Lasting relationships

Improving Talent Retention with Performance and Reward

Management
JUNE 19, 2015

LE KINH LUAN

Reward and Retention

What is Total Reward?

COMMON EXAMPLES

Intangible

Tangible

2015 Hay Group. All rights reserved

REWARD ELEMENTS

Work culture and climate

Leadership and direction
Career/ growth opportunities
Work/life balance
Job enablement
Recognition

Cars
Clubs
Discounts

Retirement
Health and welfare
Time off with pay
Statutory programs

Stock / equity
Performance shares

Long-term incentives

Annual incentive
Bonus/spot awards

Short-term variable

Base salary
Hourly wage

Intangibles (typically
intrinsically valued)

Perquisites / Perks

Benefits

DEFINITION

Total
reward

Total
remuneration
Total
compensation

Total
cash

Base cash
3

Objectives of reward components

Component

Objectives

Base Pay

Recognize intrinsic value of job or individual;

Attract, retain and improve individual performance

Incentives

Provide discretionary income;

Vehicle for capital accumulation

Benefits

Recognize membership in the organization;

Provide protection and security

Recognition

Drive organizational values;

Reinforce after-the-fact

2015 Hay Group. All rights reserved

Objectives of reward components

Component

Objectives

Career/ growth
opportunities

Encourage development;
Increase motivation & productivity

Leadership and
direction

Provide clarity of company direction and objectives;

Drive employee performance

Work culture and

climate
Work/life balance

Provide performance-conducive workplace;

Bring job satisfaction & pride

2015 Hay Group. All rights reserved

Evolution of Rewards
STI

STI

LTI

STI

Base
Pay

1950

Benefits
WorkLife

LTI

LTI

STI
Base
Pay

1960

Base
Pay

1970

STI
Base Pay

1980

Base Pay is King

Job-for-life mentality
Pay based on promotion

Base
Pay
1990

2000

Base
Pay
2010

Shareholder Value
focus on shareholders
mitigating the bias on isolated short-term focus

Introduction of Variable Pay

Emphasis on market performance

Variable is King
Performance is everything

Increased Diversity
more alternative work arrangements
Performance Pressure
increasing performance orientation
increasing cost pressure
2015 Hay Group. All rights reserved

Base
Pay

STI

Complete
Rewards
Reward
is more
than pay

Best value from employment cost

Base

Perceived value
to employee

10
30

Benefits

Incentives

10
Intangibles

15

30
70

30

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Cost to
employer
7

Desired Mix of Remuneration Elements

High

Focus
on People

Caring

Integrative

Competitive base pay

Comprehensive benefits
Company-wide incentives
Work-life balance

Competitive base pay plus benefits

Individual & team - based incentives
Robust performance-management system
Learning environment

Apathetic

Demanding

Low base pay

Minimal benefits
Minimal training,
Limited communication

Low base
Aggressive incentives
Rigid performance management targets

Low
Low

High

Focus on Performance
2015 Hay Group. All rights reserved

Performance and Retention

Performance management cycle

Strategy

Clarity of
expectations

Frequency and
quality of dialogue

Team objectives,
jobs, roles

Dialogue

Structure, culture &

Organization goals

Dialogue

Results
Differentiation
of Performance

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10

Different performance management stages

Strategic

Alignment
of Systems

Context
Performance
Model

More
sustainable
performance

Gap
Analysis

DNA

Dialogue
cycle

Financial metrics
Volume

Brazil
US

Grow
Revenue
Ave Price

Prod. mix
P1, P2,

COGS

Perform
ance xx

Reduce
Costs

SGA
Int. & Dep.
Tax
ROCE

IT assets
TO
NWC

Improve
P/E ratio
Image Intangibles

Less
sustainable
performance
1.

2015 Hay Group. All rights reserved

Focus on
performance
appraisal

2.

Focus on
performance
management

3.

Focus on strategy
alignment and
performance culture
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 and their impact to employees

Focus and impact of performance management models
I am truly committed to
maximize my own, my
teams and my companys
performance

More
sustainable
performance

I need coaching to improve my

competencies and achieve the
objectives
I must meet
my targets
Less
sustainable
performance
1.

2015 Hay Group. All rights reserved

Focus on
performance
appraisal

2.

Focus on
performance
management

3.

Focus on strategy
alignment and
performance culture
12

Performance management:
Employee perspective

Employees are typically glad to put their focus/energy to what the

organization wants, if only they knew what that was!

Employees need and want feedback

Employees support what they help create

Employees are much more likely to achieve an objective if they have

been involved in setting it

To be acknowledged and rewarded for accomplished results

2015 Hay Group. All rights reserved

13

Performance management:
Common challenges

Seen as an event vs. an ongoing process

Manager discomfort with coaching & feedback

Poor objectives / measures

Inflationary ratings and lack of differentiation

No discussion, then end of year surprises!

Purely HR driven. Viewed as a necessary-HR-evil

Seen as a process only used to fire people

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Performance management:
Review traps

Unplanned/unstructured

Based on gut feel

Focused on the person and not performance

Nasty surprises

Avoiding important issues

Tackling too many issues or dominated by one issue

Too little positive messages or praise

Destructive and personal criticism

Vague unhelpful feedback

Not enough listening and too much talking

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15

Role of the Manager / Leader

Give attention

Give direction

Give trust

Give direction

Give support
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Give guidance

Give appreciation
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What the best companies do Molding and mentoring

Create opportunities at all levels for people to develop their leadership

capabilities
Actively managing a pool of successors for mission critical roles
Personally spending time coaching and mentoring others
Give extra consideration to the middle management pool, ensuring that the
emerging leadership pool can simultaneously focus on innovation and
operational excellence

2015 Hay Group. All rights reserved

Source Hay Group Best Companies for Leadership Survey - 2013

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What the best companies do Rewarding strategically

While many companies still reward on results achieved, on hard

numbers now, not softer concepts like collaborating for a brighter
future, the best companies reinforce collaborative behaviors through
formal rewards and recognition programs

They reward operational excellence too, and are much more likely
than their peers to incentivize operational efficiency

2015 Hay Group. All rights reserved

Source Hay Group Best Companies for Leadership Survey - 2013

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Contact:

Le Kinh Luan
Luan.le@haygroup.com
Hay Group Vietnam
(84) 8 39141188
#Unit 1, Level 33 Bitexco Financial Tower,
2 Hai Trieu St., Ben Nghe Ward, Dist 1,
Ho Chi Minh City, Vietnam
www.haygroup.com/vn

2015 Hay Group. All rights reserved

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