kiss reward in a complex world
TRANSCRIPT
May 2, 2023 1
Remuneration Brought Back to Basics
Erste Group Bank AGMichiel van den BergHead of Group Remuneration and Organization Effectiveness
May 2, 2023
Outline of the session
2
The Past
Considerations
2012
2014
2015
Roadmap
May 2, 2023
Remuneration – 5 years ago
3
Salary increase decision by a manager is a black-box.
Board Members did not know what direct reports earned and how salaries
relate to the market.Narrow salary bands.
Salary differences of up to 4 times between employees on
the same job.
Lack of benchmark data.No structure and no
explainable difference in total reward.
May 2, 2023
Issues in focus – performance, reward, work environment
4
Business needs and priorities change faster than annual goals assigned to employees.
Real-time discussions with employees are more valuable than year-end evaluations.
Focus, direction and intensity of performance discussions is currently more on the past than on the future.
Job, skill and performance rating instead of creating an environment to engage, develop and perform.
Discussions focus more on execution of today‘s priorities instead of the future.
Limitations in access, transparency (understanding) and availability of information/knowledge.
May 2, 2023
Remuneration – further considerations
5
01 Reward develops with the person.
Person’s experience and qualifications influences current reward position.02
See reward as an investment – rather than a cost – based on fit and potential of the person.03
Give rewards that people value (based on their needs in stage of life).04
Reward value-driven business decisions that bring both profitability and sustainable growth.05
May 2, 2023
Target – „remuneration in a nutshell“
6
Specific and annually updated „merit increase“ proposals and
guidelines from HR to business.
Salary increase is a decision by manager based on contextual
data.
From To
Descriptions in salary bands and e.g. performance/development
matrixes.Contextual salary bands.
Calculated and distributed salary budgets.
PEREX / FTE / Headcount cost management.
Salary increases for all (or at least majority of employees –
water can approach).
Salary increase for selected individuals.
May 2, 2023
Learnings
7
Transparency in the process is essential.
Easy access to required data allows for flexible decisions.
Contextual data supports discussion regarding the future fit of the person as opposed to having a strong focus on the amount of salary increase.
A specific group of managers will never learn it, regardless of guidelines.
May 2, 2023
Roadmap
8
Context
Accessibility
Transparency
Many rules and guidelines for salary increases and bonus decisions
Context data for salary increases and bonus decisions
Context data for Total Reward decisions
2011
2015-16
2017-18