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Total Rewards 2014

It has been another fascinating year in rewards and as we look forward to 2014, I thought it would be useful to share four key global trends we are currently seeing in the market. Finding innovative and creative compensation, benefits and bonus structures remain increasingly important in attracting, engaging, retaining and ultimately rewarding top talent. There are also a number of competencies in this field that are fast becoming essential requirements as companies generally, and HR leaders specifically, seek to set up world class HR teams.

1. Demand

2013 has seen continued demand across the board for rewards talent and capability. We have seen significant restructuring activity, as well as appointments being made at global, regional and country levels across most industry sectors. Interestingly, much of this activity is happening in a more local context than ever before. The strategy is being driven out of HQ, but it is being determined by what is happening in emerging and growth markets.

What this means in practice is that Total Rewards is becoming much more geographically specialized. The big emerging markets like China, India, Indonesia and Brazil are very complex and becoming more so every day as they develop. Talent in those geographies is both expensive and scarce, but on the ground and in-depth knowledge is needed. Therefore, we are seeing a continued trend of de-layering where the global person at the top plays a strategic role and defines the function from a philosophical, policy and process perspective, whilst working with local compensation experts around the world on delivery. To this end, we have recently seen Heads of Rewards appointed in Singapore, China and Indonesia.

According to Stefanie Cross-Wilson, International President based in LA, “This de-layering is happening all across the HR profession, but it’s even more important in Total Rewards given the escalation in salary package cost and complexity across numerous emerging geographies. We expect to see this trend accelerate in 2014 — partly driven by U.S. multinationals continuing to struggle at home due to economic uncertainty and therefore needing to fuel growth outside of the U.S.”

2. Shifting Landscape

Simultaneously, we are seeing a broader definition of the traditional geographical scope for many. The rewards leaders of the future must be able to handle a more extensive remit than they may have done previously. They will increasingly find themselves managing rewards frameworks and policies for new and often larger regions, whilst maintaining alignment to a global company strategy.

These markets are likely to be more international in nature and may include emerging and/or growth economies, particularly in the technology and FMCG sectors. Again, driven by size and scale, these may include specific countries, such as China or India, or more general regions such as Latin America (Latam); Europe, Middle East and Africa (EMEA); Asia Pacific (North or South) or combinations of these. We have also seen global rewards leadership roles being transferred outside of U.S. and European headquarters to emerging or growth markets.

3. Organizational design

This realignment of geographies is requiring organisations to adapt accordingly, which often results in a complex and highly-matrixed environment where reporting lines are strategically significant. If we take Asia as an example with the Regional Head of Rewards sitting in Singapore, it would be common to expect that person to report functionally to the Global Head of Rewards in HQ (US/ London, etc) but at the same time have a dotted line to the APAC HR Director in Singapore. This individual might also be expected to partner closely with and advise the local GM/CEO whilst indirectly leading and managing through country HR teams. HR leaders must be able to adjust to and make the most of the opportunities these changing structures present.

4. Key Competencies

Increasingly the international rewards leader is now seen as the ‘bridge’ or ‘link’ from corporate to regional and local operations. This requires a range of skills which will enable them to work effectively with corporate leaders and senior executives on global initiatives. These initiatives will then need to be translated and rolled out in a local context with the Regional HR leader and Country HR leads.

Overall, today’s rewards leaders must be more commercial and strategic in their mind sets and thinking than ever before. They will be expected to consult with and advise senior stakeholders, push back when required, influence and make recommendations whilst driving change and leading HR teams. This high calibre and versatile individual is, and will continue to be, highly sought after.

Graham Tollit is a Director with the Chapman Consulting Group based in Singapore. In addition to regional and global HR search work, he has a particular focus on International Rewards.

We are currently busy finalizing our 2014 schedule to again bring together the Rewards community in a series of sessions across Asia including Singapore, Hong Kong and Shanghai.

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