CBIZ Human  Capital Services Total Reward Design for an Intergenerational Workforce
Introduction <ul><li>Edward R. Rataj </li></ul><ul><li>Managing Director, Compensation Consulting </li></ul><ul><li>Certif...
Overview <ul><li>Overview of generations </li></ul><ul><li>Compensation strategies for rewarding and motivating the inter-...
Why Specifically Focus on Generations? <ul><li>The workforce continues to change demographically and globally </li></ul><u...
One Note About Generalizations… Important!
* New to the workforce, characteristics still being defined Generations Born Age Traditionalists 1930-1945 66-81 Baby Boom...
The Emerging Workforce Has Different Values* *CEO Magazine Traditional (1930–1945) Boomers (1946–1964) Gen X (1965–1978) G...
Traditionalists - Characteristics <ul><li>Appreciate tradition and conformity; patriotic </li></ul><ul><li>Stability and s...
Traditionalists - Communication <ul><li>Face to face </li></ul><ul><li>Telephone </li></ul><ul><li>Formal </li></ul><ul><l...
Baby Boomers - Characteristics <ul><li>77 million strong! </li></ul><ul><li>“ Work hard, pay your dues” </li></ul><ul><ul>...
Baby Boomers - Communication Phone Personal interaction Meetings
Gen Xers - Characteristics <ul><li>More likely to be children of divorce and/or be children of working parents  </li></ul>...
Gen Xers - Communication Efficient technologies Email Voice mail Direct & Immediate
Gen Y - Characteristics <ul><li>Respect accomplishments rather than authority </li></ul><ul><li>Goal oriented, problem sol...
Gen Y - Communication Email and voice mail Instant messaging Text messaging Blogs Tweets
Millenials/Gen Z - Characteristics <ul><li>Just beginning to enter the workforce </li></ul><ul><li>Technology driven </li>...
Millenials/Gen Z - Communication <ul><li>Text messaging </li></ul><ul><li>Verbal and written communication skills may be l...
What does this mean for total reward design? <ul><li>Base salary </li></ul><ul><li>Incentives </li></ul><ul><li>Benefits <...
Base Salary <ul><li>Regardless of generation, salary must be market competitive to recruit and retain talent. </li></ul>Tr...
Designing a Market-Based Compensation System <ul><li>Plan and collect data </li></ul><ul><li>Ensure job documentation accu...
Designing Salary Structures Range Spread Midpoint Differential minimum midpoint maximum Typical Structure
Designing Salary Structures Range Spread Midpoint Differential minimum midpoint maximum Midpoint Differential minimum midp...
Incentives Traditional (1930–1945) Boomers (1946–1964) Gen X (1965–1978) Gen Y (Born 1979–1990) <ul><li>Appreciation & rec...
Incentives  <ul><li>Ensure incentive programs are aligned with overall organizational objectives </li></ul><ul><li>Develop...
Benefits Traditional (1930–1945) Boomers (1946–1964) Gen X (1965–1978) Gen Y (Born 1979–1990) <ul><li>Embrace defined bene...
Benefits  <ul><li>Consider offering high-deductible plan option </li></ul><ul><li>Think about adding a unique benefits lik...
Pay Increases Traditional (1930–1945) Boomers (1946–1964) Gen X (1965–1978) Gen Y (Born 1979–1990) <ul><li>Cost of Living ...
Pay Increases - Merit Matrix
Pay Increases - Merit Matrix
Pay Increases - Merit Matrix
Results Model fits  within budget
Pay Increases - Merit Matrix <ul><li>Common Pitfalls </li></ul><ul><ul><li>Structures out of alignment with market </li></...
Summary <ul><li>The intergenerational workforce brings different values, attitudes toward work, work styles, job satisfact...
Additional Considerations <ul><li>Nonprofit compensation </li></ul><ul><li>Executive compensation in closely held business...
CBIZ CompCasts CompCasts Nonprofit Quick Guide to Navigating Intermediate Sanctions How to Set Pay Ranges that are Fair an...
Questions? <ul><li>Ed Rataj, CCP </li></ul><ul><li>Managing Director – Compensation Consulting  </li></ul><ul><li>CBIZ Hum...
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Total Reward Design for an Intergenerational Workforce - Compensation Strategies

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Total Reward Design for an Intergenerational Workforce:

This presentation discusses:
• An overview of generations
• Compensation strategies for rewarding and motivating the inter-generational workforce including Base salary, Incentives, Benefits and Pay increases.

Ed Rataj is a nationally recognized compensation expert, Certified Compensation Professional and Managing Director of Compensation Consulting with CBIZ Human Capital Services.

For more information about CBIZ Human Capital Services, visit http://www.cbiz.com/page.asp?pid=6034.

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  • &amp;quot;How to Set Pay Ranges that are Fair and Effective&amp;quot; Business 21 Publishing www.b21pubs.com
  • Total Reward Design for an Intergenerational Workforce - Compensation Strategies

    1. 1. CBIZ Human Capital Services Total Reward Design for an Intergenerational Workforce
    2. 2. Introduction <ul><li>Edward R. Rataj </li></ul><ul><li>Managing Director, Compensation Consulting </li></ul><ul><li>Certified Compensation Professional (CCP) </li></ul><ul><li>Frequently quoted in national news publications such as the Wall Street Journal and Smartmoney.com </li></ul>
    3. 3. Overview <ul><li>Overview of generations </li></ul><ul><li>Compensation strategies for rewarding and motivating the inter-generational workforce: </li></ul><ul><ul><li>Base salary </li></ul></ul><ul><ul><li>Incentives </li></ul></ul><ul><ul><li>Benefits </li></ul></ul><ul><ul><li>Pay increases </li></ul></ul>
    4. 4. Why Specifically Focus on Generations? <ul><li>The workforce continues to change demographically and globally </li></ul><ul><li>For the first time, we have the largest number of generations (Traditionalists, Baby Boomers, Generation X, Generation Y and Millenials) in the workplace </li></ul><ul><li>Generations have varying values, motivations and perceptions of reward strategies </li></ul>
    5. 5. One Note About Generalizations… Important!
    6. 6. * New to the workforce, characteristics still being defined Generations Born Age Traditionalists 1930-1945 66-81 Baby Boomers 1946-1964 47-66 Gen Xers 1965-1978 33-46 Gen Yers 1979-1990 21-32 Gen Z/Millenials* 1991 & Later 20 & Younger
    7. 7. The Emerging Workforce Has Different Values* *CEO Magazine Traditional (1930–1945) Boomers (1946–1964) Gen X (1965–1978) Gen Y (Born 1979–1990) <ul><li>Conformity </li></ul><ul><li>Stability </li></ul><ul><li>Upward mobility </li></ul><ul><li>Security </li></ul><ul><li>Economic success </li></ul><ul><li>Personal and social expression </li></ul><ul><li>Idealism </li></ul><ul><li>Health/Wellness </li></ul><ul><li>Youth </li></ul><ul><li>Free agency and independence </li></ul><ul><li>Street smarts </li></ul><ul><li>Friendship </li></ul><ul><li>Cynicism </li></ul><ul><li>Hope about the future </li></ul><ul><li>Collaboration </li></ul><ul><li>Social Activism </li></ul><ul><li>Tolerance for diversity </li></ul><ul><li>Family centricity </li></ul>
    8. 8. Traditionalists - Characteristics <ul><li>Appreciate tradition and conformity; patriotic </li></ul><ul><li>Stability and security “You get a job…you keep a job” </li></ul><ul><li>Make a lasting contribution </li></ul><ul><li>Value appreciation for input and experience </li></ul><ul><li>Value financial security; thrifty </li></ul><ul><li>Economic success </li></ul><ul><ul><li>$1.7 trillion in buying power </li></ul></ul><ul><ul><li>50% of discretionary income -this is changing </li></ul></ul>66-81 years old
    9. 9. Traditionalists - Communication <ul><li>Face to face </li></ul><ul><li>Telephone </li></ul><ul><li>Formal </li></ul><ul><li>Handwritten personal note </li></ul>
    10. 10. Baby Boomers - Characteristics <ul><li>77 million strong! </li></ul><ul><li>“ Work hard, pay your dues” </li></ul><ul><ul><li>First generation of “workaholics”; focused on outstanding careers </li></ul></ul><ul><li>Idealism </li></ul><ul><li>Grew up during times of societal change </li></ul><ul><li>Value personal and social expression </li></ul><ul><li>A sense of community and belonging </li></ul><ul><li>Health/wellness/youth is critical </li></ul>47-66 years old
    11. 11. Baby Boomers - Communication Phone Personal interaction Meetings
    12. 12. Gen Xers - Characteristics <ul><li>More likely to be children of divorce and/or be children of working parents </li></ul><ul><ul><li>Independent; “Latch-key kids” </li></ul></ul><ul><li>Watched as parents were right-sized or down-sized and may have jaded view of loyalty to one company. </li></ul><ul><ul><li>First generation of “Job-hoppers” </li></ul></ul><ul><li>Training is security – If not learning then won’t be prepared for the future. </li></ul><ul><li>Thrive on responsibility, honesty, creative input </li></ul><ul><li>Grew up with technology, savvy with media and information </li></ul>33-46 years old
    13. 13. Gen Xers - Communication Efficient technologies Email Voice mail Direct & Immediate
    14. 14. Gen Y - Characteristics <ul><li>Respect accomplishments rather than authority </li></ul><ul><li>Goal oriented, problem solvers </li></ul><ul><li>Street smart and savvy </li></ul><ul><li>Born in the time of the “child” – praised constantly, everyone is a winner </li></ul><ul><li>Great multi-taskers – been doing multiple activities their whole life </li></ul><ul><li>Intent on making a difference in their communities </li></ul>21-32 years old
    15. 15. Gen Y - Communication Email and voice mail Instant messaging Text messaging Blogs Tweets
    16. 16. Millenials/Gen Z - Characteristics <ul><li>Just beginning to enter the workforce </li></ul><ul><li>Technology driven </li></ul><ul><li>Views communication as an instant – anytime, anywhere </li></ul><ul><li>Like Gen Y, are great multi-taskers – been doing multiple activities their whole life </li></ul><ul><li>Exposed to classrooms and teams rich in cultural, religious and ethnic diversity </li></ul><ul><li>Learned conflict-negotiation skills in school </li></ul>20 and younger
    17. 17. Millenials/Gen Z - Communication <ul><li>Text messaging </li></ul><ul><li>Verbal and written communication skills may be lacking </li></ul><ul><li>Large social networks </li></ul><ul><li>No expectation of privacy </li></ul>
    18. 18. What does this mean for total reward design? <ul><li>Base salary </li></ul><ul><li>Incentives </li></ul><ul><li>Benefits </li></ul><ul><li>Pay Increases </li></ul>
    19. 19. Base Salary <ul><li>Regardless of generation, salary must be market competitive to recruit and retain talent. </li></ul>Traditional (1930–1945) Boomers (1946–1964) Gen X (1965–1978) Gen Y (Born 1979–1990) <ul><li>Loyalty to organization </li></ul><ul><li>Internal competitiveness </li></ul><ul><li>Hired guns/ mercenaries </li></ul><ul><li>Accessing opportunity </li></ul>
    20. 20. Designing a Market-Based Compensation System <ul><li>Plan and collect data </li></ul><ul><li>Ensure job documentation accuracy </li></ul><ul><li>Complete market analysis </li></ul><ul><li>Design pay structures </li></ul><ul><li>Model implementation costs </li></ul><ul><li>Assess internal equity </li></ul><ul><li>Create procedure manual </li></ul><ul><li>Report results </li></ul>
    21. 21. Designing Salary Structures Range Spread Midpoint Differential minimum midpoint maximum Typical Structure
    22. 22. Designing Salary Structures Range Spread Midpoint Differential minimum midpoint maximum Midpoint Differential minimum midpoint maximum Market Structure “ Gen Y” Structure
    23. 23. Incentives Traditional (1930–1945) Boomers (1946–1964) Gen X (1965–1978) Gen Y (Born 1979–1990) <ul><li>Appreciation & recognition important </li></ul><ul><li>Plaques, certificates, employee of the month </li></ul><ul><li>Individual rewards </li></ul><ul><li>Reward for results </li></ul><ul><li>Team rewards </li></ul><ul><li>Constant feedback </li></ul><ul><li>Spot awards useful </li></ul>
    24. 24. Incentives <ul><li>Ensure incentive programs are aligned with overall organizational objectives </li></ul><ul><li>Develop line-of-site performance objectives </li></ul><ul><li>Consider mix of short-term and long-term awards along with spot awards and non-monetary recognition programs </li></ul>
    25. 25. Benefits Traditional (1930–1945) Boomers (1946–1964) Gen X (1965–1978) Gen Y (Born 1979–1990) <ul><li>Embrace defined benefit retirement programs, including social security </li></ul><ul><li>Eligible for Medicare </li></ul><ul><li>Make employment decisions based upon benefits offerings </li></ul><ul><li>View social security as a “ponzi scheme” </li></ul><ul><li>“ Pay me now, I’ll take care of myself” mentality </li></ul><ul><li>Prefer flexible benefit options </li></ul><ul><li>Value creative and time off benefits </li></ul><ul><li>More focused on salary than benefits </li></ul>
    26. 26. Benefits <ul><li>Consider offering high-deductible plan option </li></ul><ul><li>Think about adding a unique benefits like veterinary care insurance or sabbatical leave to attract and retain Gen Y </li></ul><ul><li>Work/life balance, flexible work environment and wellness programs key </li></ul><ul><li>Consider benefits of Early Retirement Incentive Program (ERIP) if organizational fit </li></ul>
    27. 27. Pay Increases Traditional (1930–1945) Boomers (1946–1964) Gen X (1965–1978) Gen Y (Born 1979–1990) <ul><li>Cost of Living Adjustments (COLA) important </li></ul><ul><li>Seniority and internal equity important </li></ul><ul><li>Pay increases should be tied to performance </li></ul><ul><li>In constant communication with friends, will share pay increase information </li></ul><ul><li>Entire group may leave if perceived as unfair </li></ul>
    28. 28. Pay Increases - Merit Matrix
    29. 29. Pay Increases - Merit Matrix
    30. 30. Pay Increases - Merit Matrix
    31. 31. Results Model fits within budget
    32. 32. Pay Increases - Merit Matrix <ul><li>Common Pitfalls </li></ul><ul><ul><li>Structures out of alignment with market </li></ul></ul><ul><ul><ul><li>Garbage in, garbage out </li></ul></ul></ul><ul><ul><ul><li>May improperly allocate limited salary increase dollars based upon the current competitiveness of pay </li></ul></ul></ul><ul><ul><li>Performance scores not calibrated </li></ul></ul><ul><ul><ul><li>Supervisors can learn to game the system </li></ul></ul></ul><ul><ul><ul><li>Cheating is rewarded </li></ul></ul></ul><ul><ul><ul><li>Top performers may not be properly rewarded </li></ul></ul></ul><ul><ul><li>Matrix results outside of budget </li></ul></ul>
    33. 33. Summary <ul><li>The intergenerational workforce brings different values, attitudes toward work, work styles, job satisfaction criteria, engagement beliefs, learning styles, expectations and levels of commitment to the workplace </li></ul><ul><li>Organizations that understand this and design rewards programs to meet generational needs will have the competitive edge </li></ul>
    34. 34. Additional Considerations <ul><li>Nonprofit compensation </li></ul><ul><li>Executive compensation in closely held businesses </li></ul><ul><li>Fair pay based on race and gender </li></ul><ul><li>Online performance management </li></ul><ul><li>Sales compensation </li></ul>
    35. 35. CBIZ CompCasts CompCasts Nonprofit Quick Guide to Navigating Intermediate Sanctions How to Set Pay Ranges that are Fair and Effective Creating and Using a Salary Increase Matrix Fair Pay: Maintaining Equality in Today’s Litigious Society In development at: www.cbiz.com/hr/compcasts
    36. 36. Questions? <ul><li>Ed Rataj, CCP </li></ul><ul><li>Managing Director – Compensation Consulting </li></ul><ul><li>CBIZ Human Capital Services </li></ul><ul><li>(314) 692-5884 </li></ul><ul><li>[email_address] </li></ul>

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