Sweeping change

the middle of an economic downturn, today’s graduates are not just looking for
an attractive salary as part of a job offer. Personal development is high on
their wish list, as Bo Kremer-Jones discovers

is little doubt that the economic downturn, which started in the US, has made
its way over the Atlantic and is now rippling across Europe. There is
increasing evidence of companies in the region introducing hiring freezes and
initiating other cost-cutting measures as they prepare for bad times ahead.
However, despite the gloomy outlook, the so-called war for talent is by no
means over.

firms once again struggle to do more with less, attracting and retaining the
right people is becoming even more vital. How to do this effectively is one of
the biggest challenges companies face. One weapon in their armour for battle is
the compensation and benefits they offer.

this is by no means the only factor people take into account when considering
where they want to work – as a recent study by the Community of European
Management Schools has found in which pay ranked third in importance of what
today’s graduates are looking for in an employer. The top two on their wish
list, according to the study, were "an employer that not only offers
opportunities for personal development (95 per cent) but one that is innovative
(92.5 per cent)."

results hold true in central and Eastern Europe too. "A few years ago
people would jump for any amount of money, but this is changing as the market
matures," says an executive search director in the region. He continues,
"There’s a shift in terms of what people want. Before it was compensation
and pay, now it’s training and development. They are looking for career

offering good pay and other desirable perks can go a long way to being seen as
an employer of choice and helps to hang on to much sought-after talent.
Explains Mike Johnson, author of "How to become a Talent Magnet -Getting
Talented People to Work for You (Financial Times/ Prentice Hall), "Not
getting a raise, getting a meagre bonus can both be time-to-go triggers. In
these times of shortage, you can almost guarantee that you can get more money
elsewhere, if that is all you want," he adds.

he continues, "That is also, conversely, another reason people quit – new
hires being brought into the company at much higher levels of compensation.
This, sadly is almost inevitable as the market for scarce talent moves upwards."

who are the companies in Europe getting it right? Research-based pharmaceutical
firm Schering has introduced a new share ownership plan for all employees,
which, it reports, is the perfect solution for rewarding company performance.
Above all expectations, three-quarters of employees eligible for the scheme
invested in the plan. They clearly believe it’s an attractive benefit too.

research company ACNielsen has also found a great way to make sure managers
keep their employees happy. "Twenty-five per cent of the incentive bonuses
of our senior people are based on how satisfied the employees are,"
explains Richard Savage, head of HR for Europe, Africa and the Middle East.

chain Prˆt   Manger goes one better. "When you are promoted in the
company, you receive a cash bonus, but you are not allowed to keep it – you
have to give it away to your staff." Says founder Julian Metcalf,
"people have gone out of their way to help you and you should give
something back to them." It is a great way to build company culture.

the UK, DERA – a former part of the UK’s Ministry of Defence – pays considerably
below market rates. Retention is very high, however. The reason is that it
gives people what they want, including the ability to work on exciting
projects, time off to speak at international conferences, encouragement to take
lead roles on professional organisations all over the world and the creation of
a "fellowship" programme for long stays that allows for time off to
do blue sky research (cutting edge research of their choice).

in central and Eastern Europe face problems too in retaining key staff. It is
made particularly harder in the region as salaries are much lower than in the
West. A spokesman for Global compensation adviser Watson Wyatt laments,
"Compensation practices are labour-market driven, with qualified managers
and specialists in short supply, particularly in Russia. So top management
positions are generally staffed by expatriates, especially in start-ups."

he adds, "There is still a wide differential when comparing local salaries
in CEE with those in Western Europe, with local general managers paid 30 to 50
per cent less than in the West. Equally, he continues, "There is a wide
discrepancy in wages between multinationals and local companies."

is especially true in Poland, says Watson Wyatt where, "multinationals’
pay levels are about 25 per cent above local companies. However, the spokesman
adds, "Local employers are closely monitoring multinationals’ pay levels,
both to compete for quality labour and to establish better salary benchmarks
for recruiting."

research by Watson Wyatt has also found that, "The desire to retain key
employees may be a driver in the increasing use of long-term incentives and
deferred compensation. The use of variable compensation appears to be becoming
more widespread, with more than 50 per cent of professionals now eligible.

this is considerably less prevalent than in Western Europe, the numerous tax
and other obstacles which employers face in implementing stock option plans and
similar incentives largely account for this," it notes.

no matter where you are, pay and compensation are no simple matters these days.
But, they are important if companies want to have its share of the best talent.

of attraction

all this talk about attracting and retaining talent, it is important for HR
managers and others involved in the fight for high performers to know exactly
what kind of compensation they should be offering, and to whom. According to
Mike Johnson, author of How to Become a Talent Magnet, there are three pay
categories we need to concern ourselves with:

The mediocre
– The, ooh, yes please!
– The exceptional, wow-factor!

explains, "The Mediocre. This is 80 to 85 per cent of your workforce. They
are unexceptional. You can hire lots of them." In fact, Johnson believes
"you could go to most of your competitors and swap over 80 per cent of
your people with their people and it wouldn’t make any difference to your business."
These are the people that he says, "pull and pull the business
along." When it comes to pay, you give them the going rate. "If they
don’t like that they may get more somewhere else, but it won’t be much more and
they are with you for more than money," Johnson adds.

ooh, yes please! according to Johnson are "the 14 per cent who make your
business what it is, and by judicious acquisition, will make it better
still." What you are going to do with this group when it comes to rewards,
he says, "is pay what it takes, because, they’ll do the job you want and
more! If you don’t hire them," he warns, "your competitor will, and
then where will you be?"

exceptional, wow-factor! "These are rare birds indeed," explains
Johnson. "They don’t come on to the market often and when they do there is
usually a punch-up about who gets them. But, if you’ve got two or three around
they are going to make your business hum like never before. You want them, they
make you money and they save you money too. You don’t say, ‘here’s the salary’,
you give them a bonus based on what they do."







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