total rewards: striking the right balance€¦ · the u.s. economy? quits tend to rise during an...
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Presented By |
Total Rewards:
Striking The Right Balance
Patrick Glynn, Senior ConsultantMatthew Shefchik, Senior Consultant
Carlson Dettmann ConsultingA Division of Cottingham & Butler Insurance Services, Inc.
March 10,2020
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2
PRESENTERS
Patrick GlynnSenior Consultant
Matt ShefchikSenior Consultant
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HR & WORKFORCE CHALLENGES
HR RISK
• Workplace Culture
• Productivity (Lost Time)
• Employment-Related & Discrimination Lawsuits
• Benefits Costs, Claims, & Liability
• Shrinkage, Theft, Embezzlement
• Training & Competency
• Vacancy & Turnover
RISK CONSULTANTS
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Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
Bureau of Labor Statistics: Job Openings and Labor Turnover Survey (Midwest Data - Seasonally Adjusted)
Layoffs/Discharges vs. Voluntary Quits (In Thousands)
Voluntary Quits Layoffs & Discharges Other Separations
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Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
Bureau of Labor Statistics: Job Openings and Labor Turnover Survey (Midwest Data - Seasonally Adjusted)
Layoffs/Discharges vs. Voluntary Quits (In Thousands)
Voluntary Quits Layoffs & Discharges Other Separations
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MEASURING EMPLOYER & EMPLOYEE CONFIDENCE IN THE ECONOMY
“What do these statistics tell us about employer and employee confidence in the U.S. economy? Quits tend to rise during an economic expansion and fall during an economic contraction. Therefore, quits can serve as a measure of workers’ willingness or ability to leave their jobs. Conversely, layoffs and discharges tend to fall during an economic expansion and rise during an economic contraction.”
Kimberly Riley, “Measuring Employer And Employee Confidence In The Economy: The Quits-to-Layoffs-and-Discharges Ratio,” Beyond the Numbers: Employment & Unemployment , vol. 7, no. 3 (U.S. Bureau of Labor Statistics, March 2018)
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Total Rewards
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WORLDATWORK TOTAL REWARDS MODEL
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CDC – TOTAL REWARDS METHOD
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SLICING THE TOTAL REWARDS PIE
69%
7%
3%
9%
5%
7%
Employer Costs for Employee Compensation
Wages & Salaries
Paid Leave
Supplemental Pay
Insurance
Retirement & Savings
Legally Required
Source: https://www.bls.gov/news.release/ecec.toc.htm
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“NON-CASH” BENEFITS: FOUR PRIMARY BUCKERS
Employee Non-Cash Benefits
Insurance
Mandatory Retirement
Time Off
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FOUNDATION INGREDIENTS
https://www.recognizethisblog.com/2016/01/need-revisit-maslow/
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EVOLUTION OF ENGAGEMENT (AND BEYOND)
Satisfaction
• Happiness with current job and conditions
• Hygiene factors
• More focused on the individual employee(s)
Engagement
• Active measures to improve
• Commitment to the organization
• Basic psychological needs are met
• Meaning, purpose, passion
Experience
• Entire journey an employee takes with your organization (employee life cycle)
• Pre-hire to post-exit interactions
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THE EMPLOYEE LIFE-CYCLE (GALLUP)
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WHY DO (OR SHOULD) WE SPEND SO MUCH TIME ON ENGAGEMENT?
Source: Gallup “State of the American Workforce” (2017)
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OUR APPROACH TO BALANCING TOTAL REWARDS
Discovery
StrategyImplementation
Monitoring
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Discovery
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DISCOVERY
Outcomes
Employee Preferences
External Benchmarks
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PREFERENCE: THE CHANGING OF THE GENERATIONAL GUARD
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MILLENNIALS: BENEFITS & PERKS
Benefit/Perk Gen X & Boomers
Millennials Difference (%)
Paid maternity leave 17% 44% 27%
Student loan reimbursement 19% 45% 26%
Paid paternity leave 15% 37% 22%
Child care reimbursement 8% 30% 22%
Tuition reimbursement 24% 45% 21%
Paid time to work independently on a project of your choosing
24% 42% 18%
Flexible working location where you can choose to work off-site part time
33% 50% 17%
Insurance coverage other than health insurance 43% 60% 17%
Flextime 47% 63% 16%
Flexible working location where you can choose to work off-site full time
31% 47% 16%
Paid vacation 49% 64% 15%
Professional development programs 27% 41% 14%
% employees who would change jobs for benefit or perk
Source: Gallup “State of the American Workforce” (2017)
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EMPLOYEES’ PREFERRED BENEFIT ALLOCATION
Source: Willis Towers Watson’s 2015/2016 Global Benefits Attitudes Survey
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BENCHMARKING: CDC ANNUAL WAGE INCREASE SURVEY: 2019/2020
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BENCHMARKING: WHAT HAPPENS IF STRUCTURAL ADJUSTMENTS DON’T KEEP PACE
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70%
7%
3%
8%
4%8%
Private Sector
Wages & Salaries
Paid Leave
Supplemental Pay
Insurance
Retirement & Savings
Legally Required
62%7%
1%
12%
12%
6%
State & Local Gov’t
59%
7%
3%
14%
9%
8%
Private: Union
72%
7%
3%
7%
3%8%
Private: Non-Union
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69%
8%
3%
9%
4%7%
All Workers: Full-Time
Wages & Salaries
Paid Leave
Supplemental Pay
Insurance
Retirement & Savings
Legally Required
79%
3%2%
4%2%
10%
All Workers: Part-Time
74%
6%
2%
7%3%
8%
All Workers: 1-99 Employees
65%9%
5%
9%
5%7%
All Workers: 500+ Employees
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72%
8%
3%
6%3%
8%
Private: Professional & Business Services
Wages & Salaries
Paid Leave
Supplemental Pay
Insurance
Retirement & Savings
Legally Required
70%
8%
3%
9%
3%7%
Private: Health Care & Social Assistance
66%6%
3%
10%
5%
10%
Private: Transportation & Material Moving
65%8%
5%
10%
4%8%
Private:Manufacturing
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IS PAY A MOTIVATOR?
Insights from “Payoff” by Dan Ariely
27
Source: Ariely, Dan (2016). Payoff: The Hidden Logic The Shapes Our Motivations
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WHY DOES IT MATTER?
• Economic Growth + Shrinking Workforce = More Prime Opportunities
• More Opportunities + Aging Workforce = Likelihood for Turnover
• Turnover at Large Levels = Likelihood of Higher Starting Pay
• Higher Starting Pay = Compression with More Experienced Employees
• Compression + Stagnant Wage Structures = Growing Frustration
• Growing Frustrations = Reduced Engagement AND More Turnover
EXAMPLE: Teacher “Free Agency” in Wisconsin
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Strategy
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ELEMENTS OF A SUCCESSFUL REWARDS PROGRAM
Internal Equity
External Competitiveness
Consistency of Intent &
Approach
Affordable / Sustainable
Transparency / Communications
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TOTAL REWARDS PHILOSOPHY & POLICY
Good Better Best
Total Rewards
Philosophy /
Policy
• Non-
Integrated
• Why, What,
How
• Total
Rewards
Statements
• Partially-
Integrated
• Values
Alignment
• Unobtrusive
• Manager
Education
• Employee
Communicati
on
• Fully-
Integrated
• Corporate
Social
Responsibilit
y
• Transparency
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WHY A TRUSTED ADVISOR?
• Identify & Resolve Strategic ElementsStrategy
• Depth & Breadth of KnowledgeExpertise
• Removed From Internal PoliticsIndependence
• Reliable (But Expensive) Data SourcesAccess to Data
• Not Vested In Promoting Any AgendaUnbiased
• Focused on Measuring the Right ThingsMetric-Focused
• Balancing Internal & External PressuresComprehensive
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ADVISORS: BENCHMARKING INSIGHTS
Apples-to-Apples Comparisons are Extremely Difficult
• Especially for health insurance
• The key is to find a balance between competitive wages and benefits
Great Analytical Tools
• Cottingham & Butler 3C’s Insurance Analysis (In-Depth, Data-Driven)
• CDC Surveys- Annual Wage Increase Survey (Survey July-August, Results September)- PTO Survey (Coming Soon)
Good Higher-Level Data Sources
• Society for Human Resources Management (SHRM)
• Bureau of Labor Statistics (BLS)
• WorldatWork (fka American Compensation Association)
• Kaiser Family Foundation
• Published or Custom Compensation Surveys
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OPTIONS
Make the “Pie” Bigger
• New revenue streams; increased prices/taxes;
Re-slice the “Pie”
• Rebalance the ratio of compensation to benefits- Cost-shifting/sharing; new markets; consumerism; etc.
Recent Success Stories
• County
• Manufacturer
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A SOUND TOTAL REWARDS PROGRAM IS…
Strategically Aligned
Internally Equitable
Market Competitive
Supportive of Employees
Total Rewards Focused
Legally Sound
Affordable UnderstandableAudited
Regularly
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Implementation
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SPECTRUM OF PAY TRANSPARENCY ©
Source: PayScale 2019 Compensation Best Practices Report
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TOTAL REWARDS COMMUNICATIONS
Source: PayScale 2019 Compensation Best Practices Report
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BENEFITS OF FAIR PAY
Source: WorldatWork - Rasch, R. and Szypko, M. (2013). Perception is Reality: The Importance of Pay Fairness to Employees and Organizations.
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Questions
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