SERVING OUR CLIENTS

We’re there for our clients as a true partner. Watson Wyatt is committed to integrity, excellence and putting clients first in all we do. To make sure we take the best strategic approach for our clients, we hire the most talented people in the business. We ask the right questions early. And we develop creative, practical solutions that meet our clients’ needs. By anticipating the future, we help our clients look beyond today. » We’ve highlighted some of the many ways we’ve partnered with our clients to address important issues they face every day: controlling the cost of employment, increasing productivity, complying with regulatory and governance mandates, and gaining competitive advantage in today’s global economy. »

Controlling the Cost of Employment
Getting the right pay and benefits to the right people at the right price is becoming more complex each year. Clearly, organizations that find a way to manage employment costs more efficiently have a competitive edge.

Redefining Health Care
Watson Wyatt is uniquely qualified to help companies manage rising labor costs, by delivering evidence-based, practical solutions that have proven impact. Our consultants pioneered the move toward containing costs by implementing consumer-directed health care, and our research shows that this new approach to health care works. Companies that use quantitative data to set strategy, engage employees through information and tools, and focus on health management can expect a median cost increase of 5 percent — versus 15 percent for companies that do not.

This past year we worked closely with our clients to help them achieve that 5 percent, developing effective strategies that empower employees in the effort to lower health care costs. Our innovative solutions combine the tax advantages of health savings accounts with incentives for changing lifestyle and behavior, helping companies contain costs so they can stay competitive.

In the United States, we team with the National Business Group on Health — the leading voice of large employers on health care issues — to find the best ways to control health care costs. By leveraging exclusive relationships with technology provider HighRoads and the employer consortium National Business Coalition on Health, we help clients automate vendor selection and administration and standardize vendor information requests. And we manage the National Data Cooperative, an initiative that pools data from large employers to identify health cost savings opportunities. These partnerships have helped us stay at the forefront of health care cost-containment issues.

Managing Pension Financial Risk
Pension plans are a significant source of pressure on labor costs. Stakes rise with the volatility of pension plan funding — and the lack of long-term regulatory certainty for funding rules and plan designs. As an established global leader in innovative pension plan design, Watson Wyatt has helped organizations around the world find designs that both meet corporate goals and address external challenges.

Alternative plan designs, such as our Stable Value Plan in the United States, can help our clients manage some of the financial stress associated with pension plans. And our Pension Risk Management solution enables us to quantify risk for our clients and help them determine an acceptable level of risk to take going forward. Our leading-edge financial modeling and diagnostic tools help our clients better control risk and understand the impact of pension plans on their financial statements.

Streamlining HR Administration
Another way to reduce costs is by streamlining HR administration via technology and outsourcing. Total HR outsourcing has created tremendous buzz in the industry. But our research shows that companies that take a more blended approach report the largest increases in efficiency and savings. By combining our services and technologies with our clients’ in-house capabilities, we tailor selective outsourcing approaches that maximize cost savings while improving service.

To that end, our fully integratable technology solutions include comprehensive systems for managing pensions (PensionPath®), health and welfare benefits (BenefitConnect™), compensation (REWARD™ and eStatements) and employee service centers (AnswerKey™).

Increasing Productivity
People matter: Our research confirms that companies with superior human capital practices can create more than double the shareholder value of companies with average practices. With productivity growth slowing for many organizations, managing human capital to increase employee effectiveness is more important than ever.

Facing the Challenges of Shifting Workforce Demographics
In developed countries, the number of employees eligible for retirement rises each year, and fewer younger workers are entering the market. Preserving the knowledge base of experienced workers — while creating talent management programs for the next generation of workers — is now a primary focus of many HR executives, especially in the Asia-Pacific region.

Our ground-breaking 2005 WorkAsia® research examines the attitudes of employees in Asia and spotlights the links between HR programs and employee commitment, alignment and enablement. This allows us to help companies implement the right attraction and retention programs. Our in-depth research on phased retirement provides insights and strategies to help companies adapt and align employer programs with workers’ preferences as they mature. Some key approaches include developing re-recruitment policies for highly skilled workers reaching retirement age and revising HR systems to cope with dramatic changes in retirement policy.

In addition to retaining older workers, companies also need to position their workforce for the future. We help our clients implement HR programs to find top talent and develop a total rewards strategy to compensate and motivate existing employees.

Our competency frameworks and talent assessments help organizations bring in the best new employees and avoid making costly mistakes. By analyzing compensation and benefits packages, Watson Wyatt can determine the most cost-effective way for our clients to hire the right people.

Transforming Organizations
Many organizations throughout Asia-Pacific and Latin America — whether a multinational operation, family-owned firm, government-linked company or state-owned enterprise — are feeling the urgency to modernize and transform. As a result, companies are sharpening their focus on strategy, structure and performance management.

With the increase in mergers and acquisitions, as well as transformation and expansion efforts, we are helping companies improve productivity through organizational change. We help clients assess their leadership style, build their unique management culture, and establish processes to assess risk and reorder priorities — all actions that affect management and productivity.

In China, for example, companies are restructuring in anticipation of more intense competition resulting from entry into the World Trade Organization. Clients are relying on Watson Wyatt for strategic advice on how to enhance productivity and stimulate competitiveness, particularly in the areas of telecommunications and banking. We engage our clients’ executive teams to improve their management mechanisms and transform their culture, linking improvement in both to their business strategy, thus enhancing their competitive advantage.

Allocating Rewards
Our Strategic Rewards® research indicates that companies are devoting more of their reward allocation to variable pay and tying compensation directly to employee performance. Traditionally focused on monetary elements such as base pay and benefits, reward packages now encompass all aspects of the employment “deal” between companies and their employees — including non-financial rewards such as career development, job satisfaction, a fulfilling work environment and an improved work/life balance. We help clients determine the right mix of rewards to help balance cost with design while also aligning employees to company goals.

Communicating Effectively
Without clear communication and implementation, even the best-designed reward packages can create a less-than-positive perception among employees. Our pioneering Communication ROI Study™ found that organizations that communicate effectively dramatically outpace those that do not. When companies consistently share their goals, business plans and financial information, employees see the big picture and are more likely to remain engaged. Our communication experts work with clients to implement communication strategies that foster a culture of information exchange, enabling them to better attract, retain and motivate a talented workforce.

Engaging Employees in Wellness and Illness Prevention
Our research has found that companies with a greater focus on health management are more successful than others at controlling health care costs. Our customized health and disease management programs deliver measurable ROI and raise productivity by engaging employees in wellness programs, illness prevention, health management and short-term absence management.

In Canada, we developed the Health and Productivity Framework in response to our clients’ concerns that employees’ ill health — caused by factors such as increasing workplace stress and mental illness — was creating an unexpected drag on company productivity. The tools in the framework enable employers to assess and improve their company’s approach to employee health.

Complying with Regulatory and Governance Requirements
The HR function stands front-and-center in the face of critical governance issues affecting compensation and benefit programs. Throughout the world, we combine unparalleled expertise with local market knowledge to help clients decipher new regulatory and governance requirements.

Addressing Changing Pension Regulations
Compliance can be challenging, and we tackle the problem on all fronts — including innovative plan design and government outreach — to ensure compliance and competitiveness. As a longtime leader in innovative retirement plan designs, we actively support more flexible funding rules and regulatory clarity on cash balance and other hybrid plans. We believe both are necessary for the long-term preservation of the defined benefit system.

Around the world, pension regulations and government requirements are evolving rapidly. In Europe and Asia-Pacific, new legislation and accounting standards coupled with shifting demographics and increasing costs are dramatically altering the way in which corporations and governments look at pensions. We are working closely with our clients to proactively address the impending changes while ensuring proper compliance.

Accounting and Governance Policy
Investors worldwide are demanding that companies provide more transparent financial information. And regulatory bodies are considering new ways to account for stock option and retirement benefit programs. Our rigorous operational review process is the cornerstone for complying with Sarbanes-Oxley legislation and changing accounting rules around the world. The process produces a consistent structure that allows clients to set assumptions globally and ensure consistent treatment of workers.

We work with our clients to design compensation and benefit plans that are not only well documented but also current, competitive and well thought-out. In light of new accounting rules calling for the expensing of stock options, we deployed our global proprietary valuation model to address the distinctive features of these awards. We help companies evaluate plan designs, determine how best to comply with new standards, and find shareholder-friendly approaches to attract and motivate a talented workforce while keeping costs in check.

Realizing the Potential of Health Savings Accounts In the United States, health savings
accounts (HSAs) are another tool that can help control costs. HSAs allow consumers and their employers to contribute pre-tax dollars to a tax-free savings account. We are leading a coalition of large employers to allow more coordination and integration between HSAs and other individual accounts, such as flexible spending accounts and health care reimbursement accounts. By educating lawmakers, we’re paving the way for employers and workers to realize the full potential of HSAs and high-deductible health plans.

Gaining Competitive Advantage in a Global Economy
The business issues playing out on the world stage — from global competition, to offshore outsourcing, to cross-border mergers and acquisitions — can profoundly affect companies’ workforce requirements. We help clients navigate the complexities of a multinational workforce, ensuring consistency across borders while recognizing the unique needs of local cultures.

Managing Human Capital Around the Globe
Our expertise starts with understanding human capital around the world, and extends to the financial and governance aspects of managing people as well. For example, our Global Work Series, an ongoing study of employee attitudes around the world, highlights our specific knowledge of markets such as China and India.

And our research on multinationals shows that companies with centralized compensation systems report higher effectiveness levels than those with decentralized structures. Armed with these data, we work closely with clients to develop, implement and communicate a coherent benefit and compensation strategy worldwide.

Our BenTrack™ system helps clients coordinate and manage benefits throughout their far-reaching operations. The BenTrack community includes Microsoft, Citigroup, IBM, Reuters and other leading corporations. And our Global Remuneration Planning Report — together with local, regional and global databases provided by Watson Wyatt Data Services — has become a critical reference work for international HR practitioners.

We also work with clients to design and implement accounting processes and policies for pension and other benefit plans on a global basis, specifically with the major accounting standards, including IAS 19, FAS 87, FAS 106 and FRS 17.

But our expertise doesn’t end there. As one of the world’s most respected advisers on retirement and pension plans, we have conducted some of the most extensive demographic research in the business. Notable among those efforts is the 2004 report on pensions and global aging, Global Aging —The Challenge of the New Millennium, released in conjunction with the World Economic Forum.

With our global network of investment consultants and industry-leading asset-liability modeling tools, we also provide comprehensive advice on investing pension plan assets, selecting investment managers and monitoring performance.

Wherever and whenever we’re needed, we’re there for our clients. We’re there to help them face the challenges of the global economy. And we’re there to help them take advantage of the opportunities that lie ahead.

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