1. CONSIDERATIONS FOR TRANSITION PLANNING IDENTIFYING PRIORITIES FOR CHANGE
Tool 18

2. Introduction to this tool IDENTIFYING YOUR HIGH IMPACT, QUICK WINS
By now you should have collated all of your insights from the review and have an understanding of where there are any particular issues and concerns. This tool is designed to aid your thinking about what may be easy to change or have the highest impact in either change or communication. On completion of this tool you should be able to populate the PRIORITISATION MATRIX and identify which activities you can focus on in updating your Total Rewards proposition
The matrix asks you to rate each of the key issues from your gap analysis according to:
The level of impact the change will have for your market
The ease of making the change – your quick wins
Your current state assessment (step 9) will be a key input into this exercise
This document provides information to help you assess and plot how impactful and challenging a transition will be and enable you to prioritise your high impact quick wins
Tips for success - The following pages include insights from Mercer’s experience. As an overview we suggest:
You may find that there are no problems with your Total Rewards offer (or only minor tweaks) but that employee understanding is the biggest factor. It is not uncommon for the need for better communication to be the biggest outcome of the exercise
If you have identified a “red flag” in you gap analysis then consider if this is really of concern to your market. For example, if your bonus isn’t rewarding individual performance but that is by design then this is not something to change

3. Typical factors that influence on IMPACT and IMPLEMENTATION High level
WHAT CAN MAKE A CHANGE HIGH IMPACT?
The size of the problem. The more misaligned the component of reward with the guiding principles then the higher the impact of change
The population impacted. If the change affects everyone in the Market then the impact is much higher than if it only affects a small segment
The scale of the benefit. If the change needed will dramatically improve the reward offering / understanding / take-up then it will have a higher impact than if it is just a marginal change or improvement required
WHAT CAN MAKE IMPLEMENTATION EASY?
The number of stakeholders involved in making the change. Typically, the more people you need to involve the more challenging the implementation. If external stakeholders are required this can be more difficult
Costs. The higher the spend and sign off, the higher the challenges around implementation
Interdependencies. If the change will impact on other HR programmes then complexity increases and it becomes more difficult to implement
Cultural barriers. If the change is significant and requires big changes in the way employees understand rewards, then the complexity increases
Timescale. If the scale of the change is big and requires a long term approach then this makes the transition more difficult

4. Before we use the matrix we need to identify desired changes for the future and consider factors influencing impact and implementation For each of the key issues identified in your assessment analysis, note below the nature of the core issue and whether it was red / amber or green. In the following pages we will help you assess the appropriate change and considerations for prioritisation
You can already complete this from your assessment analysis
Questions for this prioritisation analysis
Component of rewards
Issue identified through current state assessment
RAG
Desired future state / change required
Considerations for impact
Considerations for implementation
Base salary
Sales employees have an average compa-ratio below 80% of market
Amber
Improve competitiveness of pay for this critical segment
Size of population is small (30 people), likely cost of change is around 8% of spend. Impact on retention will be significant
May take two years to transition up to market rate
Managerial sign off will be required

5. Considerations for assessing impact and implementation of your Total Rewards challenges 1. Base pay
Depending on the issues identified in the current state analysis, and changes required, these questions may help you think about considerations for prioritising change
Guiding principles
Issues that lead to high IMPACT scores
Issues that typically lead to an “easy” IMPLEMENTATION score
Market competitive
Particularly high levels of misalignment with the market (i.e. more than 20% above or below market rate)
Struggling to recruit certain talent or a high rate of attrition (if yes then this will have a high impact on the business)
Costs of aligning rewards with the market are relatively low and obtainable
If costs are significant or sign off on pay increases are required this will lead to more difficulty with implementation
Aligns Total Rewards with performance
Presence of several poor performers at the top of the pay band. This can demotivate high performers and is an inefficient spend
Lack of clarity around correlation between pay and performance rating
This depends on how poorly it is working. If managers need to be re-educated around issuance of performance ratings then that will be challenging to implement
Clear and understood by employees
High level of dissatisfaction with base salary levels and communication. Base salary is not typically a key source of motivation. It only becomes a critical issue if it is so low as to be demotivating
Enhancing communications can be a relatively simple exercise (see stages 9 and 10 of the toolkit
Motivate employees
Support corporate behaviours
Unlikely to be a high impact score, unless performance management is encouraging mal practice and being rewarded through base pay
Unlikely to be an issue
Supports business goals
Critical segments are not paid competitively to the market and are at risk of leaving
Distance from market, if they are significantly above or below the market then this impacts on the implementation score
Most significant issues Mercer finds when reviewing base salary

6. Considerations for assessing impact and implementation of your Total Rewards challenges 2. Variable pay
Depending on the issues identified in the current state analysis, and changes required, these questions may help you think about considerations for prioritising change
Guiding principles
Issues that lead to high IMPACT scores
Issues that typically lead to an “easy” IMPLEMENTATION score
Market competitive
Bonuses are significantly higher or lower than the market
Contractual obligations and plan design will make changes difficult. If you have remit to reduce target bonus this will make changes easier
Size of population will impact, if it is a small group of employees it will be easier to change
Aligns Total Rewards with performance
Dissatisfaction with bonus payments as they relate to performance
Lack of differentiation in bonus levels
Autonomy of the C&B function over bonus plan redesign. If you have the power to change the bonus objectives then this is easier to change
Clear and understood by employees
This may not be a problem if that is the aim of the plan design.
Effective communications is usually an easy and high impact implementation to make
Motivate employees
High levels of importance of the bonus plan (as determined through the survey). If it is a central part of reward for a key segment then it will have a high impact
This is limited by business challenges and results. If the issue is low bonuses in a challenging market then this is very difficult to change / shouldn’t be changed
Support corporate behaviours
If there is a behavioural issue in the market then bonus can be highly influential in changing behaviours
This is always a difficult challenge to implement and would require a high score as it requires a change in the way performance is measured and rewarded which has a cultural transformation requirement
Supports business goals
No obvious alignment with strategy and cascade of skills from leadership levels can lead to high impact scores
This could be changed relatively easily if your unit can influence performance measures. However, it would need to be led at an executive level
Most significant issues Mercer finds when reviewing bonuses

7. Considerations for assessing impact and implementation of your Total Rewards challenges 3. Benefits
Depending on the issues identified in the current state analysis, and changes required, these questions may help you think about considerations for prioritising change
Guiding principles
Issues that lead to high IMPACT scores
Issues that typically lead to an “easy” IMPLEMENTATION score
Market competitive
A cost of benefit it very high compared to the market
A key benefit is missing which is desired by employees, then it can have a high impact
New government mandated benefits requirements are absent
Inexpensive benefits which are highly desired (such as local discounts) can be simple and quick to introduce
You may have current contracts in place for benefits provision which make changing providers difficult
Introducing new mandated benefits can be challenging (i.e. pensions changes). It will depend on the nature of the benefit
Aligns Total Rewards with performance
Not relevant – benefits typically are not informed by performance
Clear and understood by employees
Communicating benefits clearly can immediately drive usage and lead to value for money, this can have a high impact
Effective communications is usually an easy and high impact implementation to make. Please see stages 9 an 10 of the toolkit
Motivate employees
Often smaller benefits (such as lunch provision etc) can have highest impact in focus groups
As with above, the level of implementation depends on the ease and cost of introducing the benefit
Support corporate behaviours
Unlikely to be of a high impact
Unlikely to be a big issue if the benefits are market competitive (as above)
Supports business goals
Major overspend on benefits could be a factor
Failure to comply with local legislation will have a high impact score
Will depend on the nature of the risk
Changing benefits providers to reduce costs can be a simple task, but is dependent on contracts in place
Most significant issue Mercer finds when reviewing benefits

8. Considerations for assessing impact and implementation of your Total Rewards challenges 4. Personal growth and development
Depending on the issues identified in the current state analysis, and changes required, these questions may help you think about considerations for prioritising change
Guiding principles
Issues that lead to high IMPACT scores
Issues that typically lead to an “easy” IMPLEMENTATION score
Market competitive
Unlikely to be an issue for personal growth. Consider if you received an feedback from focus groups and interviews that suggest people believe the careers proposition at Nestlé is less compelling than your competitors
Aligns Total Rewards with performance
High performers are not receiving additional coaching to support growth
Availability of relevant training and development in your market. If it is already available then this makes implementation easier
If recognition is an issue then this should be easy to rectify through the new recognition programme
Clear and understood by employees
This is dependent on the extent of the understanding. But is usually very high impact when administrating these programmes
Communication can be relatively simple to enhance to raise the profile of personal growth and development programmes
Motivate employees
If the issue is performance evaluation then this is usually a long term solution requiring all performance managers and is therefore more commonly a difficult change to make
Support corporate behaviours
The level of impact will depend on whether there are any behavioural issues and the scale of them.
Revising recognition is relatively simple but addressing performance management may be more challenging
Supports business goals
Likely to be of very high impact if there is an issue in the alignment of performance and corporate strategy
Typically more difficult to implement as it requires several different stakeholders including managers, leadership and multiple HR experts across performance and rewards
Most significant issue Mercer finds when reviewing personal growth and development

9. Considerations for assessing impact and implementation of your Total Rewards challenges 5. Work-life environment
Depending on the issues identified in the current state analysis, and changes required, these questions may help you think about considerations for prioritising change
Guiding principles
Issues that lead to high IMPACT scores
Issues that typically lead to an “easy” IMPLEMENTATION score
Market competitive
Not usually a significant consideration. We wouldn’t anticipate any changes required due to market competitiveness
Aligns Total Rewards with performance
N/A - Work-life environment should not be influenced by performance
Clear and understood by employees
Unlikely to have a high impact
Unlikely to be any significant and challenging changes to be needed
Motivate employees
High level of engagement with lifestyle programmes can mean increasing communications around them can have a medium impact score
Usually fairly easy, quick and inexpensive to address, especially at Nestlé with it strong brand and employee value proposition
Support corporate behaviours
Unlikely to have a high impact but increasing communication can raise take-up of these programmes
We would expect it to be very easy to communicate these provisions better
Supports business goals
You may want to review the provision with leadership guidance if required. This could have a low to medium impact
Usually fairly easy , quick and inexpensive to change
We do not usually experience any significant issues with the work-life environment aspect of Total Rewards

10. Introduction to the prioritisation tool Understanding the matrix
HIGH IMPACT
HIGH IMPACT, DIFFICULT TO IMPLEMENT
MAY BE A LONGER TERM PRIORITY
HIGH IMPACT & EASY TO CHANGE = PRIORITIES
LOW IMPACT, DIFFICULT TO IMPLEMENT = LOW PRIORITY
EASY TO DO BUT LOW IMPACT – MAYBE A QUICK WIN BUT LESS OF A PRIORITY
very high impact 5
High impact 4
Significant impact / improvement 3
low but positive impact 2
very low impact 1
IMPACT
Will this change have a high impact on the Total Reward proposition?
Will the likely gains of the change be large and employee engagement enhanced?
LOW IMPACT / DIFFICULT 1 2 3 4 5
Very difficult to Implement
Difficult to implement
Some challenges to implement
Straightforward to implement
Simple to implement
EASY
EASE OF IMPLEMENTATION
Is the change relatively easy to implement? (including costs and issues associated with communications, stakeholders to include, system changes and impact on other arrangements

11. Mercer Limited is authorised and regulated by the Financial Conduct Authority
Registered in England No Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU