Employee Value Optimiser

2 EMPLOYEE VALUE OPTIMISER | BDO LLP

Many HR decisions are made based purely on experience, half-truths or what someone has seen work elsewhere. Clearly, this is far from ideal. The reality is that data is everywhere in the people space. But it is used inconsistently, often to prove a hypothesis, and then discarded. Evidence-based HR uses data and expert analysis to understand the connection between people and business outcomes. Viewing employee data in a consistent format, particularly when compared against other metrics, enables boards and HR teams to explore what is really happening. And to make decisions supported by data that everyone recognises. What is the Employee Value Optimiser (‘EVO’)? EVO is a people dashboard which views the people dimension via four lenses:

Why EVO?

Board level insights Provide your Board with a comprehensive overview of your people data – focussing on trends, risks and opportunities. Strategic decision support Prioritise and enhance the delivery your people experience by offering data-driven insights to aid informed, targeted decision-making. Easy to digest graphics Engaging visualisations, charts, and graphs make vast amounts of complex data easy to understand and interpret. External benchmark Enables a view of how your practices compare to other organisations.

Workforce 1

Reward 2

ED&I 3

Performance 4

How does it work?

Step 1  We provide a simple template to collect your data  The basic data points

Step 2  We run the dashboard and analyse the outputs  We use consistent

Step 3  We prepare a bespoke ‘key insights report’ derived from the data for each lens  The report may raise issues for follow up or further investigation.

Step 4  We present the report to you and your Board  The discussion about

metrics and ratios to enable faster analysis and benchmarking of outcomes by sector and size.

the key insights report, and what the dashboard tells us, is where the value lies.

are all available from your HRIS system and your statutory or management accounts.

BDO LLP | EMPLOYEE VALUE OPTIMISER

Workforce Workforce analytics helps you gain insights into future workforce planning, identifying critical staff and any skill gaps that exist. Monitoring recruitment and retention trends for your organisation helps you better understand where and why you are losing talent and whether these losses are preventable. Addressing these issues will ultimately help you optimise your Return on Investment (‘ROI’).

Employee split by grade

Workers by employment type

Percentage of employees by function

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

87.7%

Business Unit 1

36.6%

Business Unit 2

29.3%

Finance

12.7%

Marketing

12.1%

Technology

8.4%

Human Resources

0.5%

11.3%

Legal

0.4%

0.9%

20%

40%

Permanent

>6 month Contractor

<6 month Contractor

% of Employees

Time in grade vs tenure at the company

12-month rolling voluntary turnover by grade

12%

11%

10%

Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6 Grade 7 Grade 8 Vol Leaver (Positive) Average Turnover

Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6 Grade 7 Grade 8 Time in Grade Tenure

4 EMPLOYEE VALUE OPTIMISER | BDO LLP

Reward Staff costs are among the highest expenditure for most organisations. Reward analytics provides you with insights on your reward policies and practices, identifying how strong the alignment between pay decisions and employee performance is. This can help you allocate your employee spend in the most impactful way.

Fixed pay

Salary range by grade

Percentage of employees between lower, mid and upper salary band

Average salary for new joiners vs existing employees

100 120 140 160

143

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6 Grade 7 Grade 8

£95,137

£92,662

2% 2% 2%

£71,327

£71,513

£56,014

£56,664

8% 11%

£45,690

£46,096

0 20 40 60 80

16%

£37,363

£37,843

15%

£28,278 £32,606

£32,117

£28,316

2% 4%

21 25

£22,164

£22,168

20 20

Existing New Joiner

Grade 1

Grade 2

Grade 3

Grade 4

Grade 5

Grade 6

Grade 7

Grade 8

Grade 1

Grade 2

Grade 3

Grade 4

Grade 5

Grade 6

Grade 7

Grade 8

Lower - Mid Mid - Upper

Salary increase by performance rating

Pay mix by grade

0.25

5.0%

Grade 8 Grade 7 Grade 6 Grade 5 Grade 4 Grade 3 Grade 2 Grade 1

2% 2% 1% 1% 0% 0% 0% 0%

68%

17%

11%

74%

13%

0.2

4.0%

3.9%

4.0%

4.1%

4.4%

4.1%

3.6%

76%

12%

4.1%

3.8%

0.15

3.0%

4.1%

74%

15%

3.8%

4.1%

4.0%

4.2%

4.1%

4.0%

79%

10%

3.9%

4.2%

3.9%

0.1

2.0%

3.8%

4.1%

3.9%

4.1%

4.0%

71%

18%

2% 2% 2%

4.1%

3.8%

4.3%

3.9%

4.0%

3.3%

3.9%

0.05

1.0%

74% 74%

14% 14%

10% 10%

4.3%

4.2%

3.9%

3.8%

3.3%

0.0%

Grade 8 Grade 7 Grade 6 Grade 5 Grade 4 Grade 3 Grade 2 Grade 1

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Average Salary Increase

Salary Benefits Pension Bonus LTIP

BDO LLP | EMPLOYEE VALUE OPTIMISER

Reward

Benefits & pension

Variable pay

Total benefit spend by grade

Average bonus payout by grade

Grade 8 Grade 7 Grade 6 Grade 5 Grade 4 Grade 3 Grade 2 Grade 1

25% 25%

49%

48%

20% 20%

30%

47%

35%

40%

15%

40%

35%

10%

45%

25%

20%

50%

20%

25%

73%

27%

20%

40%

60%

80%

100%

Allocation

Gym Healthcare Benefits Car Allowances

Other

Benefit types chosen by grade

LTIP as a percentage of salary by performance rating

Grade 8

3.7%

3.2%

5.1%

2.7%

4.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6 Grade 7 Grade 8 Gym Healthcare Benefits Car Allowances Other

Grade 7

1.7%

2.6%

1.5%

2.6%

Grade 6

2.4%

1.1%

2.2%

1.5%

1.3%

Grade 5

1.3%

Grade 4

Grade 3

Grade 2

Grade 1

1 2 3 4 5

6 EMPLOYEE VALUE OPTIMISER | BDO LLP

ED&I: Gender Measuring the impact of DI&E initiatives can help you understand how effectively these policies are implemented in your organisation and identify any gaps. Ensuring your pay decisions are made in a fair and equitable way, regardless of employee gender and ethnicity, can help you create a truly diverse and inclusive workforce.

Average tenure by gender and grade

Salary increase by gender

4.0%

3.9%

4.1%

3.9%

4.0%

3.9%

4.1%

4.0%

3.9%

Grade 1

Grade 2

Grade 3

Grade 4

Grade 5

Grade 6

Grade 7

Grade 8

Grade 1

Grade 2

Grade 3

Grade 4

Grade 5

Grade 6

Grade 7

Grade 8

Female Male

Bonus as a percentage of salary by grade and gender

Grade 8

16%

Grade 7

10%

Grade 6

Grade 5

Grade 4

Hourly rate gender pay gap -3%

Percentage of female ex co members 20%

Grade 3

Grade 2

Grade 1

10%

15%

20%

25%

30%

35%

Female Male

BDO LLP | EMPLOYEE VALUE OPTIMISER

ED&I: Ethnicity

Number of employees by grade and ethnicity

Percentage of employees receiving bonus and LTIP by ethnicity

99.1%

98.8%

98.4%

98.5%

Grade 8

17%

18%

22%

24%

19%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Grade 7

20%

18%

23%

19%

Grade 6

21%

20%

18%

21%

Grade 5

20%

19%

18%

23%

Grade 4

20%

19%

21%

Grade 3

21%

19%

21%

20%

19%

17.8%

16.4%

16.1%

14.8%

Grade 2

17%

24%

20%

19%

21%

Grade 1

20%

18%

19%

24%

19%

White

Other

Mixed or multiple ethnic groups

Black, Black British, Caribbean or African

Asian or Asian British

20%

40%

60%

80%

100%

Asian or Asian British

Black, Black British, Caribbean or African

Mixed or multiple ethnic groups

Other

Bonus LTIP

White

Salary increase by ethnicity

Percentage of employees by ethnicity and performance rating

White

9.54%

3.78%

4.1%

3.7%

4.1%

3.7%

4.2%

4.1%

3.9%

3.8%

Other

9.10%

3.19%

3.8%

4.0%

4.1%

3.9%

4.0%

4.2%

4.0%

Mixed or multiple ethnic groups

9.51%

3.33%

4.3%

4.2%

3.9%

4.0%

3.7%

4.4%

4.2%

Black, Black British, Caribbean or African

9.29%

3.28%

4.1%

4.3%

4.1%

4.0%

3.7%

3.8%

4.0%

3.9%

3.8%

3.7%

Asian or Asian British

8.76%

3.67%

Grade 2 Grade 1 Asian or Asian British

Grade 3

Grade 4

Grade 5

Grade 6

Grade 7

Grade 8

10%

15%

20%

Black, Black British, Caribbean or African

Mixed or multiple ethnic groups

Other

1 2 3 4 5

White

8 EMPLOYEE VALUE OPTIMISER | BDO LLP

Performance Performance analytics can highlight issues with employee productivity and engagement, especially when compared to the performance of similar organisations. These metrics can help identify how aligned your workforce performance is with the overarching business strategy. Any improvements in this area will immediately impact your bottom line.

Productivity per employee

PBT vs bonus vesting vs LTI vesting

PBT spending

80%

£60,000,000

£120,000

42% 44% 46% 48% 50% 52% 54% 56% 58%

70%

£100,000

£50,000,000

60%

£80,000

£40,000,000

50%

£60,000

40%

£30,000,000

£40,000

30%

£20,000,000

£20,000

20%

£10,000,000

£0

10%

2017

2018

2021

2019

2020

£0

Av. Revenue Av. Employee Cost

Av. Employee cost Employee cost (% of Revenue)

2021 2020 2019 2018 2017

PBT

Bonus

LTI

Environment score

Energy use 208 kWh/m2/year -12.6% vs 2016/2017

Community investment £3,080,000 invested in community engagement +28.3% vs 2016/2017 19,700 hours of pro-bono advice and volunteer work +23.1% vs 2016/2017

Carbon emissions 3.0

tCO2e/employee/ year scopes 1, 2 + 3 business travel

-5% vs 2016/2017

BDO LLP | EMPLOYEE VALUE OPTIMISER

About us

Advice on appropriate overall quantum and mix of pay (i.e. short-term vs long-term and fixed vs variable) to align with the overall reward policy and approach. A key tool in enabling the delivery of broad based reward projects. It enables us to ‘value’ roles (to work out how much to pay) and provide structure and hierarchy to an operating model. Creating incentives with a transparent link to performance, using measures aligned with an organisation’s value drivers and strategic aims. Integrating diversity & inclusiveness lens into pay decisions, focusing on gender pay gap and equal pay. Support with investor and stakeholder management and reporting compliance (e.g. DRR). Measurement of performance for the purposes of signing off pay-outs. Modelling returns and costing proposals for P&L, dilution and cash movement purposes. The analysis, evaluation and design of an organisation’s executive and broad-based approach to total reward which supports and drives the business strategy and culture.

What we do The Strategic Reward Advisory Team at BDO helps Remuneration Committees and management teams create effective reward strategies that are fit for the future and deliver interventions to support long-term business success. We advise clients on all aspects of executive remuneration, including remuneration strategy, remuneration policy drafting and reporting.

Quantum and mix of pay

Evaluation and grading

Incentive design and link to performance

Governance and regulation

David Ellis Partner

+44 (0) 7800 682 160 david.ellis@bdo.co.uk

Valuation and measurement

Strategic reward review

Nora Sherman Director +44 (0) 7468 740 327 nora.sherman@bdo.co.uk

Benchmarking

Design

Modelling

Implementation

Communication

Reporting

FOR MORE INFORMATION:

This publication has been carefully prepared, but it has been written in general terms and should be seen as containing broad statements only. This publication should not be used or relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained in this publication without obtaining specific professional advice. Please contact BDO LLP to discuss these matters in the context of your particular circumstances. BDO LLP, its partners, employees and agents do not accept or assume any responsibility or duty of care in respect of any use of or reliance on this publication, and will deny any liability for any loss arising from any action taken or not taken or decision made by anyone in reliance on this publication or any part of it. Any use of this publication or reliance on it for any purpose or in any context is therefore at your own risk, without any right of recourse against BDO LLP or any of its partners, employees or agents. BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list of members' names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU. BDO LLP is authorised and regulated by the Financial Conduct Authority to conduct investment business. BDO is the brand name of the BDO network and for each of the BDO member firms. BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, is licensed to operate within the international BDO network of independent member firms. Copyright © October 2023 BDO LLP. All rights reserved. Published in the UK. www.bdo.co.uk

David Ellis 44 (0) 7800 682 160 david.ellis@bdo.co.uk

Nora Sherman +44 (0) 7468 740 327 nora.sherman@bdo.co.uk

Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10

www.bdo.co.uk

Made with FlippingBook HTML5