferences – employers must understand the reward preferences of their workforce.
• Articulating the reward promise – to harness the prospective power of rewards, employers must use the performance management process to communicate the reward opportunities available and set goals showing what employees must do to realise these opportunities. This will build employee line of sight.
• Delivering on the promise – rewarding outcomes that align with reward promises and actual performance builds employee commitment and engagement.
• Addressing stress in the workplace – to lessen stress-related turnover, employers must ensure that organisational design, job design and performance expectations are “aggressive but realistic”.

The report adds that: “Employers that succeed in these areas will maximise the return on their reward investments by reinforcing the achievement of their business, financial and human capital objectives.”

Global merit budgets also examined

A separate part of the report examined plans concerning the size of merit pay budgets for the coming year and despite the similarity in other results across the regions, this section illustrated a divergence in future intentions.

Expected merit pay increases in certain less developed regions, for example, are likely to outstrip those of their counterparts in Europe and the United States.

Merit-based pay is expected to increase by 5% in Asia-Pacific and 4.5% in Latin America compared with just 3.6 % in the United States and 3% in Europe. Overall, the global median is forecast to be 4%.

About the study

A total of 946 companies across 22 countries on five continents participated in the survey. Collectively this represented 15 million employees with 40% of companies being domestic, 26% international, and 35% were global meaning they operate across three or more continents.

All organisations had a minimum of 250 employees.

The employer research was conducted in conjunction with a survey of more than 13,000 employees of mid-sized to large employers. This sample captured employee opinions at all professional levels and locations, ensuring comparability with employer responses.

A final word

One of the main conclusions from the research was that: “Organisations around the world - regardless of region, industry or historical performance - are struggling to attract and retain the top-flight talent they need to survive and thrive in fast-changing markets. They are actively using and updating their intrinsic and extrinsic reward programmes to respond to these challenges.

However, most companies have room to improve the effectiveness of these efforts and better align them with the drivers that influence employees’ decisions to join or leave a company. The clear implication is that employers need to take a more holistic view of the employee value proposition so they can improve talent acquisition, increase employee engagement and reduce turnover”.

Want to know more?

Title: Global Strategic Rewards Report 2007/2008, Watson Wyatt and WorldatWork.

Availability: To order a copy of the report visit www.watsonwyatt.co.uk. Alternatively, to view the executive summary click here.

About Watson Wyatt Worldwide

Watson Wyatt is the “trusted business partner to the world’s leading organisations on people and financial issues”. The firm’s global services include: managing the cost and effectiveness of employee benefit programmes; developing attraction, retention and reward strategies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,000 associates in 31 countries and is located on the web at www.watsonwyatt.com.

About WorldatWork

WorldatWork is an international association of human resource professionals and business leaders focused on attracting, motivating and retaining employees. Founded in 1955, WorldatWork provides practitioners with knowledge leadership to effectively design and implement strategies and practices in total rewards. WorldatWork supports its 30,000 members and customers in 75 countries with thought leadership, education, publications, research and certification. More details at www.worldatwork.org.