COMPENsation

Compensation Strategies

Consider the following question and address it in the discussion board:

· Review the compensation strategies discussed in the HRCI text. With which strategies do you have personal experience, either in implementing at your workplace or in receiving as your own compensation? Do you think compensation is an issue that needs to be addressed with the company you’re using for your HR Plan?

· Reed, Sandra M. (2017). A Guide to the Human Resource Body of Knowledge. Hoboken, NJ: John Wiley & Sons, Inc.

· Read Chapter 5 (Pages 245-260)

How Total Rewards Can Drive Performance Management Success

Keeping a motivated workforce requires meaningful rewards and career opportunities

By  Stephen Miller, CEBS May 31, 2018

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Forward-thinking employers are treating their rewards strategies as integral to their staffing and performance management efforts—and viewing their rewards as an investment in workers' productivity and engagement—especially as organizations face  greater competition for talent .

At WorldatWork's 2018 Total Rewards Conference, held recently near Dallas, many speakers encouraged using total rewards—compensation, benefits, work-life quality and career development—to enhance business success.

"Productivity increases have slowed to a crawl since the 2008 recession and engagement has barely moved up," said Josh Bersin, founder and principal of Bersin by Deloitte, a unit of Deloitte Consulting, during a keynote address. "But a set of companies have figured out how to engage people in this environment," he noted. These organizations have adopted "a culture of taking care of people," assessing the needs of their workforce based on factors such as age, education, demographics and job level, and then offering segmented benefits to meet these needs.

For those struggling with making ends meet, for instance,  financial wellness education  comes into play, while Millennial women, in particular, seek  generous maternity leave  benefits.

A "new generation of rewards" emphasizes well-being by offering benefits that address financial wellness, fitness, stress relief,  mindfulness  and work-life flexibility, Bersin said. Highly valued rewards can become competitive differentiators that make an employer stand out, and these can be highlighted as the employer's "rewards brand."

Since organizations have different aims and goals, these, too, should be reflected in the rewards strategy. If retaining experienced employees is a priority, consider  letting older employees work fewer hours , perhaps with lower pay, and become "champions" who are a resource for younger employees, Bersin advised. Growing organizations that need to bring in new talent may prioritize  student-debt repayment assistance .

Compensation and Business Strategy

Keith Reynolds, vice president of global compensation at Pepsico, encouraged thinking of total rewards as it relates to business and talent strategies by asking, "How do we create a compensation and benefits programs that can help us to attract the right talent, retain that talent, and help to engage that talent now and in the future?"

As an example, measuring the effectiveness of compensation designs "is paramount to the work that we do, especially in our variable compensation plans," Reynolds said. "Our job is to create and design compensation programs that support business strategy. If we don't take the time to pause, look back and measure how well our overall earnings achievement is correlated with business achievement, we'll never understand if our compensation design is effective and where we should make modifications."

[SHRM members-only toolkit : Developing Employee Career Paths and Ladders ]

Career Development as a Benefit

A vital component of rewards strategy, Bersin said, is adopting "a new way of thinking about careers" by helping employees shift roles within a company, even if this doesn't involve a promotion, to keep them engaged. "Thriving companies are social enterprises that believe in employees' growth and development," he said.

He gave the example of Unilever, a company that  encourages employees to create "purpose statements"  envisioning what they want from the company, and then helps them plan a path to achieve these aims.

Picking up on Bersin's theme, "redirecting, re-engaging and differentially rewarding employees can drive up business results," said Kim Scott, a senior professional services consultant at pay consultancy Salary.com. "Retention can't be a passive activity. Make transfers between departments part of your career-development program" by encouraging managers to redirect employees into new roles, even if those roles are outside their department. 

Managers are often unenthused about talent moving away from their team, even if these workers would be re-energized by the change and the organization would benefit. HR, with the support of senior management, can counter this reluctance through training and discussions, with recognition and rewards given to managers that help their team members shift to a new role.

Reynolds said that when managers at Pepsico have conversations with employees about their future, the focus usually isn't on pay. "It's about learning and development, career progression, and whether you can explain to employees what their career will look like the next one, two and three steps out."

Twice a year, Pepsico conducts a pulse survey that asks employees to rate their confidence in their ability to achieve career objectives and asks what is impeding their ability to advance, "which shows where more opportunities for training and development should be directed," Reynolds said.

Recently, Pepsico split many salary-range broadbands at the director level and above into separate bands so employees could more easily advance to a higher-level position, Reynolds noted. In broadbanding, organizations have fewer but wider bands to allow employees' pay to rise significantly without a promotion, but  employees value promotions even without pay increases , Pepsico and other employers have found.

Present the Full Picture

"Reinforce your story about market competitiveness through total rewards statements," recommended Tom McMullen, senior client partner at pay consultancy Korn Ferry Hay Group. He noted a trend toward using personalized total rewards statements "not just for your current employees but also for candidates." In addition to the offer letter, for instance, a total rewards statement "highlights the full value of rewards within the organization."

Along with pay and traditional benefits, the statements should list programs such as learning and development and career-advancement opportunities, he advised.

While in the past it may have been challenging for small companies to produce individualized total rewards statements, "the technology barriers have largely gone way," McMullen said.

Added Reynolds, "If you're not doing this, you're missing a huge opportunity to foster employee engagement."

Voluntary Benefits Now Essential, Not Fringe

Student loan help and financial planning aid are among offerings on the upswing

By  Stephen Miller, CEBS April 13, 2018

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Employers no longer consider voluntary benefits as simply add-ons but rather as "a way to address a host of employee needs, offer choice and allow employees to personalize their rewards," said Lydia Jilek, director of voluntary benefits at consultancy Willis Towers Watson.

Voluntary benefits are supplemental to core health insurance and retirement savings plans and are typically employee-paid through salary-deferred contributions. They can be a cost-efficient way to provide additional coverage to employees, who can purchase these plans through their employer at a lower, group rate.

Newly released findings from Willis Towers Watson's 2018 Emerging Trends: Voluntary Benefits and Services Survey of large employers show that:

· Only a handful of respondents (5 percent) say voluntary benefits will have little importance to the value they offer employees through their total rewards strategy. Five years ago, 41 percent of employers said voluntary benefits would have little importance.

· More than two-thirds of employers (69 percent) believe voluntary benefits will be a very or more-important component of their total rewards strategy in three to five years.

The survey was conducted in November 2017, with responses from 336 large U.S. employers representing more than 4.3 million employees. Eighty percent of the respondents have more than 1,000 employees.

"While employers continue to embrace traditional voluntary benefits, such as life and disability coverage, they are offering benefits more often to help employees and their families with their financial issues," said Mary Tavarozzi, managing director of health and benefits at Willis Towers Watson.

(Click on graphic to view in a separate window.)

"The good news is that improvements in enrollment technology are making it easier for employers to expand their voluntary benefit offerings—and the expanded choices are resonating," said Sherri Bockhorst, managing director of benefits delivery and administration at Willis Towers Watson.

[SHRM members-only toolkit:  Designing and Managing Flexible Benefits (Cafeteria) Plans ]

Options on the Rise

"Attractive benefits can make the difference between whether a prospective employee accepts a job offer or not," said Ray August, CEO of Benefitfocus, a benefits management software company. The firm's 2018 report  The State of Employee Benefits , published earlier this year, analyzed data from 540 large employers with more than 1,000 employees, representing 1.3 million benefit plan enrollees.

"For 2018, 42 percent of employers offered at least one of three voluntary income protection benefits to their employees—voluntary accident, critical illness and/or hospital indemnity plans—and 18 percent offered all three," said Justin Verona, Benefitfocus lead researcher and co-author of the report. Those numbers are up from their 2016 levels.

"Employees continue to appreciate these options," added Logan Butler, Benefitfocus lead writer and report co-author. "When given the choice, 25 percent elected at least one of the three voluntary income protection products for 2018, with over 20 percent enrolling in multiple plans."

"It’s clear that workers are increasingly interested in building financial security in areas beyond health care," Verona said, noting that participation in identity protection and legal insurance plans increased by 17 percent and 13 percent, respectively, year over year.

"Through a wide array of voluntary benefit options, employers can offer a more comprehensive benefits package to cover practically every aspect of their employees' lives," Butler noted, "but each life is different, and employees need help understanding the variables that impact their coverage needs and identifying the combination of benefits that's right for them."

Related SHRM Articles:

Tips for Launching a Student-Loan Repayment Benefit , SHRM Online Benefits, October 2017

Open Enrollment: Voluntary Benefits Emphasize Choice , SHRM Online Benefits, September 2018

Use Voluntary Benefits to Attract and Keep Part-Time Workers , SHRM Online Benefits, August 2017  

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