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  1. 1. Los 20 Mejores Patronosen Puerto RicoTo protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  2. 2. Today’s Goals Describe Engagement and Why It’s Important Discuss Findings from our Best Employer Research Employee Benefits: Market Practice and Trends Recommendations Communications: Bringing it all To Life Next Steps 2
  3. 3. A Global and Local Perspectiveof Engagement Engagement and Best Employer studies with over 5,000 organizations Conducted Engagement Research in 80 markets, 60 industries, and 40+ languages 150+ organizations in Puerto Rico (41,000+ employees) Our solid experience and proven methodology: 65+ years of experience in HR consulting, 30+ years of experience in employee surveys 3
  4. 4. What is Engagement?To protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  5. 5. Engagement is…about ResultsHigher Business Results Positive Correlation to Business Performance The extent to which people will Engagement act and intervene to improve business results Commitment The extent to which people want to contribute to business success Satisfaction The extent of people’s approval of their employerLower Hewitt’s Employee Research Over Time 5
  6. 6. Six Categories Drive Employee Engagement — Experiences that Influence Engagement Behaviors Drivers Engagement People Work Senior Leadership Work Tasks SAY Manager Sense of Accomplishment Co-Workers Resources Valuing People Process EngagementTotal Rewards Opportunities Career Opportunities STAY Pay Benefits Learning and Development Recognition Company Practices Quality of Life Communication Work Life Balance Performance Assessment Physical Work STRIVE Company Reputation Environment Employee Perceptions Behaviors 6
  7. 7. Why is EngagementImportant?To protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  8. 8. The Engaged Associate Adds More Value Companies With Engaged Employees Report… Growth in employee productivity Recruitment Higher profitability costs 55% Higher lower customer loyalty Turnover down $3,800 more 40% to 50% profits per employee $80,000–$120,000 additional revenue per month $18,600 more market value per employeeSource: Impact of Engaged Employees on Business Outcomes; Ongoing Employee Engagement Research, Hewitt Associates, 2005 8
  9. 9. Best Employers Attract and Retain More Employees Best Employers have higher Engagement scores Best Employers have significantly lower levels of turnover: “Being a Best – Asia: 40% lower Employer is worth $75 million annually – Australia: 45% lower in recruiting, – Canada: 54% lower retention, and productivity gains.” – Europe: 30% lower —Scott McNealy – U.S.: 50% lower Sun Microsystems – Puerto Rico: 32% lower Best Employers have larger pools of talent— nearly twice as many applications per employee in most studiesSource: Hewitt Best Employer Studies 9
  10. 10. What We Learned from Our2009 Best EmployerResearch in Puerto RicoTo protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  11. 11. What Differentiates the 20 Mejores Patronos? Senior Leadership – Leaders: > Hold a deep belief that people are their greatest asset > Deliver on their promises to their employees > Are champions of their organization’s values > Create a compelling picture of the future > Instill a culture of accountability > Grow and stretch their people > Are open and involved 11
  12. 12. What Differentiates the 20 Mejores Patronos? Well defined communication strategy – In a monthly basis the Mejores Patronos informed their employees of: > Business goals/objectives > Organizational operating results The Mejores Patronos provide different tools to continually listen to their employees, such as; Los 20 Mejores The RestEmployee surveys 100% 83%E-mails from the highest executive of the organization 95% 67%Employee focus groups 75% 40%Formal employee suggestion program 80% 40% 12
  13. 13. What Differentiates the 20 Mejores Patronos? Performance Management Process – 75% of the Mejores Patronos link performance process results to pay – moving toward a pay by performance organization – Frequent management training about performance management process – 80% of the Mejores Patronos include leadership competencies as part of the performance management process – Between 25% - 75% of a leader’s performance assessment is based on their ability to develop leaders for 70% of the Mejores Patronos vs 31% of the Rest 13
  14. 14. High Performance WorkforceIndex and AlignmentTo protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  15. 15. The Business Case for Building a High Performance Workforce is Strong… …We don’t have to look far for the reasons this mattersPeople Who Are…Focused Accountable AchievingEveryone focused Energizedon the right priorities,feeling accountable to deliver Engagedgreat results, energized and engagedand equipped to give their best, and Skilledbuilding skills important for growing the business Growing 15
  16. 16. Hewitt’s Performance and Development FrameworkAcross the organization, we have to get four things right: Accountability Rewards High-Achievement Trust Ratings That Goal-Setting Send the Performance Authentic, Right Coaching Business- Messages Focused Rewards That Conversations Motivate Opportunity Growth Built Into Every Job People Directed Toward Future-Critical Skills …Sustainable high performance requires manager capability in these essentials 16
  17. 17. Engagement and HPW 93% 88% 86% 77% 70% 55% Engagement HPW Index HPW Alignment 20 Mejores Patronos Rest 20 Mejores Patronos 2009 17
  18. 18. TrustAccountability Accountabilty Reward Opportunity 80% 60% 65% 47% We set aggressive goals Managers are provided at all levels of the with the tools and organization training to set aggressive goals that will have a positive impact in our business results 20 Mejores Patronos Rest 20 Mejores Patronos 2009 PPI 18
  19. 19. TrustOpportunity Accountabilty Reward Opportunity 70% 70% 57% 60% 43% 33% We have identified and All our employees have We provide employees provide training in skills the opportunity to learn with many opportunities required for the future new skills and grow in to grow and learn success of our their current jobs without relying on organization promotions 20 Mejores Patronos Rest 20 Mejores Patronos 2009 PPI 19
  20. 20. Trust Accountabilty Reward OpportunityRewards Trust 90% 63% 50% 27% A significant portion of Our people practices people managers make it clear to reward is based on the employees that they are capability to develop this organizations most people valued assest 20 Mejores Patronos Rest 20 Mejores Patronos 2009 PPI 20
  21. 21. Additional Key Findings Benefits: Employee satisfaction 92% Regular employees Best Other OrgnsMedical insurance 100% 100%Prescription drug coverage 100% 100%Employee assistance program 100% 100%Dental plan 100% 100%Group life insurance paid by employer 100% 100%Accidental death and dismemberment insurance paid by employer 100% 100%Business Travel Accident Insurance (BTA) 100% 100%Short-term disability (additional to SINOT) paid by employer 100% 100%Long-term disability paid by employer 100% 100%Medical insurance for retirees paid by employer 100% 100%Other (Specify) 100% 100% Communication: Employee satisfaction 84% 21
  22. 22. Employee BenefitsMarket Practice and Trends To protect the confidential and proprietary information included in this material, it may not be disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  23. 23. 2009 Benefit SurveyFindingsTo protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  24. 24. 2009 Survey FindingsRetirement and healthcare are the benefits with the higher price tag. Notsurprisingly, these reported the most significant changes since last surveywas conducted in 2007 Retirement Benefits – A number of defined benefit plans were either “frozen” or modified since 2007. – Over 90% of the companies reported a defined contribution plan. This represents an increase of approximately 5% compared to the 2007 survey results. – Employers continue changing the define benefit formulas or replacing these plans with non-contributory defined contribution plans or “hybrid” pension plans. Healthcare Benefits – The average copays and coinsurances have increased slightly since the 2007 survey was conducted. – Employee contributions have increased significantly since 2007. These increases range from 32% to 58% depending on the tier coverage. 24
  25. 25. Additional findings Benefit costs continue to be a top three expense for most organizations, yet many do not have metrics to measure their actual of perceived value. Employers have to think through what are the appropriate benefit changes to achieve benefit cost reductions and optimization at a time when some of these changes may be inadvisable since the employees are feeling the impact of the global economic situation. As health care costs continue to rise in this struggling economy, employers are challenging employees to take more responsibility for healthy behaviors and retirement saving. 25
  26. 26. Emerging Trends in HRand Employee BenefitsTo protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  27. 27. Wellness / Disease Management InitiativesLike it or not, people frequently don’t do what will help them stay healthyand live longer.In our most recent survey 2009 The Road Ahead: Emerging Health Trends,“Promoting employee accountability” was ranked the number one healthand prevention component of organizations’ health care strategy in 2009.Our biggest challenge: About half of eligible employees participate inhealth promotion program activities when they are presented at theworksite. That number declines unless significant effort is expended toenhance participation using a range of different incentive and engagementstrategies. 27
  28. 28. Wellness / Disease Management InitiativesAn effective wellness initiative requires a new approach. It shouldconsider the following: Design an incentives program. Research the population in order to structure incentives to be complementary to the desired behavior; – Ensure balance between incentives that change behavior and those that give away the potential ROI. – Rewards or incentives should be focused on participation rather than on results or outcomes. Provide two-tiered incentives (for initial and ongoing participation); Communicate the rationale; use at least three different communication channels and forms during the year; and share participation results at the end of the incentive cycle; Compliance with HIPAA and ADA. As a general guideline, employers can avoid discrimination and fulfill compliance with incentive programs that are both voluntary and targeted toward behavior versus health status. 28
  29. 29. Wellness / Disease Management InitiativesExamples of incentives that could be used include: Entering employees into a raffle, providing a monetary bonus, providing health coverage credit, and providing other wellness incentives such as gift certificates.Measurement is the basis for success! Continually review theincentive program for maximum effectiveness. 29
  30. 30. Pharmacy Purchasing GroupsPurchasing groups give mid-sized employers access to the same deeplydiscounted pricing usually afforded only to the very largest companies–while offering a full range of quality guarantees and consulting services toensure the highest standards for your pharmacy benefits.Main features: Include a complete set of rigorous vendor guarantees for financial and service performance. Client retains complete flexibility of plan design, including utilization management programs like prior authorization and step therapy. Expected savings of 7% – 10% off current net plan costs 30
  31. 31. Benefits competitiveness and perceived valueQuantitative assessment of value relative to the market By what percent does each benefit and the aggregate exceed or fall short of the market? How many are richer and how many are less rich? What programs are provided by each of the competitors? What specific plan features are found in the market place: e.g., what do the other companies require for prescription copays? What would happen to the values if plan changes were implemented?Employee perception Assess employees’ awareness, understanding, and perception of adequacy and competitiveness of both the overall benefit plan and each key component. Assess employee readiness in the areas of health/well-being and retirement.Through these type of analysis employers understand the current value ofthe benefits package offered to employees and define its future direction. 31
  32. 32. Flexible work arrangements (FWA)Volatile economic factors, the effect of a long-term recession, as well asnew legislative proposals are leading employers to re-think how work isperformed and delivered.What are the options? Compressed workweeks: Working a full-time schedule in fewer than five days in a week or ten days over two weeks. Flextime: Varying the start and end time of a standard day around core hours either on a regular basis or adjusted daily. Part-time: Working less than a full-time schedule with a corresponding reduction in pay and benefits. Phased Retirement: Working part-time or stepping down to less responsibility in preparation for retirement. Virtual Work: Working in an entirely goal-driven environment with no defined work schedule or workplace. In this arrangement, there is no requirement to be anywhere at any time, the only focus is on results. 32
  33. 33. P. De la C. 2218A bill was recently introduced to allow flexible work arrangements based ona compressed workweek.If approved, employees and employers will be able to mutually agree on awork arrangement in based on a compressed workweek schedule. Undersuch arrangement: The workweek will not exceed 40 hours; daily working hours must not exceed 10 hours Hours worked in excess of 10 hours a day will be paid at 1.5 times pay Hours worked in excess of 12 hours a day will be paid at 2.0 times pay 33
  34. 34. FWA – Additional considerationsThe bottom-line is that FWA benefit both employees and employers.Nearly 80% of workers say they would like to have more flexible workoptions and used them if there were no negative consequences at work.FWAs are not about working less, but about working differently.The organization must have a performance/goal driven culture in order tobe able to implement these arrangements successfully.FWA programs must be formalized and clearly communicated toemployees.Document and measure success by establishing ROI metrics and linkFWAs to prove the business results. 34
  35. 35. Change is in the Air – The Health Care ReformThere are growing doubts about what benefits the residents of Puerto Ricoand other US territories would see under the healthcare reform legislationthat results from a divided Congress. The Senate bill excludes Puerto Rico and US territories from the exchange The under funding of Puerto Rico’s Medicare and Medicaid programs is estimated at $2.8 billion annually. Supporters of the current formula note that most residents of the US commonwealth do not pay federal taxes. Proponents of a funding fix say that no Medicaid beneficiaries -- the countrys poorest residents -- pay taxes, and Medicare beneficiaries on the island pay the same taxes as stateside residents. 35
  36. 36. CommunicationsBringing it all To LifeTo protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  37. 37. The Purpose of Communication — Employee Perspective Provide education and tools – Promote employees’ sense of value Provide timely information – Maintain healthy levels of noise Clarify expectations or uncertainty Increase awareness – Sustain employees focus on Improve the emotional business environment Reinforce decision to join and – Increase job remain with the company satisfaction/morale Employees expect communication to be honest, thorough, understandable and relevant. 37
  38. 38. The Purpose of Communication — Employer Perspective Reinforce mission, vision, values Change/set proper employee and culture attitudes and behaviors Pave the way for program goals – Change any entitlement mentality Align administration processes – Increase employee Comply with legal requirements appreciation Improve utilization or programs = – Establish and sustain a sense improvement in ROI of equity and efficiency Increase understanding and Set the ground for a trustworthy responsiveness relationship Improve productivity Helps ensure there is a proper change management process in place 38
  39. 39. The Purpose of Communication — Change ManagementDefined Change management is the planning and execution of activities that ensure a workforce is committed, enabled, ready, and organizationally aligned to implement lasting change to achieve specific business objectives 39
  40. 40. Importance of Investing in Change ManagementIn a study conducted by McKinsey & Co., they examined 40 organizations’major change initiatives and found an: ROI of 143% when an excellent change management program was part of the initiative (translates to 43 cents gain for each dollar invested); 35% when there was a poor change management program or no program at all (translates to 65 cents loss for each dollar invested);According to a Harvard University study of 93 companies, a high percentageof business initiatives fail to achieve their stated objectives for the followingreasons: Took more time than allocated 76% Unanticipated problems 74% Coordination was ineffective 66% Competing crisis caused distractions 64% Capabilities of employees inadequate 63% Insufficient training of participants 62% Uncontrollable external events 60% 40
  41. 41. Hewitt 5C Change Management Approach – A Framework for Producing Results and Sustaining Change Commitment ■ Clear vision, linked to the business strategy ■ Sponsorship from major stakeholders ■ Ability to influence and partner Culture■ Connection to broader business and Communication organization goals ■ Messages and actions that set the■ Align leaders’ values & behaviors to right expectations shape culture ■ Communication at all levels to both■ Align people policies and programs define and reinforce behavior to reinforce desired culture Consequence Capability ■ Incentives to change and consequences of not changing ■ New skills and behaviors defined■ Alignment of performance, reward, and ■ Support of organizational capability with recognition education, processes, and tools ■ Disable the ability to support old behaviors 41
  42. 42. Managing Change to Drive the Right Results – DevelopStrategy and ExecuteCommitment – Stakeholder readiness Culture – Honest assessment ofLeadership and employee engagement cultural barriers to change, culturalFeedback mechanics supports for change and required organizational alignment– Lesson Learned: Assume that all stakeholders have different needs – Lesson Learned: “Culture eats strategy for lunch.”Communication – Context setting,clear messages and a flexible, Consequence – Clear requirementsresponsive plan for behavior change, rewards and consequences for changing or not– Lesson Learned: Different groups changing and specific links between may need different media—one size pay and performance goals does not fit all – Lesson Learned: BehaviorCapability – Employee training, measurement is labor intensive—itmanager coaching, systems and requires ongoing monitoring.process support– Lesson Learned: Timing is critical— train “just in time,” and provide the tools people need 42
  43. 43. Manage Change at Both the Program and Individual level Transformation Transformation • Objective External: Objective, Facts, tasks Transformation a different policy, Program Predictable (Focus on • Outcome focused process, View (Focus on • Predictable All People Business “Same” for structure or Business • Facts Outcomes) technology Outcome) • Reality & Tasks • “Same” for All People Transition Transition • Subjective Subjective Experience Transition is Internal: (Focus on a • Unpredictable & Feelings Perception internal: a reorientation (Focus on • Perception & Feelings person’s ability a psychological that people have Individual People View Where to • Psychologicalfor All People peoplethrough go to adjust “Different” reorientationto to go have that People change) Experience through • “Different” for All People How will I be Are) impacted? What is How will I get the changing? What do you need What’s in it knowledge, skills, and for me to do? for me? information that I need?Change Undermines a Persons Sense Of Comfort, Control, & Competence 43
  44. 44. Change Challenges Clients Typically Face during Transformation Change challenges / risks clients Hewitt’s recommended best practices typically experience as result of our client experiences•Define success as “get the technology up”, Ensure project team and sponsors define success as behavior changeinstead of defining success as “end-usersadopted desired behaviors” Clearly define desired behaviors (e.g. “stop/start/continue” doing) Define and track metrics indicating adoption of desired behavior Develop “consequence management” plan to encourage desired behaviors and discourage unwanted behaviors•Stakeholders, especially managers, are Conduct a stakeholder analysis to understand which and how employeesresistant to the change (e.g. using work- are impacted, their concerns, how to best address those concernsarounds or continue to use old system), orhave emotional reactions to the change Develop “what’s in it for me” messages tailored to managers and other key stakeholder groups Conduct workshop to support “personal transitions” Develop tailored and timely 2-way communications•Insufficient engagement from sponsors and Develop strategy for involving sponsors and leaders in leading the changeleaders and holding them accountable for the results Provide sponsors and leaders with on-boarding and skill-building sessions Hold regular check-ins with sponsors and leaders•Insufficient Change Management capability Outline the role and required skills of Change Team members and selectand/or resources on client team and fully staff based on the role profile(s) Provide Change Team with on-boarding and skill-building sessions Hold regular reviews of change management lessons learned 44
  45. 45. Checklist of Actions for Successful ChangeCommitment Consequence Determine the business case for change Review stakeholders Determine what will change Determine behaviors to stop/start/continue Engage executive sponsors who own the change Determine reinforcement mechanisms Define success metrics Identify and prioritize specific actions Create change dashboard Implement planCommunication Culture Conduct stakeholder analysis Review change readiness assessment Define key messages Identify stakeholder issues that help or hinder Create communication plan change Prepare the 60-second speech Align with organizational structure (if needed) Evaluate communication effectiveness Align with selected processes (if needed)Capability Redefine jobs to fit the change (if needed) Identify the roles impacted by the change Identify change impacts and readiness issues Identify knowledge/behaviors required Create a learning plan Identify timing/sequence for learning 45
  46. 46. 46
  47. 47. Next StepsTo protect the confidential and proprietary information included in this material, it may notbe disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
  48. 48. Steps to Consider Leadership Effectiveness Tools • Prepare managers and direct reports for their role providing them learning & • Leadership style assessment. development opportunities that equipped them to conduct evaluations, • Develop Leadership profile. feedback discussions and other critical instructions with their employees. • Work on gap’s between actual and desire profiles. • Provide strong vision with clear business objective. Driving and • Coaching and/or mentoring formal programs. affirming key messages. • Build strong leadership pipeline for the organization. Tools High Performance Workforce • Link individual goals to organizational • Assess Performance Management process objectives. and keep moving forward to a high • Reward success; reject mediocrity. performance organization mindset. • Apply work processes consistently. • High Potential Program. • Coaching and mentoring. 48
  49. 49. Steps to Consider Initiatives: Process/Tools: Wellness and Disease Management • Population and group utilization assessment. • Structure incentives to be complementary to the desired behavior. • Communicate and measure participation and results. Share results with the employees. Pharmacy Purchasing Groups • Evaluate the option of joining a PPG for higher cost efficiency for your pharmacy benefits. Assess your benefits program • Measure benefit program alignment against competitiveness and perceived value market from a quantitative standpoint. • Identify what specific plan features are found in the market place. • Assess employees’ awareness, understanding, and perception of their benefits and what would happen to the quantitative value if plan changes were implemented? Evaluate work/life balance or similar • Re-think how work is performed and delivered. initiatives • Assess your organization’s readiness for these type of changes (i.e. culture, performance management process). 49