On October 23rd, 2014, we updated our
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Generational (Age) Differences Veterans – Older than 65 Boomers – 47 to 65 Gen X – 32 to 46 Gen Y - Younger than 31 Practical Optimistic Skeptical Hopeful Patient, Loyal, Hard working Teamwork, Cooperation Self-reliant Meaningful work Respectful of Authority Ambitious Risk Taking Diversity & change valued Rule followers Workaholic Work / Life Balance Technology Savvy
Total Rewards should be a part of an integrated set of solutions that should align with desired business objectives Revenue Growth Cost Efficiency Risk Management Business Objectives/Outcomes Customer Value Operations / Process Deal / Transaction Business Value Drivers Attraction / Selection Engagement/Performance Retention Human Capital Outcomes Leadership Development Performance Metrics Recruitment & Staffing Integrated Human Capital Solutions Organization Structure & Governance Total Rewards Selection & Assessment Solution Shaping Research/Analytics Communication HR Function Effectiveness Change Management / Project Management Technology/New Media
Total Rewards: Balancing multiple inputs is necessary to determine the right rewards designs Optimized Total Rewards Designs
Leadership input :
Business objectives/ value drivers
Workforce input :
Engagement/Retention forecasts associated with rewards changes
Rewards Cost :
Current rewards spend
Cost/savings forecasts associated with rewards changes
External input :
Legislation / tax
Planning: Articulate the total rewards philosophy that aligns with your business objectives C R Current position Required position to align with business objectives C C C C C C C C C R R R R R R R R C R R ILLUSTRATION One size fits all design Customized reward packages Linked to company performance Linked to individual performance Low variability based on performance High variability based on performance Service/Level oriented Performance/Value oriented Fixed costs Variable costs Company bears the cost Employee bears the cost Company bears the risk Employee bears the risk Base compensation below market median Base compensation above market median Incentive compensation below market median Incentive compensation above market median Benefits below market median Benefits above market median
Generally Traditional Monetary Compensation
Variable pay including bonuses
Sales compensation plans
Non-qualified deferred compensation plan*
Employee stock purchase plans
Defined Contribution savings – qualified plans
Defined Benefit pension – qualified plans
Defined Contribution savings – non-qualified plans
Defined Benefit pension – non-qualified plans*
Traditional: Performance & Business Outcomes
Effectively using your Rewards budget
Do your employees perceive that the company “significantly” (i.e. makes a difference in the eyes of the employees) differentiates the merit award?
Would alternative rewards be more effective in reinforcing employee engagement?
What alternative rewards do you use?
Diagnostics: Understand forecasted gaps between current and future work force required to meet growth objectives
Strategic workforce planning linked to growth objectives
Lines of business
Strategic job groups
Core job groups
Customer & Workforce demographics
Business Case: Engagement / Performance
Organizations scoring in the top quintile of talent management practices outperform their industry, as measured by return on shareholder value, by a remarkable 22%
The engagement of a firm’s talent has far reaching implications on its ability to outperform competitors and to maintain that edge going forward
Increased productivity in operations roles (40%)
Increased profit in general management roles (49%)
Increased revenue in sales roles (67%)
Source: McKinsey study (Axelrod, et al., 2010)
2010 Top Five Total Rewards Priorities
1. The cost of providing health care benefits
2. The ability of reward programs to attract, motivate, and retain talented employees
3. Clear alignment of Total Rewards strategy with business strategy and brand
4. The willingness of employees to pay for an increasing portion of benefit plan coverage and to manage their own “rewards budget”
5. The ability of reward programs to accommodate the varying needs and interests of different generations with distinctly different needs and priorities
Source : Deloitte and the International Society of Certified Employee Benefit Specialists
Base pay and benefits had a weaker relationship with the organization’s ability to foster high levels of employee engagement and motivation compared to nonfinancial incentives, intangible rewards and quality of leadership
2010 Global survey by WorldatWork, Loyola University Chicago and Hay Group, Impact of Rewards Programs on Employee Engagement .
Over the past 18 months, amid limited pay budgets, organizations increased their use of non-cash rewards as a means to enhance employee retention and engagement. Rewards offered more during this time period include communicating the value of total rewards to employees (27%), work-life programs (22%), formalized career paths (21%) and special project opportunities (20%).
Mercer’s 2010 Attraction and Retention Survey
Engagement / Retention through the use of Nonmonetary Rewards & Recognition
Choosing personal items from a catalog
Thanked publicly at a departmental function
Having lunch / dinner with the head of the organization
Receiving an extra day off
Being put on a desirable taskforce
Choosing a taskforce to be on
Getting a new piece of furniture
advancement opportunities, flexible schedules, and the opportunity to learn new skills
Rewards Recognizing / Driving Business Outcomes
Appreciation: Rewarding behavior / outcomes that have happened (past)
Motivation: Rewarding behaviors / outcomes that will happen (future)
Communication: Process which helps determine if reward is appreciation or motivation
Communication & Timing
Implementation: Allocation of communication investment? Source: Aon Consulting sponsored round table Conference Board Event New York City 2009
Approaching it the right way Customize Communications and Rewards
Think about Objectives
Think about Interests
Think about Touch points for each group
Multi-Generational Communication Preferences Communication World , March/April 2008 Veteran (Born Before 1946) Boomer (1946 - 1964) Gen X’er (1965 - 1979) Gen Y’er (1980 - 2000) STYLE Formal Eye-catching; fun CONTENT Chunk it down but give me everything Get to the point – what do I need to know? CONTEXT Relevance to the bottom line and my rewards Relevance to what matters to me ATTITUDE Accepting and trusting of authority and hierarchy OK with authority that earns their respect TACTICS Print; conventional mail; face-to-face dialogue; online tools and resources Online; some face-to-face meetings (if they’re really needed); games; technological interaction SPEED Available; handy Immediate; when I need it FREQUENCY In digestible amounts Constant
Multi-Generational Communication Preferences Communication World , March/April 2008 Veteran (Born Before 1946) Boomer (1946 - 1964) Gen X’er (1965 - 1979) Gen Y’er (1980 - 2000) STYLE Formal Semiformal Not so serious; irreverent Eye-catching; fun CONTENT Detail; prose-style writing Chunk it down but give me everything Get to the point – what do I need to know? If and when I need it, I’ll find it online CONTEXT Relevance to my security; historical perspective Relevance to the bottom line and my rewards Relevance to what matters to me Relevance to now, today and my role ATTITUDE Accepting and trusting of authority and hierarchy Accept the “rules” as created by the Veterans Openly question authority; often branded as cynics and skeptics OK with authority that earns their respect TACTICS Print; conventional mail; face-to-face dialogue or by phone: some online information and interaction Print; conventional mail; face-to-face dialogue; online tools and resources Online; some face-to-face meetings (if they’re really needed); games; technological interaction Online; wired; seamlessly connected through technology SPEED Attainable within reasonable time frame Available; handy Immediate; when I need it Five minutes ago FREQUENCY In digestible amounts As needed Whenever Constant
Engagement Communication Customization Take Aways
The medium is not the message
You must have a plan
The employee is at the center
IF COMMUNICATIONS NEED TO BE CUSTOMIZED FOR DIFFERENT KEY DEMOGRAPHIC GROUPS….. SHOULD REWARDS BE CUSTOMIZED ALSO?
Source: Multi Generational Workforce - 9/2008, WorldatWork
Non-monetary Reward & Recognition programs @Teva Programs Veteran (Born Before 1946) Boomer (1946 - 1964) Gen X’er (1965 - 1979) Gen Y’er (1980 - 2000) Special learning and development Flexible work schedule Mentoring programs Handwritten thank you note Introduce to key suppliers, customers or someone in senior management Recognize effort (not just results) Applaud their efforts — literally A few hours off pass Assignment Swap Elect them to the Wall of Fame Recognize the family / significant others Telecommuting
Non-monetary Reward & Recognition programs @Teva Programs Veteran (Born Before 1946) Boomer (1946 - 1964) Gen X’er (1965 - 1979) Gen Y’er (1980 - 2000)
Creating a High Impact Rewards Program
Managers, with HR support, must understand the dramatically different work styles, expectations, performance goals and personal-time needs of generational and other key demographic groupings that make up today’s workforce.
Managers, with HR support, must step carefully to get the best effort from all team members, while honoring and respecting key demographic group norms in work styles.
Strategic employee reward & recognition programs enable organizations to personalize the reward process and appeal to the multiple generations and cultures that characterize your workforce today and in the future.
The recognition moment should closely follow the act that is being recognized
This ensures the act is top-of-mind for the recipient and he/she fully understands why the actions were appreciated and aligned with the company’s values.
Recognition is for everyone
Reward is to differentiate contribution.
Therefore, high contributors may have different rewards than mid-level contributors
As Jack Welch said in his book Winning, “Everyone in the middle (80%) needs to be motivated and made to feel as if they truly belong.”
When measured appropriately, company leadership can begin to map patterns of recognition behavior and values adoption across the relevant demographic and geographic groups in the company.
Human Resource can provide greater insight into how employees from various key demographics, (gender, generations, cultures, etc) regard recognition and understand company values
This is important because the values should be universally applied to build a global, consistent company culture.
And it will enable the executives to begin to influence the company’s social (demographic) architecture to better achieve strategic business goals and the company mission.