R.News September 2009

As spring approaches we welcome you to the September edition of R.News. The past few months have been very exciting for Remesys as we launched R.Network, attended the Telstra awards as an AMP Innovation award finalist and continued to showcase our remuneration review software R.Review.

In this edition of R.News we: Share the details of our Melbourne R.Network launch; delve into the hot topic of the impending National Employment Standards with a look at the Right to Request Flexibility; introduce you to our latest software solution, R.Performance; bring you a case study from long-standing R.Review client Pitcher Partners; provide practical advice on reward and recognition programs; detail the latest developments in the area of Executive Termination Pay; and reveal the results of our non-financial rewards survey.

Telstra Business Awards 2009

As reported in the July edition of R.News Remesys was named as a Finalist in the 2009 New South Wales Telstra Business Awards. On 21 July the Remesys team attended the Telstra Awards dinner at the Westin Hotel in Sydney, where we encountered some very tough competition in the category of the AMP Innovation Award. Whilst Remesys did not win the award our innovative web-based salary review software R.Review made us stand out from the thousands of entries received, and it was truly an amazing honour and fantastic experience to be recognised by such a prestigious awards program.

Murray Fogarty of AMP presenting Remesys with the Finalist certificate. Left to right are Rebekah Alexander, Natalie Feller, Melinda Jarvey and Lara Kirschner.

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Non-Financial Rewards

In response to the challenging economic climate many organisations have focused on reining in their fixed cost expenditure in an attempt to maintain a cost neutral position. With this in mind, Remesys was eager to understand if these cost restrictions extended beyond the realm of fixed cost to include company benefit programs. We undertook a survey on non-financial rewards to assess the impact of the financial crisis on non-financial rewards in organisations. The findings are outlined below.

Work/Life Benefit Programs

In the area of leave entitlements, the Remesys survey revealed that 73% of surveyed organisations provide employees with paid leave in addition to the legislative requirement. 86% of these organisations offer extended leave in the form of community days, time away from the office to study or sit exams, as well as volunteer days.

Interestingly the survey results highlighted that only 14% of surveyed organisations that offer above the minimum leave entitlements specifically provide “additional annual leave”. This percentage may appear low at first glance, but is counteracted by the large percentage of organisations (64% of surveyed companies) that offer their employees, regardless of the employee’s level, the opportunity to purchase additional annual leave. Providing employees with the ability to purchase additional annual leave has certainly been a recent trend and supports the direction that most organisations are taking in their desire to provide employees with work-life balance, but at the same time address their need to reduce the cost of leave accruals sitting on their books.

Other survey results in the area of work-life balance show that 82% of surveyed companies offer some form of paid parental leave with 18% of surveyed companies offering unpaid parental leave in excess of 12 months.

In organisations that do offer paid parental leave the average offering is10 weeks for the primary caregiver. Additionally, 45% of organisations report that they offer some form of paid spouse leave, however, 71% of these programs are at the discretion of management. The number of weeks offered as paid spouse leave differs significantly not only from one company to another, but also within the same company due to management discretion.

Overall the survey results confirm a trend for organisations to commit to formalising their flexible work practices, with 73% of respondents confirming that they have developed and implemented a flexible work hours’ policy.

Employee Well-Being Programs

The survey results confirm that the well entrenched benefit of providing financial assistance to staff to undertake external study remains, with 100% of surveyed companies continuing to offer some level of financial assistance. 82% of all reported companies extend this benefit to include additional leave for the sole purpose of study, or to attend classes and/or exams. Similarly, commitment to offer Employee Assistance Programs continues, with 91% of surveyed companies maintaining this benefit to staff and their immediate family.

The survey also examined life and associated insurances. Surprisingly, as most company funded life insurance benefits sit within the company superannuation plan, it is interesting that the results of our survey show a much higher percentage of surveyed companies provide salary continuance insurance to staff than those that offer a life insurance benefit (e.g. death, permanent disability cover) with 85% and 42% respectively.

In recognition of the need to maintain productivity in these tough times and in an attempt to reduce the number and cost of sick days, 82% of surveyed companies reported that they offer flu vaccinations to staff. Conversely, and more likely due to the high costs associated with this benefit, the company funded medical benefit appears to be vanishing from a company’s benefit suite, with only 9% of surveyed companies reporting that they continue to offer this benefit to staff.

In other areas of health and well being, 9% of surveyed companies offer free gym membership and 64% provide access to a company social club.

Perhaps the most surprising of all findings relates to the number of companies that continue to offer superannuation above the legislative requirement. With so many legislative changes in the area of superannuation and extensive time and company resources devoted to ensuring that organisations are equipped to comply with these changes, it is interesting to note that 36% of surveyed organisations report that they continue to pay superannuation in excess of the legislative requirement.

With staff engagement, a high profile HR function in most organisations, it is no surprise that our survey reveals that 64% of surveyed organisations offer their staff some form of discount on company products. The results also show that this is an area that many surveyed companies would like to review with the intention of improving.

What’s next?

None of the organisations reported that they will look at reducing the benefits offered under their benefit suite. Rather 27% of surveyed organisations reported that they intend to increase the number of benefits that they offer with 50% focusing on the area of work-life balance, and the remaining 50% on increasing the level of a benefit which they already provide.

Summary

The Remesys results reveal that the global financial crisis has not necessarily impacted non-financial reward offerings in Australian companies with the same severity as it has fixed remuneration costs. Rather, our findings suggest that there has been an increase in investment in this area. This is most likely as a result of the high profile that work-life initiatives have played in the political and media arenas. Companies recognise that to be able to effectively attract and retain staff, particularly as the economic climate recovers, that it is no longer enough to pay people a competitive fixed salary but rather that employees are looking for additional benefits, flexible work practices, choice, development opportunities, recognition, formal feedback and performance pay.

If you are interested in finding out more about what organisations are doing in the area of non-financial reward, and have not already registered to join R.Network, Remesys’ networking group, please click here. We also invite you join our conversation on Twitter.
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National Employment Standards - Right to Request Flexibility

Increasingly, businesses are recognising that many of their employees struggle to balance their work commitments with other obligations outside of the workplace. There are, however, some relatively simple measures that employers can take to provide some assistance to their employees. Some of the more common initiatives include:

• Part-time hours
• Job sharing
• Flexible start and finish times
• Working remotely / telecommuting
• Compressed working weeks

Flexible work practices can be a valuable tool for attracting and retaining talent and whilst many organisations have designed flexible work policies that incorporate the measures listed above, the reality is that these are not always fully understood and executed by line managers. Effective January 1^st 2010, when the National Employment Standards of the Rudd Government’s Fair Work Act are ushered in, the provision of flexible work practices will be formalised for a significant section of Australian workers.

One of these Standards is the Right to Request Flexibility, a provision which allows employees to request a change in working arrangements if they meet the conditions summarised below:

• The person making the request is a parent of or carer for a child/children under school age, or aged under 18 with a disability
• The employee has at least 12 months service with the employer to whom they submit the request
• If employed on a casual basis, the individual must be a long-term casual with the expectation of continued employment
• The person making the request makes a written submission that includes the reason they are seeking changes and the nature of the changes sought

Following introduction of the Standards, employers will be obliged to consider all requests and respond in writing within 21 days, advising the employee of the decision. Organisations may decline requests on the basis of reasonable business grounds, however they will be required to justify why an application has been declined. Employers should bear in mind that non-compliance with the Standard may attract a penalty of up to $6,600.

The Right to Request employment standard has been thrust into the spotlight recently due to a survey undertaken and report published by Aequus Partners and CCH. The survey found that more than 80% of respondents (who were primarily employed in the areas of HR, diversity and law) rated their knowledge of the Right to Request Standard as either non-existent or low. The subsequent report recommended that Australian organisations act immediately to ensure they understand and are prepared for the introduction of the Right to Request Standard, warning that if no action is taken now, companies will most certainly find themselves non-compliant when the Act is introduced.

Is your organisation prepared for the introduction of the ten National Employment Standards? What measures are you taking to ensure your HR team and managers are fully versed in their responsibilities in relation to the Right to Request Flexibility? Please join our conversation on Twitter.

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Pitcher Partners

Pitcher Partners reflects on three years using R.Review, Remesys’ innovative online remuneration review software, to streamline the annual salary and incentive review process.

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R.Network Melbourne Launch

R.Network, the remuneration and benefits networking group facilitated by Remesys, was launched in Melbourne on 3 September 2009, building on the success of the Sydney launch in June. The event format began with informal networking, followed by an official welcome during which Remesys unveiled the objectives of R.Network.

The focal point of the Melbourne launch session was a series of presentations from highly regarded remuneration and HR leaders who provided insight into how the current economic climate has impacted, and is still impacting, remuneration decisions in their organisations. The line up featured Rachel Wolfe, Group HR Manager Remuneration & HR Support, MMG Minerals and Metals Group; Colin Pritchard, Manager - Performance and Reward, Ericsson Australia; and Elizabeth Nunez, Director - Human Resources, Pitcher Partners Advisors Pty Ltd.

The primary objective of R.Network is to provide a forum for remuneration and benefits specialists to share ideas, seek solutions and discuss topical issues in an open and collaborative environment.

Remesys will continue to hold R.Network events in both Sydney and Melbourne on a quarterly basis and we encourage members to utilise our Linkedin group to share ideas or pose questions.

If you are interested in finding out more about R.Network, would like to register your interest to attend future R.Network events, or are not based in either Sydney or Melbourne but would still like to be part of an Australian networking group for remuneration professionals, please register your interest online.

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Reward and Recognition Programs

In the previous edition of R.News we provided insight on how to develop a short term incentive plan. In this edition we focus on developing a recognition program. Both these remuneration tools are vital to an efficient remuneration framework and both have their own purposes and benefits.

Recognition Programs acknowledge and recognise employee accomplishments that contribute to organisational success and reward employees who have gone beyond and performed in an exceptional manner. These programs can be either formal or informal. Recognition programs are a highly effective tool in improving the working environment and aligning employee and organisational goals.

Retaining your high performers requires a careful balance between:

1. Offering competitive salaries to attract and retain good people;

2. Designing effective variable reward programs that promote a performance based culture;

3. Offering a wide choice of employee benefit programs that meet individual needs; and

4. Rewarding and recognising those employees who contribute to the organisation's success.

There is no one size fits all solution when it comes to designing an effective recognition and reward program. Each plan should be designed specifically to meet your business requirements and employee needs. However, if you are considering reviewing your current recognition program or implementing a new program we suggest that you consider on the following:

• Does the reward program encourage and reward desired behaviours? Does it directly link awards to results?
• Have you effectively communicated the plan so all employees are aware of the program and managers have incorporated it into their day to day management?
• Do you apply a consistent approach?
• Does it reward both individuals and teams for outstanding achievement?
• Are employees provided with the opportunity to provide feedback to colleagues for outstanding performance?
• Is the program fair and consistent in its application, is it open to everyone, and does it provide all employees with the same opportunity to be rewarded?
• Does it enhance and promote collaboration in the workplace?
• Is your reward program reward flexible in its ability to reward employees in a timely manner?
• Is there a wide choice of rewards so that you can match the reward to what motivates each employee?
• Does the scope of the awards differ to that you can match the reward to the achievement?
• Does the level of reward appropriately reflect the effort it took to obtain it?
• Is the program flexible in its ability to be changed as and when organisation, division or department objectives change?

Once you have designed your recognition program it is worth considering technology to replace the traditional paper based approach. Implementing a tailored web-based solution can streamline your program, reduce administration, improve communication and increase uptake of the program. Some additional benefits of introducing a web-based system to manage your recognition program(s) include:

• Allowing nominations to be made electronically through a web application;
• Nominations can easily be tracked and approved or rejected;
• All nominations and awards are stored in a centralised database;
• Recognition Certificates can easily be printed directly from the system; and
• Reports can be downloaded at any time including: details of award nominees; number of nominated awards approved and rejected; type of award; and cost of award including FBT.

With the current pressure on annual salary increases and bonus payments it is timely to consider implementing or reviewing a recognition program. Please don’t hesitate to give one of our consultants a call if you require any assistance or have any questions.

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Introducing R.Performance

Remesys is pleased to announce that our performance and development management software, R.Performance, is available now.

A transparent performance and development framework provides the foundation for a strong performance culture where employees are encouraged to achieve their set objectives, develop their skills and emerge as high performers. It ensures that the organisation as a whole meets its goals and performs well and is therefore critical to an organisation’s success.

Performance reviews have traditionally been paper based. When performance and development is managed in this way it is very difficult to track participation and compliance, and employees are not empowered to take ownership of their own performance outcomes and development needs. The performance process in many organisations can be haphazard, inconsistent, cumbersome, time consuming, poorly administered and very difficult to report on.

Technology can address these concerns by supporting your organisation’s performance framework and implementing checks and balances along the way. An effective performance management system will allow you to establish workflow, implement deadlines for particular stages in the review process, automate reminders and run comprehensive reports.

R.Performance is a web based performance management system intended to manage the design, assessment, approval and storage of performance reviews. Remesys will tailor R.Performance to suit your organisation’s specific rules and processes. R.Performance is a highly flexible solution and can be implemented as a tool for managing a number of different processes including, but not limited to:

• Annual performance and development reviews
• Semi-annual performance and development reviews
• Reviews for specific groups of employees
• Probation reviews

R.Performance provides employees, managers and human resources with user-based access to a centralised and secure web-based application. R.Performance allows employees, managers, peer reviewers and human resources to establish, assess, rate and monitor performance for a specified period.

The benefits of R.Performance include:

• A focus on pro-active performance planning rather than reactive assessment of what has occurred in the past
• Increased understanding of the critical role performance and development plays in aligning individuals with organisational goals
• Increased ownership of performance and development plans by employees
• Transparency of the process and accountability for outcomes
• Increased meaning around performance through feedback collected by managers and peers
• A streamlined workflow that is easily monitored
• Reduction or elimination of the paper trail
• Ease of administration
• Consistent measurement
• Real-time reporting that allows you to look at an individual employee, a group of employees or the entire organisation

If you want to learn more about the benefits R.Performance can bring to your organisation’s performance management process, please contact Lara Kirschner on 0411 380 370.

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Executive Remuneration: Termination Benefits

In our July 2009 newsletter we included an article on the Australian Government’s proposal to reign in executive termination pay with draft legislation released in May in the form of the Corporations Amendment (improving accountability on Termination Payments) Bill 2009 and subsequent reiteration of the Regulations that accompanied that Bill in June.

On ^{3 September} 2009, the Government released the third and final version of the regulations and explanatory material relating to the proposed reforms. In essence, the latest release maintains the key changes proposed in the May Exposure Draft of the Bill but does contain some important variations, these relate to how organisations define base salary in the case of individuals for whom the maximum termination payments are applicable, what is deemed a benefit and therefore included in the termination pay cap, as well as those benefits that sit outside of the calculation.

The Government's proposed reforms to laws regulating executive termination benefits have been delayed in the Senate. This means the earliest the laws can be passed is when Parliament resumes on 17 October 2009.

One of the key requirements for organisations, brought out in the May draft, is that termination payments for directors and some senior executives that equate to more than one year’s base salary, or the average of three year’s base salary for those with at least three year’s service, be subject to shareholder approval. This measure has been maintained in the government’s latest iteration.

Unlike the Bill which provides a broad definition of what constitutes a benefit, the recent Regulations now provide a specific outline of the benefits that are included as part of the one year’s base salary cap.

What’s in?

• Payments from any kind of pension (other than from a superannuation fund or superannuation annuity (including both Australian and foreign funds);

• Amounts paid as a voluntary out of court settlement in connection with the termination of employment (not including other types of actions such as those relating to unfair dismissal, harassment or discrimination); and

• Payments made as part of a restrictive covenant, restraint of trade or non-compete clause.

What’s out?

• Payments from a defined benefits superannuation scheme which already exists;

• “Genuine” accrued benefits that are payable under law (e.g. annual leave and/or long service leave), or required by law of a foreign country;

• Reasonable payments made in accordance with a company policy that applies to all employees as a result of a genuine redundancy;

• Payments from a prescribed superannuation fund due to death or incapacity; and

• A deferred bonus (such as cash or securities earned, allocated or accrued before termination but not paid or provided at the time they are earned, allocated or accrued).

Although the Regulations specifically excludes deferred bonus, shareholder approval is required for the accelerated or automatic vesting of share-based payments, including deferred bonuses, if they exceed the statutory limit (other than where the benefit is attributable to death or incapacity).

The new laws will apply to retirements from a “managerial or executive office” under a new agreement entered into or extended after the commencement of the new laws. More significant for organisations, however, is that the law will trigger for current agreements in the case where a variation is made. A “change” to remuneration is considered a “variation of a condition”.

Update

The Government's proposed reforms to laws regulating executive termination benefits have been delayed in the Senate, meaning the earliest the laws can be passed is when Parliament resumes on 17 October 2009.

We would be interested to hear your thoughts on how your organisation will address these revised requirements, including any changes you intend to make to the pay mix of your executive team. Please join the conversation on Twitter.

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Remesys Recruitment

With the remuneration market outlook experiencing steady improvement over the last few months, the timing is right to remind you about Remesys Recruitment.

We recognise that finding the best remuneration and reward specialists can be challenging and time consuming. Our specialist knowledge and hands-on experience in remuneration and benefits and our established network of remuneration and reward professionals enables us to provide quality candidates with the appropriate skills to meet your specific requirements, irrespective of your company size or structure.

Through Remesys Recruitment, we are able to quickly and professionally react to your recruitment needs, from permanent vacancies in your remuneration team to placing remuneration contractors for specific fixed term projects or short term requirements.

We currently have a number of highly skilled and experienced remuneration specialists available in both Sydney and Melbourne.

Please don’t hesitate to contact Remesys if you are recruiting for either permanent or contract remuneration and reward roles. For further information please email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call 0411 380 370.

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Remesys Training

Remesys offer a range of practical remuneration and benefits training programs. The programs provide an environment for participants to learn and share ideas through practical examples, hands-on exercises and group discussion. Register your interest now as spaces are limited for the following courses:

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