Digitalization and a volatile economy are shifting the regulatory landscape for financial services firms. Additional factors, for example early-career Taiwanese talent looking for a higher proportion of guaranteed cash (i.e., base salary), are intensifying competition for talent not only within the sector but also in other industries as well.
These upheavals are driving new behaviors and strategies that have a greater focus on customer relationships, such as adjusting pay structures and sales incentive programs. These challenges also were the impetus for the CHRO of a multinational financial services organization based in Asia-Pacific to reach out to WTW a couple of years ago.
This executive wanted to evaluate the firm’s sales incentive programs and practices against current local and regional market practices. Having partnered with the organization for several years, WTW entered the conversation with a deep familiarity of the company’s culture and operations as well as recent challenges with sales growth.
Two crucial points emerged for the multinational:
Effective incentive programs drive employees’ behavior, align with an organization’s pay philosophy and support the achievement of business objectives. They also are governed by market eligibility rules and labor laws. Specifically, in 2021, Taiwan’s Financial Supervisory Commission established guidelines related to sales incentives in multinational financial services companies versus local organizations.
The guidelines state that banks must avoid compensating wealth managers based solely with variable pay or size of sales. The financial services CHRO wanted to see how these changes would affect the way the organization – and industry peers – would think about the redesign of pay programs.
As companies redesign pay structures to align with shifting market regulations, WTW research found that financial services organizations have increased the guaranteed compensation of wealth managers. While the goal has been to comply with regulatory changes and discourage unethical practices, these design shifts have led to fewer incentives for employees to chase sales targets. As such, companies are focusing on establishing and maintaining client relationships as well as employees’ efforts, and this is reflected in base salaries rather than commission-based incentives.
This was the situation that prompted the CHRO to contact WTW for a third-party view. The company already had access to WTW data on variable compensation and incentive policies and practices, but the CHRO wanted a more comprehensive and holistic picture of the relationship between rewards and sales strategies.
WTW’s custom data analytics team interviewed the CHRO to identify:
The findings from this interview were analyzed against variable pay data from WTW compensation surveys and HR policies and practices surveys. Specifically, the WTW team and the client worked together to identify a custom peer group of financial services organizations in major competitor markets and gathered the associated data for that group.
As data from the client as well as the surveys were collected, reviewed and analyzed, WTW also leaned on its experiences within the financial services sector and the diverse challenges and implications on reward and sales strategies within the industry.
By digging in to understand the organization’s structure, its current challenges and objectives, we were able to identify a couple of issues:
Providing a customized, data-driven approach to analyze these root-cause issues allowed us to bring the CHRO to their “A-ha!” moment on what was working – and what was not – in their current incentive program. We were able to identify:
Effective leaders know that changes are inevitable and acting in a timely, yet thoughtful, way is pivotal in efficiently spending budget without erroneously encouraging performance at the cost of legal and regulatory guidelines. Relying on both WTW’s best in class benchmark survey data, insights, and expertise can help you shape and create your own solutions that are fundamental to your organization’s growth and survival.