1. Assessing your total rewards offer
Collating and analysing findings following the customer analysis

2. Introduction Gap analysis
This analysis will help you to summarise and assess the current state of your Total Rewards in light of all of the research done around the MARKETS, COST, EMPLOYER AND EMPLOYEE views. It will help you assess the Total Rewards offer against the guiding principles, highlighting any key areas to change for change. We anticipate this review may take up to 3 hours
The following pages will help you to gather your thoughts on each of the elements of Total Rewards from what you have heard in leadership interviews, employee surveys and employee focus groups. You will also need to incorporate the information you have gathered from completing the cost modelling and market data analysis
On the following page, consider things about that element that stood out in each of these exercises. Was there anything that surprised you or were there any themes which showed up consistently across the tools in this section of the toolkit?
Consider your strategic employee segments, was there anything in particular that stood out as needing to be changed to better support that segment?
You will need to look back over your outputs from the leadership interviews, employee survey, employee focus groups and modelling spreadsheets
We have included a table with questions which should help you to think about how each of your Total Reward elements compared with each guiding principle
Once you have captured your key observations for each element and read through the questions, you should find it easier to fill out the gap analysis table and identify the key areas for change. We have included an example as well as a template for your convenience
The outcomes from this gap analysis will then feed into a prioritisation matrix so that you can determine the impact and ease of implementation of your required changes

3. Summary analysis Key observations
You will now have a lot of insights and analysis in your Total Reward review paper. This now needs to be assimilated into key messages so that gaps from desired practice can be identified
When conducting these reviews, Mercer consultants find it helpful to identify the top issues that really stood out in each area of analysis. This helps to gather your thoughts before completing the gap analysis
Leadership interviews:
1. (i.e. concerned about skills to meet business objectives) 2. 3.
Employee views: 1.
Cost modelling:
Market perspective:
Some questions have been put together (overleaf) which may help you identify any key issues

4. Using the guiding principles to draw central conclusions about each element of Total Rewards These questions are designed to support a review against each principal
Total Reward element
Principles
Market competitive
Aligns Total Rewards with performance
Clear and understood by employees
Attract, retain and motivate employees
Support corporate behaviours
Supports business goals
Fixed pay
Did the market analysis show any issues with competitiveness? Are any particular segments impacted?
Did the survey receive positive feedback to the following question: “In my opinion, the following are as good as or better than those in other organizations: Our pay?”
In the costs analysis, was there a correlation between base salary and performance rating?
In the employee survey, did employees respond positively to the question : How good a job is your company doing in matching pay to performance?
What feedback did employees provide in the focus groups about their pay? Did they understand how pay decisions were made?
Did you receive any feedback from the focus groups around motivation? Were any particular issues identified?
Did Leadership note the importance of Reward in supporting corporate behaviours? Did any particular issues arise?
Are the roles which are critical to the corporate objectives (your key segments) rewarded competitively?
Variable pay
Does the pay mix analysis show that bonus and LTI levels are aligned with the market?
Did interview and focus groups suggest employees feel bonuses reflect their performance?
Is there differentiation in bonus levels?
Is there a correlation between performance rating and bonus levels?
Do people understand how their bonus was derived?
If people are really disengaged with the bonus, then are the right people eligible and does the plan design work?
Are behaviours considered in bonus plan design, or is it just performance output?
Are performance measures are aligned with corporate objectives and strategy?
Benefits
Did the market review show all key benefits are broadly aligned with the market?
Are costs of benefits provision competitive?
Do they reflect changing legislation?
n/a
Did the employee survey demonstrate a high level of understanding in benefits provision?
Are there high levels of usage / take-up of benefits?
Did the employee focus groups demonstrate a high level of engagement with their benefits provision?
Were any critical benefits identified as missing, impacting on any particular segments? For example was a certain demographic impacted?
Does the benefits spend impact on the business expenses appropriately?
Are there any legal risks?
Growth
Is there alignment between performance and the availability of training and development?
Was this issue raised in the leadership interviews?
Does the recognition programme reward individual performance?
Are employees aware of the training and learning / careers support and recognition programmes on offer?
Are employees having regular discussions with their managers about their performance?
Were any issues raised about the quality of these discussions?
Are employees happy with the recognition programme?
Is behaviour considered in performance evaluation? If not, is this desired by leadership?
Does recognition reward corporate behaviours?
Are performance goals aligned to business strategy?
Are leadership engaged with performance management?
Are key talent receiving sufficient training?
Work-life
Are employees aware of the work-life environment provisions available, including Work-life flexibility, wellness programmes etc.?
Do employees value this component of reward? (as demonstrated in survey results)
Are people engaging in the CSV principals?
Are there any business goals that require enhanced work-life provision? Are you failing to attract and employees because of this factor?

5. Assessment of Total Rewards Key
This key will help you to make decisions about the strength of each issue that has arisen during your Total Rewards Review
Use these points to make a decision about which colour to assign in the gap analysis. You should assign the colour which best fits the issue
There is a large misalignment between current state and the guiding principle
An issue has arisen with regards to this principle in at least 2 of the quadrants (leadership, employees, costs and the market)
The issue affects a large majority of the employee population or a critical segment
There is some misalignment between current state and the guiding principle
An issue has arisen with regards to this principle in at least 1 of the quadrants (leadership, employees, costs and the market)
The issue affects at least 25% of the employee population
There is a general alignment between current state and the guiding principle
No major issues have arisen in any of the quadrants (leadership, employees, costs and the market)
The issue affects a small proportion of the employee population

6. Assessment of state of current Total Rewards Example output
= broadly working well. No immediate action required
= major improvements can be made
= action needed
= already being addressed in HR policy
Assessment of state of current Total Rewards Example output
Total Reward element
Guiding principles (what rewards should be doing)
Market competitive
Aligns Total Rewards with performance
Clear and understood by employees
Attract, retain and motivate employees
Support corporate behaviours
Supports business goals
Fixed pay
No issues identified
Good correlation with performance
Reasons for increase unclear to employees
Not a reason for joining Nestlé
n/a
No differentiation of rewards in key segments
Variable pay
Slightly below market in some grades
Some correlation with performance
Feel that this is well communicated
Bonuses paid irrespective of behavior
High differentiation in key segments
Benefits
A feeling that these are well below market
High level of understanding
Play a small part in attraction & retention
Benefits cost too high
Growth
No alignment with performance
Opportunities not well communicated
Big attraction to Nestlé
No link identified
Performance goals aligned to strategy
Work-life
Some key segments affected by gaps

7. Assessment of state of current Total Rewards Template
= broadly working well. No immediate action required
= major improvements can be made
= action needed
= already being addressed in HR policy
Assessment of state of current Total Rewards Template
Copy and paste these circles to fill in your template
Total Reward element
Guiding principles (what rewards should be doing)
Market competitive
Aligns Total Rewards with performance
Clear and understood by employees
Attract, retain and motivate employees
Support corporate behaviours
Supports business goals
Fixed pay
Variable pay
Benefits
Growth
Work-life