Reward reviewed - PwC · The perfect reward package p14 / Bonding better with your talent p16 /...

Reward reviewed

www.pwc.be/hrservices – www.iswlimits.be

The Reward Barometer is an annual survey on how financial and non-financial rewards influence employee motivation, brought to you by PwC and ISW Limits

2014 Belgian Reward BarometerThe annual barometer p2/ Job ties: losing grip? p4/ What drives us p6/ What they really value p8 / The payslip formula p9 / Generations united p10 / The shifting generation gap p11 / Drivers that cross generations p12 / The perfect reward package p14 / Bonding better with your talent p16 / We’re here to listen p20

ii Reward reviewed – 2014 Belgian Reward Barometer

PrefaceWhat keeps us going?

Welcome to the Reward Barometer, the annual survey on how financial and non-financial rewards influence employee motivation. A joint endeavour by PwC and ISW Limits, the Barometer asks employees how satisfied they are with their rewards, both financial and non-financial, and how motivated they are by their jobs and their employers.

Why does this matter? It matters because today’s market for talent is so competitive. If business managers understand what motivates people to choose a job, they stand a better chance of attracting the best. If they know what will encourage them to stay, they stand a better chance of holding on to them and improving their overall engagement.

Understanding these drivers is especially relevant in Belgium. High taxes and labour costs can weigh heavily on competitiveness. The Belgian government will take further measures to control tax and labour costs, but without employee motivation, organisations cannot compete effectively. Therefore, Belgian employers need to be innovative in how they attract, motivate and retain talent with the limited budgets available.

Our survey shows that employees value both financial and non-financial rewards. Different aspects of each have an impact on motivation, both in terms of job commitment and of organisational commitment. Money is, understandably, a key element of the package. Yet the most important driver for job commitment is the job itself: personal development, variety, skill utilisation and how meaningful it feels. For organisational commitment, the driver with the most impact is belief in the organisational policy: the values, the work organisation, information, staff attraction and retention, and participation.

Reward reviewed – 2014 Belgian Reward Barometer 1

This year’s survey also looks specifically at whether generations differ in their relationships with work. We look at the workforce in three distinct age groups. There is the youngest generation the under-35s, the so-called ‘Millennials’; ‘Generation X’, those who are mid-careers and aged between 35 and 50; finally the ‘Baby Boomer’ generation of 50 and above.

Although we found a number of differences between the generations, what is most striking are the similarities, in spite of the stereotypes about their inability to find common ground.

While money is, understandably, a key element of the package, the single most important driver for job commitment is the job itself: personal development, variety, skill utilisation, and how meaningful it feels.

Based on the sample of respondents, our Reward Barometer provides valuable insights into what employees really think of their jobs, their employers and their reward packages. It shows you where reward policy helps, and where it could undermine respondents their motivation. However, if companies want to understand their own specific needs, we strongly advise they should commission their own dedicated survey.

We can help you. We can work with you to discover what you would like to achieve in the areas covered by this survey. From recruitment to leadership support, from company cars to pension plans, from reward packages to flexitime or even entire employee assistance programmes, we can design tailor-made solutions for your business. Our expertise will let you find the reward policies, organisation and communication that you need to succeed.

Nicolas de Limbourg Partner HR Services, PwC Belgium

Dirk Antonissen CEO, ISW Limits

2 Reward reviewed – 2014 Belgian Reward Barometer

Chapter 1

The annual barometer

What do your employees really feel about their jobs? How committed are they to their work and their company? What would really improve their drive and productivity? What would provoke them to think about moving to another employer?

The answers to these questions lie at the core of the 2014 Reward Barometer. The results reveal a complex web of factors affecting the way respondents relate to their work and their employers. Job content and organisational policy remain the two most important drivers of job commitment. However, they also show an entrenched gloominess about prospects as the global economic crisis grinds on.

Employee sentiment remains relatively stable, as many of the reward drivers remain the same since 2013. Yet in certain key areas, a year seems to be enough to spur a surge in discontent, notably on whether salaries fairly reflect the employees’ actual work and effort.

In key areas, a year seems to have been enough to spur a surge in discontent, notably on whether salaries fairly reflect the employees’ actual work and effort.


2014 Reward Barometer: facts and figures

© 2014 PwC. and ISW Limits


Job ties: losing grip? Company ties: weaker than you think!

What do you think your employees would be ready to do for you? You might believe that your team would run through a wall, but our answers on job and organisational commitment show otherwise.

Glass: half full or empty?

Approximately 50% of the respondents show a high job commitment and 50% also show a high organisational commitment. However, employers may well be looking for employees that score high in both. The study reveals that only 36% describe themselves as highly committed for both job and organisational commitment. This compares to 38% who describe themselves as having a moderate commitment. This is remarkably stable; last year’s results showed 39% with high job and organisational commitment, and 35% with moderate commitment.

Drilling deeper into the results, 12% say they have a low to moderate job but high organisation commitment (14% in 2013). It could be that this group of employees is sitting in a ‘golden cage’, staying simply for the rewards. Meanwhile 13% describe the opposite, with a high job but low to moderate organisation commitment (up from 12% in 2013). Employees who are highly motivated but prepared to consider leaving, are a retention risk for employers.

Reducing unwanted turnover and re-energising demotivated employees can make the difference, reducing costs and offering a competitive edge in finding – and retaining – talent.

36%describe themselves as highly committed for both job and organisational commitment.


Priority chart Organisational commitment

Priority chart Job commitment


What drives us Money satisfies, but job content drives and organisational policy binds

Despite the obvious lure of money, job and organisational drivers show that other factors play important roles.

As with 2013, when it comes to job commitment, the two leading drivers are content, followed by organisational policy. The high ranking for job content suggests that employees are motivated by real challenges. Within the job content bracket, employees highlight issues such as personal development, variation, skill utilisation, autonomy and meaningfulness.

Within organisational policy, belief in values, trust in the policy of the organisation, work organisation, participation, clear expectations, staff attraction, staff retention, emerge strongly.

By contrast, the main driver for organisational commitment is belief in the organisational policy. The second and third most popular drivers here are career opportunities (including training and career perspectives) and working atmosphere, including elements such as support from colleagues, and superiors, feedback and social atmosphere.


Warning signs?

Although financial reward items are in the middle of job and organisation commitment drivers, these have changed most, gaining in importance as reasons why employees lose motivation. Moreover, the satisfaction with the financial reward items decreases, creating the risk that financial rewards become demotivating.

Financial rewards cover three areas:

• value of the salary package (the fixed wage, its evolution, the pension plan, other benefits),

• fairness of the salary package (as a reflection of effort, as a reflection of results, as a reflection of expectations),

• the wage policy (transparency, communications, freedom of choice and tax optimisation).

This seems to suggest that as the economic downturn continues to dampen pay awards, it also effects the job commitment of workers: respondents feel that the correlation between their salary and their efforts is falling. Even over the course of a year, there is a small but marked rise in despondency on key points, such as promotion prospects, and salary. Employers need to see these as a signal to consider rebalancing their total reward package.

Employees are motivated by real challenges: they highlight issues such as personal development, variation, skill utilisation, autonomy and meaningfulness.


What they really value Give them more freedom?

The survey reveals dissatisfaction in two important areas: career options and flexibility. What steps can employers take to improve employee commitment?

With flexibility, the question covers how and when professional duties are performed. Only 11% are very satisfied by how much flexibility their employer gives them when they perform their professional duties, down from 14% in 2013. By contrast, 35% are not satisfied at all, up from 32%. Employers could consider new approaches to working, to boost motivation.

When it comes to career options, the survey shows a grim outlook. Almost half (48%) believe there are few opportunities to grow within the organisation, a marked increase from the 40% recorded in 2013. At the same time, 40% say they don’t see a promising future for themselves within their own organisation, the same score as in 2013. This may be a consequence of employers’ actions to manage the challenging economic climate. Promotions may become more difficult to achieve, while horizontal moves postponed, ironically because employees are effective in their current role.

Is this enough to lead employees to look elsewhere?

Almost one quarter of respondents say they are considering a change of employer, up from 22% in 2013. Amongst those aged 34 and under, this rises to 38% (although down from 40% in 2013). Confidence in employers remains low, with 38% saying their organisation is unable to hold on to good and capable employees (also down from 40% in 2013). Meanwhile, 52% believe they could earn just as much, or even more, with another employer. Employers have a lot to do if they wish to retain talented staff.

When it comes to career options, the survey shows how grim the outlook seems: almost half say there are few opportunities to grow within the organisation (up from the 40% in 2013).


In these straitened times, respondents care about more than the figure at the bottom of the payslip; they are also interested in how it is packaged. They seek a compensation package that is fair, personalised and optimised.

Tax efficiency emerges as a key area where businesses could improve, an issue particularly relevant in Belgium, with its high tax and labour costs. Only 15% were highly satisfied with their employer’s efforts. Furthermore, half (unchanged since 2013) think employers need to communicate more clearly and be more open on their pay policy.

Employees also look for greater flexibility in how their package is made up, to meet their personal needs more accurately. In fact, 73% (up from 70% in 2013) want greater flexibility to customise their compensation package.

Half of all respondents believe that their pay package does not adequately reflect their efforts. They also feel that the remuneration policy is not applied fairly throughout the organisation, a sharp climb from 40% in 2013. In addition, 45% (40% in 2103) believe that premiums, bonuses and non-statutory benefits are not attributed fairly.


The payslip formula Packaging can make all the difference


Chapter 2

Generations united Whatever happened to the Millennials?

All three generations attach great importance to personal development, varying their routines, and how meaningful their job feels to them.

We are all shaped by the passage of time. Our outlook and expectations alter with age and experience. But is there really a generation gap over reward expectations? Do those new hires, fresh from university and internships, really think differently about their careers? Or do they hold common concerns with those with two decades of graft under their belts, or the over-50s who may have one eye on retirement?

The survey looked at three age groups:

• Under 35s, born 1981-2000, also known as Millennials, Generation Y or GenMe

• 35s to 50, born 1965-1980, also known as Generation X or GenX

• Over 50s, born 1946-1964, also known as Baby Boomers

Remarkably, the Millennials actually share very similar views on rewards with the other age groups.

All categories attach great importance to personal development, varying their routines, and how meaningful their job feels to them. In addition, all say that the most important element of their current salary package is their pension plan, followed by medical coverage. This shatters the assumption that there is an unbridgeable chasm between newest recruits and those at the other end of their working life. It also challenges the clichés about the lack of commitment amongst Millennials.

We present a summary of the main results and an interpretation of what it means to employers. Like the annual Reward Barometer, this survey covers a range of financial and non-financial rewards, and shows the complex interplay of factors that secure commitment and motivation across the generations.


The shifting generation gap Where did Millennials go?

The easy assumption is that the younger generation is unreliable and has less loyalty to their employer than previous generations. In fact, when it comes to both job and the organisation, the generation gap appears between Generation X and the Baby Boomers.

Indeed, Generations Y and X display remarkable similarities. In both groups, 32% say they are highly committed to both the job and the organisation. This compares to 41% amongst Baby Boomers. Meanwhile, 42% of Generation Y and 44% of Generation X respondents say they have a moderate commitment to both the job and the organisation, with Baby Boomers at 33%.

The fact that Baby Boomers show lower intention to leave and score better in terms of job and organisation commitment may be explained by the so-called ‘healthy worker effect’. This effect assumes that workers who do not like their job, or cannot meet the physical demands, move on, leaving employees who are happy in their job and are really absorbed by their job.

Job commitment and organisational commitment


Drivers that cross generations Millennials are people too

The results on the reward aspects that most drive both job and organisational commitments are strikingly similar for all three generations. The differences emerge with the results further down the list of priorities.

The distinctions are a little clearer in organisational commitment drivers. Organisational policy is the top ranked issue for all generations. However, there are differences at lower levels. Work atmosphere becomes more of a priority with age, while the significance of the value of the salary package decreases with the age. For younger staff, career opportunities matter more.

The specifics are revealing and tie in with other results. Millennials emphasise the work-life balance and the commute, while these issues become routine and less worrisome as one get older. What is striking is that in all age categories, respondents are rather satisfied with their daily commuting time. And company cars remain an important element of reward packages (see page 15), despite efforts to promote alternative commuting methods. If employees are content with their commute, they won’t rate alternatives like company bikes highly.

Days off are more of a priority for the older generations, and provide greater satisfaction. This is understandable, as they are more likely to have families and don’t have the social flexibility of young people.

For job commitment, the top four drivers are the same:

The survey reveals strikingly similar results for all three generations, suggesting that the workforce’s values and aims are fairly consistent over time.



Priority chart Job commitment vs. Organisational commitment


The perfect reward package Why iPads don’t impress

How can you balance the elements in the reward package to match the desires of the workforce? It turns out that the different generations have similar priorities. All three rate their pension plan as most important, followed by medical coverage. This is contrary to the common assumption that younger employees rarely consider the longer term. Also, all ages rank seniority-based pay as more important than rewarding competence or individual performance. This has consequences for employers, creating issues over internal fairness and cost efficiency between generations. It makes seniority-based pay an attractive, albeit potentially inefficient reward for current and future employees.

At the other end of the scale, all three categories placed the least importance on the same five items: an ironing service, a tablet, a company bike, childcare and birth/marriage bonus. While these may appear valuable from the employers’ perspective, they seem frivolous when bundled into the salary package.

Seniority-based pay remains an attractive but ‘forbidden fruit’ compared to competence and performance-based pay.



Most important in current salary packages <35 years (top 5)

Most important in current salary packages 35-49 years (top 5)

Most important in current salary packages >50 years (top 5)


Chapter 3

Bonding better with your talentShine a light on the paycheck

The Reward Barometer is designed to provide insight into the drivers of employee commitment and the factors that help or hurt job satisfaction and loyalty. However, it offers more. It is also an opportunity to review existing approaches and policies to motivate employees.

Using these insights, employers can redress concerns over perceived unfairness of both financial and non-financial rewards. The aim should be to help employees feel that they have a fair, personalised and optimised compensation package.

17Reward reviewed – 2014 Belgian Reward Barometer

Total reward statements: see where it all comes from

Personalised reward packages: give them options

The economic crisis has meant that most employees have not seen much of a pay rise in recent years. Employers are understandably focused on remaining competitive and safeguarding jobs. In these difficult circumstances, it is important that employees feel appreciated to show how highly you value them.

One clear finding is that employees want flexibility to customise their compensation according to their personal needs. Almost three-quarters of respondents feel that they don’t have enough say in how their package is assembled and want greater influence or choice.

A Total Reward Statement shows employees exactly how much their salary and benefits are worth. It is an effective way to help them understand the real costs and show the value of each reward. It covers many elements that they may not equate with their benefit package, from pensions and health coverage to bonuses and travel allowances.

This presents an opportunity for employers; it need not cost the company more, yet it would help them overcome the perception that they do not do enough to make employee packages tax efficient. Only 15% are happy with their employers’ efforts. However, if the employee is making the choices, will tax efficiency be the main driver?

Much of this is about perception. Many employees feel their salary is unfair compared to the efforts. They may feel undervalued when compared peers. Half of respondents feel that their package does not adequately reflect their output and that the remuneration policy is not applied fairly throughout the organisation. A Total Reward Statement can help them draw comparisons more easily, especially if the employer is able to provide examples from previous years.

This is also important where there are differences across generations. For example, Millennials value work-life balance more than other generations, while the over-50s value days off. Offering options here can improve motivation. Commitment could improve through a flexible system where additional days off can be bought or unused days off can be ‘banked’ for later use.


Understand the generation gap: they don’t want trinkets

The survey revealed remarkable similarities between the generations. For example, Millennials often represented as a lazy, high-maintenance generation with a sense of entitlement, are in fact just as committed to their job and their organisation as those in mid-career.

Employees are more likely to work where they feel happy, more so for younger employees. Organisations that make workers feel valued and appreciated will retain staff. Many best practices apply across the generations, each share similar motivations for staying in their organisation.

All generations share similar motivations for their work and priorities for their rewards package. These insights should help employers focus rewards. If all three generations rate their pension plan highest in their reward package, followed by their medical coverage, are employers doing enough to meet expectations? Meanwhile, organisations that boast iPads and laundry services for employees may simply be assuming their appeal: for many employees these are trinkets, holding little value.


Using this information demands new approaches and new platforms for discussion with employees. All too often, employers assume they know best, and impose solutions without realistic prior discussions. A badly managed reward package could be the last straw for employees, who might seek a better one elsewhere. It is far better to engage and explain.

The Barometer makes it clear that many intended incentives are not really valued. Employers need to consult to understand what employees really value and whether proposed incentives will work. The smart employer will ask rather than impose. Whatever the risks employers imagine may come from letting their employees have a say in how to arrange the package, they are almost always outweighed by the benefits of giving people a sense of engagement and empowerment.


Communication: talk - or see them walk


We’re here to listen

At PwC, we focus on three things: audit, tax and consulting. But we don’t think ‘off-the-shelf’ products and services are always the way to go. How we use our knowledge and experience depends on what you want to achieve.

So we’ll start by getting to know you. You do the talking, we’ll do the listening.

What you tell us will shape how we use our network of 180,000 people around the world – and their connections, contacts and expertise – to help you create the value you’re looking for.

Are you ready to move forward? With more than 150 multidisciplinary HR professionals in Belgium, our HR Services team is here to help you shape your response to tax, legal, regulatory and organisational issues.

ISW Limits, a spin-off of KU Leuven and UCL, occupies a leading position in the area of innovative tools and services for measuring aspects of psychosocial well-being (commitment, stress, absenteeism, satisfaction, conflicts, resilience and positive attitudes) and provides support to organisations, managers and employees wishing to make improvements in this area.

Since it was established in 1998, ISW Limits has built up a great deal of expertise in the areas of psychosocial measurements and tools, employee assistance programmes, conflict mediation, and training and education. ISW Limits has around 20 permanent employees as well as a network of over 150 freelance staff, including psychologists and counsellors, based in the Benelux.

www.pwc.be/hrservices www.iswlimits.be

Nicolas de LimbourgPartner HR Services Tel: + 32 (0) 2 710 74 18 [email protected]

Dirk AntonissenCEO Tel: + 32 (0) 16 20 85 96 [email protected]

Bart Van den BusscheSr Manager HR Services Tel: +32 (0) 2 710 74 43 [email protected]

Inge Van den BrandeSr Project & Account Manager Tel: +32 (0) 16 20 85 96 [email protected]

About PwCPwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

© 2014 PwC. All rights reserved.

About ISW Limits ISW Limits supports companies and organisations in the optimisation of the factors that promote well-being and productivity in the workplace. Find out what ISW Limits can do for you on www.iswlimits.be.

© 2014 ISW Limits. All rights reserved.

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