HR’S ROLE INHEALTH CAREREFORMReevaluating Your Total Rewards Strategy                                           1
Session Objectives Business Impact of Pay or Play Decisions for HR Implications to Total Rewards Strategy Role of Benef...
T he Af for dable Car eActThe Affordable Care Act (ACA) offers employers thechoice to “pay or play” Employers can offer h...
Wer e You Ready forHCR THEN?In 2010, most employers predicted reform would have no impacton workforce management objective...
Are You Ready forHCR NOW?Fewer than half of humanresources and employee benefitsdecision makers are confidentthat they un...
Health Car e Refor mDrives BusinessOutcomesHow will employers respond?Most Employers Expect to “Play” by Retaining a Medic...
T he Impact of HealthExchangesWhat is the difference between private and publichealth exchanges? Private exchange is fund...
Defined Benefit vs.Defined Contribution    Defined Benefit         Defined Contribution Employer contributes       Emplo...
PollWhat impact will Reform have on my company’s ability to achieveworkforce management goals (productivity, attraction an...
Health Car e Refor mDrives BusinessOutcomes“Pay or Play” decision impacts: Different workforce composition- more part-tim...
Implications to TotalRewar ds Str ate g yHealth Care Reform will have a direct impact on: Attraction and retention Total...
Implications to TotalRewar ds Str ate g y                        12
Total Rewar dsStr ate g y- KeyConsider ations Does your Total Rewards program attract, retain and engage the  talent you ...
PollAre you having difficulties with attracting and retaining toptalent and those with critical skills in your organizatio...
Attr action andRetention IssuesEvolve AroundCritical Skills  % of Companies Citing                                        ...
Employee ValuePr oposition (EVP)Total Rewards is a key component of a company’s EVP.       Business Strategy              ...
W hat is yourEmployee ValuePr oposition?Benefits           Medical                  Prescription Drug Plan    Legally R...
W hy is it Impor tant?                      Optimal Mix       Employ           Drive The Company’s                      of...
Attr acting and RetainingCritical Wor kfor ceSe gmentsHo                     What are the current                      dem...
T he Reality is…Organizations Must Consider: Understanding the different segments of their workforce and  implementing ta...
PollDo you think that your top competitors will maintainemployer sponsored health insurance benefits? 1.Yes 2. No         ...
EmployeeEnga gementDefinition of a Fully Engaged Employee Is enthusiastic and inspired by his/her work Is willing to “go...
W hy EmployeeEnga gement Matter s                                        It is estimated that disengagement costs         ...
T he Impor tance of Health Car eBenefits   Employers underestimate the importance of health care benefits to   attracting ...
T he Role of Benefitsin EmployeeEnga gementOrganizations Must Consider: An effective benefits strategy tailored to the ne...
W hat Do EmployeesWant? The current system of job-based                                                     Value in  ben...
W hat Do Employer sWant? benefits to employees as part of the employee’s total Continue to offer    compensation package ...
W hat Can Employer sDo? Continue to Reduce Benefits / Cost Shift to Employees Offer Value Based Benefits or Wellness Incen...
Employer ConsiderationsBefore dropping health coverage, employers shouldconsider: Tax implications – employer and employe...
Implications to TotalRewar ds Str ate g yHealth Care Reform will have a direct impact on: Attraction and retention Total...
Total Rewar dsStr ate g y- KeyConsider ations and engage theDoes your Total Rewards program attract, retain  talent you n...
Take a Str ate gic ViewHealth care strategy, as an element of the Employee ValueProposition, is formed through internal di...
Do Your Homewor kAs with any major change initiative, people need to be involved tobuild acceptance and adjust behaviors....
PollIf Reform increases your organization’s health care costswould you:1. Pass cost increase toemployee- increaseshare of ...
Health Car e Refor m isa Catal yst for ChangeEmployers now have a significant opportunity to reshape theirEmployee Value P...
Education is Key Educate management on reform and their implications Model financial impact of reform on the organizatio...
Change Mana gementAs with any major change initiative, people need to be involved tobuild acceptance and adjust behaviors:...
Pr epar e Mana gementfor ChangeUse health care strategy to inform management how Health CareReform continues to affect the...
Pr epar e Employeesfor ChangeIn 2010, most employers predicted reform would have no impacton workforce management objectiv...
Achieving the OptimalTotal Rewar dsStr ate g yOrganizations Must: Understand the critical workforce segments and implemen...
Key Takeaways Align Employee Value Proposition and Total Rewards Strategy Engage leaders and employees regularly and act...
Questions?             42
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  • So more and more organizations are readdressing the need to have a competitive compensation program that attracts and retains employees AND drives high performance Aside from competitiveness, it’s important when you have limited dollars and budgets, that you allocate the top rewards to your highest performers and to those in mission critical roles You just can’t fall too far behind or you’ll risk losing key talent when the economy turns around…
  • (Extremely/Very Confident: Fewer than half of human resources and employee benefits decision makers across all sized companies are highly confident that they understand employer responsibilities under the ACA. Small = 20%, Midsized = 17%, Large = 41%). ADP Research Institute, “Talent Management in 2011: Perceptions and Realities” • According to participants in a recent Aberdeen Group survey, six out of the 10 top challenges for achieving business goals are HR related and span all aspects of talent management, including recruiting, performance management, succession planning, and compensation. What’s more, recent research shows that many companies are struggling to fill critical jobs – whether by recruiting external candidates or promoting internal qualified candidates – due to a lack of the necessary job skills. Source Aberdeen Group, “ Quarterly Business Review Survey,” 2011, 1). S ix out of the 10 top challenges for achieving business goals are HR related and span all aspects of talent management, including recruiting, performance management, succession planning, and compensation . The implications of health care reform will be far reaching for cost management, talent management and productivity. To position themselves for the long term, employers need to model the fi facial implications, the myriad business scenarios and the impact of health care reform legislation on their current employee value proposition. Keep abreast of evolving regulatory interpretation One of the most prominent features of the PPACA is its complexity and sheer volume. As a result, interpretive regulations to implement the law will be required for years to come. Keeping abreast of this evolving guidance and sharing the emerging implications with key stakeholders, including boards of directors and senior management, is critical. Gather and analyze necessary information (e.g., competitive practices, cost drivers, industry trends, benchmark data, workforce demographics, and results from employee satisfaction surveys). Consider all internal and external factors that may influence and guide your recommendation for a health-care strategy. Understand your health-plan offerings and plan costs. Know the provisions of the new health-care reform law. Comply with all legal requirements. Stay up-to-date on legislative and regulatory updates. Source Aberdeen Group, “ Quarterly Business Review Survey,” 2011, 1).
  • Mid-term: More utilization of private and public exchanges Long-term: Will ACA be repealed?
  • So more and more organizations are readdressing the need to have a competitive compensation program that attracts and retains employees AND drives high performance Aside from competitiveness, it’s important when you have limited dollars and budgets, that you allocate the top rewards to your highest performers and to those in mission critical roles You just can’t fall too far behind or you’ll risk losing key talent when the economy turns around…
  • Health care reform is forcing employers rethink their employee value proposition and educate workers about how their health-related behaviors affect the bottom line.
  • Anyone here a member of WorldatWork? WorldatWork is the professional association of HR professionals in compensation, worklife, and overall total rewards. I am a big believer in their total rewards model which emphasizes that you have to look at rewards more holistically—Compensation is one piece of the employee value proposition. But you can’t just focus on compensation. You have to look at the bigger picture of “total rewards” which also includes benefits, work-life balance, performance and recognition, and career development opportunities. It is all about the integration of these five elements to effectively attract, retain, and motivate the talent required to achieve the desired business results. Key point…..a satisfied and engaged workforce….satisfied and engaged workforce creates a high performance work culture and drives results. The portfolio should allow employers to align what they expect and reward with what employees want and have to deliver. Align with business strategy Is optimized to deliver the right ROI for the right level of cost and risk Drivers required employee behaviors
  • According to a recent study by the Adberdeen Group, Six out of the 10 top challenges for achieving business goals are HR Related Many companies are struggling to fill critical jobs In fact, by the end of last year, we were already seeing attraction and retention issues particularly among high potentials and top performers… When you look at retention--- Companies are not having a difficult time retaining employees EXCEPT for those in critical skills and to some degree, high performers. People are not quitting their jobs—you can see that the voluntarily quit rates are much less now…1.3% than 3.1% in 2007. Nevertheless, the really top performers and those who are highly skilled are highly mobile, and employers are concerned about losing them. Other Notes: Before recession, approximately 5 million employees per month left their jobs; NOW it’s fewer than 3.5 million people per month have changed jobs over the past two years—this is a 30% DROP in voluntary turnover. While unemployment remains high indicating an abundance of available workers- employers say they are having problems attracting critical skill and high performing employees
  • What is your Employee Value Proposition? An optimal mix of rewards elements to balance company and employee needs Recognition: Acknowledges or gives special attention to employee actions, efforts, behavior or performance
  • What Positions are going to have the biggest impact to your company’s bottom line? What positions are the most difficult to fill? Identify and Evaluate Workforce Segments Level of difficulty of sourcing for the skills/roles within this segment Level of costs involved in hiring employees within this segment Level of costs involved in training the employees within this segment Level of future availability of the roles/skills within this segment Degree of specialized skills or knowledge required for roles within this segment Level of current market value (compensation offered) of the roles within this segment Degree of competition for this segment in the marketplace Today’s workforce is more global, celebrates greater diversity and employs more knowledge workers than ever before. With an increasingly diverse workforce, no single reward element will be a value driver. The implication is that HR practitioners and managers who understand their employees’ life stages and rewards priorities can begin to fashion a more relevant and meaningful total rewards package, thereby increasing their odds of retaining employees and driving down turnover and replacement costs. If you are not already, you should regularly be reviewing the organization’s workforce, based on various life stages: Social Statuses Age Years of experience in current field Years of experience in organization Number and age of children Number and age of adult dependents Marital status Supervisor status Employment status of spouse/partner Gender Race/ethnicity Income What are the organizational capabilities and competencies needed to meet these challenges? Do they currently exist? If not, where are the gaps? What are the current demand/supply characteristics of your labor market? Is a particular skill set or expertise in especially high demand at present? Which position are most critical to the company’s success? Which are the hardest to find and keep - those that create competitive advantage? How competitive is your industry for human capital? What is the availability of critical talent in your industry? What are your key challenges with respect to attracting, retaining and motivating the right talent? Have you identified the key competencies and skills that most directly impact the success of your people and your business?
  • So more and more organizations are readdressing the need to have a competitive compensation program that attracts and retains employees AND drives high performance Aside from competitiveness, it’s important when you have limited dollars and budgets, that you allocate the top rewards to your highest performers and to those in mission critical roles You just can’t fall too far behind or you’ll risk losing key talent when the economy turns around… Today, the most desirable job candidates evaluate not just salary, but total reward packages that include a mixture of base pay, bonus potential, and the quality and value of the complete benefits package. There are a variety of recruiting websites that provide checklists and tools to help employees and job applicants with the analysis of total rewards.
  • Definition of a fully engaged employee Is enthusiastic and inspired by his/her work Is willing to “go the extra mile” Believes that they can affect quality, customer service, and business costs Believes in the organization and works to make it better Understands organizational context and the “bigger picture” Respects colleagues and help others Remains at the organization despite opportunities elsewhere
  • The best-performing companies know that an employee engagement improvement strategy linked to the achievement of corporate goals will help them win in the marketplace. Beyond the significant differences engaged workgroups show in productivity, profitability, safety incidents, and absenteeism versus disengaged workgroups, we have proven that engaged organizations have 2.6 times the earnings per share (EPS) growth rate compared to organizations with lower engagement in their same industry. Watson Wyatt's 2008/2009 WorkUSA Report, Driving Business Results Through Continuous Engagement , released Feb. 10, 2009, reports that highly-engaged employees are twice as likely as their less-engaged peers to be top performers. Moreover, when employees are highly engaged, their companies enjoy 26 percent higher employee productivity, have lower turnover risk and are more likely to attract top talent. Such workers miss 20 percent fewer days of work, and three-quarters of them exceeded or far exceeded expectations in their most recent performance review. Additionally, highly-engaged workers tend to be more supportive of organizational change initiatives and resilient in the face of change. “ During periods of turmoil—when the organization is undertaking cost-reduction measures, consolidations or other dramatic change events that will profoundly impact employees—maintaining or enhancing employee engagement can be critical to the organization’s return to profitability,” the report notes. Watson Wyatt surveyed more than 13,000 full-time U.S. workers in May and June 2008, before the full advent of the financial crisis.
  • So more and more organizations are readdressing the need to have a competitive compensation program that attracts and retains employees AND drives high performance Aside from competitiveness, it’s important when you have limited dollars and budgets, that you allocate the top rewards to your highest performers and to those in mission critical roles You just can’t fall too far behind or you’ll risk losing key talent when the economy turns around…
  • So more and more organizations are readdressing the need to have a competitive compensation program that attracts and retains employees AND drives high performance Aside from competitiveness, it’s important when you have limited dollars and budgets, that you allocate the top rewards to your highest performers and to those in mission critical roles You just can’t fall too far behind or you’ll risk losing key talent when the economy turns around…
  • The implications of health care reform will be far reaching for cost management, talent management and productivity. To position themselves for the long term, employers need to model the fi facial implications, the myriad business scenarios and the impact of health care reform legislation on their current employee value proposition. Keep abreast of evolving regulatory interpretation One of the most prominent features of the PPACA is its complexity and sheer volume. As a result, interpretive regulations to implement the law will be required for years to come. Keeping abreast of this evolving guidance and sharing the emerging implications with key stakeholders, including boards of directors and senior management, is critical. Gather and analyze necessary information (e.g., competitive practices, cost drivers, industry trends, benchmark data, workforce demographics, and results from employee satisfaction surveys). Consider all internal and external factors that may influence and guide your recommendation for a health-care strategy. Understand your health-plan offerings and plan costs. Know the provisions of the new health-care reform law. Comply with all legal requirements. Stay up-to-date on legislative and regulatory updates.
  • Health care is a catalyst for rethinking Total Rewards Continually mounting health care costs and the implication of health care reform are converging to ignite a new and different dialogue about health benefits within total rewards CFOs must rethink health care within unit labor costs in our global economy and are considering reducing costs/volatility or exiting health benefits HR leaders often see health care as crowding out other elements of total rewards and are increasingly receptive to more aggressive trend mitigation and workforce health improvement strategies Wellbeing is a theme often heard with senior HR leaders. The concept ties work-life balance, work environment, financial security, health-wealth attainment and support resources to help employees in achieving their goals With the advent of health reform, health care has become a total business issue
  • The potential impact of health care-related decisions on: Competitive advantage Reinvesting money in other areas of total rewards offerings (e.g., wages, salaries) Employee expectations Employee relations Presenteeism Disability claims Absenteeism Organizational productivity Employee engagement Health and productivity Attraction and retention Company reputation Employee morale Employee satisfaction
  • Health care is a catalyst for rethinking Total Rewards Continually mounting health care costs and the implication of health care reform are converging to ignite a new and different dialogue about health benefits within total rewards CFOs must rethink health care within unit labor costs in our global economy and are considering reducing costs/volatility or exiting health benefits HR leaders often see health care as crowding out other elements of total rewards and are increasingly receptive to more aggressive trend mitigation and workforce health improvement strategies Wellbeing is a theme often heard with senior HR leaders. The concept ties work-life balance, work environment, financial security, health-wealth attainment and support resources to help employees in achieving their goals With the advent of health reform, health care has become a total business issue “ culture of health” environment sends a strong message that senior leaders are concerned about employee well-being. Finally, engaged employees are far more likely to devote discretionary effort to their jobs, which in turn leads to performance improvement for the organization.
  • So more and more organizations are readdressing the need to have a competitive compensation program that attracts and retains employees AND drives high performance Aside from competitiveness, it’s important when you have limited dollars and budgets, that you allocate the top rewards to your highest performers and to those in mission critical roles You just can’t fall too far behind or you’ll risk losing key talent when the economy turns around…
  • Human Capital is an Asset … Manage it Whether a company competes on the basis of productivity, innovation, customer loyalty, efficiency, speed, or agility, the workforce has a make-or-break impact on those results . It is important to have the right talent, with the right skills, in the right place, at the right time, and at the right cost .
  • Hcr strategies for hr february 2013 wi_combined_2 7 13 mah

    1. 1. HR’S ROLE INHEALTH CAREREFORMReevaluating Your Total Rewards Strategy 1
    2. 2. Session Objectives Business Impact of Pay or Play Decisions for HR Implications to Total Rewards Strategy Role of Benefits in Employee Engagement Key Considerations for Achieving an Optimal Total Rewards Strategy 2
    3. 3. T he Af for dable Car eActThe Affordable Care Act (ACA) offers employers thechoice to “pay or play” Employers can offer health insurance to their workforce or pay a non-deductible tax penalty to the IRS Health care exchanges provide an open market where customers can pick the right plan at the right price for their needs 3
    4. 4. Wer e You Ready forHCR THEN?In 2010, most employers predicted reform would have no impacton workforce management objectives.Improving productivity 72%Engaging employees in driving business results 74%Attracting and retaining talent 67%Providing effect total rewards package 49%Health care reform is forcing employers rethink their employeevalue proposition and educate workers about how theirhealth-related behaviors affect the bottom line. 4
    5. 5. Are You Ready forHCR NOW?Fewer than half of humanresources and employee benefitsdecision makers are confidentthat they understand employerresponsibilities under the ACAMore than 50% of small and midsized companies are not preparedto provide the SBC, and a third of large companies are also notprepared for this requirementRoughly a fifth to a third donot or are not sure if theyexpect some degree of impactresulting from theestablishment of publicSource: ADP Research Institute Survey May 2012Exchanges on January 1, 2014 5
    6. 6. Health Car e Refor mDrives BusinessOutcomesHow will employers respond?Most Employers Expect to “Play” by Retaining a Medical Programafter 2014 15% "Pay" options 13% 67% "Play" options 67% Finance 18% Dont know HR 20% Source: 2011 Towers Watson-Forbes Survey: Opportunity to Align Cost and Talent Objectives 6
    7. 7. T he Impact of HealthExchangesWhat is the difference between private and publichealth exchanges? Private exchange is funded using a defined contribution approach Under this plan, the employer funds a defined account on a pre- tax basis for each eligible employee who then purchases health coverage within the exchange 33000516 Private corporate exchanges are considered employer-sponsored health coverage 7
    8. 8. Defined Benefit vs.Defined Contribution Defined Benefit Defined Contribution Employer contributes  Employer contributes finite amount towards finite amount towards employee’s health employee’s health insurance insurance Variable employer cost  Employer controls of health care annual cost increases Uncertain annual health  Increased product care cost increases options selected by Limited product options employee selected by employer  Recommendation Limited decision engine to identify best support for choosing option for employee health plan 88
    9. 9. PollWhat impact will Reform have on my company’s ability to achieveworkforce management goals (productivity, attraction and retention,competitive rewards package)?1. Positive Impact2. No impact3. Negative Impact 10 9
    10. 10. Health Car e Refor mDrives BusinessOutcomes“Pay or Play” decision impacts: Different workforce composition- more part-time workers Reallocation of total rewards package- additional compensation in lieu of health insurance More health care choices for employees- workforce uncertainty Corporate image and perception Internal and external administrative challenges (data gathering, tracking and reporting) Competition for critical talent 10
    11. 11. Implications to TotalRewar ds Str ate g yHealth Care Reform will have a direct impact on: Attraction and retention Total Rewards mix Employee engagement Competitive position in the marketplaceEmployers must take into consideration: Organizational Philosophy/ Mission/Values Competition for talent Employer Value Proposition 11
    12. 12. Implications to TotalRewar ds Str ate g y 12
    13. 13. Total Rewar dsStr ate g y- KeyConsider ations Does your Total Rewards program attract, retain and engage the talent you need? Does your Total Rewards program align employee behavior with the organization’s overall strategic objectives? What are the tradeoffs for balancing employer and employee objectives? Do employee understand the value of their Total Compensation package? 13
    14. 14. PollAre you having difficulties with attracting and retaining toptalent and those with critical skills in your organization? 1. Yes 2. No 10 14
    15. 15. Attr action andRetention IssuesEvolve AroundCritical Skills % of Companies Citing 2007 2008 2009 2010 2011 RETENTION Difficulties Critical-skill employees 49% 47% 16% 31% 36% Top-performing employees 40% 37% 14% 25% 28% All employees 27% 19% 5% 11% 11% Quit rate 2.1% 1.9% 1.2% 1.3% 1.3% Number of quits per month (in millions) 3.1 2.7 1.7 1.8 1.9Sources: 2011/2012 Talent Management and Rewards Study, Towers Watson and the U.S. Bureau of Labor Services 15
    16. 16. Employee ValuePr oposition (EVP)Total Rewards is a key component of a company’s EVP. Business Strategy Business Results Organizational Context Employee Performance Human Capital Practice Financial Performance Brand Promise Customer Engagement 16
    17. 17. W hat is yourEmployee ValuePr oposition?Benefits  Medical  Prescription Drug Plan  Legally Required /  Dental  Life Insurance Mandated (Unemployment, Social  Vision  EAP Security, Workers’  FSA  Retirement (DB and Compensation, Medicare DC) and State Disability)Comp  Fixed Pay (aka base  Variable Pay (at risk) pay)Performance  Performance and Goal  Self, Peer and 360  Formal or informaland Setting degree feedback  Cash or noncashRecognition  Ongoing coaching and  Rewards and rewards feedback RecognitionDevelopment  Tuition reimbursement  Corporate universities  Internshipsand Career and / or discounts  Coaching / Mentoring  ApprenticeshipsOpportunities  Attendance at outside  On-the-job learning  Job rotations seminarsWork-Life  Health and Wellness  Workplace Flexibility  Community Involvement  Caring for Dependents  Paid & Unpaid Time Off  Culture Change Initiatives 17
    18. 18. W hy is it Impor tant? Optimal Mix Employ Drive The Company’s of Reward Top Talent Business Ability To Elements That Is Success Attract 1. Compensation  Engaged  Performance Motivate 2. Benefits  Satisfied  Results Retain 3. Work-Life 4. Performance & Recognition 5. Development & Career Opportunities 18
    19. 19. Attr acting and RetainingCritical Wor kfor ceSe gmentsHo What are the current demand / supply characteristics of your labor market? Is a particular skill set or expertise in especially high demand? Which positions are most critical to the company’s success? Which positions are the hardest to find and keep? 19
    20. 20. T he Reality is…Organizations Must Consider: Understanding the different segments of their workforce and implementing tailored strategies to attract, develop and retain them Falling too far behind increases the risk of losing key talent when the economy turns around 68% of employees said their benefits influence whether they choose to stay in their current job (Source: MetLife; 7th Annual Study of Employee Benefits Trends) Job candidates evaluate not only salary but total rewards packages 20
    21. 21. PollDo you think that your top competitors will maintainemployer sponsored health insurance benefits? 1.Yes 2. No 10 21
    22. 22. EmployeeEnga gementDefinition of a Fully Engaged Employee Is enthusiastic and inspired by his/her work Is willing to “go the extra mile” Believes they can affect quality, customer service, and business costs Believes in the organization and works to make it better Understands organizational context and the “bigger picture” Respects colleagues and helps others Remains at the organization despite opportunities elsewhere 22
    23. 23. W hy EmployeeEnga gement Matter s It is estimated that disengagement costs companies $350 Billion per year in lost productivity.1  Higher productivity  Lower turnover  Attract top talent  Enhanced reputation  Improved customer satisfaction and loyalty  Reduced absenteeism  Sustainable growth  Resilient in the face of changeSource: 1 Gallup August 2009 Employee Engagement Index 23
    24. 24. T he Impor tance of Health Car eBenefits Employers underestimate the importance of health care benefits to attracting employees All Employees High-Potential Employees Rank Employers Employees Rank Employers Employees 1 Base Pay Job Security 1 Challenging work Job Security 2 Organization’s Base Pay 2 Career development Base pay mission and opportunities values 3 Organization’s Health care benefits 3 Organization’s Career development reputation as a mission, vision and opportunities great place to values work 4 Career Length of commute 4 Base pay Promotion opportunity development opportunities 5 Challenging work Vacation/PTO 5 Organization’s Health care benefits financial performance 24Source: Towers Watson 2011 Talent Management and Rewards Survey
    25. 25. T he Role of Benefitsin EmployeeEnga gementOrganizations Must Consider: An effective benefits strategy tailored to the needs of the workforce creates a positive brand image Sends a message • We care about our employees • You are joining a healthy and engaged team A recent MetLife study noted that 68% of employees said their benefits influence whether or not they choose to stay in their current job Gather and analyze information (benchmarking, demographics, surveys) Inventory current benefits offerings. Do they align with overall benefits strategy? 25
    26. 26. W hat Do EmployeesWant? The current system of job-based Value in benefit coverage restricts choice Employer and that employees greatly Benefits value being able to exercise that choice Employees value choice in Provide Change more health plan offerings Options for Would be Slow Employees most often selected Employees plans within the same price range as their current employer- offered plans 26 26
    27. 27. W hat Do Employer sWant? benefits to employees as part of the employee’s total Continue to offer compensation package Source: 2012 Survey on Employer Health Benefit Plans and Preferences by Oliver Wyman 27 27
    28. 28. W hat Can Employer sDo? Continue to Reduce Benefits / Cost Shift to Employees Offer Value Based Benefits or Wellness Incentives Offer Narrow Networks / Implement Compliance Models Get Out – Move Employees to Public Exchange Defined Contribution with Private Exchange 28 28
    29. 29. Employer ConsiderationsBefore dropping health coverage, employers shouldconsider: Tax implications – employer and employee premiums are pre-tax shielded from FICA and income taxes Coverage in the exchange may be inferior to employer sponsored health plans 33000516 Moving to the exchange is an all or nothing proposition 29
    30. 30. Implications to TotalRewar ds Str ate g yHealth Care Reform will have a direct impact on: Attraction and retention Total Rewards mix Employee engagement Competitive position in the marketplaceEmployers must take into consideration: Organizational Philosophy/ Mission/Values Competition for talent Employer Value Proposition 30
    31. 31. Total Rewar dsStr ate g y- KeyConsider ations and engage theDoes your Total Rewards program attract, retain talent you need? Does your Total Rewards program align employee behavior with the organization’s overall strategic objectives? What are the tradeoffs for balancing employer and employee objectives? Do employee understand the value of their Total Compensation package? 31
    32. 32. Take a Str ate gic ViewHealth care strategy, as an element of the Employee ValueProposition, is formed through internal discovery, internalphilosophy and competitive pressures.How does this decision affect employees? Your competitivepositioning?Would these dollars be reinvested elsewhere in Total RewardPortfolioWould you lose control over the companys investment ofworkforce health?Can you still influence employee well-being and productivity?Group benefits plan vs. private exchange? 32
    33. 33. Do Your Homewor kAs with any major change initiative, people need to be involved tobuild acceptance and adjust behaviors. Gather and analyze information (benchmarking, demographics, surveys) Consider internal and external factors that may influence your health care strategy Inventory current benefits offerings. Do they align with overall benefits strategy? Understand your health plan offerings and costs Know the provisions of the new health-care reform law 33
    34. 34. PollIf Reform increases your organization’s health care costswould you:1. Pass cost increase toemployee- increaseshare of health costspaid by employee2. Reduce health benefits3. Absorb cost in thebusiness 10 34
    35. 35. Health Car e Refor m isa Catal yst for ChangeEmployers now have a significant opportunity to reshape theirEmployee Value Proposition and Total Rewards strategy to: Ensure competitiveness while managing costs Align employer and employee goals Update Total Rewards programs to maximize employee engagement Enhance corporate image through effective communication and change management programs 35
    36. 36. Education is Key Educate management on reform and their implications Model financial impact of reform on the organization Educate employees on reform and their implication Reexamine your benefits strategy regularly 36
    37. 37. Change Mana gementAs with any major change initiative, people need to be involved tobuild acceptance and adjust behaviors: Significant effort is necessary to educate and engage employees Enlist support from leaders Solicit employee input Communicate relevant and timely information on an ongoing basis to employees Engage employees in a meaningful conversation about health care 37
    38. 38. Pr epar e Mana gementfor ChangeUse health care strategy to inform management how Health CareReform continues to affect the company. Changing health care landscape affects business overall What competitors are likely to do How the organization aligns its health care strategy with its total rewards strategy The potential impact of health care related decisions on employee relations and productivity 38
    39. 39. Pr epar e Employeesfor ChangeIn 2010, most employers predicted reform would have no impacton workforce management objectives.Communicate relevant and timely information on an ongoing basisto employeesFocus on the total health experience as part of the employee valuepropositionEngage employees in a meaningful conversation about health care 39
    40. 40. Achieving the OptimalTotal Rewar dsStr ate g yOrganizations Must: Understand the critical workforce segments and implement strategies to attract develop and retain them Create a mix of rewards to balance company and employee needs Design total rewards strategy to influence the right behaviors to drive business results Continuously evaluate the rewards mix – to avoid losing key talent when the economy turns around 40
    41. 41. Key Takeaways Align Employee Value Proposition and Total Rewards Strategy Engage leaders and employees regularly and act on feedback Measure results in context of business outcomes Recognize that improved workforce health increases employee engagement, which in turn improves business results 41
    42. 42. Questions? 42
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