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May 09, 2007
Top 3 Issues Facing Total Rewards Professionals in 2007

By Catherine L. Moreton, J.D.

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WorldatWork recently surveyed its members on what they consider to be the top three issues facing them in 2007. According to Ryan Johnson, Director of Public Affairs, 38% of respondents cited retaining a productive workforce followed by recruiting and hiring, and the disclosure of executive compensation. These priorities were reflected in the presentations offered at WorldatWork's 2007 Total Rewards Conference in Orlando this week.

Recruiting, Hiring, and Retention

Two of the top issues reflect a concern about the potential for a shortage of qualified workers, as well as a focus by human resources professionals on the critical role they play in making sure their organizations have the talent they need. One of the realities faced by employers is the pending retirement of the baby boom generation and concerns about how this talent will be replaced.

In a presentation titled Understanding and Preparing for the Exodus of Mature Workers, panelists presented the findings of a survey conducted jointly by Buck Consultants, Corporate Voices for Working Families, and WorldatWork. The survey included 487 organizations, and 64 percent of those participating have 1,000 or more employees. Key findings from the survey:

  • 42% of the respondents believe aging workforce issues are significant
  • Loss of mature workers at the senior leadership level is the most significant risk
  • Organizations perceive that aging workers want to remain in the workforce because of financial reasons
  • Most significant strategy for keeping mature workers in the workforce is the use of flexible work schedules
  • A key issue is the preservation of mature workers' knowledge
  • Integrating multiple generations of workers was a very significant business risk
  • The most used knowledge transfer mechanisms are intergenerational work teams and formal mentoring programs.

The level of concern about the anticipated exodus of mature workers varied by industry-- with healthcare reporting the greatest level of concern and tech companies reporting less of a concern. However, two key issues emerged: the need to retain mature workers and the need to develop mechanisms for transferring knowledge to younger workers.

Donna Klein from Corporate Voices for Working Families noted there were a number of perceived advantages to hiring and retaining mature workers, including that they have valuable knowledge, are reliable and dedicated workers, and can understand and meet the needs of an aging population and customer base. On the flip side, perceived disadvantages include concerns about integrating an intergenerational workforce, accommodating flexible schedules, and increased labor costs such as higher health insurance and seniority-related compensation.

During the session, attendees were asked to identify programs they were using to help retain mature workers or to facilitate the transfer of knowledge. Flexible work schedules, including the ability for older workers to work part of the year in a different location such as Florida or Phoenix , were cited as retention tools. In addition, some companies are looking to retirees to work as consultants or on a temporary basis to fill the gap.

In a separate presentation titled Even the Odds: Four Bold Bets on the Future of HR , Pete Sandborn from Hewitt identified four key roles for human resources. Two of these involved recruiting, hiring and retention. The first is that human resources must serve as the human capital R&D function. He noted that there is wide body of data available to the human resources professional and this must be used to help the organization better understand what works. The second is that human resources must build a talent engine to identify, recruit, and hire the people needed by the organization to ensure a ready supply of talent.

Executive Compensation

There were quite a few breakout sessions at the 2007 Total Rewards Conference dealing with executive compensation and in particular the new proxy disclosure rules set by the federal Security and Exchange Commission (SEC). These rules apply to publicly traded companies, and Ira Kay, Ph.D.from Watson Wyatt Worldwide, discussed the rules as well as the future of executive compensation in detail. He objects to the idea that the current executive compensation model is broken and believes that executives must have an ownership stake in the company to represent shareholder interests effectively. He set out the following prognosis for executive compensation:

  • Proxy disclosure will improve
  • Companies will use a portfolio approach to long term incentives
  • Stock option usage will continue to decline due largely to accounting costs
  • Stock plan participation will decline with less availability to lower level employees
  • Executive stock ownership will continue to rise
  • Restricted stock usage will climb
  • Compensation committees will act even more independently
  • CEO pay will go up and down
  • CEO pay will remain controversial
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