Director of Consulting Services, Kevin Empey Director of Consulting Services, Towers Watson Introducing and Maintaining Market Based Reward Systems

New Order, New Challenges Introducing and Maintaining Market Based Reward Systems Kevin Empey Towers Watson October 6th, 2015

The employee perspective ? - Some warning signs for employers…. 40% likely to leave their employer over the next 2 years. 10% in 2010 70% of employees are often worried about their financial future 40% Feel their retirement benefits meet their needs Less than 29% of employees see clear link between performance and pay Only 70% believe they will have to leave their current employer for better career and pay prospects Over 50% of employees say they have been working more than before and believe that this trend will continue 50% of highly engaged employees also report high stress and low well being scores Almost Source: Towers Watson Global Workforce Studies - IRELAND Towers Watson Talent Management and Rewards Study - EMEA towerswatson.com © 2015 Towers Watson. All rights reserved.

Sustainable engagement Top drivers of attraction, retention and sustainable engagement in Ireland Attraction Retention Sustainable engagement Base pay/salary Leadership Job security Career advancement opportunities Workload & Work-Life Balance Learning and development opportunities Goals & Objectives Career advancement opportunities Trust/confidence in senior leadership Empowerment Organisation’s reputation as good employer Length of commute Image Source: Towers Watson 2014 Global Workforce Study — Ireland

…Making way for the 21st century work experience Safe to say that the classic employer-employee deal is becoming extinct… …Making way for the 21st century work experience It’s unaffordable. Shared responsibility and risk. It’s outmoded. A sum greater than its parts. It’s ineffective — and inefficient. Many sizes; many shapes. towerswatson.com © 2014 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Emerging topics in shaping future reward and pay - Current issues underpinning reward reform in Ireland Cost and investment balance - Employer / Employee co-investment Performance, recognition & differentiation Total Reward and EVP view – value versus cost What next for variable pay ? Governance, regulation & control - Changing nature of the reward function itself Simplification and flexibility Delivery system - Manager capability, comms, technology… Market alignment & Segmentation 6 towerswatson.com © 2014 Towers Watson. All rights reserved.

Pay Prospects 2015 / 2016 2015 Actual 2016 Projected General Industry = 2.2 FS = 2.4 HT = 2.4 PHS = 2.2 2016 Projected General Industry= 2.5 FS = 2.5 HT = 2.7 PHS = 2.5 towerswatson.com © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Salary Review Practice 2009 – 2015 towerswatson.com © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

An opportunity to reframe a new deal with employees EMPLOYEE EXPERIENCE EMPLOYER EXPECTATIONS Employees’ interactions with the company, colleagues and customers, the work environment and total rewards that drive their behaviors and engagement The desired affiliation, mindset and behaviour that optimise the employee’s contribution to business success towerswatson.com © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Providing a customer grade employment story & experience… - A whole new level of EVP design and delivery is ahead

Total Rewards on a page…… Career & Environmental Rewards Performance-Based Rewards Foundational Rewards Total Rewards Program Delivery Program Design Strategy & Structure towerswatson.com © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Reward reform and change can be too focused on the “what” at the expense of the “how”…… towerswatson.com © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

For example - Pension Change Shock/anger Can you do this? Is this legal? Why is this happening? Agreement I have to manage my pension. Show me how Blame Who’s fault is this? Is there another solution? Why can’t the Company put more money in? Leadership/ manager ownership Acceptance I understand the need for change. I don’t like it but I need to move on. Understanding What does this mean for me? Show me some examples What are my options? Proposal pack: booklet, letter, feedback form Financial education tools: games, profilers Website: Q&As, feedback, videos, updates Personal Illustrations Modellers and ready ‘reckoners’ towerswatson.com © 2014 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Implementation Challenges & Trade Offs – impossible to keep everyone happy

Reward Reform – Final Thoughts & Observations Know your customer(s) and your business case Define your “story” for your current and future talent needs A talent (and reward) strategy to get where you want to go Design with the future in mind – transition compromises may be necessary Manage the change at the pace that will bring success Implement & communicate effectively, support your managers Be open to change over time towerswatson.com © 2014 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Kevin.empey@towerswatson.com 16