Using Total Rewards to Attract and Retain a ...Lockton conducted a total rewards analysis of: Total...

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Using Total Rewards to

Attract and Retain in a Low

Unemployment MarketPresented by Lockton Companies

Compensation Practice

Lockton Companies |

Definition of Total Rewards

Multigenerational workforce

Total Rewards value analysis

Employee survey

Total Rewards strategy sessions

Brand and culture

Today’s goals and objectives

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Lockton Companies |

Shortage of “skilled workers to fill projected needs

Unable to attract and retain in a low unemployment market

Cost-shifting in company-sponsored health benefit plans

Flat or shrinking salary adjustment pools

Generational workforce diversity—different perceptions and needs

Why a Total Rewards strategy?

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Lockton Companies |

Multigenerational workforce differences

ElementsBaby Boomers Generation X

Generation Y (Millennials)

1946–1964 1965–1980 1981–2000

Values Participation equity Balance between life and work Diversity/morals

Authority Non-authoritarian Dislikes close supervision Respectful of early generations

Characteristics Optimistic Highly motivated Can-do attitude

Work priorities To be a star Fun and flexible Money/career development

Training Skill practice Visional stimulation Mentor programs

Technology Willing to learn Technologically savvy Technologically superior

Career Goal Build a stellar career Build a portable career Build parallel careers

Work/Life Need Assistance Balance Meaningful balance

Compensation Fixed salary/LTI/stock Fixed salary/STI STI/commission

Benefits Security Portability Education

Retirement and Wealth Need

Retirement planning Build wealth Education/portability

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Lockton Companies |

The building blocks of Total Rewards

Compensation

Benefits

❖ Medical

❖ Vision

❖ Dental

❖ HSA, FSA

❖ Basic Life

❖ Supplemental life

❖ Spousal/domestic

partnership

❖ Dependent child(ren) life

❖ Personal accident

❖ STD, LTD (low and high

option)

❖ Voluntary benefits

❖ Tuition reimbursement

❖ 401(k)

❖ Student loan assistance

Workplace Experience

❖ Growth and development

❖ Communication

❖ Recognition

❖ Referral awards

❖ Member discount programs

❖ Flexible schedules/

telecommuting

❖ Base salary

❖ Variable pay

Annual

incentives

❖ Pay for

performance

❖ Sales

compensation

❖ SERP (executive

only)

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Lockton Companies |

Process for creating a Total Rewards Strategy

Employee

survey/pulse on

employee total

rewards

•Conjoint analysis

Total Rewards

market analysis

(published

survey data)

•Compensation, benefits, retirement, PTO

• (Other non cash benefits)

What is “desired”

position in the

market

•At or near the 50th percentile

•Above the 50th percentile for certain

elements

•Key stakeholder meetings

Inventory rewards

not offered •Determine cost impact

Develop Total

Rewards strategy

and communicate

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Total Rewards value analysis

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Lockton Companies |

Total Rewards

value analysis

Identify peer group

Who do you lose to or

draw from?

Scope/demographics

Geography

Lockton Data

Mercer, CompAnalyst,

Willis Towers Watson,Compdata, HRA, ERI

Benchmark

Compensation/benefits/

401(k)/paid time off/other benefits

Total Rewards value analysis

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Lockton Companies |

Lockton conducted a total rewards analysis

of:

Total cash compensation (Base + STI)

Medical, dental, vision, and life insurance

Retirement

Paid time off

Sample Total Rewards summary analysis

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Total Cash

83.52%

Medical (Employee Only)

4.35%

Retirement

3.74%

Life Insurance

0.03%

PTO

8.37%

Market – Total Rewards breakdown

Total Rewards breakdown

[Company]

average

value

Market

average

value

Ratio % -

[Company]

to market

Cash compensation $90,250 $93,346 97.0%

Medical benefits $4,380 $7,180 61.0%

Retirement $6,000 $4,176 144.0%

Paid time off $7,139 $9,352 76.3%

Market value $107,769 $114,054 94.5%

Total Rewards employee survey

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Lockton Companies |

Employee Total Rewards survey process

Determine type of

employee survey

(conjoint or

traditional)

Finalize questions

and develop

online tool

Download and

analyze data

Develop final

report with

recommendation

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Lockton Companies |

Sample overall results summary

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12.1%

3.6%

13.9%

22.4%15.9%

33.2%

26.0%

44.6%

45.8%

39.9%

20.8%

27.7%

21.2%

18.2%

27.5%

21.4%

24.0%

14.0%

10.6%12.1%

12.5%18.7%

6.3%3.0% 4.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Rewards Career Development Communication Culture Employee Engagement

Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree

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Lockton Companies |

Assesses the importance employees assign to different features of a

total rewards package

Employees are asked to compare two benefits packages and choose the

benefits package they most prefer

Conjoint survey—overview

Total Rewards Package #1 Total Rewards Package #2

Compensation No base pay increase 2% base pay increase

Medical 10% increase in health care premiums 20% increase in health care premiums

Retirement 6% matching contribution 3% matching contribution

Paid time off Vacation buying program Unlimited PTO

Work life Catered lunch 1x per week Paid gym membership

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Lockton Companies |

Understand and cultivate a value proposition that speaks to the unique

preferences and needs of an organization workforce

Identify the benefits employees value most and understand which

trade-offs they are willing to make

Conjoint survey—outcome

21%

14%

12%

9% 9%

7%

0%

5%

10%

15%

20%

25%

Base pay increase 401(k) match

at 3%

Regular healthcare

premiums

Paid time off Bonus Gym wellness

reimbursement

+7%The largest delta between two features is from the

most important to second-most important.

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Lockton Companies |

Conjoint analysis: feature importance sample

21%

14%12%

9% 9%7% 6%

5% 5% 5% 4% 3%

0%

5%

10%

15%

20%

25%

+7%The biggest delta between two features is from most

important to second-most important

Base pay increase is 50% more important than the next

most important feature

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Lockton Companies |

Scores for each level can be used in an Excel-based simulation to model

expected satisfaction of potential total rewards packages

Conjoint survey—outcome

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Total Rewards strategy session

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Lockton Companies |

How would you describe your culture?

Paternalistic

Inclusive

Collaborative

Reinforces the values of the organization

What the company “stands for” is very important to millennials

Where is the organization in their life cycle?

Transformative

Stagnate

High growth

How does your culture come across to the organization?

Positive

Negative

Needs changing/updating/enhancing

Merge/acquisition (unsteady)

Culture

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Lockton Companies |

Do you have a brand that people want to work for?

How would you describe your brand?

Is the brand known? (if not is the culture known?)

How does Glassdoor describe your organization?

What does social media have to say about you?

What is the “image” you are trying to present?

How are you communicating your brand?

Social media

Word of mouth (referrals from employees?)

Are we cultivating the brand and communicating to employees?

Brand

Lockton Companies |

Strengths

• Which reward programs are effective today?

• What should be kept or emulated?

Weaknesses

• Which plans do not work today?

• What and how much needs to change?

• What are the market conditions and are we

competitive?

Opportunities

• How can we best meet the demands of key

stakeholders?

• How competitive are our programs?

• What perception do employees have of Total

Rewards?

Threats

• What conditions threatened business success?

• How do existing plans fail to respond to external

conditions?

• How do existing plans fail to respond to internal

conditions within the organization?

SWOT analysis

Sample SWOT analysis for Total Rewards strategy

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Lockton Companies |

The employee life cycle

Recruit

Talent acquisition

Compensation

Benefits

Retirement

Work/life balance

Onboard

Job orientation and

training modules

Online benefits

enrollment

Develop

Performance

management

Learning management

Career development

Retain

Employee engagement

Succession planning

Work/life programs

Other non-cash benefits

Off board

Exit interview and feedback

Initiation of retirement plan

benefits and final pay

Lockton Companies |

Market Study

Business Needs

Sample Total Rewards strategy

TOTAL

REWARDS

PROGRAM

Fixed payPerformance

management

Health and

welfare

Savings/

retirement

Time offLearning and

developmentWorklife

Variable

pay

Employee

needs

Business

needs

Employee

Needs

Total Rewards

Programs

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RISK MANAGEMENT • EMPLOYEE BENEFITS • RETIREMENT SERVICES

Our Mission | To be the worldwide value and service leader in insurance brokerage,

risk management, employee benefits and retirement services

Our Goal | To be the best place to do business and to work

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