Compensation Communication Practices Survey - Participant Report

Compensation Communication Practices Survey (February-March 2016)

Solertia Consulting Group

Claudio Gardonio, M.B.A., B.I.B.C, CEBS, CRHA

Karine Bergeron, CRHA, CEBS

April 29, 2016

Content

2

• List of Participants

• Highlights

• Results

• Points to consider

• Appendix: Biographies and services

Context

3

• The survey aims to understand current compensation program communication practices of organizations

• The survey explores the following themes:– Communication practices of the salary structure;

– Communication practices of short-term bonus plans;

– The media used to transmit the value of the total compensation;

– Perceived effectiveness of communication practices;

– Communication intentions and efforts.

• The survey also examines the practices of organizations which reported having effective communication practices

• The survey was conducted in February and March 2016 across Canadian companies, mainly in Quebec and Ontario.

The Participants

The Participants

5

Public, 11, 19%

Private, 47, 81%

Is your organization private

or public?

1,000+, 12, 21%

500 to 1,000, 5, 8%

200 to 500, 12, 21%

10 to 200, 29, 50%

Number of employees?

Other, 4, 7%

Canada, 4, 7%

Quebec, 3, 5%

Greater Montreal, 47, 81%

Location of head office?

List of ParticipantsSurvey Participants

6

47 Private Companies• Alarme Sentinelle • Groupe AGF • Lightspeed

• Association des chirurgiens dentistes du Québec

• Groupe Censeo • Moisson Montreal

• Auberge Saint-Antoine • Groupe ISN Canada inc. • Negotium Technologies Inc

• Belron Canada • Groupe Lemur • Novexco Inc.

• Biron Groupe Santé • Groupe Robert • Optelvision

• Caisse de dépôt et placement du Québec • Groupe Robitaille • OS4 Techno Inc.

• Ceriko Asselin Lombardi Inc • Groupe Swagelok Québec • Paiements Pivotal

• Cirque du Soleil • Gwava Inc. • PolyExpert

• EH Price • Hitek Logistic • Radiologie St-Martin & Bois-de-Boulogne

• Emballages Poliplastic Inc. • Hubert et associés • RICHARD BEGIN R.I.INC

• Enviroplast inc • Incell Inc. • SDR Imports Co. Ltd

• Envitech Automation 2009 inc • Jam Industries • Société de services dentaires ACDQ inc

• Équation Humaine • KD Services • Sogedent Assurances inc

• Groupe Fordia • La turquoise, Cabinet en assurance de dommages et services financiers

• Stationnement Safeway Canada Limitée

• Gestion Robgroup Inc. • Langlois avocats • Université McGill

• GL Creations • Lavery

List of ParticipantsSurvey Participants

7

11 Public Companies• ADP Canada Co

• Andritz Ltd

• Banque Nationale

• Bristol Myers Squibb Canada

• CDK Global (Canada) Limited

• Dundee Corporation

• Engagement Labs Inc.

• Industries Lassonde

• Intact Corporation Financière

• Metro-Richelieu Inc

• Ubisoft Divertissements

Highlights of the Survey

Highlights

9

The Survey clearly revealed that participants want to do much more to improve the effectiveness of their communication strategy. Here are some highlights:

– Two thirds of the participants have a salary structure;• Over 75% inform their employees of its existence but only 46% explain the functioning of the salary structure and the same

percentage communicate the monetary value of the salary structure

– Nearly 80% of respondents have one or more short-term incentive plans;• Variable compensation differs depending on whether the organization is private or public

• All respondents in public organizations indicate that employees know their target bonus, only 43% in private organizations

• Almost three quarters (73%) of respondents in public organizations indicate that bonus targets are communicated to all employees, only 15% among private organizations

– Half of the participants indicate that the organization knows and calculates the value of the total compensation; • Of these, half indicate that their employees know the value of their total compensation

– The media used to convey the value of total compensation;• Those that communicate the value of total compensation (48% (28)) are using the following media: informal discussions,

individual statements (paper) and individual statements (online)

Highlights

10

– Practices of organizations that believe their communication techniques are effective:• They frequently have a salary structure (79% vs 67%)

• They further inform employees that they have a salary structure (60% vs 50%)

• However, organizations that believe their practices are effective inform employees of how the structure works and the value of the scales at about the same frequency as those who judge their practices as ineffective

• They indicate more frequently that employees know the value of total compensation of the jobs (54% vs 25%)

• They indicate most frequently that they use individual statements (paper or online) to communicate the value of their total compensation to employees (36% vs 14%)

Results

Yes38

No18

Does your organization use a salary structure(s) to

determine base salary?

Does your organization inform its employees that it

uses a salary structure?

13

05

1015

2025

30

No

Yes

9

29

Among the organizations that have

a salary structure, 76% inform

employees that they have a salary

structure

Does your organization inform employees about how

the salary structure

works?

14

05

1015

2025

No

Yes

24

13

Among the organizations that have a

salary structure, 35% inform the

employees on how the salary structure

works (grades, how positions are

evaluated, levels, width of scales, etc.)

Does your organization communicate to employees the

monetary value of the salary

scale to which they belong?

15

05

1015

2025

No

Yes

24

13

Among the organizations that have a

salary structure, 35% inform the

employees of the monetary value of their

salary scale (evaluation, amounts at

minimum/midpoint/maximum ($))

What type of short-term variable compensation

is available in your

organization?

16

0 2 4 6 8 10 12 14 16 18 20

None

Discretionary bonuses

Profit sharing

Bonus plan based on performance

More than one of these choices

12

8

3

19

15

Among the organizations that offer

short-term variable compensation,

bonus plan based on performance is the

most common

Do employees know their target bonus

(% of base salary)?

17

05

1015

2025

3035

We do not have target bonuses

No

Yes

21

6

31

The target bonus is generally known

Are target bonuses communicated to all employees

for each position?

18

05

1015

2025

We do not have target bonuses

No

Yes

21

21

15

Nearly 60% of organizations do not

disclose the target bonuses

What type of salary surveys does your organization

use?

19

05

1015

2025

None

Free data on the Internet

Specific surveys in the industry

Database or reports from compensation firms

18

7

9

23

Database or reports from compensation

firms are clearly the most common

Does your organization communicate to employees

that it conducts salary

surveys?

20

05

1015

2025

3035

No

Yes

33

23

Nearly 40% of organizations disclose

that they conduct salary surveys

Does your organization calculate the value of each

job’s total compensation package?

21

• 50% of companies indicate that they calculate the value of total compensation

• Of these:• 29% have informal discussions• 36% communicate in a statement

on paper or online / intranet• 35% do not communicate the value• 80% of companies do their own

internal communication

Yes50%

No50%

Do employees know the value of their total

compensation ($) and

its different components?

22

05

1015

2025

3035

40

No

Yes

36

21

Over 60% of organizations indicate that

employees do not know the value of

their total compensation

What method does your organization use to

communicate to

employees the value of

their total compensation?

23

We do not communicate the value of

the total compensation

52%

Other3%

Individual statement

(online version or intranet)

7%

Individual statement

(hard copy)16%

Informal discussion

22%

Slightly more than half of the

participating organizations do not report

the value

Does your organization outsource its compensation

communication

(in part or in whole)?

24

010

2030

4050

No

Yes

46

11

19 % outsource the communication to

one or more of their compensation

suppliers

(eg: pension plan provider or group insurance

company)

Overall, how would you rate the effectiveness of your

current compensation communication practices in

fostering a better understanding of employees' total

compensation?

25

• 43 % of companies consider that their currentcommunication practices are effective

• 41% believe that the practices in place arouseorganizational engagement from the employees

• Half said that the communication practices are alignedwith the organization’s business goals

Totally Ineffective

9%

Ineffective48%

Effective43%

Overall, how would you rate the effectiveness of

your current compensation communication practices

in fostering a better

understanding of

employees' total

compensation?

26

05

1015

2025

30

Totally Ineffective

Ineffective

Effective

Very Effective

5

28

25

0

One organization out of two indicate that

communication is either ineffective or

totally ineffective

Overall, how would you rate the effectiveness of your

current compensation

communication practices in

encouraging employee

engagement and

motivation at work?

27

05

1015

2025

30

Totally Ineffective

Ineffective

Effective

Very Effective

4

30

23

1

Nearly 50% say their current

communication practices generate

engagement and motivation

Overall, how would you rate the alignment of your

current compensation

communication practices

with the organization's

business objectives?

28

05

1015

2025

30

Totally Ineffecive

Ineffective

Effective

Very Effective

3

26

28

0

50% say their current communication

practices are aligned with business

objectives

How does your company plan to change its efforts in

compensation

communication over the

next two years?

29

05

1015

2025

3035

Same Efforts

Decrease Efforts

Increase Efforts

26

1

31

Over 50% of participating organizations

plan to increase communication efforts

Does your business have a concrete compensation

communication plan to be

launched or one that is

currently being rolled out?

30

0 510

1520

2530

3540

45

Yes

No

16

42

72% of participating organizations do

not have a concrete plan

What are your organization's compensation issues?

Some answers ...

• Adjust to the needs of younger / Y generations that seem less sensitive to conventional compensation, besides the salary and bonus;

• Communication of total compensation;

• Reliability of market data;

• All that is related to the non-salary offer (insurance, pensions);

• Internal equity, harmonization of policies and practices;

• Five respondents have pay scale issues;

• Highlight the value of social benefits and other benefits.

31

Points to Consider

Barriers to Communicating CompensationWhat is holding people back

33

• Fear of being confronted

• Prefer to keep the space for flexibility and discretion

• Fear that it is "discovered" that not everything is equal for all

• Do not want to be obliged to inform of any future changes

What are the perceptions or fears that restrict people to

communicate?

Board of Directors,

Senior Management,

Management,

Finances or HR… What do we communicate when we do not communicate?

By saying nothing, people do not know what we do well ...

An Engaging Communication – Why?

34

Know the true valueFor the perception of fairness, that employees understand the actual aggregate value of the

compensation envelope

The numbers do not tell the whole story

Hallway discussions

Because people talk, and it is preferable to explain the differences rather than have them brought to light

Silent dissatisfactionBecause there are people experiencing dissatisfaction who do not speak up, but the repercussions can

be felt

To promote total compensation and emphasize the elements of total compensation that

are not cash compensation

Compensation Communication Continuum What is the optimum level of transparency for your organization?

35

Closed Transparent

• What is your level of confidence of your compensation policies and its effectiveness in achieving your talent

management goals?

• Would transparency positively affect your engagement and retention challenges?

• How familiar are managers with your compensation programs and are they ready to have conversations about it with

their team?

Factors to be Considered

My Pay

The employee knows his/her

total compensation and

confidentially discusses it with

his/her manager. The manager

knows the salary ranges of the

position within his/her team.

The Company does

its HomeworkIt is communicated that the

Company has a compensation

philosophy, job evaluation plan,

and salary structure based on

grades

Here is our

Structure

The Company communicates

its compensation philosophy,

grades, the width of pay ranges

and market surveys used

Fully Opened

The Company communicates

grades, which jobs are in which

grade, the midpoints of the

ranges and comparison groups

used for market survey

What is Engaging Communication?The employee’s questions are answered and the employee leaves even more enthusiastic

36

Adapted

Comes from the person

who knows us,

understands us, and

who can adapt to us

Relevant

Is relevant in time and

provides the

information to take

action in a timely

fashion

Inspiring

Changes perceptions,

providesa vision, and

inspires us to move

forward

Touching

Touches our emotions

AppendixBiographies and services

Karine’s Bio

Karine Bergeron, CHRP, CEBSManager, HR Consulting

Karine contributes to the growth of Solertia Consulting Group being

responsible for services to businesses in the greater Quebec City area.

Karine is a passionate business professional and has many years of

experience working in Human Resources Management mandates

including training, compensation, career mapping and performance. She

has worked with SMBs across Quebec and Canadian subsidiaries of

international companies. Karine is a graduate of John Molson’s School of

Business and University of Laval, and a member of WorldatWork, of the

Order of Certified Human Resources Professionals (CHRP) in Quebec,

and of the Chambre de la sécurité financière. Karine has given

conferences to various business community audiences, and is also an

Emploi-Québec certified trainer.

Karine brings a refreshing vision of Human Resources Management

projects in an approach based on best practices, rigor, and innovation.

Servicing her clients with the highest level of professionalism, ethics, and

quality is her objective. She is able to do this all while relying on a

collaborative approach. With her field experience in a variety of business

environments, she can assist you in aligning your practices with your

business objectives.

Claudio’s Bio

Claudio Gardonio, M.B.A., B.I.B.C, CEBS, CHRPSenior Director, Total Compensation

Claudio Gardonio holds the title of Senior Director, Global Compensation

at Solertia. With a solid experience of over 20 years in global

compensation and change management, Claudio has recently joined the

Company. In the past four years, Claudio held the title of Senior Vice

President for a large company headquartered in Quebec. Claudio is

recognized as a strategic consultant and as an effective change agent. He

holds a Master of Business Administration (MBA) from Université du

Québec à Montréal (UQAM). He is a Conseiller agréé en avantages

sociaux from the Chambre financière and Certified Employee Benefits

Specialist (CEBS) from Dalhousie University, Nova Scotia. Mr. Gardonio is

a member of the Order of Certified Human Resources Professionals

(CHRP) in Quebec du Québec and sits on the ESG Alumni Association -

UQAM.

Claudio is a seasoned expert in the field of compensation, specializing in

the development and implementation of compensation policies and

programs for senior executives. His services will allow you to distinguish

yourself from your competitors in order to attract and retain talent.

Our Services

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