advances in technology make access to global rewards data

Advances in Technology Make Access to Global Rewards Data Easier Than Ever

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The total rewards profession is growing. You’re being asked to do more than ever. Where can you turn for the ideas, inspiration and innovation to be a success and advance your career?

At Total Rewards 2015, you’ll find fresh, informative and implementable solutions for your challenges.

Keynote SpeakerDr. JP Pawliw-Fry

Fortune 100, U.S. Army, U.S. Navy, and CIA leaders have turned to Dr. JP Pawliw-Fry for performance coaching. He

recently authored the thought-provoking book, “Performing Under Pressure.”

In his keynote presentation, he’ll discuss how you can drive meaningful results and be your best when it matters the most.

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Register today + save $200




Minneapolis

MAY18-202015

REGISTER TODAY! worldatwork.org/tr2015 | 877.951.9191

The total rewards profession is growing. You’re being asked to do more than ever. Where can you turn for the ideas, inspiration and innovation to be a success and advance your career?

At Total Rewards 2015, you’ll find fresh, informative and implementable solutions for your challenges.

Keynote SpeakerDr. JP Pawliw-Fry

Fortune 100, U.S. Army, U.S. Navy, and CIA leaders have turned to Dr. JP Pawliw-Fry for performance coaching. He

recently authored the thought-provoking book, “Performing Under Pressure.”

In his keynote presentation, he’ll discuss how you can drive meaningful results and be your best when it matters the most.

1501JAN_WSAD_TR15spread_J328.indd All Pages 12/11/14 9:53 AM

http://www.worldatwork.org/tr2015

features

ARTICLE REVIEWERS

Janet Adams, CCP, GRP, GPHR, DLA PiperAnil Agarwal, American ExpressAngel Alamo Ruiz, CCP, Wal-Mart Stores Inc.Todd Allen, CCP, SPHR, The Allen GroupChristine Bailey, CCP, GRP, Teacher Retirement System of TexasSteve Bloomfield, CCP, SPHRLisa Chekimoglou, CCP, CLC Consulting LLCElliot Dinkin, Cowden Associates Inc.

Kevin Garrett, CCP, Deloitte Services LLPSanjay Gawde, Deere & Co.Kevin Gunnell, CBP, SPHRHolly Hubbell, CCP, CBP, Samson ResourcesJolene Huey, CCP, PHRRobert Jones, CSCP, Innovative Compensation & Benefits ConceptsGerald Ledford, Ph.D., USC Marshall School of Business

Richard Levarsky, CCP, CBP, CLU, SPHR, RAL Financial & Insurance Services Inc.Evelyn Johnston, CCP, Blue Shield of CaliforniaJennifer Mackin, CCP, CBP, Ferro Corp.Susan Malanowski, CCP, CBP, GRPMichael McAnally, CCP, City of PhiladelphiaThomas McCoy, TJ McCoy & AssociatesAndrew Moore, CCP, Fairchild Semiconductor Corp.

John Munoz, CCP, CooperVision Inc.Paul O’Malley, MercerBarbara Parry, GRP, Barbara Parry Expatriate ConsultingEsther Scarpello, CCP, CBP, University of Nebraska at OmahaThomas Sondergeld, Walgreen Co.Douglas Van Tornhout, Purdue Pharma LPPatrick Wagner, Children’s Health Care

24 Pay Equity: Ignore at Your Own Risk Pay equity concerns may seem like an old problem, yet they are very real in today’s business environment. Proactive companies are managing pay equity with greater transparency, and including performance reviews, to get ahead of the issues and their competition.BY BRIAN LEVINE AND GAIL GREENFIELD

32 What Should You Pay: The Job? The Person? The Results?Salespeople make sales, engineers and scientists bring technical abilities, and other employees fill specific roles in an organization. When different occupations make different contributions, it’s prudent to tie the way they are paid to the type of contribution they make.BY ROBERT J. GREENE, PH.D., CCP, CBP, GRP, SPHR, GPHR

38 How to Communicate the Value of Health Care to the CFOOffering health benefits has evolved from being just another way to attract and retain employees to having a significant impact on business outcomes. Make sure you know how to communicate that value to the CFO. BY THOMAS PARRY, PH.D.

42 TransUnion’s Journey Through Global Sales Incentive DesignFinding itself needing to solve clients’ critical business issues and shift the selling model, TransUnion underwent a redesign that not only revamped its plan but offered valuable lessons.BY JAMIE REINER AND TOM HILL

48 The Global Mobility EvolutionIntegration with Total Rewards and Talent Management is Critical to SuccessFor mobility teams to be a full player in global talent management strategy, they need to strengthen their alignment to the business through total rewards and talent management, and develop a more proactive approach that helps senior leadership identify promising employees for global assignments.BY LESLIE FIORENTINO AND JANE MALECKI

54 Caregiving and Lost ProductivityAdding In-Home Care to Your EAP Program Can Lead to Significant Savings As the population ages, along come new and bigger challenges, such as adult children acting as caregivers. But EAPs can provide relief, and save money on lost productivity, by adding non medical, in-home care options.BY JEFF BEVIS

58 Escape the Tyranny of Ratings and Forms in Performance Management Changing your performance management system isn’t easy. But by considering alternative approaches, total rewards professionals can influence business success. Learn how Adobe and Expedia changed their methods and experienced positive outcomes.BY JEANNIE COYLE AND JIM HARVEY

32

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departments

January 2015 Vol. 58, No. 01 ISSN 1529-9465

WORLDATWORK MANAGEMENT TEAM

President and CEO Anne C. Ruddy, CCP, CPCU

Vice President and Chief Financial Officer Greg Nelson, CPA, CCP

Senior Vice President, Marketing, Channel Management and Strategy

Betty Scharfman

Vice President, Public Policy, News and Publications

Cara Woodson Welch, Esq.

Vice President, Human Resources Kip Kipley, CBP, SPHR

EDITORIAL

Publisher Anne C. Ruddy, CCP, CPCU

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stat rack

6 From the Leadership

8 Feedback

12 Research for the Real WorldQuotas on Boards and the Gender GapBY KEVIN F. HALLOCK

14 Capitol Perspective2015 Promises Action from a New Republican Senate: A Look at Washington’s Total Rewards To-Do’sBY ROBERT BAYLOR

64 Profiles in Career ExcellenceHow I Became a Change Agent

66 Back to BasicsHow to Optimize Your Total Rewards MixBY ROSE STANLEY, CCP, CBP, WLCP, CEBS

68 Research in BriefTop Trends in Attraction, Retention and Motivation

■■ Compensation

■■ Executive Compensation

■■ Sales Compensation

■■ Benefits/Work-Life

■■ Total Rewards

Act Now!

www.worldatwork.org/60days Offer valid January 1 – March 1, 2015. Promo code: 60DAYS. See website for details.

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from the leadership

WORLDATWORK ASSOCIATION BOARD

Lead Director Dave Smith, CCP, CBP, CECP

5N2 Works LLC

Secretary/Treasurer Jeff Chambers, WLCP

Goodwin Executive Search

Directors Bruce Clark, J. D.

Capital Associated Industries

Karen Ickes, CBP

Margaret Gagliardi, CCP MMG Advisors

Alan Gardner Verizon Communications

Michael Davis, CCP

Sara R. McAuley, CCP, WLCP McAuley Consulting Group

WORLDATWORK SOCIETY OF

CERTIFIED PROFESSIONALS BOARD

Lead Director Nathalie Parent, CCP, CBP, GRP, CECP, CSCP

SAP Inc.

Secretary Kevin F. Hallock, Ph.D.

Cornell University

Directors Trevor Blackman Dairy Farm Group

Carrolyn Bostick Federal Aviation Administration

Robin Colman eBay Inc.

Ann Hatcher, CCP

Karen Ickes, CBP

Tracy J O Kofski, CCP, CBP, GRP General Mills

Kumar Kymal Thomson Reuters

Steve Pennacchio Pfizer

J Ritchie, CCP Microsoft

Guillermo Villa Royal Caribbean Cruises

Brit Wittman, CCP, CECP Intel Corp.

Sincerely,

At the most recent meeting of the WorldatWork Society of Certified Profes-sionals Board, we had a very robust discussion about talent development and the increasingly important role that compensation and rewards professionals are playing in this area.

Whether talent management oversight resides within other functions, such as Organizational Development, Learning and Development or Workforce Planning, talent development has become more strongly identified as a strategic lever in attracting, retaining, engaging and motivating the best and brightest work-force. And, as multiple board members confirmed in the meeting, the impact and involvement of total rewards professionals in this aspect of the employee value proposition (EVP) are growing.

For seasoned total rewards professionals, the connection to and impact on talent development comes as no real surprise. But for emerging professionals, seeing the link between their roles in job architecture or functional competency models and overall talent development strategy is not as clear. Realizing their importance in the beginning stages — acquiring and onboarding talent — or at the end stages — creating programs that encourage people to stay or leave, such as retirement or severance plans — is something that becomes obvious over time. Or at least, we hope it does.

To that end, WorldatWork and the Society of Certified Professionals are taking a closer look at how we can help compensation and rewards professionals acquire, deepen and more effectively apply their practice-specific knowledge and responsibilities to the larger issue of talent management and development in their organizations. We recognize that total rewards professionals play a pivotal role in the success formula for sustaining organizations.

Talent

Development

Hits Center

Stage for

Rewards

Professionals

Anne C. Ruddy, CCP, CPCU President and CEO, WorldatWork

www.worldatworksociety.org

There are many reasons why professionals worldwide are getting a WorldatWork certification.

yours?

Certificationspeaks volumes

What’s

certified compensation professional

®

advanced certified compensation professional

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feedbackWorldatWork (www.worldatwork.org) is a nonprofit human resources association for professionals and organizations focused on compensation, benefits, work-life effectiveness and total rewards — strategies to attract, motivate and retain an engaged and productive workforce. WorldatWork and its affiliates provide comprehensive education, certification, research, advocacy and community, enhancing careers of professionals and, ultimately, achieving better results for the organizations they serve. WorldatWork has more than 70,000 members and subscribers worldwide. Founded in 1955, WorldatWork is affiliated with more than 70 local human resources associations and has offices in Scottsdale, Ariz., and Washington, D.C.

WorldatWork Society of Certified Professionals® is the certi-fying body for six prestigious designations: the Certified Compensation Professional® (CCP®), Certified Benefits Professional® (CBP), Global Remuneration Professional (GRP®), Work-Life Certified Professional® (WLCP®), Certified Sales Compensation Professional (CSCP)™ and Certified Executive Compensation Professional (CECP)™.

The WorldatWork group of registered marks includes: Alliance for Work-Life Progress or AWLP, workspan and WorldatWork Journal.

workspan Vol. 58, No. 01/January 2015 (ISSN 1529-9465) is published monthly by WorldatWork, 14040 N. Northsight Blvd., Scottsdale, AZ 85260-3601, as a benefit to members who receive an annual subscription with their membership. Subscriptions in the United States and U.S. possessions are $100 per year; in other countries, subscriptions are $125 per year. Periodicals postage paid at Scottsdale, AZ, and addi-tional mailing offices. POSTMASTER: Send address changes to workspan, 14040 N. Northsight Blvd., Scottsdale, AZ 85260-3601; 480-951-9191. Canada Post (CPC) publication #40823004.

WorldatWork neither endorses any of the products, services or companies referenced in this publication nor does it attest to their quality. The views expressed in this publication are those of the authors and should not be ascribed to the officers, members or other sponsors of WorldatWork or its staff. Nothing herein is to be construed as an attempt to aid or hinder the adoption of any pending legislation, regulation or interpretive rule, or as legal, accounting, actuarial or other such professional advice.

Copyright © 2015 WorldatWork. All rights reserved. WorldatWork and workspan: Registered Trademark® Marca Registrada. Printed in U.S.A. No portion of this publication may be reproduced in any form without express written permission from WorldatWork.

Reprints To order electronic or bulk reprints, log on to www.worldatwork.org/workspan and click on “Order Reprints.”

Writing for workspan For information about writing for workspan, visit our website at www.worldatwork.org/workspan or call 480-951-9191.

®

American Compensation Association®

Legacy publication®

You Asked … the Community Answered

AChange the base/bonus mix so a

substantial portion of the total

compensation is contingent on

completion of such supervisory responsi-

bilities. No “punishment” need be applied

to the negligent, but they will not receive

the bonuses paid to those who satisfactorily complete the full range of manage-

ment duties that accompany their jobs. See www.compensationcafe.com/2014/

02/positives-about-negatives.html.— E. James Brennan

A Have the boss send him/her a personal letter telling him/her to submit

the evaluation by a certain date. That lets him/her know it is an

important matter, not just an HR concern. When you put it in writing,

it gets people’s attention. No one likes to get a negative letter from the boss

,and most people don’t like to send them.

— Anonymous

WorldatWork Post Throwback Thursday (TBT) … in HR?You know that little social media trend of sharing pictures from the past to celebrate people, fashion and hairdos? I saw my share of TBT posts today, which I usually enjoy … and it got me thinking about a throwback look at HR. Pictures would surely make this more fun, but in the spirit of TBT we’ll go for it anyway.

TIMELY PERFORMANCE EVALUATIONS

Q I just want to get an idea of how your respective organization handles/

penalizes managers for not submitting employee evaluations on time.

I am looking for creative ways of handling (other than to reduce the

manager’s own evaluation rating or take away his/her merit increase). I work in an

organization (outside of the United States) where culturally, it is not acceptable to

penalize managers via the aforementioned methods.

— Anonymous

Alison Avalos Research Manager, WorldatWork

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feed back

There’s no historical account of the profession here, just a few “snapshots.” Feel free to imagine the people, the times, the fashion, the hairdos and the aged photo paper on which these mental pictures could have been printed, for full effect.

❙ The first Salary Budget Survey from WorldatWork (then American Compensation Association) in 1974 was roughly six pages, in the form of a letter to membership. The cover letter sounds like it was a pretty painful effort. I can’t imagine data collection, analysis and reporting without some of today’s technology! Salary increases were more than triple what they are today, but that was a different economic landscape and total rewards environment, too.

❙ Grunge music and broadbanding were the next big things in the early 1990s. Check out this 1998 ACA Journal article with some of the history and myths (about broadbanding, not grunge music).

❙ In 2000, only 26 percent of organizations offered online open enrollment, according to the “Online Benefits and Open Enrollment Survey.” Any benefits professionals out there missing those days?

❙ In 2005’s “State of the Work-Life Profession Survey,” respondents predicted that attraction, motivation and retention efforts would be primarily focused on health and well-being, workplace flexibility, and culture change initiatives.

❙ In 2005, 2008 and again in 2011, rising gas prices in the United States caused topics like flexible schedules, telecommuting and mileage reimbursements to fi l l WorldatWork “airwaves” and discussion boards.

❙ In keeping with the tradition of TBT, here’s a picture of past ACA presidents taken in 1980. For more throwback photos, check out 2005’s 50th anniversary website.

Sometimes it’s fun to look back on what we’ve been through and accomplished. Some things make us proud,

others make us cringe. But no doubt a little reflection here and there helps us appreciate where we are today.What do you look back on in HR and laugh about, cringe

over or celebrate?

Total Rewards Poll Is your company planning on changing its 2015 salary increase budget from what was projected earlier in the year?

No, we have no plans to change our 2015 salary increase budget68.6%

Too soon to tell19.6%

Yes, we will increase our 2015 salary increase budget8.8%

Yes, we will decrease our 2015 salary increase budget, but will still budget greater than 0%

2.9%

Yes, we will decrease our 2015 salary increase budget to 0%0%

WEB EXTRAS!Go online to www.worldatwork.org/workspan to get extra pieces to the stories in this issue.

www.worldatwork.org/community

http://blog.worldatwork.org

How Employee Experience Drives Organizational Results

March 17-18, 2015 | Nashville, TN

www.worldatwork.org/futurework15

There’s a new world of work emerging.Benefits packages are stale. Recruiting

is more competitive than ever. Employees’

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research for the real world

Kevin F. Hallock, Ph.D. Donald C. Opatrny ’74 Chair, Department of Economics Cornell University

Joseph R. Rich ’80 Professor,Departments of Economics and HR Studies Cornell University

Director, Institute for Compensation Studies Cornell University

Board Member, WorldatWork Society of Certified Professionals

U.S. Gender Pay Gap in Top Corporate JobsBack in the late 1990s, Mari-anne Bertrand and I examined the pay gap between male and female executives listed in the proxy statements of publicly traded U.S. firms from 1992 to 1997, which we later published in the October 2001 edition of Industrial and Labor Relations Review. We found that, taken as a whole, women in these “top five” posi-tions (about 2.5 percent of the

sample) earned about 45 percent less than men in these positions. At the same time, we found that as much as 75 percent of this gap could be explained by the fact that women managed smaller companies, and were less likely to be CEO, chairman or company president. Further, by taking into account the fact that these women were, on average, younger and had less seniority than their male counterparts, the unexplained gap dropped to less than 5 percent.

We argued at the time that these results certainly do not rule out the possibility of discrimination via gender segregation (e.g., in certain industries or jobs) or unequal promotion. Also, one could argue that the few women who made it into our sample (by having “top five” jobs in large publicly traded firms in the 1990s) were truly exceptional and that comparing their pay to that of the average male in the sample (as is implicit in the statistical models we estimated) might be underestimating the true pay gap.

The gender gap has many

dimensions. A decade

ago, Norway passed a

law mandating 40 percent

representation of women

on public boards, creating

a new “natural experiment”

for gender gap research.

Quotas on Boards and the Gender Gap

| 13january 2015 workspan

research for the real world

The Institute for Compensation Studies (ICS) at Cornell University analyzes, teaches and communicates about monetary and nonmon-

etary rewards from work, and how rewards influence individuals, companies, industries and economies. ICS research and leading-edge insight address compensation issues challenging employers and employees in today’s dynamic global marketplace. www.ilr.cornell.edu/ics | facebook.com/ICSCornell

Send topic suggestions to [email protected].

got aquestion

More recent work by George-Levi Gayle, Limor Golan and Robert Miller, “Gender Differences in Executive Compensa-tion and Job Mobility,” published in the October 2012 edition of the Journal of Labor Economics, is related to this. Creating background histories for 16,300 executives linked to more than 2,800 firms, the authors determine that women who make it to the top executive ranks earn more but have “higher pay-for-performance sensitivity” than their male peers with similar background. These women also drop out of the executive ranks at higher rates, but are promoted internally more quickly – if they do hang on – which is consistent with being above-average contributors in the company’s eyes.

Changing the Playing Field by QuotaTwo recent studies of board quotas in Norway provide inter-esting extensions to the research on gender gaps at the top of the corporate structure. A decade ago, Norway passed a quota law that mandated that 40 percent of board seats be held by women. Obviously, for those organizations that already had high representation of women on their boards, the rule had no binding impact. But many had to increase the fraction of women on the board to comply with the rule. Some felt that in addition to increasing the representation of female directors, this rule could spur representation of women in executive jobs at large, reduce the gender earn-ings gap and motivate more women to go into corporate careers. Others argued against such a rule, suggesting that there weren’t enough qualified women to fill such roles. Academics saw a great opportunity for study.

Female Style in Employment StrategiesIn “A Female Style in Corporate Leadership: Evidence from Quotas” by David A. Matsa and Amalia R. Miller, published in the American Economic Journal: Applied Economics in July 2013, the authors compare firms affected by the rule to other Nordic companies (public and private) that are unaffected. They find, among other results, that those firms that are affected by the quota (i.e., increase the share of women on their boards to meet the new quota) execute fewer layoffs, increase relative labor costs and levels of employment and reduce short-term profits. The authors could not measure long-term profits or whether the labor-retention strategy provided some longer-run competitive advantage, but did find that the results exist even for companies with more experienced boards.

Quotas and QualityAn even more recent paper on the Norwegian quotas considers the longer-term labor market consequences of

the quota law. In a National Bureau of Economic Research working paper, “Breaking the Glass Ceiling? The Effects of Board Quotas on Female Labor Market Outcomes in Norway,” June 2014, authors Marianne Bertrand, Sandra E. Black, Sissel Jensen and Adriana Lleras-Muney document a series of interesting findings.

One of their conclusions is that the chief criticism of the law – that there would not be enough qualified female board members to fill all of the roles – was just wrong. The authors show that the observable qualifications of the female board members increased after the reform. One possible reason for this is that, due to the publicity and energy around the reform, organizations worked harder to find qualified women, presumably through avenues they overlooked before.

Another important finding of their work is that the earnings gap within boards shrank (although male board members still earned more than female board members). A shrinking gap seems especially reasonable, given that the average qualifications of female board members increased.

Trickle-down ProgressThe benefits that Bertrand and her co-authors found in Norway’s gender quota law didn’t, however, extend beyond those women newly appointed to boards. Increased repre-sentation of women on boards in Norway hasn’t increased the relative earnings of other women with excellent quali-fications who were not appointed to boards. Nor has the reform lead to increases in female enrollment in business programs or a smaller earnings gap among new graduates of such programs. Perhaps role modeling and network effects from change at the top take more time to have an impact. Or maybe making broader change in the rest of the corporate ranks requires direct effort. Academic researchers will abso-lutely continue the search to find the answer, hopefully in partnership with practitioners working for the same end.


capitol perspective

“We expect to see a lot more action in the Senate on existing proposals, such as giving the employees the choice of time off instead of overtime pay, or raising the full-time workweek from 30 to 40 hours a week to make employees el ig ible for health-care coverage as mandated by the PPACA [Patient Protection and Affordable Care Act of 2010],” said WorldatWork Senate Lobbyist Claiborne Guy.

With the Republicans now controlling both the House and Senate, their leadership promises action on a number of bills that

will affect the total rewards community. However, it will be some time before the contentious bills are acted upon — House Republicans promise few legislative battles in the early months of 2015 to avoid a difficult start for their party in the Senate.

In CongressPaid Time OffBoth chambers are expected to reconsider legislation intro-duced last year to give some employees the option of receiving compensatory time off in lieu of overtime pay. New Senate Majority Leader Mitch McConnell (R-Ky.) and Sen. Mike Lee (R-Utah) offered similar proposals last year and likely will

Dramatic change and

the end of a year of

ambiguity were the result

of November’s election,

but Republican control

of the U.S. Senate in

2015 and 2016 promises

action on a number of

key total rewards issues.

2015 Promises Action from a New Republican SenateA Look at Washington’s Total Rewards To-Do’s

Robert Baylor WorldatWork

capitol perspective


do so again this year. Democrats continue harboring hopes of pushing their own paid-leave policy agenda.

Wellness Program ReformSen. Lamar A lexander (R-Tenn.), who now chairs the Senate Health, Education, Labor and Pensions (HELP) Committee, is weighing legislation addressing the confu-sion employers are facing when attempting to introduce wellness programs into their workplaces. The PPACA, Employee Retire-ment Income Security Act of 1974 (ERISA) and Health Insurance Por tabi l it y and Accountability Act of 1996 (HIPAA) govern these programs, but contradictions between these various laws’ requirements are confusing many employers.

Tax ReformRep. Paul Ryan (R-Wis.) is the new House Committee on Ways & Means chairman. His long-standing interest in tax and entitlement reform will find a ready audience in both the Republican House and Senate. And his reforms will become a marker for the 2016 presidential election, as he has always promoted a bold vision of small-business tax relief,

corporate income-tax reforms and other tax-code changes designed to gain the widest national support. Sen. Orrin Hatch (R-Utah), the likely new Senate Finance Committee chairman, also may push tax reform.

Immigration ReformBoth McConnell and House Speaker John Boehner (R-Ohio) have promised action in immigration, and President Obama has said he wants to work with Republicans on this issue. The question is: Can they work together and compromise following the recent executive order for immigration reform?

A Look Back at 2014Most of last year’s federal action on total rewards issues came in the first quarter and was from the White House and the agencies.

In February, President Barack Obama signed an executive order to raise the minimum wage to $10.10 per hour for all federal contractors and subcontractors. The final executive order requires prospective contractors to disclose any labor law violations when applying for federal work.

Also, the IRS continued to issue regulations rolling out the PPACA. These regulations included final rules governing the employer mandate that requires

employers to provide affordable coverage for their full-time employees or else pay a penalty. In March, the IRS issued the requirement that the reporting of the aforementioned affordable coverage be reported back to the agency.

Also in March, Obama signed an executive order instructing the U.S. Department of Labor (DOL) to update the Fair Labor Standards Act of 1938 (FLSA) overtime pay protections. He also signed a pair of executive orders that same month related to federal contractors: one focused on federal contractors’ compensation data collection requirements, and another made it unlawful for a federal

contractor to retaliate against an employee for discussing an employee’s salary. WorldatWork submitted comments regarding both of these executive orders.

Meanwhile, Congress was unable to move past the political gridlock on many national issues — including total rewards issues. Any action at all was tied to gaining an advantage in the November elections, such as twice-failed votes in the Senate in April and September to pass the Paycheck Fairness Act (S. 2199). The Senate Democratic leadership also tried to raise the minimum wage in April, but the vote failed to pass.

Total rewards professionals should keep an eye on employee verification requirements and new-immigrant worker programs that are likely to be included in immigration reform legislation.


capitol perspective

Regardless, total rewards professionals should keep an eye on employee verification requirements and new-immigrant worker programs that are likely to be included in immi-gration reform legislation. The reform bill passed by the Democratic Senate last year included new-immigrant worker programs, but it might not find the support needed in the Republican-enhanced House.

National Labor Relations BoardRepublican senators introduced a bill to increase the National Labor Relations Board (NLRB) from five to six members late last session. They argued that the change would reduce partisan advocacy on the board by requiring four members to make a decision.

Sens. Alexander and McConnell are promising legislation that would help reform the NLRB’s judicial process, allowing faster court challenges and ordering the board to issue its decisions within a year. Alexander pointed out last session in an earlier bill that 30 percent of the board’s decisions were still pending a year after their hearing.

Finally, there is another, more aggressive Senate proposal that would take all judicial power away from the NLRB, leaving it as just an investigative and enforcement entity, similar to the Equal Employment Opportunity Commission.

The White HouseThe Obama administration is not expected to play defense in 2015 while all this action in Congress happens.

“The administration has a robust regulatory agenda in play, with a number of proposed regulations heading toward a final rule,” said WorldatWork House Lobbyist Patrick Brady.

Executive CompensationThe U.S. Securities and Exchange Commission (SEC) is expected to release several long-delayed regulations emerging from the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The agency’s mandated CEO

pay-ratio regulation was scheduled to be issued last fall, but was delayed. The rules will require publicly traded companies to disclose the ratio between a CEO’s total compensation and median-employee total compensation.

SEC regulations addressing clawbacks that would recover incentive-based compensation from executive officers whose organizations issue accounting restatements are expected to become effective in mid-2015, five years after the bill was signed into law.

The SEC also may examine hedging regulations for companies to disclose whether employees and directors are permitted to hedge the market value of securities granted as compensation. Current regulations already require disclo-sure regarding hedging economic risk of owning company securities, but the agency hasn’t formally proposed new regulations required under Dodd-Frank.

CompensationThe DOL is expected to release regulations that address updating FLSA overtime exemptions. The Office of Federal Contract Compliance Programs (OFCCP) is working on regu-lations governing data collected from contractors, including the equal-pay report and the prohibition of retaliation by federal contractors against employees who discuss their pay.

Ending the Term with a Bang … Or a Fizzle?Like other Congresses held in the last half of a president’s term of office, there will be a lot of activity in 2015 to position each political party against the other’s ideas — but without much chance of being enacted into law. Regula-tions will be introduced in their own timeframe, but there may be a rush by the outgoing Obama administration to introduce more so they are enacted before its January 2017 departure.

Robert Baylor is a public affairs manager at WorldatWork in

Washington, D.C. He can be reached at [email protected].

The WorldatWork public policy team represents WorldatWork’s members before lawmakers, federal agencies and other policy

institutions through strategic lobbying and advocacy and targeted outreach and communications. Through legislative and regulatory analysis, we keep the total rewards profession informed on the myriad public policy issues that could affect them. We assess, analyze and advocate for you.

issuesknow

the

For more information, log on to www.worldatwork.org and scroll down to

Public Policy Watch.

SEC regulations addressing clawbacks are expected to become effective in mid-2015, five years after the bill was signed into law.

www.worldatwork.org/careercenter

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http://www.worldatwork.org/careercenter

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cover story

Advances in Technology Make Access to Global Rewards Data Easier Than Ever


As the economy continues to improve, it is a good time

for multinational employers to look at emerging global rewards trends. Targeted improvements for specific geographies or divisions may help resolve issues that could not be addressed in tougher economic times. Technology companies were largely insulated from the recession and were waging a war for talent during the past five or six years. Multinationals in other sectors may learn from their experience trying to differentiate themselves in the marketplace and drive employee engagement without dramatically increasing cost.

Technological advances have improved multinational employers’ ability to access and analyze global data at a lower cost, significantly reducing the cost per employee for

Take total rewards

assessments global. With technology

cheaper and easier than

ever, the value of combining

various benefits and rewards

statements is too good to

pass up.

By Dany Mathieu, Aon Hewitt


certain analytical tools. They allow multi-nationals to make more informed decisions about benefits assessments and insurance solutions. Technology improvements have also reduced transactional costs. Solutions previously available only to large employee populations are now accessible to virtu-ally all employees within a multinational organization. This article examines the technology-driven trends of benefits assess-ments and global insurance solutions.

Transforming Benefits Assessments into Total Rewards Assessments Traditionally, multinationals have bench-marked benefits within a country through a qualitative assessment of each program — insured benefits, retirement savings, paid time off and perquisites and allowances. Compensation is excluded or benchmarked separately. This is a straightforward approach as it aligns with the allocation of roles and responsibilities within most compensation and benefits functions.

However, the traditional approach has three main disadvantages. First, it is only a qualitative assessment, i.e., it compares benefits only in relative terms and does not provide the dollar or value differen-tial between the benefit provided by the company and the market. Secondly, the compensation and benefits elements are not easily combined to provide a complete understanding of the total rewards package offered to employees. Finally, it provides an aggregate view and does not allow an organization to “slice and dice” the results for particular subgroups of employees.

More robust approaches to benchmarking, such as total rewards assessments, are becoming prevalent and address all three disadvantages of the traditional approach. They enable multinationals to gain a better understanding of their true market positioning in each country in which they operate. A total rewards assessment is particularly effective, and the study can be conducted for smaller headcounts at a much lower cost today than in the past.

In a total rewards assessment, the value of each benefit element is calculated using generally accepted accounting principles and compared to the value of competitive market data. This comparison is done at the incumbent level (i.e., for each employee) and not at a plan level, thus providing the organization with the value of its benefits and the market for each employee. Similarly, each element of employee compensation is compared to the competitive market data based on the employee role and actual pay. The benefits and compensation values are combined and supplemented with additional information about each employee such as division, role, reporting manager, annual performance rating, etc. When aggregated, the information gives an organization a quantitative assessment of its total rewards package against market. In addition, using the individual employee information incor-porated in the analysis, an employer can determine the market positioning of certain divisions, job classes, etc. (See Figure 1.) It is also possible to answer broader strategic questions such as whether a rewards philos-ophy (e.g., pay for performance) is truly

Total rewards assessments enable multinationals to gain a better understanding of their true market positioning in each country.


Figure 1 | Total Rewards Assessments

Country: Germany Percentile: 50thFunction: Product Development

Once a total reward assessment is completed, the data are typically exported to a widely available software such as Excel featuring dynamic workbooks to help multinationals easily customize and leverage results across their organization as needed.

Base Variable Equity Benefits Total

Total Rewards Benchmarking(You as % of Market)

95%

85%

110%

90% 93%

Total Rewards

Value

1,000,000700,000

100,000

200,000

delivered or how the total rewards package compares at various levels of seniority.

This approach is ideal if the main objec-tive of the benchmarking is to understand where money must be spent to maximize the multinational’s total rewards package compared to market. For example, an employer that wants to implement a defined contribution approach to benefits by providing each employee a fixed amount of dollars to be allocated among an array of benefits now has data to understand the relative value of each benefit.A total rewards assessment also shows

how subgroups of employees compare against one another or their market peers. Often, one category of employees is above market while another is below. For example, support engineers at a technology company may be above market while senior software engineers are below market. This type of information allows the organization to clarify opportunities to improve market positioning and solve lingering issues by selectively improving benefits.

For example, one multinational used a total rewards assessment to address

three specific but related issues. First, management was concerned that above-average performance was not properly recognized. Secondly, the company faced shareholder pressure to reduce its long-term incentive programs to moderate equity dilution. Finally, there was some indication that market positioning was adequate for the salesforce but not for key engineering positions.The total rewards assessment allowed

this multinational to determine that above-average performers were, in fact, adequately recognized. By running multiple scenarios, the company was able to determine the additional retirement benefits and perqui-sites needed to be provided to employees to compensate for the reduction in long-term incentive. The model also allowed the company to do long-term cost projections to ensure that cost would not unduly increase in the foreseeable future.

Global Insurance SolutionsProviding life and disability insurance to employees around the world requires multi-national companies to maintain multiple

Information allows the organization to clarify opportunities to improve market positioning and solve lingering issues by selectively improving benefits.


policies in each country. This burdensome framework is necessary to comply with local employment and insurance laws and take advantage of tax regulations. However, each policy is underwritten separately, resulting in increased risk for the insurer (and higher premiums for the organization) due to the small headcounts in some locations. Also, policies typically have to be renewed annually and the renewal process is often difficult due to the organization’s lack of local expertise and the limited number of available options. Multinational pooling was introduced in the early 1960s as a solution to these issues. However, pooling is a partial solution at best because it addresses only the economic inefficiencies after the fact through second- stage accounting and does not address the administrative difficulties.Technological advances and the globaliza-

tion of the insurance market have created new solutions to solve this issue. Most of the large insurance networks (e.g., Allianz, Generali, Maxis and Zurich) have recently introduced or expanded existing products in that space. In the past year, there have been several cases where global carriers have implemented global life and disability insurance arrangements that are managed and administered centrally, but delivered through locally admitted policies. In the past, such global reinsurance solutions had only been implemented for a few very large multinational companies with a global employee headcount in excess of 100,000.

Midsized multinationals will gravitate toward a global reinsurance solution because of the potential cost savings. Providing that the number of covered employees is large enough (at least 5,000 globally), the group experience is statisti-cally credible, and a reduction in the overall life and disability premium should be realized. An accurate estimation of the reduction requires underwriting, but may be equal to 5 percent to 15 percent of premiums compared to a traditional country-by-country approach. Moreover, these arrangements typically offer a multi-year rate guarantee.

The central administration and multi-year rate guarantee of a global reinsurance arrangement eliminate the burden of renewing dozens of life and disability

policies each year. This second advantage is significant and benefits midsize as well as smaller multinationals. Since smaller orga-nizations typically have a lean HR structure, the gain in efficiency makes this arrange-ment very attractive even if the cost savings are not as significant.The implementation of such arrangements

requires an upfront investment of time and resources that more than pays for itself later given the simpler ongoing governance model. However, the popularity of these global risk benefit arrangements will depend, in part, on how successful multi-nationals will be in convincing their local affiliates to transfer control of the imple-mentation and management of insurance contracts from local operations to head-quarters. The ability of insurance networks to implement such arrangements is another important factor that will determine their ultimate popularity.

The Future of Global BenefitsWhile total rewards assessments and global insurance arrangements have been avail-able for some time, they were difficult to implement, expensive and available only in a few countries. Easier access to data and technology advances are breaking down these barriers and making these solutions affordable for employers with relatively small employee populations. As technology continues to improve at an increasingly fast pace, one can conclude that analytical tools will become cheaper and transactional costs will continue to fall. To find the next signifi-cant global benefits trend, examine the local solutions considered cutting edge today.

Dany Mathieu is senior vice president and

innovation leader, Global Benefits for Aon Hewitt

and is located in San Francisco. He can be reached

at [email protected].

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❙❙ Total compensation statement

❙❙ Employee rewards.

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PAY EQUITY

IGNORE AT YOUR

OWN RISK


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he issue of pay equity has become a high priority as

legislation and media watchdogs have focused pressure on employers. Employers — federal contractors in particular — can expect increased scrutiny of their pay and employment practices and should be proactive in assessing potential equity issues.While organizations often rely on

the legal or compliance function to manage pay equity, it is vital for pay equity to be in the purview of the compensation function. Pay equity processes should not only mitigate risk but promote good pay practices. Effective pay equity management

— especially when made public — means greater access to increasingly diverse talent. This article addresses

Don’t leave performance ratings out of

your pay equity programs just

because they can be “subjective,”

or you could be could doing

your company a disservice.

By Brian Levine and Gail Greenfield, Mercer

t


two key issues compensation practitioners should consider: 1) Why pay inequity creates risk and 2) the importance of ensuring that remediation practices do not conflict with the legitimate objectives of compensation programs.

Why Worry About Pay Equity?Federal contractors in the United States face a new offensive from the Office of Federal Contract Compliance Programs (OFCCP), which focuses on pay equity in nearly every audit. The agency is concerned with systemic risk — that is, finding cases of alleged, broad discrimination by gender, race or ethnicity across compensation programs — and, having revoked standards for its own investigations established in 2006, it allows its investigators significant latitude in proving cases.

Broadly defined, systemic risk also allows the agency to consider all employment practices that may lead to compensa-tion disparities including job assignment, new-hire pay practices and promotion opportunities. In August, the OFCCP mandated that companies submit an “Equal Pay Report” annually, which will detail

summary compensation data by gender, race and ethnicity, ostensibly to allow them to more effectively target employers.But pay equity pressure is not just a

U.S. phenomenon: Countries globally are mandating that companies conduct reviews and submit reports. In this evolving climate, organizations must be ready to advise regulators on how to properly assess their compensation programs. Compensation practitioners are increas-ingly being asked about their policies and practices by the OFCCP and should have relevant facts ready to defend the integrity of those programs. Of course, where there is no good defense, proactive analysis should drive corrective action.There’s good reason to promote pay

equity. Proactive remediation not only reduces compliance risk, but also reduces talent risk. It helps to ensure an employer’s value proposition is optimized to attract, retain and motivate an increasingly diverse workforce and better access to underutilized talent pools.Mercer’s recent research in collaboration

with the World Economic Forum shows that women, for example, are underutilized

Figure 1 | Regression Analysis Reveals the Impact of Legitimate Factors on Pay

Recently promoted

Below average rating (vs. average rating)

Five years more tenure

Five years older

Above-average rating (vs. average rating)

Five more years in grade

Part-time (vs. full-time)

Has graduate degree (vs. bachelor’s degree)

Is a supervisor (vs. individual contributor)

10%

8%

6%

4%

3%

-3%

-4%

0.5%

0%

Percentage difference in base pay

Note: Analysis also accounts for job and location (results not shown)

5.5%

Source: Mercer

Proactive remediation not only reduces compliance risk, but also reduces

talent risk.


in the potential workforce with lower rates of participation in nearly every age category, across nearly all countries. The labor force participation rate for women aged 25 to 54 in the United States was 74.5 percent in 2012, compared to 88.7 percent for men in this age group.To appeal to sources of untapped talent,

companies must be aggressive in offering engaging, equitable packages. Pay equity is a critical requirement to improve diversity. Yet, despite overwhelming evidence that engaged female talent is a key driver of competitive advantage, workplace diversity remains a challenge. Some companies are voluntarily sharing data and information on their pay and diversity processes to attract more diverse talent, even though such action risks legal exposure (and potentially bad press). Google, for example, led the pack in publishing its government-submitted reports to counter public scrutiny. It then followed the release with a commitment to improve diversity outcomes. Yahoo and others have followed Google’s lead in the information and technology sector. It is conceivable that entire indus-tries will soon be under pressure to release such statistics and explain their actions to promote diversity and equity.

Though it is not yet the right move for every company, those that can proactively rise to the opportunity and credibly commit to ensuring equity will increas-ingly dominate in the talent wars.

Ensuring AlignmentPay equity processes can reinforce or undermine compensation program strategic objectives. For example, many analyses conducted

purely for legal reasons withhold subjective, documented performance as an explanation of pay differences because such ratings might be “tainted” (i.e., impacted by discrimination).

However, if performance ratings are not accounted for, employees who appear to be underpaid will generally be low performers, and pay adjustments will mainly be directed to low performers. Such an outcome can threaten the integrity of compensation programs. Compensation practitioners should insist that performance evaluation is accounted for in rewards reviews and ensure that the company is able to defend the consistency of the performance process (across raters) and its validity (through linkage to hard performance measures, where available).

Figure 2 | Good Pay Equity Analysis Minimizes False Negatives and False Positives

False NegativesRisks neither identified

nor addressed; continued exposure

False PositivesWasted, misspent dollars;

no risk reduction; may create misalignments in the

compensation system

Risk Mitigation, Compliance, Pay Equity

No ActionNo

No

Analysis: Pay Change Required

Re

alit

y: P

ay C

ha

ng

e R

eq

uir

ed Y

es

Yes

Source: Mercer

Some companies are voluntarily sharing data and information on their pay and diversity processes to attract more diverse talent, even though such action risks legal exposure (and potentially bad press).


Compensation professionals should also be engaged when employees of acquired and legacy entities are compared. Pay differences driven by legacy asso-ciations can continue for long periods (and might be legally defensible), but should not be perpetuated by proactive pay equity processes.

Sampling SmallSince “big numbers are bad numbers” is the adage of many professionals engaged in assessing pay equity, a common conse-quence is that analyses are run separately by job. Jobs are deemed appropriate for grouping because, according to Title VII of the Civil Rights Act of 1964, the standard is to look at similar employees based upon the

“nature of work.”The problem with this approach is that

when samples get small — and they frequently do when the unit of analysis is a job — there is little ability to account for legitimate factors (e.g., experience, educa-tion, performance) that drive differences in pay. That’s particularly common when conducting a regression analysis, which remains the legal standard for assessment.

Small samples also can inhibit the ability to identify areas of risk proactively and identify employees in areas for whom pay adjustments are warranted.

For proactive analysis, it makes more sense to combine into statistical models comparably paid employees — that is, employees for whom experience, education and performance similarly drive differ-ences in pay. Factors driving differences, including job-level differences in pay, can be accounted for in the analysis. (See Figure 1.) Such larger models, which should be run without accounting for gender and race, do a much better job of mirroring an organization’s legitimate pay practices and can be more effectively leveraged to assess risk by gender, race or ethnicity in narrow groups (i.e., to identify fewer false negatives in specific jobs or locations that might be targeted by the OFCCP). This approach is equivalent to using “interaction terms” (e.g., on gender, race or ethnicity controls; by job and/or location) in a regression model where the dependent variable is pay. (See Figure 2.)

To effectively employ this approach, engaging compensation professionals is

Figure 3 | Use Regression Models to Identify Outliers to Consider for Pay Adjustments

Predicted Pay Range

Predicted Pay

Potential Adjustment

Contain Pay

Source: Mercer

When samples get small there is little ability to account for

legitimate factors (e.g., experience,

education, performance) that drive differences

in pay.


critical. They can ensure that employees paid in a compa-rable manner are pooled together for analysis and can point to specific data elements to include in that analysis.

This approach has another benefit: Given that the OFCCP is looking at risk broadly — across jobs and businesses, for example — it is helpful for an organization to be able to look at risk in a variety of ways, quickly, in the context of an audit. The above approach can provide fast feedback on the risk in any work group that might be examined by an auditor.

Inevitably, this sort of modeling is complex. Robust statis-tical analysis should be handled by an expert to ensure companies do the best job of identifying true disparities since organizations will be allocating real dollars to fix the potential disparities that are found. (See Figure 3.) But the engagement of the compensation function is no less critical to ensuring success.

Ultimate ResponsibilityThe risk of pay inequity has never been more significant. Regulators are intently focused on the issue while organi-zations striving to acquire more diverse talent need every advantage in doing so.Compensation practitioners are critical to effective pay

equity processes. They can safeguard that such processes achieve objectives without undermining the integrity of

rewards programs. Their knowledge of practices and policies can guarantee that dollars spent on remediation are most effectively directed — as organizations move from “small samples” based on similarity of work to “right samples” based on how employees are paid.

It is the ultimate responsibility of the compensation function to ensure the equitable implementation of its programs. In an environment of heightened risk, now is the time for compensation professionals to assume this responsibility.

Brian Levine is a partner and senior workforce strategy consultant at Mercer

in New York. He can be reached at [email protected].

Gail Greenfield is a partner and senior workforce strategy

consultant at Mercer in Washington, D.C. She can be reached


resources plus


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❙❙ Pay Equality

❙❙ Pay compliance.

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1501JAN_WSAD_DianneAuld_J330.indd All Pages 12/11/14 9:20 AM

THE PERSON? THE RESULTS?

What Should

You Pay: THE JOB?


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employers administer base pay rates can vary across occupations. Direct sales

personnel most often are paid for producing tangible results in the form of sales. Research scientists and other professionals typically are paid for the qualifications and capabilities they bring to the organization, as well as the type and level of work they do. But most employees are paid based on the jobs they hold and how well they do those jobs.

The fundamental principle guiding how employers compensate these different occupations and roles should

No matter what pay method or combination of

methods you choose, make sure

it’s the right fit for your company.

By Robert J. Greene, Ph.D., CCP, CBP,

GRP, SPHR, GPHR, Reward Systems Inc.

HOW


be “pay for cont r ibut ion.” Since different occupations are expected to make different kinds of contribu-tions — make sales, use competence or perform job duties — tying the way they are paid to the type of contribu-tion they make is prudent. This article describes the different approaches to managing base pay and then discusses the implications for overall HR manage-ment strategy.

Paying for the JobMost organizations use base pay systems that tie rewards to employees’ roles or jobs. For example, within the management hierarchy, the CEO job pays more than the manager job. Within job families, the senior-level job pays more than the entry-level job.The “pay the job” approach ties base

pay to the job’s relative internal value and to its market value. The method-ology used typically follows several steps. Jobs are placed into grades within a pay structure that reflects their relative internal value. Pay ranges are assigned to each grade, based on the competitive pay rates prevailing in the relevant labor markets. These pay ranges define the pay potential for incumbents holding jobs in each range. Finally, individual pay rates are administered according to a strategy, which can be pay for longevity, pay for mastery, pay for performance or a combination of these factors.

Paying for the PersonWhen employees do not have well-defined duties or when they change

roles rapidly, tying individuals to specific jobs is difficult. For example, an engineer who works on a new product design project might have a specified role with defined objec-tives, such as designing a circuit that has the required characteristics. That engineer still might be working on that circuit design in six months, but also might assume a leadership role for another project spanning 18 months. Or he/she might play a continuous role as “firefighter,” responding to production problems as they arise. This type of context is increasingly common and poses chal-lenges if the organization were to use the “pay for the job” approach.When an organization sees value in

having employees who can perform a variety of tasks, it can make a case for paying for these capabilities by using a “pay for the person” approach. One approach to paying for the

person’s capabilities involves the use of career ladders. This best fits employees whose career path is most likely to remain in an occupation, with advancement based on compe-tence. Each ladder represents a job family. The levels of a career ladder describe what type of work the employees are competent to perform (in terms of its nature, complexity, difficulty or scope), as well as the latitude they exercise, the poten-tial impact of their work and the qualifications required. Specific quali-fications can be extremely important in occupations where licensing or certification is mandatory. As a result, many professional occupations,

such as law, accounting and finance, and many technical occupations, such as nursing and water treat-ment plant operation, might have entry requirements for each level of the career ladder.Another approach focuses on

the specific skills employees have mastered. Skill-based pay systems can compensate employees who have a greater breadth of skills or depth of mastery. These employees earn pay increases when they demonstrate mastery in a number of roles and use the broader range of skills. Skill-based plans might have provisions for adjusting pay if an employee’s compe-tence in specific skills atrophies or if the employer no longer needs those skills, but such provisions are difficult for employees to accept. As a result, the system often falls apart if the necessary skills change frequently or if there are no new skills that employees can learn to retain their base pay rates.

Paying for the ResultsSales personnel most often are measured and rewarded based on tangible results. Production employees who control their physical output also might be paid at least partially based on that output. When utilizing the “pay for results” approach, rewards come in the form of variable pay, and base pay might be set relatively low. Sales representa-tives technically might have no base pay, with all of their direct compen-sation based on results. Production workers typically are assigned base

The “pay the job” approach ties base pay to the job’s relative internal value and to its market value.


pay rates that are competitive and that provide a reasonable income when conditions outside their control affect their output.

Management personnel normally are valued based on their role and the results they produce, which could be viewed as a hybrid that rewards both the job and the results. A significant part of their current cash compen-sation might come in the form of incentive programs, and senior-level people also might have long-term incentive programs. This portion of their direct compensation most often is tied to some measure of financial results, although meeting specified operational objectives also might be considered. But base pay rates are administered based on individuals’ job or role and where that job fits in the organizational hierarchy. The result is a total direct compensation package that combines job-based and results-based pay.

One Approach or Many?There is a strong case for basing direct sales personnel’s compensation largely on results, basing management incentives on results and basing incen-tives for certain production personnel on volume. There is an equally strong case for using job-based pay administration for employees in stable, well-defined roles with clearly defined performance metrics.

However, a gray area exists for technical personnel and those in staff functions. These employees may be paid for what they are doing and what they are capable of doing.

Highly skilled engineers or scien-tists performing research are likely to be paid based on the knowledge, skills and abilities they bring to the organization. It is up to the organiza-tion to use the technical personnel’s knowledge, skills and abilities in a way that justifies their pay. If senior design engineers are placed in jobs that require a much lower level of competence, the organization still has to compensate them for what they are capable of doing rather than what they are doing. Otherwise the engineers can take their capabilities elsewhere.Another example is a software engi-

neer who spends a significant amount of time documenting a system he/she designed. Viewing this assignment from the outside, it might appear that a highly paid person is performing work that someone at a much lower pay rate could do. But it also might be operationally expedient, since it could take the designer longer to explain the system to a docu-mentation specialist than to do the documenting himself or herself.Adding to the “capable of vs. currently

doing” dilemma is the increasing impor-tance of project management. Given the complexity, scope and duration of some projects, the project manager must be highly skilled. But when a project manager completes a long-term, large, complex project, the organization might not have another project of that magnitude available. NASA entities, for example, are based on missions, and they often face this dilemma.If the person is assigned to manage

a smaller, less critical project than

he/she has managed in the past, the organization has several alternatives:1 | Use the “pay for the person”

approach and keep the person’s pay range and pay rate the same.

2 | Use the “pay for the job” approach and reclassify the person to the grade or range for the level in the career ladder warranted by the new assignment.

3 | Let the incumbent seek other opportunities that warrant his/her skill level.

In places like Silicon Valley, it is common practice to let employees leave with a commitment to stay in touch and to welcome them back when the need arises. This keeps people challenged and pays them in a manner fitting their contributions.The career ladder approach is

increasingly used for staff profes-sionals as well, such as in human resources, legal, information tech-nology, accounting/finance and procurement. These professionals often function as “firefighters,” responding when needs arise. But many also participate in a series of overlapping projects, such as installing a new HRIS, revising the compensation system or ensuring compliance with a new law or regulation. This is why it is often difficult to write job descriptions for employees functioning in “as needed” environments.When a manager organizes a staff

function, he/she needs to fit the workforce mix to the probable work mix. An HR function in a complex, dynamic organization might need to

A gray area exists for technical personnel and those in staff functions. These employees may be paid for what they are doing and what they are capable of doing.


support recurring transactions but also staff multiple projects of varying complexity, difficulty and duration. It’s therefore necessary to project the optimal mix of skill and knowl-edge, of depth and breadth, and to select and develop HR employees so collectively they can meet the most likely challenges.

Determining base pay rates for people operating in this type of environment is challenging.Again, the organization has several

alternatives:1 | Use a “pay the person” approach

and retain base pay rates for employees working at compe-tence levels below the level at which they are classified.

2 | Use a “pay the job” approach and give increases on the same basis as those working at the same competence level.

3 | Use a “pay for results” approach and decide how long employees will be paid above the level warranted by what they are doing.

Challenging decisions like these arose during the economic downturn beginning in 2008, when many organi-zations were forced to reduce staffing to align their people costs with revenues. They had to decide whether to keep highly skilled, highly paid people so the organizations would be prepared for the return of prosperity, or to keep less-skilled, lower-paid people and achieve greater cost savings. If organizations had assessed

their workforce skill mix compared to the work mix, they could have used the opportunity to intelligently decide how to better align the two.

Choosing the Approach The most fundamental question about how to pay people is to ask what they will be paid for: Doing specific jobs? Qualifications? Results? The right answer is often complex to discover, and all three approaches can fit different occupations, roles and organizational designs.

Rewards practitioners have been using all these approaches, and the tech-nology for designing and administering the various types of base pay manage-ment systems is well known. It can appear to be simpler to pay everyone using the same approach, even though how individual pay rates are adminis-tered can vary to fit the situation. But the lure of “one system fits all” often results in adopting a strategy that does not fit many occupations and roles.One example is the public sector,

where the default position has been to classify employees based on the job they hold and to pay individuals based on longevity. The experience of the U.S. government’s General Schedule system has made the weak-ness of this approach apparent. This system mandates that “firefighting professionals” be considered as having a stable job that can be evaluated and placed into grades using a point-factor job evaluation system. It also

pays individuals for longevity rather than performance, using a time-based progression step system. Because of the inadequacies of this approach, individual agencies have removed at least half of the federal workforce from the General Schedule system. Whether the requirement to classify employees using a job-based approach or the requirement to pay for longevity has prompted this exodus to “excepted service” systems, many agencies have found the General Schedule system does not work for a significant percentage of employees.

In determining how employers administer base pay rates, “what works is what fits” should be the guiding principle. If this means paying some employees for the job they hold, others for their capabilities and yet others for the results they produce, it might mean a more complex system. But it is likely to produce a better result.

Robert J. Greene, Ph.D., CCP, CBP,

GRP, SPHR, GPHR is CEO at Reward

Systems Inc. in Glenview, Ill. He can be

reached at [email protected]

or www.robertjgreene.com.

resources plus


❙❙ Base pay

❙❙ Pay for results

❙❙ Pay the person.

In determining how employers administer base pay rates, “what works is what fits” should be

the guiding principle.

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What’s

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Anew question is being posed in a growing number of corner offices: “What is the company getting for all the

money we’re spending on employee health?” Treating health and related costs simply as expenses to be mini-mized as a strategy for managing health cannot survive in the future.

It wasn’t long ago that the value of health benefits focused solely on the attraction and retention of employees. With new post-reform opportunities to exit the system or reduce their role, the employer value proposition for providing health benefits and investing in health must be much broader if companies are to continue to play a central role in providing health and related benefits in the

United States. As employers evaluate the future of health benefits for their organizations, benefits managers must keep two things in mind.The Patient Protection and Affordable

Care Act of 2010 (PPACA) has changed health care and the health insurance marketplace for good. Employers can decide to provide employee health benefits through private or public exchanges, discontinue offering health insurance (and likely incur financial penalties), invest in workforce health or completely turn health decisions over to employees.Companies will always need high-

performing, productive workforces in order to remain competitive. The challenge to benefits professionals is how to make the transition

Make sure the CFO has information on the value of benefits, not just the costs.

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from health-as-cost to health-as-business-value given changes in the health-care system and the need to support their businesses.

The CFO’s PerspectiveThe perspective of senior financial executives is critical to meeting the challenge. The author’s company has published three major studies of CFOs over the past 10 years on how CFOs view health and health care in their organizations. Over that 10-year period, these studies showed that CFOs have continued to broaden their view of health and its importance to their companies. The most recent study, undertaken soon after PPACA was adopted, surveyed 343 CFOs in partnership with CFO magazine’s research group to learn more about their views on health and health care. Several important CFO perspectives emerged: ❙ CFOs are key participants in benefits decisions. Eight in 10 CFOs reported that finance professionals play an important role in their organiza-tion’s health-care benefits decisions, usually in collaboration with human resources and executive leadership, and with business operations.

❙ Health is an organizational priority. A majority of CFOs reported health is a cultural or financial priority in their organizations. However, the patterns of their responses indicate the existence of a subset of CFOs from organizations with an especially strong perspective on the importance of workforce health to their business, with a much broader understanding of health and its business impact.

❙ Productivity is critical to the bottom line, but the role of health is less clear. CFOs tended to view productivity as an important direct contributor to their bottom line through meeting customer and market needs. However, they view employee health as a less important driver of workforce productivity than other human capital considerations.

❙ CFOs understand that health impacts financial performance.

CFOs viewed health as having an impact on financial performance in conventional (e.g., health-care expenses, sick-day absences) and less conventional ways (e.g., oppor-tunity costs of responding to absent employees, requirements for larger-than-optimal staffs).

❙ Critical information is lacking. CFOs have ample access to some types of helpful information when making decisions about improving the health of their workforce — such as benefits costs, sick leave days, and measures of employee satisfac-tion and productivity — but face substantial information deficits in areas they view as helpful, such as ROI analysis from health interven-tions and for the impact of health on work performance or quality.This research indicates that CFOs

understand the importance of human capital to their business success, that health’s effect goes well beyond the costs of health care and that additional information is needed for measurement of the full impact of health. CFOs also see that there are opportunities to extend the discus-sion of health to the top line and not just as a bottom-line cost.

Using Data to Effectively Tell the Story The challenge of what data to present to CFOs to make the business case for health — and the way to present that information — is vexing to many employer benefits professionals, particularly with the advent of new technologies and a near-geometric expansion of data about workforce

health. Benefits leaders often think that more is better when demon-strating their value to senior leaders. In fact, the opposite likely is true. If benefits professionals cannot use data to tell a convincing story to their CFOs about opportunities to improve health and what it will bring to the company, it will be difficult to make a transition to viewing health as business value.Three questions can guide the way

benefits professionals communicate the story to senior leaders about health and its value: 1 | What is the status of the

health of the workforce and what is its financial impact on the company — not just on health-care costs but on business-relevant outcomes as well?

2 | Where are the most impor-tant opportunities to improve status and outcomes?

3 | How will we know if we are successful?

The biggest mistake that benefits leaders make in bringing data to these questions is to focus on a level of data granularity that quickly overwhelms the ability to communi-cate key elements, their impact and importance. Rather than starting with the finest level of detail, it makes far more sense for benefits profes-sionals to think top down rather than bottom up. With this in mind, 10 key dimensions of workforce health can be used to effectively answer these questions. (See Figures 1, 2, 3.) Furthermore, they can be organized to support an action plan as leading indicators of health, indicators of care and lagging/outcomes indicators.

Figure 1 | Leading Indicators of Health

Often ignored, leading indicators of health are factors that drive the health-care experience.

Health Dimension Definition Key Metric

Health risksThe profile of risk factors existing in the workforce

Number of health risks per employee

Biometric screening

The biometric profile of the workforce

Employees meeting clinical targets as a percent of all employees

Chronic conditionsThe prevalence and distribution of employee chronic health conditions

Employees with chronic conditions as percent of all employees


The most pragmatic way to identify areas for improvement is through benchmarks on each of the key metrics. Benefits professionals can look to benchmarks for their industry from various sources or get bench-marks from their benefits partners (such as health plans, disability companies and consultants/brokers).

Once health dimensions are targeted for attention, the employer and its partners must decide where to focus their actions given the limited financial and time resources available. Because high-level metrics are diffi-cult to act on, employers must think about metrics as hierarchies of infor-mation. For example, if the employer finds that it measures up poorly within its industry on time loss for employees, disaggregating that metric into “constituent metrics” should be straightforward. Several constituent

metrics contribute to lost time from work: sick leave, short-term disability, long-term disability, leave associated with the Family and Medical Leave Act of 1993, workers’ compensation disability and reduced performance time. Identifying which of these constituents is the principal driving factor allows the employer to target intervention and tracking efforts.

Integrated vs. Siloed DataMost employers have housed data relevant to health in separate parts of their organization: group health data in one silo, disability in another, workers’ compensation in a third. Often, employee incidental absence information is housed in payroll, while performance and HR data are housed in separate organizational units as well. As employers seek a more causal interpretation of the full

impact of their health interventions, they will naturally gravitate to devel-oping employee-centric information across health-related programs in an integrated, longitudinal database.While much of the conversation

about health’s organizational effects thus far has focused on bottom-line costs, the concomitant question is how health may affect employer revenue opportunities. For example, American Express Co. has examined how employee health risks impact customer service scores — key to revenue maintenance and growth opportunities. The company’s analysts found a significant relationship, which allows their senior benefits leader to greatly expand the conversation within their company on the full impact of workforce health and its value to the business.

The Future is NowEmployers are at a crossroads with regard to health-benefits decisions. They can turn health decisions over to employees with the rationale that buying and managing health is no different than any other commodity purchase or other deci-sions employees make in their lives. Or, they can invest in the health of their employees and quantify the full impacts of those interventions. Or, they may adopt some combination of the two. One thing employers must not forget: Regardless of how they decide to secure the purchase of health care, the full cost and risk of employee health never can be fully shifted outside of the organization.

Thomas Parry, Ph.D., is president at

Integrated Benefits Institute. He can be reached


resources plus


❙❙ Health care reform

❙❙ Employee health

❙❙ Healthy employees.

Figure 2 | Indicators of Care

Indicators that elucidate what, how and where care is delivered to employees and dependents.


Preventive careThe degree to which employees are being screened for age- and gender-appropriate health conditions

Employees receiving appropriate screening as a percent of all eligible employees

Program participation

Degree to which employees are enrolled and taking part in available health-related programs

Participating employees as a percent of eligible employees

Employee engagement

The degree to which employees are engaged in managing their health

Average health engagement survey score per employee

UseThe amount of care delivered and the health-care setting in which it occurs

Employees receiving medical care as a percent of all employees

Figure 3 | Lagging/Outcomes Indicators

Outcomes indicators tell the employer what has resulted from the status of workforce health and interventions to make improvements.


FinancialExpenditures for all health-related benefits programs

Total health-related program costs per employee

Lost time from work

The number of health-related lost workdays, both from absence and reduced performance

Number of lost workday equivalents per employee from health-related conditions

Lost productivity

The financial opportunity costs borne by the employer in responding to lost work time by employees (overstaffing, temporary help, overtime, lost revenue opportunities)

Lost productivity costs per employee

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case study

By Jamie Reiner, TransUnion, and Tom Hill, Hay Group

TransUnion’s five-step journey led it to sales incentive program success.

Whether seeking to better serve existing customers, expand their reach in established markets or break into new markets, sales teams are an essential tool to support companies’ growth strategies. For global businesses, optimizing and enhancing sales team effectiveness through impactful rewards strategies

requires a sales incentive program design that is standardized and aligned to the organization’s strategy yet flexible enough to be applied across regions, accounting for variations in multiple markets. This article details TransUnion’s journey through the design and implementation of a new global sales incentive program.



The ApproachTransUnion sought to provide solutions that helped solve clients’ critical business issues. The company determined that it needed to focus on client relationships, deploy the right resources against key clients and opportunities, shift the selling model and strengthen the sales process.To drive this effort, it developed

an enterprise-wide sales strategy initiative constructed around four key pillars: client engagement; operational capability; sales strategy; and people, skills and motivation. The HR team led the people, skills,

motivation part of the initiative. Within this focus area, the goal was to maximize the effectiveness of the sales teams by shifting to consulta-tive selling, developing current talent, onboarding new talent and ensuring that the incentives drive the right behaviors.Through a partnership with Hay

Group, the company developed a competitive sales incentive and total compensation program to ensure consistency and alignment to the sales strategy. TransUnion conducted the impact modeling based on the design recommendations and implemented the program.

Project JourneyTransUnion determined that the best approach was a common design framework that allowed for some variability. This enabled the company to set expectations for roles globally, align quotas and payouts to busi-ness results, provide more visibility into measures and outcomes, promote fairness and effectively manage costs.To arrive at the final incentive

design, several steps, as listed below, were undertaken:1 | Interviewing senior leaders2 | Clarifying roles for the future

state of the organization3 | Benchmarking compensation

levels and plan designs4 | Establishing guiding

principles for plan design5 | Developing design frameworks.

Step 1Interviewing senior leadersThrough interviews, regional leaders and country leaders provided insight into their markets, roles and strategic direction. The markets where TransUnion operates are vastly different because of local laws and regulations. One key theme of these sessions was that TransUnion needed to move from a transactional selling model to more of a consultative sale. A shift like this is not an easy undertaking as it requires sales training, customer education, sales operations and infrastructure with tools like Client Relationship Management (CRM) systems. TransUnion leaders also discussed the need to drive new products into the marketplace and expand into new vertical markets.

TRANSUNION NEEDED TO FOCUS ON CLIENT RELATIONSHIPS, deploy the right resources against key clients and opportunities, shift the selling model and strengthen the sales process.

TransUnion developed an enterprise-wide sales strategy initiative constructed around

four key pillars:

Client engagement

Operational capability

Sales strategy

People, skills and motivation.

Figure 1 | Sales Value Matrix for Defining Desired Sales Roles

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Step 2Clarifying rolesTransUnion did not focus on the current role design; rather, significant attention was directed toward how to define sales roles to meet the company’s current objectives going forward. TransUnion defined these future-facing sales roles by plotting the desired state of the roles using the Sales Value Matrix. (See Figure 1.)The matrix is defined by

two ranges:1 | The nature of client

interaction, defined from transactional to consultative

2 | The degree to which the role is servicing versus initiating demand (familiarly defined as farmer and hunter roles).

TransUnion then used the database to benchmark prevalent plan design elements, pay mix and competencies for these roles.

Step 3Benchmarking compensation and plan designsSenior leaders at TransUnion also sought to answer questions about local market practices and compensation levels. TransUnion relied on surveys focused on core plan elements — such as plan type, measures, elasticity, frequency and pay mix by country — to meet the leaders’ needs.Compensation benchmarking was

especially vital for the sales roles that had changing job responsibili-ties and expectations. In addition to looking at the median performer relative to market, TransUnion also assessed the distribution of pay and how that compared with not only the market percentiles, but also internal sales volume against its goals. This market analysis became useful in the cost-modeling phase as well when TransUnion had to make decisions regarding impact.

Step 4Establishing guiding principlesEstablishing guiding principles is an important, yet often overlooked, step

in the plan design process. Incentive plans cannot solve for everything. Articulated principles allow the design team the ability to prioritize objectives, and they serve as a critical check when the cost impact modeling shows a different outcome than what was expected on an incumbent basis.

Ultimately, the team set out to develop the plans to align with the go-to-market strategy and sales roles for each country. The HR team also prioritized creating common threshold and quota levels, and setting the total measures in the plan at a maximum of four. Though it didn’t drive the design, a secondary consideration was to review the local market customs and incorporate this learning into the design process.

Step 5Developing design frameworksThe team took the input from the previous steps to create the plan design frameworks for each role. The key account manager role, for example, shows a scorecard bonus as well as a commission opportunity. The bonus had some level of common fate with the country success, but was heavily weighted to individual performance. The role had a well-established book of business, so upside was built into the bonus plan to push for growth with existing clients but also included the commission arrangement to the key account managers on new oppor-tunities. Because there was ample base salary in many locations, the commis-sion design had a quota requirement, though the product and rate were dependent on each market and what was available to sell.

Cost Modeling and ImplementationAfter acquiring the general frame-work, TransUnion performed a cost modeling and impact analysis assessment. TransUnion constructed a template to review and assess the cost implications of the new plan design based on a number of scenarios, such as overachieving plan and missing

target. In this analysis, TransUnion looked at the individual impact to associates, specifically: ❙ Were the top performers earning the same or more under this new construct?

❙ Was leadership comfortable with the reduced earnings for low performers?

lesson learned: Engage local finance when reviewing the cost analysis. This will help it plan for accruals and prepare to handle the payouts.

Next, legal counsel reviewed all plan changes and provided feedback and recommendations. lesson learned: Changes to base pay or payment mix may not be possible, new employee agreements may be needed, and/or staff may need to approve the new plan prior to implementation.

Finally, TransUnion checked that the new plan design aligned with the expectations set with key stakeholders through the following guiding principles: ❙ Competitive pay to recognize and reward talent – Compensation and incentives are aligned to the local market to attract and retain talent. Bench-mark data was used to confirm total compensation offering. – At least one or two components of plan design were locally influenced.

lessons learned Engage local finance when reviewing the cost analysis.

This will help it plan for accruals and prepare to handle the payouts.

Changes to base pay or payment mix may not be possible, new

employee agreements may be needed, and/or staff may need to approve the new plan prior to implementation.

Build additional review into implementation timeline.

Establishing a governance policy up front is critically important.


❙ Clear understanding and direction – Standard, role-specific plan docu-ments were created for associates on the sales incentive plan to support clear understanding of incentives and provide direction on desired behaviors and activities.

❙ Greater upside/earnings potential to encourage long-term focus and success. – Pay curves increased incentive reward for higher-achieved targets. – More frequent delivery of payouts to quickly acknowl-edge and reward associates’ valuable contributions.

Implementation of a new sales-incentive plan required clear explanation to ensure associates understood the impact on their pay and on their work effort. TransUnion created core communication materials, allowing for slight customization in each region. After an initial commu-nication from the division president to introduce the overall 2014 sales incentive plan, local sales leaders were expected to discuss the frame-work in more detail with the staff and review the implications of the framework for associates.

Executing the final communications through the sales leaders was more challenging than expected. While sales leaders had been involved in the process and eager to sponsor the project originally, they had difficulty communicating the changes, benefits and reasoning behind the new plan. Open lines of communication among the design team and sales leadership helped bridge this gap and keep the framework intact. lesson learned: Build additional review into implementation timeline.Another aspect to consider is the

framework’s elasticity. TransUnion wanted to encourage dialogue and buy-in with the sales leaders, but needed to be clear about who would ultimately be accountable for the design and maintenance. A governance model [responsible, accountable, consulted, informed (RACI)] was created to outline the

roles and ongoing responsibilities of corporate (finance, human resources, compensation, sales operations and plan administration) and local (sales leaders, finance and human resources) participants. lesson learned: Establishing a governance policy up front is critically important.

Crafting a global sales rewards program requires the development of a framework that meets the needs of the business. Global companies undertaking this kind of effort should begin by clearly defining a frame-work, articulating guiding principles and establishing a governance policy, all of which should take into account the viewpoint of stakeholders in impacted sales regions. Benchmarking costs and compensation program designs should be considered at a regional level and include substan-tial input from local finance teams. Companies should be aware that substantial shifts to rewards programs will likely require substantial employee support and may necessi-tate modifying employee agreements.Getting the balance right in devel-

oping an effective new global sales incentive program takes an invest-ment of time and resources. But it is well worth the effort to ensure the end result is aligned with business strategy and drives the right behav-iors. This has enabled TransUnion to use a common template to gather information, which in turn has made it easier to report and analyze the

information as well as assess how the plan is operating and what changes may be needed going forward.

About TransunionTransUnion is a global leader in credit, risk and information management employing more than 3,500 people worldwide, building credit economies in more than 30 countries on five continents. The company is focused on expanding its footprint in high-growth markets and implementing new products. To accomplish this goal, TransUnion created a strategy that would strengthen client relationships, shift its selling model to a more consultative approach and adjust its rewards strategy.

Jamie Reiner is a senior compensation manager

at TransUnion in Chicago. She can be reached at

[email protected].

Tom Hill is the national practice development

leader for the Enterprise Sales Effectiveness

practice at Hay Group in Chicago. He can be

reached at [email protected].

TransUnion wanted to encourage dialogue and buy-in with the sales leaders, but needed

to be clear about who would ultimately be accountable for the design and maintenance.

resources plus


❙❙ Sales incentive

❙❙ Incentive pay

❙❙ Global + sales incentive.

mailto:[email protected]


http://www.worldatwork.org/search/searchWorldatWork.jsp?N=0&Ntt=sales+incentive&Ntk=General&Ntx=mode+matchallpartial

http://www.worldatwork.org/search/searchWorldatWork.jsp?N=0&Ntt=incentive+pay&Ntk=General&Ntx=mode+matchallpartial

http://www.worldatwork.org/search/searchWorldatWork


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By Leslie Fiorentino and Jane Malecki, EY

Mobility programs are playing an increasingly important role as many corporations continue to expand their

global footprint and presence.The results of EY’s “Global Mobile

Effectiveness Survey” (GMES) reveal that the most successful global mobility teams have learned how to become fully integrated with global total rewards and talent management programs. Educating senior leaders on the value that mobility offers the business can be a key step in that evolution.

Integrating the responsibility for mobility and global assignments with the total rewards function makes good business sense.

Integration with Total Rewards and Talent Management Is Critical to Success


For example, the 2013 GMES found that 58 percent of the organizations have a talent management agenda, up from 51 percent the previous year. While 31 percent of respon-dents reported that they were involved in assignee selection; this statistic also increased 2 percentage points. However, 56 percent said they were primarily involved in deploying services, reflecting the further progress that needs to be made with total rewards and talent-management decision makers.While facilitating global assignments will

always be a key role for mobility teams, total rewards and talent management leaders often have valuable insight into potential assignees and assignment specifics that could help avoid future complications or surprises, which go far beyond securing visas and living arrangements.

Building a Business Case for IntegrationA closer review of the survey results can offer a timely and useful road map for convincing senior leadership why they should have a stronger voice when strategic talent decisions are made. Here are a few talking points for mobility professionals to use while building a business case to integrate their function with total rewards and talent management: ❙ ROI. Most mobility teams face the pressing challenge of needing to move assignees as fast as possible. This may be one reason why 4 percent of companies reported that they measured ROI, with another 18 percent unsure. In fact, 78 percent of the companies reported that they did not measure ROI at all. As senior leaders and businesses continue to focus on reducing costs, more companies are likely to take steps to measure ROI. At the same time, mobility professionals will also need to weigh in on establishing measurements that demonstrate the strategic value mobility brings to the business. Any true measurement for mobility should also include long-term, more subjective metrics such as employee retention and the assignee’s continued upward path in the company.

❙ Assignee selection. Sixty-five percent of companies cited family or personal factors as the primary reason for failed assignments or early repatriation. If involved earlier in the process, mobility professionals can iden-tify and determine characteristics that may jeopardize the assignment. By taking a more proactive approach and weighing in before the final decisions are made, mobility teams can help the organization identify people who are next in line for an assignment. Mobility teams can also assist with crafting an assignment package that makes the most sense for the business objectives, balanced against the needs of the individual while taking into account all the challenges and legal requirements of each specific country.

❙ Linking with diversity goals. Mobility teams can also build their case by citing the survey finding that only 6 percent of responding companies said they actively encouraged members of minority groups to participate in assignments. This doesn’t mean that any minority group was discouraged. However, it does reflect the reality that mobility programs are not integrated into overall diversity efforts and, therefore, long-term development of a diverse talent pipeline. Again, by taking a full seat at the talent management table, mobility teams can create stronger synergies between the talent-management team and diversity programs, enabling the organization to achieve its overall mobility goals and diversity objectives.

❙ Expansion into growth markets. As many companies see their growth in emerging and frontier markets, the talent gap is even more pronounced, reflecting the need to develop talent in these markets, both with international assignees and in-country resources. As all global companies engage in an increas-ingly competitive battle for scarce human resources in these rapidly growing markets, any company seeking only to fill short-term needs is taking a shortsighted approach.

❙ Risk management. This area is an increasing concern as many companies expand globally, especially into jurisdictions that are eagerly seeking new sources of revenue. Combine this with increasing sophistication and coopera-tion among immigration and tax authorities and cross-border information sharing, and it’s easy to see the possibilities for significant compliance violations. Sixty-four percent of the companies surveyed reported having to pay fees or penalties for noncompliance, with

Any true measurement for mobility should also include long-term, more subjective metrics such as employee retention and the assignee’s continued upward path in the company.

58%

of companies have a talent management

agenda, up from 51% the previous survey

31%

are involved in assignee selection,

while 56% are primarily involved in deploying services

50%

think their global mobility team is

understaffed.

78%

do not measure ROI, with another

18% unsure

Source: EY’s “Global Mobile Effectiveness Survey 2013”


Source: EY’s “Global Mobile Effectiveness Survey 2013”

83% of respondents believed mobility had a positive impact on an individual’s career progression.

Positive impact on career

AND

Increased staff in growth markets

of companies increased staff in growth markets in 2012

leave their employer within two years of repatriation

of companies have incurred avoidable penalties for noncompliance

83%

40%reported they did not have a formal risk control frameworktax and social security

more reporting that they needed to hire outside attorneys or firms to address the problem. Mobility teams can have a significant impact on compliance, however, through talent deploy-ment initiatives that protect the bottom line and corporate brand. By effectively integrating mobility into talent management, mobility teams can take steps to avoid those compli-ance issues, create more efficient processes and actually save money for the company.

Strengthening AlignmentAs the survey results indicate, mobility will continue to play an important role in helping organizations meet the challenges and needs of running a global business.

However, if mobility teams are going to be a full player in global talent management strategy, they need to strengthen their alignment to the business and develop a more proactive approach that helps senior leadership iden-tify promising employees and when they are ready for assignment.

Mobility teams that have more influence in the decision-making process would help orga-nizations avoid some of the inevitable issues, particularly with failed assignments that lead to early repatriation or perhaps the employee leaving the organization.

By merging mobility with total rewards and talent management, teams can begin to develop true metrics for success, identify the right assignees at the right time in their careers and fully integrate each assignment into an overarching framework for talent management. Mobility can be used to support short-term resource gaps. But best-in-class organizations use mobility to help support the long-term talent management goal of having the right resources in the right place, at the right time.

Leslie Fiorentino is the mobility services leader and partner

in EY’s Human Capital group in the Boston office.

Jane Malecki is an executive director in EY’s Human Capital

group in the Iselin, N.J. office.

Authors’ Note The views expressed in this article are those

of the authors and do not necessarily represent the views of

Ernst & Young LLP

resources plus


❙❙ Mobility programs

❙❙ Assignee selection

❙❙ Mobility + talent management.About the Global Mobility Effectiveness Survey More than 230 multinational companies across industry sectors were surveyed in 2013.

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Employee assistance programs (EAPs) were launched in the 1960s in response to the need to help employees overcome alcoholism. Since then, they have evolved to address many non-work issues impacting an employee’s life.While the challenges faced by today’s workforce may be

changing, employees are still faced with personal stress that impacts their job performance such as aging parents and caregiving issues. EAPs need to evolve to offer relief for these challenges if they are going to maintain value for both employees and their companies. Home-care assistance is one way to help employees combat those challenges. In fact, expanding EAPs to include home-care hours can reduce absenteeism and turnover costs, as well as reduce the health-care costs of employees.

Non-medical care as part of an EAP

can help decrease absenteeism and increase productivity.

By Jeff Bevis, FirstLight HomeCare


Nonmedical home care fills a specialized niche between employees needing medical services often covered by insur-ance and Medicare, and those who need nonmedical help around the house. Nonmedical in-home care covers everything from household duties like cooking, cleaning and laundry to individual needs such as bathing and hygiene, continence and toileting care, and assistance with mobility and eating.

By partnering with a home-care company, an EAP can be an effective solution for an employee overwhelmed by caregiving responsibilities. The employee could use those home-care hours provided through an EAP to provide respite care, allowing for continued full-time employment, or to provide interim care when work requires greater attention. In any case, employees and the family member they are caring for receive value from an EAP that has estab-lished a relationship with a home-care provider. The company also benefits through increased productivity, reduced employee health-care costs and the retention of valued employees.

Facing the Facts on Senior CareThe responsibility of caring for an older parent or relative is a part of life for many adults across the country. According to the U.S. Census Bureau, by 2050 the projected popu-lation of people age 65 and older will be 88 million. The number of older adults with aging parents is increasing and with it the impact on companies that employ them. According to a 2009 study conducted by the National Alliance for Caregiving and AARP, more than 65.7 million caregivers, accounting for 29 percent of the U.S. adult population, provide care to someone who is ill, disabled or aged.As an increasing number of Amer-

ican employees face the challenges and responsibilities of caring for an aging family member, employers

can use EAPs to reduce the impact of caregiving and improve the well-being of caregivers.“For an EAP to be successful at helping employees, it needs to go beyond geriatric counseling,” said Gina Kaurich, executive director for client care at FirstLight HomeCare.

“Employees who are providing care need actual relief from their care-giving duties, not just advice on how to provide care. It is similar to providing not just referrals, but actual treatment services for other EAP-supported issues, such as substance abuse and family counseling.”

The Significant Costs of Senior CareIn addition to relieving the stress and burden on employees, adding home care to the company’s EAP can combat the costs of lost productivity.

The combined costs of workplace disruptions from family caregivers totaled between $17 billion and $33 billion per year, according to the MetLife Study of Working Caregivers and Employer Health Care Costs. These costs include

absenteeism, shifts from full-time to part-time work, the need to replace employees and workday interruptions.The 2010 study also found that

employees providing eldercare were significantly more likely to report depression, diabetes, hypertension or pulmonary disease, regardless of age, gender and type of work. Caregivers also were more likely to forego recommended annual screenings. For example, women caregivers were less likely to undergo annual mammograms than non-caregivers.

Quantifying the Value of Home CareFor HR managers and business partners looking to include nonmedical home care for employees via an EAP, there are several factors they should consider to demonstrate a busi-

ness value for the company.First, the company should determine

how much lost time in productivity dollars it has experienced as a result of senior care/aging parents/family members. This should not include hours lost from child-care issues.

Using this value, the company should determine the level of benefit that should be offered via the EAP. The benefit level can range from full payment of home care for an employee’s immediate family member to reimbursement of home care for a standard number of hours each week. Both of these options may actually save the company money based on the hours of lost productivity and increased health-care costs incurred by employee caregivers. A third option is to provide a direct referral to the company-approved home-care provider so the employee is able to immediately address the need and save the time that would be normally spent by the employee researching, comparing and securing home-care services.

If the current EAP does not have a nonmedical care component, request that the EAP add this offering. If

“Employees who are providing care need actual relief from their caregiving

duties, not just advice on how to provide care.”

— Gina Kaurich, FirstLight HomeCare


the company does have nonmedical care included in the EAP, it should review the provider to ensure the level of care, service and client satisfaction are all at a high standard.

Start With the Business CaseThe senior care population is expanding, and while many prefer to stay at home, it takes a financial, emotional and physical toll on their adult children who become care-givers. And that means it will impact the companies that employ those adult children.

Start by identifying the company’s lost productivity and increased health-care costs. Then identify the financial commitment to offset those costs while providing an essential employee service that has become the hallmark of an EAP since it began by helping employees overcome alcoholism. From there, determine the level of service to provide — a set number of hours or dollar amount — that employees can access as part of the EAP.

Finally, the company needs to promote the new service to employees so they are aware of its availability. This can be done during the open enrollment period, but should also be done as a separate initiative to ensure employees are informed and educated about the benefits.

Jeff Bevis is president and CEO of FirstLight

HomeCare in Cincinnati, Ohio. He can be reached


Identifying Quality Home Care CompaniesWhen looking for a home-care company to include in the EAP, there are several key factors to consider to ensure that employees and their family members will receive the best care.

Are 24/7 care and live phone contact always available? In addition, does the company offer a wide range of services from companion care to personal care and dementia care? It is also important to make sure the company offers nonmedical care because not all home-health companies offer this type of care. Nonmedical care,

such as hygiene help and cooking and cleaning, can be among the most needed services for those elders who prefer to remain at home but need help with nonmedical tasks.

When reviewing a company, find out if client satisfaction is measured and how often. It should be measured at least monthly. Due to the rapid growth and the short-term care provided, the client base is different each month. Measuring yearly or quarterly doesn’t provide an accurate reflection of client satisfaction when the client base

is significantly different month to month. In addition, monthly telephone satisfaction surveys result in a higher response rate (more than 80 percent) vs. quarterly or annual reply card surveys, which often have a response rate below 5 percent. Ask about the company performance year-to-date and historically in terms of client satisfaction.

A main contributor to client satisfaction is caregiver turnover. What are the caregiver turnover numbers for the past month and year? The industry has historically high turnover, often averaging 70 percent annually. Because the stress and dissatisfaction high turnover places on the client and the client’s family are major, home-care

companies with turnover more than 25 percent should be avoided. In addition, does the company have a comprehensive caregiver-training program and the documentation to show that all caregivers have been trained and receive ongoing training for the care they provide?

resources plus


❙❙ Caregiving

❙❙ Lost productivity

❙❙ EAP.

Because the stress and dissatisfaction high turnover places on the client and the client’s family are major, home-care companies

with turnover more than 25 percent should be avoided.

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Business success often depends upon faster innovation, cross-company collaboration and a highly motivated workforce. But many companies apply an overly structured, forms-bound and ratings-dependent performance management process that prevents the successful execution of their strategy.According to 2014 research by the Corpo-

rate Executive Board (CEB), only 3 percent to 4 percent of companies recognize this danger. They are significantly rede-signing their performance management

processes and eliminating ratings and rank-ings while changing how they set goals and distribute rewards.Critics cite that performance management

takes too long, doesn’t deliver the intended benefits, and managers and employees hate it. Further CEB research reveals that although 96 percent of companies have a defined performance management process, 86 percent dislike it and consider it a time-wasting ritual.

Those dissatisfied with a traditional approach but cautious about eliminating ratings must understand the current thinking and learn what progressive companies have done to reinvent performance management, which is detailed in this article.

Move beyond the forms and ratings. Instead, embrace the idea of development and coaching.

By Jeannie Coyle, Worktelligence, and Jim Harvey, Columbia Compensation Consulting LLC


Current ThinkingThree points of view are moving organizations to make bold changes.

1 Traditional performance management shuts people down.

Neuroscientist David Rock points to “brain pain” from using traditional performance appraisal processes, particularly those with rankings or bell-curve requirements. This often sets off alarms, triggering a “fight or flight” mode that stifles learning and creativity.

2 Make the time spent worthwhile.Marc Effron, author of “One

Page Talent Management,” advocates simplifying complicated performance management processes. He favors one-page templates for performance management and advises managers to trade one hour of structured year-end meetings for quarterly 15-minute, informal discussions that enhance the quality of feedback and focus on future performance.

3 Traditional performance management doesn’t fit

21st-century business conditions.PeopleFirm’s Tamra Chandler contends that traditional performance management is grounded in outdated assumptions borne out of post-World War II bureaucracies when companies seemed compelled to put people and jobs in narrow boxes with predictable outputs that could be measured. This

“organization-as-machine” approach led to the standardized, complex, unwieldy and underperforming performance management process still widely used. But work and the workforce have changed demanding agility, speed and flexibility.

Alternative Perspectives on Pay for Performance Without RatingsWhy Compensation Professionals Embrace Performance RatingsEmployers often proclaim, “We pay for performance,” yet most employees’ cash compensation tells

a different story. Base pay varies insignificantly by performance, but rather by cost of labor or internal job value. A core competency of compensation departments is to create and manage a job-worth hier-archy based on either market value or job content.A pay-for-performance philosophy

is a statement to justify a rewards distribution system. The compensa-tion function has embraced and supported this with structures, processes and systems, heavily relying on performance ratings to steer almost all cash compensation programs. These programs include guidelines for promotions, demotions, new hires, high-potential assessments and succession criteria that are all dependent on ratings.

Like their HR colleagues, CFOs find comfort in the assurance that fixed cost increases (wages) are based on quantifiable models and formulas. How a budget is distributed (according to ratings) seems less important than it being done without exceeding the bogey.

Do Ratings Matter? Performance ratings and compensa-tion decisions do not always correlate. For example: ❙ Long-term compensation (e.g., equity or cash) typically considers a performance rating as only one key input. Other inputs include potential, succession plans and key skills. Compensation with a longer-than-annual horizon is not dependent on an annual rating.

❙ Sales incentives are often most directly correlated to volume (e.g., revenue, units) and a total cash compensation focus frequently exclusive of the kind of annual objectives found in performance appraisals measured through a ratings scale.

❙ Some production jobs have either piece-rate or volume-oriented pay schemes. Unionized environments may have a single- or step-rate type compensation system controlled by contractual terms. In both cases, performance ratings are less relevant to total cash compensation.

Alternate ApproachesOne alternate performance manage-ment approach views employees as investments that will yield dividends.

“Buy low” and develop the investment while paying competitively commensu-rate with increasing knowledge, skills and abilities to avoid forcing base-pay changes against annual objectives. It can be viewed as increasing the value of the person in the job relative to his/her value in the market.

Another idea is to retreat to simpler times before pay ranges, midpoints, merit grids and compa-ratios and embrace a straightforward concept that links base pay to labor market movement and job value. This retro concept emerged at a company whose management did not want (or could not afford) to fund the traditional merit program (i.e., the pay for performance objective) yet insisted that pay for performance was

TRADE ONE HOUR OF STRUCTURED YEAR-END MEETINGS for quarterly 15-minute, informal discussions that enhance the quality of feedback and focus on future performance.


a vital business driver. The discon-nect between philosophy and practice was clear to employees and exposed the false notion that expecting every compensation program to fall under the pay-for-performance umbrella was unrealistic.

This led to the birth of Index Pay — a process beginning with assigned market pay rates for jobs and linking salary adjustments more closely to labor market movement and develop-ment of competencies to perform the job rather than budgets and bell curves. Its intent wasn’t to eliminate performance ratings, but to create a different approach to managing base pay that would create higher levels of employee engagement and satisfac-tion once the variability of executive budget priorities and manager subjec-tivity was eliminated. This freed the process from performance ratings and inadequate merit budgets.As the market moves, steps are

adjusted annually and individual pay rates are similarly adjusted to maintain the current step. Assuming ongoing contribution, employees may advance one step up to the market rate. Most employees’ pay will track the market rate when rates are adjusted. Exceptional employees demonstrating high levels of exper-tise may advance a step or two beyond the market rate. If the labor market doesn’t move appreciably in a given year, no adjustments would be made to the established pay rates, yet employees’ rates would be adjusted as they grew their skills and competencies.

Early Adopters See Positive ChangeThere is ease and comfort in rating employees, but escaping the tyranny of ratings and forms is worth it. According to the Institute for

Corporate Productivity, “The good news for those organizations that are thinking of moving to a performance management system without ratings, organizations such as Expedia, REI, Adobe and Juniper Networks have done so successfully. In fact, all four of those organizations have seen increases in either bottom line revenue or employee engagement, or sometimes both.”

Changing your performance management system requires objectivity, clarity of goals and new ways to assess employee value and distribute rewards. Managers must learn to regularly communicate clear goals and expectations; spend more time coaching and developing; think more carefully and rigorously about employees’ impact and their rewards; and be able to talk intelligently about these concerns.

Jeannie Coyle is president at Worktelligence

in Portland, Ore. She can be reached at

[email protected].

Jim Harvey is founder and principal consultant

at Columbia Compensation Consulting

LLC in Tualatin, Ore. He can be reached at

[email protected].

resources plus


❙❙ Performance reviews

❙❙ Performance management system

❙❙ Pay for performance.

Redefining Rewards IntentWithout performance ratings, bell curves, salary ranges and merit matrices, pay for performance can be reconstructed with four focused elements of a common compensation strategy that still achieves the desired results:

Use a group reward plan (e.g., profit-sharing) to reward most employees for achieving overall company objectives.

Adjust base salaries for changes in market rates.

Use cash bonuses or stock to recognize outstanding results of top contributors and deliver competitive long-term compensation.

Fashion a robust recognition program that enables manager and peer recognition of behaviors that align to company values, culture and goals.

1

2

3

4

CHANGING YOUR PERFORMANCE MANAGEMENT SYSTEM requires objectivity, clarity of goals and new ways to

assess employee value and distribute rewards.


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Awards & RecognitionAchieversCrystal Plus Inc.GloboforceMichael C. Fina CompanyOpenSymmetryPeak Performance Meetings & IncentivesPerks.comRideau Recognition SolutionsZS Associates

BenefitsCastlight HealthDecusoftEisnerAmper LLCMECUPayFlex

CompensationAstron SolutionsbeqomBetter Sales Comp ConsultantsCompdata SurveysCompensation Resources Inc.Crystal Plus Inc.CulpepperDBSquaredDecusoft

EisnerAmper LLCEnterprise Information Resources Inc.Harvest HCMHCR SoftwareIBMMarketPayOpenSymmetryOrganizational Consulting Group LLCPearl Meyer & PartnersPrompt> Inc.Rideau Recognition SolutionsSpiralinks Inc.The Croner CompanyTowers Watson Data ServicesZS Associates

ConsultantsAstron SolutionsCompdata SurveysCompensation Resources Inc.CulpepperDBSquaredEisnerAmper LLCOpenSymmetryOrganizational Consulting Group LLCThe Croner CompanyZS Associates

Employee CommunicationZS Associates

Executive CompensationbeqomBetter Sales Comp ConsultantsCompensation Resources Inc.CulpepperDecusoftEisnerAmper LLCOrganizational Consulting Group LLCPearl Meyer & PartnersPrompt> Inc.The Croner CompanyTowers Watson Data Services

Expatriate ServicesAIRINC

Global CompensationAIRINCBetter Sales Comp ConsultantsbeqomCulpepperZS Associates

Financial ServicesMECUOpenSymmetryPayFlex

Health and WellnessCastlight HealthMECUPayFlexSeeChange Health Solutions

Human ResourcesAstron SolutionsBuck Consultants, A Xerox CompanyCastlight HealthEnterprise Information Resources Inc.Perks.comZS Associates

HRIS & HR SoftwareAstron SolutionsAurochs SoftwareDBSquaredHarvest HCMHCR SoftwareHRsoftMarketPayPrompt> Inc.Spiralinks Inc.

Search by Vendor Name or by Topic CategoryLegal ServicesHyatt Legal Plans

Loyalty ProgramsPeak Performance Meetings & IncentivesPerks.com

OutsourcingOpenSymmetryZS AssociatesIncentius

Performance ManagementAstron SolutionsAurochs SoftwareCompensation Resources Inc.EisnerAmper LLCHalogen SoftwareHarvest HCMIBMOpenSymmetrySpiralinks Inc.ZS Associates

Relocation MobilityPerks.com

Sales CompensationAurochs SoftwarebeqomBetter Sales Comp ConsultantsCellarStone Inc.Compensation Resources Inc.CulpepperIBMIconixxOpenSymmetryThe Croner CompanyZS Associates

Surveys & ReportsArthur J. Gallagher & Co.Astron SolutionsCompdata SurveysCompensation Resources Inc.CulpepperMarketPayPearl Meyer & Partners

The Croner CompanyTowers Watson Data ServicesWorldatWork

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Work-Life EffectivenessDecusoft

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Company description

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Find Solutions Fast WorldatWork’s Vendor Directory cuts the online clutter and provides you quick and easy access to specialized providers in compensation, benefits and work-life products and services. Whether you’re ready to make a purchase or are researching options, this feature-rich reference tool is designed to help you locate the right vendor for your needs.

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profiles in career excellence

What was the No. 1 element that propelled your career forward?I am fortunate enough to have a supervisor, whom I also view as a mentor, encourage me to seek out professional development. She understood the value this type of development would bring to our organization and how it would grow my knowledge and skills personally and professionally. Her support and encouragement was essential for my career moving forward.

What role has professional development played in your career?Professional development has been vital for my career by providing me with the ability to master my technical skills and sharpen my business skills.

Before at tending a WorldatWork class, I didn’t understand what it meant to be a change agent or how important strategic communication is to an organization. Through profes-sional development, I am able to bring more value to my position and organization. My WLCP [Work-Life Certified Professional] has given me the ability to influence what my work environment looks like and provide options for my team members so they can be more productive. Even though I have not completed my CCP [Certi-fied Compensation Professional], I am already using the skills I have learned to positively impact my organization’s compensation plan.

How has the use of analytics evolved over the past 10 years? What impact has it had on your career?Over the past 10 years more tools have been developed to assist with data collection, and the biggest challenge continues to be in how we interpret this data. What is it indicating? How do we use this information? The ability to analyze and interpret this data is another business skill that was important for me to develop. I am able to look for trends in benefit usage, retention, loyalty surveys, etc., and use this information to make informed decisions about what is going on within my organization.

I can then make recommendations based on this information to assist my leadership team in moving our organization forward.

Why are adaptability and flexibility important characteristics for rewards professionals?Adaptability and flexibility are crucial behaviors as nothing ever stays the same. Rewards professionals have to be able to f lex and adapt with the ever-increasing changes in benefits, compensation, etc., in order to stay proactive. The “We’ve always done it that way” mentality just does not cut it anymore. Paralysis can lead to dissatisfied team members, turnover and ultimately stif le an organiza-tion’s ability to impact its market and be successful.

What qualities do organizations look for when they want professionals with strategic business understanding?We need people who understand what the business is, where it needs to go and who can put a plan in place to get the organization there. These people cannot be afraid to admit something is not working, shake things up and try something new. Organizations will not be able to thrive without individuals who are able to execute this valuable skill.

Carolyn LaneAssistant Vice President of Human Resources Development 3Rivers Federal Credit Union

How I Became a Change Agent


profiles in career excellence

WorldatWork Career Excellence Model for Total Rewards ProfessionalsTM

Analytical Skills & Attention to Detail

Strategic Business Understanding

Communication & Connection

Technical Mastery

Adaptability & Flexibility

Passion & Proactivity

Continuous Learning

Development Support System

What does continuous learning for a rewards professional look like? Why is it important to an organization?Continuous learning is critical to staying on top in any field. Laws change, business needs change, and continuous learning provides professionals with the ability to stay ahead of these changes. My organi-zation encourages all team members to seek out some type of continuous learning opportunities in order to be the best at what they do.

Why is proactivity an important characteristic for rewards professionals? How did it benefit your organization(s)?To stay cutting edge in your organi-zation you must be proactive. Team members are happier and more effective when they know what is expected of them. My organization has really focused on becoming more efficient through planning ahead and anticipating problems and possible solutions before they happen. We have done this from the top down and have seen an improvement in loyalty surveys and morale because of these changes. Organizations that are reactive tend to have frustrated team members who waste valuable time and are not as effective.

Name a characteristic or skill set that sets a total rewards professional above the rest.I would say perseverance. The best total rewards professionals steadily persist in a course of action even when no one else will initially support the idea. It doesn’t seem to matter what obstacles are thrown their way or how difficult it seems, they find a way to make it happen.

http://v


back to basics

How to Optimize Your Total Rewards Mix

Leaders may even review WorldatWork’s total rewards inven-tory checklist to see what type of programs organizations are using and choose a mix that best reflects the company’s philosophy and culture.

It’s intuitive that organizations cannot offer everything on the list, but for many, the goal will be to create a strategy that achieves a desired level of attraction and retention and fits within their budgets. An effective total rewards strategy results in satisfied, engaged and productive employees, who create desired business performance and results.

Optimizing your total rewards mix is not a one-size-fits-all approach, but rather a well-thought-out plan that looks at employees, and prospective employees, as consumers.

Just as a marketing department needs to find the right product to offer at a price consumers find affordable, so too are rewards professionals going to learn what the right mix is based on consumer preferences, cost and ROI.

Following are some considerations for optimizing your total rewards mix: 1| See the employee as a consumer of the organization’s

brand. Looking at it from an employee value proposition (EVP) perspective, find out what the employees value when they come to work (the employer brand).

2| Consider employee segmentation. Understand how various employee groups and roles contribute to business success. How do differing employee needs, attitudes and preferences shape the way workers perform their jobs and engage with their organization? You’ll then have a better grasp of how to approach your total rewards mix. There are various ways to segment your population: standard demographics, generational, critical jobs, loca-tions and even life cycles. However you segment, it’s important to look at the distinct segments that make

up your workforce and determine how those segments deliver value to the organization and what those segments value from the organization in return.

3| Learn which rewards preferences each segment is inter-ested in, then test them to determine each reward value. This can be done through focus groups, data mining and employee surveys, or perhaps even via a conjoint analysis (methodology for the measurement of psychological judg-ments such as consumer preferences).

4| Review the cost factors associated with each. Then determine which tradeoffs will best fit your segmentation for the desired return and the money spent.

It is wise to create future communication based on these segmentations. What’s the story that you want to tell with your rewards mix? How does this story connect to the busi-ness? Your goal is to achieve a better understanding for the consumer (the employee) and better utilization of the rewards you are offering.

Rose Stanley, CCP, CBP, WLCP, CEBS, is total rewards practice

leader for WorldatWork in Scottsdale, Ariz. She can be reached at

[email protected].

Every organization puts some thought into its total rewards mix. It may approach the mix by adding the basics: compensation and traditional benefits, plus a smattering of other rewards.

Back to Basics is intended to provide entry-level information on issues relevant to com pen sation, benefits and the work experience.

Though factual in nature, nothing herein is to be construed as legal, accounting, actuarial or other such professional advice.

basicsknow

the

Looking at it from an employee value proposition (EVP) perspective, find out what the employees value when they come to work (the employer brand).

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research in brief

Top Trends in Attraction, Retention and Motivation

Top Drivers of Employee

Top Drivers of Employee

Source: 2014 Towers Watson Global Workforce Study and 2014 Towers Watson Global Talent Management and Rewards StudySource: 2014 Towers Watson Global Workforce Study

Attraction

Retention

How Engaged Are Employees?

Highly engaged Employees who scored high on all three elements of sustainable engagement

Unsupported Employees who are traditionally engaged but lack the enablement and/or energy for sustainable engagement

Detached Employees who feel supported and/or energized but lack a sense of traditional engagement

Disengaged Employees with less favorable scores for all three aspects of sustainable engagement

17% 40%

19%

24%

DetachedHighly engaged

Unsupported

DisengagedEmployer View Talent Management and Rewards Study

Employee view Global Workforce Study

1 Career advancement opportunities Base pay/salary

2 Base pay/ salary Job security

3 Challenging work Career advancement opportunities

4 Organization’s reputation as good employer Learning and development opportunities

5 Organization’s mission/vision/values Challenging work

6 Learning and development opportunities Organization’s reputation as good employer

7 Job security Vacation/paid time off

Employer View Talent Management and Rewards Study

Employee view Global Workforce Study

1 Base pay/salary Base pay/salary

2 Career advancement opportunities Career advancement opportunities

3 Relationship with supervisor/manager Trust/confidence in senior leadership

4 Manage/ limit work-related stress Job security

5 Learning and development opportunities Length of commute

6 Short-term incentives Relationship with supervisor/manager

7 Challenging work Manage/limit work-related stress

Leadership Is Everything

72% 55%Sustainable engagement requires strong leaders and managers. In companies where both leaders and managers are perceived by employees as effective, 72% of employees are highly engaged.

Inspiring and motivating employees is the most important driver of leadership effectiveness. Yet only slightly more than half (55%) of employees say their leaders inspire them.

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