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HR Connect New Zealand – Volume 3, Issue 1, 2013
Managing employee engagement during times of change
Today’s global economy has had a major impact on the way organisations operate. Although successful organisations often apply a modest level of continuous change, in the past few years, organisations have had to employ significant business and talent survival tactics in response to challenging economic conditions.
Times of change can be difficult so it is important that employers maintain a focus on how employees think, feel and behave in these situations, to gain useful insight into their workforce. A recent Aon Hewitt whitepaper explored how employee engagement is impacted during times of change and how organisations can manage it more effectively to maintain business performance.
Aon Hewitt’s analyses identified four key themes that are important for organisations undergoing change:
Connection – Employees have a heightened need for personal connection with leaders and co-workers during times of change. Leaders need to be visible and engage in two-way dialogue to build team cohesion and keep employees engaged.
Control – During times of change, employees can feel that change is happening to them rather than feeling they are involved and part of the process. Organisations must have strategies in place to ensure that employee’s feel included and valued throughout the change process.
Career – Employees undergoing change need to understand what the change will mean for their role and future career prospects. To avoid losing critical talent, organisations must provide some clarity about career opportunities for employees.
Capability – Finally, organisations need to ensure that any skill gaps resulting from significant change are countered by effective workforce and capability planning, as well as the implementation of effective development plans focused on what is required to deliver value in the new organisation.
To request a complimentary copy of the whitepaper click here. For more information on how your organisation can measure and improve employee engagement, contact Alison Hall on +64 9 362 9292 or email [email protected].
Going global with employee benefits
Multinational companies are operating in an increasingly complex and competitive environment. There are several issues associated with managing a workforce spread across multiple geographies and jurisdictions. Organisations are taking a more active role in managing their employee benefits as the economy becomes more global, accounting standards converge and workforce mobility increases.
Historically, most multinational organisations have taken a decentralised approach to employee benefits, leaving local head offices responsible for the purchase and provision of benefits such as life, disability and health insurance. This approach commonly delivers one of two outcomes:
- Local teams simply duplicate the benefits provided by global head office with no reference to local market requirements; or
- The organisation ends up with a myriad of policies and employee benefits that differ significantly from one county to another.
In the current economic climate, organisations are faced with high employee expectations, new and ever changing compliance requirements, critical shortages of skilled workers and a global workforce that is more mobile and transitory than ever before. Many multinationals are finding they can more efficiently manage employee benefits with a global approach.
The key organisational drivers for implementing a global benefit approach include:
- appropriate governance, including management of compliance and liabilities
- improved efficiencies in cost, delivery and design of employee benefits
- consistent and relevant treatment of employees worldwide
- a balance between central control and the local environment
- robust data capabilities to measure performance and impact of employee benefit programs.
Often the first and greatest challenge of 'benefit globalisation' for a multinational organisation is understanding exactly what they are currently providing. Many organisations are surprised at the work involved and the inventory that turns up in the audit phase. This phase is key in identifying not only potential exposures but also the opportunities the organisation has to streamline benefit provision.
Due to admittance requirements and the requirement for most insured benefits to be written on local policies, a large multinational could have hundreds of insurance policies spread across a wide geographic range. However, there are ways of aggregating premium expenditure across a multitude of countries and leveraging buying power to improve terms, conditions and pricing, such as multinational pooling or utilising captive solutions.
Multinationals are finding the positive outcomes of globalising their employee benefits too significant to ignore. Expenditure savings, improved governance, greater compliance, consistency and streamlined benefit administration means that this trend will likely become the norm.
Aon Hewitt has responded to the needs of our multinational clients by building a team of over 100 professionals around the world dedicated to assisting our clients in equalising and globalising their employee benefits programs. Aon Hewitt can partner with your organisation to:
- identify, collate and manage benefit data through Aon Hewitt's fully customisable platform Greater Insight (GI)
- provide data storage, interrogation, analytics and testing of local compliance through GI
- effectively manage program delivery, communication and employee interaction
For more information contact Peter Harland on +64 9 362 9127 or email [email protected].
Tackling the difficult remuneration issues
Each year, New Zealand organisations spend hundreds of millions of dollars on pay and benefits. It’s hardly surprising that there is increasing focus on how that spend is managed, and what outcomes are generated. In 2014 organisations are gearing up to tackle some complex remuneration issues:
Gender pay equity
Aon Hewitt’s consultation with clients has not led us to expect an unexplained gender differential in pay. However, our database suggests that the differential is real and persistent across organisational levels and job families. So what should remuneration professionals be doing to address this disparity?
To close the current 9% fixed remuneration gap at the fully proficient career level, females would have to achieve an annual increase of 1.5 times that of males (in percentage terms) for five remuneration cycles1. Eliminating the gap seems unlikely without direct intervention, but pay increases modified along gender lines represent an uncomfortable scenario for many organisations. Gender pay equity is a complex issue and organisations should invest time and resources into understanding the facts and learning from the experiences of others.
The link between pay and performance
Another issue under the microscope going into 2014 is the link between pay and performance. 96%2 of organisations in Aon Hewitt’s database currently have a strategy of targeting total remuneration outcomes at, or above, the median (or middle) of the competitive market. However by definition, this proportion of organisations cannot be performing at that level relative to their peers. This suggests that while organisations hope their pay structures recognise and reward high performers, execution of pay strategy may not always realise this.
Many Short-Term Incentive (STI) plans need re-engineering to better align intended and actual outcomes through modified funding mechanisms, steeper payout curves and the use of the right performance metrics to drive behaviour. Against this backdrop, 60%3 of the market cites aiming to “attract the best” as one of the three most important objectives for remuneration strategy. Appropriately reflecting organisational performance while paying competitively to attract and retain strong talent can be competing interests, and the solutions are not straight forward.
1 Assumes male salaries progress at the forecast 2014 rate of 3%
2 Source: Aon Hewitt New Zealand – Source Remuneration Report – September 2013
3 Source: Aon Hewitt HR Policy and Practice Report – November 2013
Education key to financial security in retirement
For many New Zealanders retirement planning is not comprehensively understood. Unable to gain clarity around just how much money is required for retirement, what New Zealand Superannuation will pay in the future, and potential options for investment and saving options leaves many unprepared for impending retirement.
New Zealand launched its National Strategy for Financial Literacy in 2008. The impetus rose from the inaugural Financial Literacy Symposium in 2006 which highlighted a nationwide gap in financial literacy and educational resources.
Since its inception, the National Strategy for Financial Literacy has worked on a number of key focus areas with regard to education and as a nation we’ve seen high profile and tangible examples of its work with the launch of www.sorted.co.nz; a dedicated financial planning and educational website, alongside regular nationwide media campaigns promoting financial literacy. And this year the Government made it a requirement of all KiwiSaver providers to ensure promotional and contractual material is written in ‘clear, concise, everyday’ language to promote accessibility and readability amongst KiwiSaver members new to investment.
However, while more readily available, applying educational resources to our own lives and understanding all the variables that come into retirement planning still requires some effort. The truth is no one really knows how much money a person will need to secure their future.
Living large or living lean
What are your plans and dreams for retirement? Do you wish to travel and pursue relatively expensive hobbies, such as golf or skiing? Or do you intend to spend your senior years relaxing at home and visiting your children and grandchildren? Each of these choices requires a nest egg of significantly different size.
A recommended approach is to aim for a retired life that includes a reduced annual income, perhaps 80% or a little less of a pre-retirement budget. For retirees who plan to travel and pursue various hobbies, obviously, this type of planning could be inadequate. Some retirees may need more than 100% of their current annual income, if they want to be financially able to pursue their dreams.
Longevity
No one can accurately predict how long he or she will live. Conservative financial professionals advise everyone to plan their finances as if they will live to be 100. This philosophy helps ensure that planning will be adequate and retirement funds will last a lifetime. Of course, workers who plan to retire before 65 face even longer planning issues. Their retirement years could well be longer than the years they spent in the workforce and healthcare must also be considered.
Despite such variables however, we do know that saving and beginning to save as young as possible is the first step towards financial security in retirement. The next step is educating yourself on how you can best make those savings work for you. Visit www.sorted.org.nz for further information. If you would like any information regarding KiwiSaver specifically see www.aonkiwisaver.co.nz or call Amanda Beeslaar, Aon KiwiSaver Scheme Manager, on +64 9 362 9184 or email [email protected]