H E A LT H W E A LT H CAREER

THE FUTURE
OF HR
HR 2020:
W H AT T H E F U T U R E H O L D S

DRIVEN
B Y D ATA

E M PLOY E E VA LU E
PROPOSITION
W H AT S E T S YO U R C O M PA N Y A PA R T ?

T O TA L R E W A R D S
2020

TO P WATC H O U T ‘ FO U R S ’
O N T H E H O R I ZO N
D R I V I N G D I G I TA L E N G A G E M E N T
CONTENTS
1
HR 2020: What the
Future Holds HR 2020:
W H AT T H E F U T U R E H O L D S
2
Driven by Data
Four major factors are impacting, TECHNOLOGY
3 and will continue to impact,
organizations and shaping the
Technology enables
employees at all levels
Employee Value future of work.
to work virtually while easily
Proposition: What Sets
collaborating and sharing ideas not
Your Company Apart?
G LO B A L I Z AT I O N only with each other, but also with
outsiders. Continued advancements
It is clear that the world
4 will become increasingly
in globalization and technology
increasingly turn work into a
connected over the next 10
Total Rewards 2020 24/7 reality which blurs the lines
to 20 years as the flow of products,
between work- and non-work lives
services, talent, and knowledge
and increases the pressures and
5 continues apace across developed
stress on employees sometimes with
and developing countries. To
Top Watch Out “Fours” unfortunate consequences for their
compete and survive, a growing
on the Horizon physical and emotional well-being.
number of companies will intensify
their efforts to explore new market Implications for HR: In a world of
opportunities and develop business increasingly advanced technologies,
capabilities to take advantage of where the nature of work changes
these markets, while continuing to with great frequency, traditional
grow in more established venues. approaches to filling jobs internally
will give way to more systematic
Implications for HR: Companies will
and decentralized approaches to
increasingly depend on building
matching talent to work and work
organizational and employee agility
to talent. As work is redefined and
rather than relying on periodic
talent flows increase, new, primarily
change initiatives. They will find it
online approaches to employee
necessary to develop the capacity
development will become necessary
to attract, develop, and retain top-
to ensure that requisite hard and
notch talent in emerging markets.
soft skills are kept current.

From the Center for Advanced Human Resource Studies at Cornell University, February 2015.

2
 CONSUMERIZATION number of one-size-fits-all policies members of a given generation are
and practices in their arsenals in the same, employers will see key
Greater access to
favor of greater overall flexibility differences across generations
information, combined
and, in particular, the capacity to in terms of working styles and
with the spread of social media,
be more responsive to employees’ approaches to collaboration,
encourages the development of
individual needs and wants. Leaders communication, and decision-
a consumer mentality in which
and managers will find it necessary making, as well as expectations
customers and clients feel
to improve their understanding regarding feedback, rewards, and
empowered to shape their own
of employees as individuals by the pace of promotions.
experiences while companies are
developing deeper relationships
forced to adapt by customizing their Implications for HR: Nearly all
with them and engaging them in
products, services, and solutions. traditional HR practices are coming
genuine dialogue around work, goals,
These experiences are increasingly under scrutiny as companies find
and processes, as well as more
being replicated inside organizations it particularly difficult to motivate
personal matters.
as employees — particularly young people and retain this talent
younger employees — come to see long enough to recoup investments
“consumerization” and customization in their development. In broad
G E N E R AT I O N A L
as guiding principles on which terms, many, if not most, gen Ys
DIFFERENCES feel entitled to jobs, projects, and
to base the employer–employee
relationship. Most organizations experiences that are tailored in a
currently have four generations way that they (as consumers) find
Implications for HR: In this new
in their workforce: traditionalists/ personally meaningful. As leaders
model, employees expect a greater
greatest generation, baby boomers, and managers feel the pressure
say in shaping the content of their
generation X, and generation Y/ to individualize everything and to
assignments, goals, and even work
millennials — with some companies coach and mentor (and even to be
environments when it comes to
starting to see a fifth (generation reverse mentored), organizations
issues such as where and when
Z — those born in 1997 and later). will find that some leaders will and
to work. Companies will find it
Although there are many similarities can adapt whereas others will not
necessary to cut back on the
across generations and not all and cannot.

IMAGINE ...
Instead of HR “You have to ...” HR delivers “I needed this”
delivering “Do this now ...” experiences that “This is easier”
messages that associates want
“You must ... or ...” to use “This makes my
begin with:
life better”

3
 E X T E R N A L FA C T O R S I N F L U E N C I N G T O TA L R E W A R D S
MULTIPLE GENERATIONS: MANAGING DIFFERENT SEGMENTS REQUIRES SENSITIVITY TO VARYING
GENERATIONAL NEEDS

PERCENTAGE
OF WORKFORCE
10% 4 4% 34% 12%
(2014)
TR ADITIONALISTS B A BY B O O M E R S GEN X M I LLE N I A L S
(Born < 1946) (Born 1946-1963) (Born 1964-1979) (Born 1980-1995)

Company loyalty: Live to work: Work to live: Work my way:

“same company “office face time” “work should not “own careers,
forever” define life” meaningful work”

“The Conference Board’s 2014 survey of global CEO challenges

ranked human capital as the number one challenge,” says
Dave Ulrich, the Rensis Likert Professor at the University of
Michigan’s Ross School of Business.

“We’ve found that the leadership profile of successful CEOs

most closely matches that of effective CHROs,” he adds,
referring to a 2014 analysis he undertook in partnership
with Korn Ferry that was published last year in the Harvard
Business Review. This suggests that future CEOs may not only
place greater importance on HR —- in a growing number of
companies, they themselves will be former CHROs.

4
DRIVEN
B Y D ATA
By 2020, HR will need to be
adept at providing the rest of the
organization with data that does
more than simply explain what’s
already happened — it must tell its
leaders who within the organization
may be thinking of leaving, who’s
joining and why, and why one team is
experiencing performance failures
while another is thriving, says Jean
Martin, talent solutions architect at
consulting firm CEB.
As work has become more horizontal
and collaborative, says Martin, a
surfeit of data and technology
provides a new level of insight for
obtaining more precise answers.
Today, she says, companies can
report on their turnover rates, but
tomorrow, they may be able to
foresee that turnover and design
programs accordingly, thanks to
the level of insight offered by
predictive analytics.
C O N D U C T Q U A L I TAT I V E A N D Q U A N T I TAT I V E A N A LY S I S
Insights that come from
juxtaposing “say” and “do”
are so strong, and so often at
variance with what comes from
either approach alone, that
the best way to ensure insight
and successful change — for
the important issues — is to
work with both.
Companies such as Google use
“meeting-cancellation rates” as
an indicator of engagement and
potential turnover challenges, says
Martin. HR will become a kind of
analytics guide, producing “the right
answers at the right times” to avoid
negative HR outcomes.
“Wearables” will also play an
important role; devices such as
smart identification badges can
predict performance. Hitachi, whose
smart badges track employee
movement in the workplace,
revealed that engineers who move
around a lot and eat lunch with large
groups of co-workers are more
productive than their more solitary
counterparts.
There’s some bad news, however:
Many current HR professionals won’t
have what it takes to measure up
in this new world. CEB’s research
CROWD-SOURCING
Data about what employees and
employers say about performance
management as caused by:
predicts that about half the
people working in HR today won’t
be working in the profession five
years from now. The CHRO role is a
demanding one that requires deep
domain in HR but also a willingness to
innovate, to push the envelope, and
not all director-level HR people are
ready for that.
What sorts of skills will be
necessary? The ability to
understand analytics and draw
prescriptive guidance from data
will be vital. HR must also be seen
as a credible source — in other
words, CHROs who are confident
in their ability to deliver what the
business needs should insist on the
same level of support and respect
granted to other C-suite members,
particularly the CFO.
Excerpted from Human Resource Executive
Online, May 2015
D ATA
Data about how performance
management influences employer
and employee actions as captured
by actions such as pay increase/
promotion linkages to ratings
5
E M PLOY E E VA LU E
PROPOSITION
W H AT S E T S YO U R
C O M PA N Y A PA R T ?

The value of working needs to go beyond the

traditional silos of HR programs. The glue that
binds colleagues together isn’t simply the sum
of the pay and benefits program.

Total rewards is a part of your broader employee

value proposition (EVP), which includes long-term
career opportunities, workplace culture, and
line of sight to the impact of jobs. The EVP has to
connect to the meaningfulness — the purpose —
of the work of your next generation of talent
and leaders.

6
W E N E E D T O R E - I M A G I N E W H AT W E D O
Love isn’t an abstract emotion. It’s the
most acute and specific emotion we feel.
It’s about a specific relationship built on HOW DO WE WI TH A
unique experiences between two people. FALL IN LOVE JOB?
WE ENVISION AND ARE
INSPIRED BY FUTURE
SHARED VALUES POSSIBILITIES WE CAN BE OURSELVES AND

What if we re-imagined the programs of COMPLEMENTARY EMOTIONALLY ENGAGED

PLAY TO OUR STRENGTHS

PASSION MY BASIC NEEDS

HR into complete, distinct, and personal STRENGHTS IN OUR PRESENT WORK
ARE MET
BRIGHT FUTURE
set of experiences built on a common WORKING FROM WE FEEL SAFE WE’RE IMMERSED IN

compelling story — experiences that

HOW DO WE THE HEART AND SECURE NEW EXPERIENCES

WE FEEL

foster passion for the purpose of work, SUSTAIN LOVE RESONATING VALUE

experiences that translate into delighted

EXCITEMENT OVER A
customers and an unwavering love of OF THE NEW
DOCUMENT CAREER ?
the brand? KEEP THE SPARK ALIVE EXPERIENCES

ACTIVELY ENCOURAGE A
MAKE MEMORIES FOCUS ON STRENGTHS

What if we used design-thinking, mobile, KEEP THE PROMISE OF

THE FUTURE ALIVE
NUTURE GROWTH

SUPPORT NEW
social, and big data techniques to help HEADINGS ENABLE AND ENCOURAGE AN
EMPLOYEE TO HAVE MULTIPLE
employers craft a story and build a set CAREERS AT YOUR COMPANY
ENCOURAGE NEW

of signature employee experiences — EXPERIENCES

a new and distinct employment value CULTIVATE

proposition? STRENGTHS

ENGAGEMENT DRIVES A BETTER BOTTOM LINE

Organizations with high
engagement levels experience
positive returns on talent
outcomes, customer
satisfaction, and the
bottom line.
• Employees who work 57% harder
and are 9 time less likely to leave.
• Average three-year revenue
growth of 20.1% as compared to
industry average of 8.9%.
• 3x higher EBITA growth as
compared to industry average.
• When employees clearly
understand what is expected of
them, individual performance
increases by 36%.
• In a culture where communication
between managers and employees
and between peers is frequent and
effective, individual performance
increases by 34%.
• When managers emphasize
the negative in their employee
reviews, individual performance
decreases
by 27%.
• When managers provide fair,
accurate, job relevant feedback
on a regular basis, individual
performance increases by 39%.
Source: The Conference Board

• When managers emphasize the

• Higher stock price over a periods
positive in their employee reviews,
of 3 years as compared to a
individual performance increases
sample of 500 leading companies
by 36%.
in a variety of industries.

7
 E V P A N D T O TA L R E W A R D S
I N F L U E N C E S E N G A G E M E N T,
TA L E N T, A N D B U S I N E S S EVP
Employee
The numbers show ... Engagement
Companies in the top quartile for engaged employees,
compared with the bottom quartile, had:
• 22% higher profitability. Talent
Outcomes
• 10% higher customer ratings.
Business
• 28% less theft. Per formance
• 48% fewer safety incidents.
Source: Gallup Poll/NY Times article

DRIVERS R E S U LT S OFFERS MEASURES

• Personal/relevance • Quality. • Material rewards. • Discretionary effort.
of EVP. • Productivity. • Intangible rewards. • Attraction.
• Communication. • Sales growth. • Career value. • Internal moves.
• Recognition. • Safety. • Company reputation. • Promotions.
• Empowerment. • Profit. • Turnover.
• Teamwork. • Absenteeism.
• Leadership.

HOW DOES
MERCER
DO IT?
Take a comprehensive
look at how employees
experience your EVP

ENVISION
Career
Possibilities
BUILD
Your Wealth
U N D E R S TA N D
Your Rewards
ALIGN
Purpose and
Values

FIND MANAGE
LEAD
Community Your Health
Your Team

8
T O TA L R E W A R D S
2020

There are many external factors influencing the

total rewards strategies of the future:

Aging Population Multiple Generations Health Care Retirement Compensation

We are living longer, Managing different Current trends Traditional pension Income growth
which will create segments requires in the US are plans in the US are divergence in
greater pressure sensitivity to varying unsustainable. from a bygone era. the US is causing
on retirement and generational needs. social unrest and
social programs. minimum-wage
pressure.

Unionization Diversity Globalization Technology Activist Investors

The new bargaining The workforce of There will be a Work environments Continued pressure
agenda in the US the future will be greater need for will take on a new on corporate results
calls for a living less homogenous. global workforce flexibility. requires rethinking
wage and corporate management. total rewards.
wealth sharing.

How organizations will respond is a topic for much

discussion. Through extensive research, we at Mercer
have compiled our thoughts on what total rewards
will look like in the next five years.

9
H O W W I L L O R G A N I Z AT I O N S R E S P O N D ?

THOUGHTFUL RESPONSES: PERSONALIZED EVP FOR CORE WORKERS

Y ESTERDAY 2015 2020

S TA N D A R D I Z E INDIVIDUALIZE

How to retire Confusion about employment Core employees viewed as crucial

relationship for success
Paternalistic Transactional employment Individual accountability for
relationship benefits, careers, and workplace
One-size-fits-all Limited rewards flexibility Personalized rewards reflecting
global cultures and multi-
generations

P R O G R E S S I V E E M P LOY E E R E L AT I O N S

Y ESTERDAY 2015 2020

A U T H O R I TAT I V E PA R T I C I PAT O R Y

Employees as interchangeable Employees as necessary evil Employees as volunteers

Formal dress code Business casual Anything goes
Rigid attendance policies Limited attendance flexibility Universal paid time off
Pay is secret Apps provide an opportunity for pay Pay arrangements are open similar
comparisons to proxy statement disclosures

Work is performed at the Broad-band allows work to be con- Work and play over 24/7: employee
employer site ducted outside of the employer site determines place and time
Union prominent for major employers Unions on the continued decline Unions support lack of living wages

C O M P E N S AT I O N FO R T H E N E W W O R L D O R D E R

Y ESTERDAY 2015 2020

I N T E R N A L LY B A S E D E X T E R N A L LY B A S E D

Limited employee risk Employees desire fixed pay Employees as business partners
Base pay linked to internal equity (job Market pay becomes common Market pay within global levels
evaluation) practice
Pay positioning is at market Most organizations target pay Fixed pay is at P25-P50 with P50+
between P25-P75 coming from variable cash/equity
compensation
Variable pay is limited to executives Most organizations offer variable pay Significant variable pay opportunity
and sales is the norm

10
D O - I T-YO U R S E L F B E N E F I T S
Y ESTERDAY
C O M PA N Y R I S K
Paternalistic
Organization provided health care,
retirement, etc.
Defined benefit pension plans
Health care for employee and
dependents
A C T I V E TA L E N T M A N A G E M E N T
Y ESTERDAY
PA S S I V E TA L E N T M A N A G E M E N T
Unlimited supply of talent
New hire training
Hierarchical career path
Annual performance management
process
Leadership reflects home country
D I V E R S I T Y A N D PAY EQ U I T Y A R E R E A LI T I E S
Y ESTERDAY
GOOD IDEA
Diversity goals in most organizations
Employers don’t know how to
develop diverse talent
Pay equity is afterthought
2015
Organization role continues
to decline
Cost shifting and abandonment
of employee benefits
Defined contribution
Constant cost shifting
2015
A G G R E S S I V E TA L E N T M A N A G E M E N T
Labor markets tightening
Buy experienced talent
Career progression being defined
Healthy experimentation
Global mobility is encouraged
2015
Organizations struggle to meet goals
Experimentation is rampant
Pay inequality is a leadership concern Pay fairness is assured through
analytics
2020
EMPLOYEE RISK
Individual accountability through
self-service
Organizations provide group
purchasing power without being
the sponsor
401(k) plans with and without
employer match
Opportunity to participate in
exchanges
2020
Constant struggle to retain skills and
millennials
Continuous training and develop-
ment to support EVP
Well-defined lattice career growth
Frequent performance assessments
with annual ratings
Leadership is multicultural
2020
M A N D AT O R Y P R A C T I C E S
Employers match the multiple
cultures that they serve
Analytics drives good decision-
making
11
TO P WATC H O U T ‘ FO U R S ’
O N T H E H O R I ZO N
D R I V I N G D I G I TA L E N G A G E M E N T

1
WEARABLE
COMPUTING

2
INTERNET OF THINGS

3
CONSUMERISM OF
USER EXPERIENCE

4
AUGMENTED
REALITY

12
1 WEARABLE COMPUTING

Where wearable tech is potentially

heading:
• Provide employees information
they need the moment they need it.
• Provide temperature readings of an
employee’s environment.
• Enable employees with digital
Joe Smi th
X YZ Cor p

E mployee ID
123 456

information — seamlessly.

2 INTERNET OF THINGS

JOB
WORKFORCE PLANNING INTERNET OF THINGS DEFINITION

ENTERPRISE THIRD-PARTY MANAGER ASSETS PEOPLE,

APPS, SERVICES SOCIAL TRADITIONAL
SERVICES MARKET SOURCE
HR PROCESSES

A N A LY T I C S , CONNECTED
B I G D ATA A P P L I C AT I O N S C LO U D/C R OW D
SOURCING
HR PROCESSES

13
3 THE AGE OF CONSUMERISM

Consumers are using multi-function

devices for work purposes.

Nearly 60% of consumers say it

improves their productivity to
take conference calls and use
collaborations tools from their
personal devices.
Source: Accenture

4 AUGMENTED REALITY

Job-seekers point their phone at a

building/office and immediately
see what positions are available,
X Y Z Corp. compensations ranges, and benefit
1700 Main Street
( 888 ) 555 - 123 4
packages.
www. x y zcor p.com

Industr y Pharmaceuticals Expatriates search for places of

For tune Rank 125
interest in their new home country.
2013 Revenue $11.5 Billion

Posi t ions Dir. Marketing

Available Details
Asst. Dir. Human
Resources
Details
Senior Mgr. R& D
Details

Fill out an application?

14
@ @

@ @ @

S O, W H AT N O W ? T H I N K A B O U T . . .
The impact that How machine data The impact of end How mobility, Where technology
wearables can have can intersect and user experience imaging, and is heading and how
on the workforce, merge with people and the merging of 3D content automation can
by simply monitoring data to make better personal life and management make your company
employee’s compensation work life, helping can impact better and faster.
interactions. decisions impacting employees to make your workforce,
decisions. informed benefits especially
decisions. expatriates.

@ @

@ @ @

15
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Mercer office or visit our website at:
www.mercer.com

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