Total Rewards Practices Survey Detailed Response Analysis · 2020-03-17 · Executive Summary–Health and Welfare Benefits Per employee health costs remain high, with the average

Total Rewards Practices Survey

Detailed Response

Analysis

Fall 2017

Copyright © 2017 Deloitte Development LLC. All rights reserved. 2

Building “Total Relationships” With Your Employees 3

Survey Background 4

Demographics of Survey Participants 5

Executive Summary - Total Rewards Philosophies 6

Executive Summary – Health and Welfare Benefits 7

Executive Summary – Retirement Benefits 8

Executive Summary – Voluntary Benefits 9

Executive Summary – Compensation Practices 10

Survey Exhibits on Total Rewards Philosophies 11

Survey Exhibits on Benefit Practices 19

Table of Contents


Building “Total Relationships” with your employees

For many years, employers have designed compensation and benefit programs in an independent ‘one-size-fits-all’ approach.

More recently, employers are recognizing the need to design and communicate the value of the “total package” of pay and

benefits. But what comes next?

A new generation is entering the workforce, bringing a very different set of expectations and values. Not only is a competitive

package of pay and benefits “table stakes,” workforce preferences are leading to unique benefits offering customization and

portability. And, workers want to feel that their employer cares for them in new ways that include their wellbeing, career

advancement, development, and recognition.

In order to attract and retain the top talent of the next generation of workers, employers will need to offer a Simply

Irresistible employment experience. And rewards programs will be a crucial element to building that experience.

This survey report provides a benchmarking baseline to help you understand how your programs compare to other employers.

The next step is to consider what employees value and to optimize your programs accordingly, ultimately creating an

experience that stands apart as a differentiator in attracting and retaining the high talent workers of tomorrow.

Discover Define Deliver


Survey Background

Deloitte Consulting LLP and Empsight International LLC teamed up to conduct a Total Rewards Practices survey in the fall of

2016. The survey was designed to help organizations understand how their Total Rewards programs compare to others by

collecting data with respect to total rewards philosophies, compensation and benefit practices and future strategies. In addition,

the survey examined innovation and trends in areas such as wellness, private exchange adoption, pay practices and implications

relating to movement to the “gig” economy.

Nearly 200 organizations responded to the survey. However, responses to every question were not required for survey submission, so

response rates vary in the report that follows. Throughout this report, we focus on the metrics collected and current issues and trends

faced by employers today.

We hope you find this information helpful as you plan for the future and design your programs to offer employees a simply irresistible

employment experience. If you have any questions, don’t hesitate to reach out to members of the survey team at Deloitte Consulting LLP and

Empsight International LLC.

The statements in this report reflect our analysis of survey respondents and are not intended to reflect facts or opinions of any other entities. All survey data

and statistics referenced and presented, as well as the representations made and opinions expressed, unless specifically described otherwise, pertain only to

the participating organizations and their responses to the survey.

Deloitte Consulting LLP:

Jason Flynn Patricia Ryan Yon-Loon ChenPrincipal Specialist Leader Senior ManagerDeloitte Consulting LLP Deloitte Consulting LLP Deloitte Consulting [email protected] [email protected] [email protected]

Andrew Coccia Kelley LewisSenior Manager Specialist MasterDeloitte Consulting LLP Deloitte Consulting [email protected] [email protected]

Empsight International LLC:

Jeremy FeinsteinManaging DirectorEmpsight International, [email protected]

mailto:[email protected]






Demographics of Survey Participants

A wide range of industries are represented in the survey

with Consumer & Industrial Products (24%)

representing the top participating industry [Exhibit 1].

Respondents from organizations with 5,000 or more full-

time employees represented the largest survey segment at

36%, followed closely by smaller organizations.

Organizations of different sizes were fairly evenly

represented [Exhibit 2].

Exhibit 2. How many U.S.-based full-time employees do you have?

Exhibit 1. Please indicate your organizational industry.

Industry CategoryPercent of

Total

Consumer & Industrial Products 24%

Energy & Resources 6%

Financial Services 14%

Life Sciences & Health Care 9%

Professional Services 13%

Public Sector, Education & Not-for-Profit 9%

Taft-Hartley Plan 1%

Technology, Media & Telecommunications 12%

Other 12%

Number of Full-time Employees

Percent of Total

5,000 and above 36%

500-4,999 33%

Fewer than 500 31%


Executive Summary – Total Rewards Philosophies

Only around one in five surveyed organizations

currently employs a fully-integrated Total

Rewards program approach. However, improved

integration is on the corporate agenda. Of the

remaining organizations, three out of four are

interested in increasing the integration of their

compensation and benefits programs for the

future.

The drive toward integration directly correlates

with the size of company, with larger

organizations more likely to follow a fully

integrated philosophy (about 24% of large

organizations indicated that Total Rewards is fully

integrated vs. 16% of small organizations).

The survey results also indicate that the desire to

integrate Total Rewards varies significantly by

industry. For example, organizations in the

financial services industry are far more likely to

fully integrate their total rewards programs than

those in the life science & healthcare industry.

In our experience, those taking a fully integrated approach

have greater resources to innovate and often have a business

imperative to adapt more quickly to marketplace change. They

are also less likely to be unionized, allowing them to adopt

new ways of doing things more readily.

Based on our survey:

• 36% of Financial Services organizations are fully integrated

• 25% of Energy & Resources organizations are fully integrated

• Only 9% of Life Science & Health Care organizations are fully

integrated

Fully Integrated —All rewards programs are benchmarked and designed holistically.

Partially Integrated —Compensation and some rewards programs are benchmarked and designed together.

Non-Integrated —Compensation and benefits are benchmarked and designed separately.

Integration Defined

Most organizations are not “fully integrating” their compensation and benefits programs…yet…but they are moving in this direction.


Executive Summary – Health and Welfare Benefits

Per employee health costs remain high, with the average

gross(1) cost of around $11,400 per year in 2016 and was

expected to grow by around 4.3% in 2017. This cost varies by

industry and appears to decrease slightly as employer size

increases. On average, employers are requiring employees to

share in 22.4% of this cost through payroll deductions.

Many employers did see their healthcare costs rise when the

required ACA mandates were implemented. However, as time

goes on, the challenges related to complying with mandated

ACA requirements lessen.

While moderate challenges still exist, fewer than one in four

employers reported that compliance with the Shared

Responsibility rule, planning for the Cadillac Tax, and 30-hour

rule requirements was “very challenging.”

We believe that, having dealt with these mandates for a few

years now, most employers have tailored solutions to meet

their needs or have plans in place to mitigate issues such as

the Cadillac Tax, should they come to pass.

Cost ControlsAdopted Not Adopted

Telemedicine - 76% of respondents report offering, or planning to offer

Narrow Networks - 86% of companies use the standard vendor network

Wellness - 91% of respondents offer some type of wellness benefit

Private Exchanges - 82% of companies are not currently considering offering

Participants are seeking opportunities to control medical

claim costs through wellness programs and telemedicine, but

appear to have been less willing to make fundamental shifts in

benefit philosophies by adopting high performance or “narrow”

networks or private exchanges.

Dental, Life, and Short/Long Term Disability plans

continue to be offered as part of the core health and

welfare program, consistent with prior practices:

• Dental PPOs prevail with 86% of respondents reporting that

PPOs carry the greatest enrollment of dental subscribers

• Life insurance sees little change, with 66% providing life

insurance plans offering a multiple of salary (vs. a flat

amount)

• The majority of the organizations offer STD plans at 60% -

662/3% income replacement and LTD at 60%

Benefits continue to be a key component of the recruitment and retention strategy.

(1) Gross spend is defined as employer plus employee costs for coverage, excluding cost sharing at the point of service


Executive Summary – Retirement Benefits

It’s no surprise that defined contribution plans are

the most prevalent source of retirement benefits

offered by the survey respondents. Interestingly, our

survey shows that one-third of the respondents continue

to offer both defined benefit and defined contribution

plans. Almost 70% indicate they have no changes

planned for these programs in the near term.

Whether it is due to a lack of planning tools, knowledge or

other reasons, our survey reflects that the majority of

employees in a defined contribution plan may not be

saving enough for retirement.

Approximately one-fourth of employees are

contributing less than 5% of their pay and 44% are

contributing 6% or less. Our results show that

employers have the opportunity to continue to drive home

the key messages concerning the importance of saving for

retirement and determining what may be keeping

employees from saving more.

While most Defined Benefit plan sponsors do not anticipate making any changes to their retirement plan in the next 1-2 years, the majority of those that are considering changes anticipate taking actions to transfer risk out of the plan. These actions include offering lump sum windows and purchasing annuities, reducing the overall size of the plan obligations and reducing administrative expenses and burdens.

Of the few employers that offer retiree medical benefits today, 40% allow new hires to grow into eligibility for retiree medical plans. The survey also indicates that the majority of companies offering retiree medical benefits are maintaining the status quo on benefits and eligibility. There is some indication that a significant minority of employers have implemented, or are considering implementing, some changes to their retiree health benefits to reduce costs and coverage.

Survey results indicate there is opportunity to increase employee education around saving for retirement.


Executive Summary – Voluntary Benefits

Voluntary benefits can both fill a gap and

complement the employer’s core benefit

offerings. For example, voluntary benefits can

provide a financial safety net to help employees

with expenses that may not be covered by their

core medical plan, e.g., cancer or critical illness.

They may also make new and interesting benefits

available to employees at a group negotiated rate.

According to our survey, 47% offer voluntary

benefits to their employees. The top three most

popular offerings are employee purchase/

discount programs, critical illness, and group

legal which are offered by more than half of the

survey respondents.

In addition to voluntary benefits, other employee

incentives or company provided perquisites ("perks") are

becoming increasingly popular ways to attract and retain

employees. More companies in today’s world are going casual

in their workplace attire. Our survey shows that employee

discounts for programs or services, casual dress days and

flexible work schedules are the most popular perks. Such

benefits serve to motivate and satisfy employees while typically

being low cost or no cost to the employer.


According to our survey, the primary basis for salary structure differentiation was geography or a combination of geography and industry. The median number of salary structures used by companies was 3.0.

Merit pay

The overall median merit increase forecast for 2017 was 3.0% across all employee levels. The majority of employees (67%) are eligible for short term incentives and the average award was 10.3% as a percent of base salary.

Bonuses

Almost 40% of survey respondents indicated that bonus payments were the same in 2016 as in 2015, while 22% indicated that they were higher, and 17% indicated they were lower.

Short term incentive payouts

The most frequently reported maximum short term incentive payouts (STIP) as a percent of target range was 200 - 249%, which was reported by 31% of the survey respondents. Additionally, 80% of companies budgeted between 0% and 14.99% of total annual budget/spending for short term incentives.

Approximately 45% of surveyed organizations tie individual performance ratings to the individual component of short term incentives, while 38% tie individual performance to pre-defined individual objectives.

The most frequently used operational components to determine short term incentives include: operational performance quality, productivity targets, customer satisfaction and service, while the most frequently used financial components to determine short term incentives include: operating income, net income, and EBITDA.

Long term incentives

The most frequently used Long term incentive (LTI) vehicle across all levels was Restricted Stock Units (RSUs), while senior management also tends to receive performance shares and stock options. The median LTI target as a percent of base for senior management was 25%.

Shift differentials

More than half (53%) of the survey respondents pay shift differentials. Payment as a dollar amount is twice as prevalent as payment as a percentage. Only 9% of the organizations pay shift differentials as both a dollar amount and a percentage.

Executive Summary – Compensation Practices


Survey Exhibits on Total Rewards Philosophies


Total Rewards Philosophies

Respondents were almost equally split in having a rewards program that is either partially integrated or not integrated at

all [Exhibit 3]. Only a small percentage of respondents have moved to a holistic approach in the design of their rewards

program. As may be expected, the level of integration varies by industry [Exhibit 4].

Integration of Total Rewards Strategy

Exhibit 4. The approach to having an integrated Total Rewards strategy varies by industry

Exhibit 3. How integrated are your compensation and benefit strategies as part of an overall Total Rewards Strategy?



Integration appears to be a direct correlation with the size of the organization; large organizations are slightly more

likely to adopt a fully integrated Total Rewards approach [Exhibit 5].


Exhibit 5. Level of Integration by Company Size (# of employees)



Nearly three out of four organizations (74%) surveyed indicated that they planned to move to a fully integrated or more

integrated program philosophy [Exhibit 6].

Exhibit 6. Are there future plans to move to a more integrated philosophy if your program is not yet fully integrated?




Organizations were asked to describe their desired position relative to the market for four categories: base pay, total cash

compensation, benefits, and total compensation & benefits. The majority of the survey respondents desire to be at the

Market Median for all four categories. A minority of the respondents have chosen to be significantly above market for any of

the four categories. Interestingly, a third of respondents wish to be above or significantly above market with

respect to benefits.

Position to Market

Exhibit 7. What is your company’s desired position relative to the market for base pay, total cash compensation, benefits, and total compensation & benefits?



When comparing an employer’s desired position with respect to pay vs. the market, the size of the employer does

matter. Over one-third of small employers desire to pay above the market for total compensation and benefits, while

only 13% of large employers and 29% of midsized employers choose this approach.

Position to Market

Exhibit 8. Level of desire to pay above the market for total compensation and benefits by company size (# of employees)



Participants were asked to indicate if their actual practice on base salary, total cash compensation, benefits, and total

compensation & benefits was at, above, or below their desired market position [Exhibit 9].

Actual vs. Philosophy

Exhibit 9. Level of desire to pay above the market for total compensation and benefits by company size (# of employees)



Most organizations surveyed do not plan to enhance their value proposition for contract or contingent workers [Exhibit 11].

Exhibit 10. Are you taking steps to enhance the employer value proposition of contract, contingent, or other “off balance-sheet” workers other than through higher pay?

Other Considerations

10%

18%

We are working with staffing agencies to ensure a

minimum level of benefits are available to workers

We offer access to paid time off or other rewards

allowable under applicable regulations

We are not planning to make changes at this time 72%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Level of response


Survey Exhibits on Benefit Practices


Medical Plans

Exhibit 12. On average, what percent of

total medical/Rx costs do employees share

in terms of payroll contributions (e.g.

20%)?

Employee Share of Total Medical/ Rx Costs

Percent of Respondents

0% - 15% 23%

16% - 20% 37%

21% - 30% 23%

31% - 40% 9%

>40% 8%

Number of respondents: 35

Average for all respondents = 22.4%

Median for all respondents = 20%

Exhibit 11. What is your expected 2016 per

employee medical and Rx gross cost

(employee + company share) for enrolled

employees?

Number of Full-time Employees Total Cost

5,000 and above $10,879

500 to 4,999 $11,211

Fewer than 500 $12,009


Average for all respondents = $11,389

Median for all respondents = $10,752

Per Employee Gross Costs and Employee Cost Share


Medical Plans continued

Exhibit 13. After design changes (if

applicable) and other strategies are

implemented, how much do you

anticipate your per employee costs will

change in 2017 vs. 2016?

Per Employee Costs Increase for 2017


Decrease Cost 11%

No Cost Increase 33%

1% – 5% Increase 22%

5% - 10% Increase 17%

Increase of 10% or more 17%



Median for all respondents = 2.5%

Anticipated 2017 Cost Growth After Plan Design Changes


Exhibit 14. Please indicate your position

as it relates to Private Exchanges for

your Active Employee Population.


ResponsePercent of

Total

Not considering a Private Exchange at this time 82%

In the process of studying the feasibility of a Private Exchange

7%

Currently participating in a Private Exchange for active employees

7%

Very likely to (or decided) to implement a Private Exchange in 2017 or 2018

4%


Private Exchanges are Beginning to Catch On


Exhibit 15. Please indicate the level

of challenge involved in addressing

the following provisions of the

Affordable Care Act. (1=not

challenging, 5=very challenging)


2.1

3.2

2.7 2.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Meeting the 2016

95% threshold

under Shared

Responsibility

Rules

Information

Reporting

Requirements

(e.g. 1095 forms)

2020 High Value

("Cadillac") tax

Administering the

30-hour

requirement / look

back rules

Average Level of Challenge

Moderate Challenges Still Exist with ACA Compliance


Exhibit 16. Do you offer a

telemedicine benefit?

Exhibit 17. Do you use any non-

standard networks?


Response Percent of Total

Yes, through our health plan 37%

Yes, using a stand-alone provider or providers 14%

No, but we are considering adding this in 2017 or 2018

25%

No, and we are not considering adding this benefit at this time

24%


Response Percent of Total

No, we use the standard vendor network 86%

Yes, a narrow network offered by the health plan 14%

Yes, a narrow network that was customized for us 0%


Telemedicine and Non-Standard Networks


Wellness Programs

Exhibit 18. Do you offer wellness-

related programs?

Exhibit 19. If yes, what is the maximum

annual incentive amount an employee

with single coverage can earn if they

participate in all wellness programs?

ResponsePercent of

Total

Yes, with penalties for not participating 4%

Yes, with incentives for participating 58%

Yes, but no incentives or penalties apply 29%

No, we do not offer wellness programs 9%


Employee Incentive Percent of Total

<$250 30%

$250-$500 30%

$500-$1,000 28%

$1,000-$2,000 9%

over $2,000 3%


Average

$497

Over Half of Employers Surveyed Offer Wellness Programs and Incentives


Medical Plans

Exhibit 20. Do you have a

penalty/surcharge for tobacco

use?

Exhibit 21. Do you have surcharge

for working spouses covered on your

plan but eligible for other coverage?

Number of Full-time EmployeesPercent with a

Surcharge/Penalty

5,000 and above 54%

500-4,999 27%

Fewer than 500 8%

All employers, regardless of size 30%


Number of Full-time EmployeesPercentage with a

Surcharge

5,000 and above 39%

500-4,999 20%

Fewer than 500 12%

All employers, regardless of size 24%


Tobacco and Spousal Surcharges are Becoming More Prevalent

Average

charge: $788

Average

charge: $1,200


Dental Plans

2.5% 3.8%7.6%

86.1%

Indemnity plan

(no network)

Mixed Model

(can change

between

HMO/PPO each

month)

Dental HMO Dental PPO

% o

f Respondents

Exhibit 22. What type of dental plan do you offer?

Types of Dental Plans Offered – Most Employers Offer Dental PPO Plans


Dental Plans continued

Exhibit 23. What is your expected

2016 per employee dental gross cost

(employee + company share) for

enrolled employees?

Exhibit 24. On average, what percent

of total dental costs do employees

share in terms of payroll

contributions?

Cost and Payroll Contributions

Employee Share of Total Dental Costs


0% 20%

1% - 19% 10%

20%-25% 23%

26%-50% 30%

over 50% 17%



Median for all respondents = 22.5%

Number of Full-time Employees Total cost

5,000 and above $1,085

500 to 4,999 $788

Fewer than 500 $889


Average for all respondents = $900

Median for all respondents = $940


Life Insurance

Exhibit 25. Please provide the

amount of basic (employer-paid)

life insurance offered for your

most prevalent class of employees.

Exhibit 26. Please provide your

basic life / AD&D premium rate per

$1,000 of coverage.

Basic Life and Accidental Death & Dismemberment

Plan Details Percent of Total

2 x annual earnings, max 35%

1 x annual earnings, max 30%

Flat dollar amount 17%

No basic life insurance offered 6%

Other 12%


Plan Details Premium Costs

Basic Life average rate $0.107

Range of rates by respondents $0.032 - $0.30


Basic AD&D $0.022

Range of rates by respondents $0.012 - $0.05Number of respondents: 24


Disability Insurance


following Short Term Disability

Plan features.

Short Term and Long Term Disability Plans

Percentage Income Replacement Percent of Total

40% - 50% 12%

60% 24%

66.67% 28%70% - 75% 20%

100% 16%Number of respondents: 25Average of all respondents = 69%Median of all respondents = 67%


following Long Term Disability

Plan features.

Elimination Period Percent of Total

90 days 33%180 days 64%

Other 3%

Percentage Income Replacement Percent of Total

40% 5%50% 14%60% 61%67% 17%70% 3%

Employer Premium Subsidy Percent of Total

0% 19%50% 8%60% 4%

100% 69%



Retirement Benefits

Exhibit 29. What type(s) of retirement plans

do you offer today?Plan Percent of Respondents

Defined Benefit Only 6%

Defined Contribution Only 62%

Both Defined Benefit and DefinedContribution

32%

Number of respondents: 65e

Types of Retirement Plans Offered


Retirement Benefits continued

Exhibit 30. What is the primary

type of Defined Benefit Pension

Plan that you offer today?

Exhibit 31. What changes do you

anticipate making to the Defined

Benefit plan in the next 1-2 years?

Defined Benefit Plans

PlanPercent of

Respondents

Final Average Pay Plan 44%

Hybrid Plan (e.g. Cash Balance, Pension Equity, Stable Value, etc.)

32%

Career Average Pay Plan 8%

Other 16%

Number of respondents: 25e

ChangePercent of

RespondentsTransfer risk out of plan (e.g., lump sum window, purchasing annuities, etc.)

23%

Change investment strategy 4%

Close plan to new entrants 8%

Freeze benefit accruals 4%

Terminate pension plan 4%

No changes anticipated 69%

Other 15%




Exhibit 32. Which features apply to

the Defined Contribution (DC)

plan? Please check all that apply.

Exhibit 33. What is the average

employee deferral rate? (%)

FeaturePercent of

Respondents

Employer Match 90%

Non-Elective Employer Contributions 41%

Money Purchase Plan 2%


Average Employee Deferral RatePercent of

Respondents

0%-4.99% 26%

5%-5.99% 18%

6%-6.99% 18%

7%-7.99% 16%

8%-8.99% 9%

>9% 13%


Defined Contribution Plans



Exhibit 34. What is the most common

employer match formula? For example,

“50% of the first 6% up to a maximum

of 3% of pay."

Exhibit 35. What changes do you

anticipate making to the Defined

Contribution Plan in the near future?

FormulaPercent of

Respondents

50% of first 6% 14%

50% of first 4% 5%

Other 81%


ChangePercent of

Respondents

No changes anticipated 85%

Redesign plan to increase benefits 6%

Other 9%


Defined Contribution Plans



Exhibit 36. Is your Pre-65 Retiree Medical Plan open or closed?

Exhibit 37. Is your Post-65 Retiree Medical Plan open or closed?

Retiree Medical Plan Designs

Plan StatusPercent of

Respondents

Open 59%

Closed 41%


Plan StatusPercent of

Respondents

Open 60%

Closed 40%



Retirement Benefits continuedPost-65 Retiree Medical Cost Control Actions

Exhibit 38. Are you considering (or have you implemented) any of the following alternatives for your Post-65 Retiree Medical Plan?

Plan Design Considerations

Not Considering

Considering in the Next 1-2 Years

Already Implemented

Modifying contribution policies

60% 20% 20%

Modifying plan designs 50% 31% 19%

Modifying eligibility for participation

56% 19% 25%

Eliminating coverage for current retirees

94% 6% 0%

Eliminating coverage for future retirees

74% 13% 13%

Private Exchanges (to facilitate enrollment in Medicare plans)

52% 24% 24%

Adopting Group Medicare Advantage Plans

56% 31% 13%

Implementing Employer Group Waiver Plan (EGWP) for Rx

69% 25% 6%



Vacation and Sick Time Programs

Exhibit 39. If your organization offers

a traditional structure for time off,

enter the total number of vacation

days an employee is eligible for each

calendar year.

Exhibit 40. Indicate the number of

sick days that full-time employees

receive annually.

DaysPercent of

Respondents

0 15%

3 3%

5 15%

6 23%

9 3%

10+ 20%

Unlimited 3%

Other 18%


Percentile

Average 25th 50th 75th

New Hire 12 10 10 15

1-3 years 13 10 10 15

5 years 16 15 15 20

10 years 20 15 20 22

20 years 23 20 25 25

25+ years 24 22 25 25


Paid Time Off

Exhibit 41. If your organization offers PTO instead of (or in addition to) a traditional vacation/sick program,

enter the total number of days an employee is eligible for each calendar year.

Exhibit 42. Are holidays included in the PTO

time above or are they separate?


Separate 84%

Included in PTO Days 16%


Salaried (percentile) Hourly (percentile)

Average 25th 50th 75th Average 25th 50th 75th

0-1 Years 16 14 16 19 17 13 15 20

1-3 Years 17 15 17 19 18 15 17 21

5 Years 21 19 21 25 22 20 21 26

10 Years 24 20 24 29 25 22 25 29

20 Years 27 23 28 31 29 27 29 32

25 Years 27 21 28 32 30 26 30 34


Paid Holidays

Exhibit 43. How many paid holidays does

your organization offer annually?

Exhibit 44. How many floating/personal

days does your organization offer

annually?

DaysPercent of

Respondents

6 12%

7 6%

8 18%

9 22%

10 18%

11 12%

12+ 12%


DaysPercent of

Respondents

0 41%

1 15%

2 18%

3 8%

4 8%

5 3%

6+ 3%

Other 4%



Severance

Exhibit 45. How are severance benefits paid

at your organization?

Exhibit 46. What is the maximum number

of weeks that can be accrued by an

individual?

DaysPercent of

Respondents

Number of weeks per year of service up to a tier, then flat amount

thereafter5%

Formula is based on job level 25%

One month per year of service 5%

One week per year of service 20%

Two weeks per year of service 13%

Three weeks per year of service 2%

No formula 10%

Other 20%


DaysPercent of

Respondents

Other or no formal severance plan 36%

less than 12 3%

13 2%

26 10%

39 3%

52 23%

78 3%

104 2%

No maximum 18%



Other Voluntary Benefits

Exhibit 47. Do you make any of

the following benefits available

for purchase on a fully

voluntary basis?

BenefitPercent of

Respondents

529 Plans 15%

Cancer Insurance 21%

Critical Illness Insurance 52%

Employee Purchase / Discount Programs 58%

Financial Counseling 27%

Group Auto / Home 40%

Group Legal 52%

High Limit Disability 8%

Hospital Indemnity 17%

Identity Theft Protection 27%

Long Term Care 23%

Permanent Life Insurance 17%

Personal Accident Insurance 27%

Pet Insurance 38%

Umbrella Insurance 2%



Perquisites

Exhibit 48. Besides annual incentive

plans, what other employee incentives,

or company provided perquisites

("perks"), does your company offer?

BenefitPercent of

Respondents

Casual dress days 78%

Cell phone allowance 47%

Certification or licensure pay / reimbursement 26%

Company car / car allowance 28%

Employee discounts on products and services 83%

Financial planning benefit 39%

Flexible work schedule 81%

On-site day care 11%

On-site fitness 58%

Paid parking 36%

Subsidized meals 22%

Tuition reimbursement* 36%

Working from home 69%


* The average annual tuition reimbursement, based on survey responses, is $4,000 per year.


Compensation Practices

Average number of salary structures employed = 5.8

Median number of salary structures = 3.0

Exhibit 49. How many salary structures

do you use in your organization?

Exhibit 50. What is the primary basis for

salary structure differentiation?

Salary Structure Design

Differentiator Percent of Total

Geography 14%

Combination of Geography & Industry 17%

Key Functions 16%

We do not use salary structures 21%

Critical Workforce Segment 4%

Business Unit 10%

Other 18%


Number of Structures Percent of Total

Not applicable 36%

1 19%

2 11%

3 9%

4-5 8%

6-10 9%

>10 8%



Compensation Practices continued

Exhibit 51. What is your forecasted

salary structure increase for 2017, if

known? (Excludes Zeros)

Exhibit 52. What is your Merit & Total Increase Forecast for 2017, if known? (Excludes Zeros)

2017 Salary Structure Forecast and 2017 Merit Forecast

BonusNumber of

RespondentsAverage increase

Median Increase

Hourly 29 2.65% 3.00%

Salaried 38 3.07% 3.00%

Survey Element # of Cos. Mean25th

PercentileMedian

75th

Percentile

Overall Forecasted Merit Increase Budget for 2017 44 2.92% 2.90% 3.00% 3.00%

Executive 28 2.87% 2.86% 3.00% 3.00%

Management 33 2.90% 2.90% 3.00% 3.00%

Professionals 30 2.89% 2.93% 3.00% 3.00%

Support / Non-Exempt 30 2.89% 2.93% 3.00% 3.00%

Survey Element # of Cos. Mean25th

PercentileMedian

75th

Percentile

Forecasted Total Salary Budget Increase for 2017 30 3.39% 3.00% 3.05% 3.88%Executive 21 3.14% 3.00% 3.00% 3.50%Management 21 3.15% 3.00% 3.00% 3.50%Professionals 21 3.15% 3.00% 3.00% 3.50%Support / Non-Exempt 21 3.13% 3.00% 3.00% 3.50%



Exhibit 53. What percent of employees are eligible for Short Term Incentives (STI) overall and by level?

Short Term Incentives

STI Eligible %STI Received

Award %Average Award as

% of Base Pay

Overall 67.3% 62.7% 10.3%

Executives 77.2% 70.6% 37.6%

Management 75.9% 68.7% 14.9%

Professionals 63.2% 58.9% 8.2%

Support / Non-Exempt 48.2% 41.3% 3.8%



Compensation Practices continuedShort Term Incentives

Exhibit 54. How did bonus payouts in 2016

(for 2015 performance) compare to the

prior year (2015 bonuses for 2014

performance) for the average incumbent

who received a bonus?

BonusPercent of

Respondents

Higher 22%

Lower 17%

About The Same 39%

Did not payout in 2016 12%

Do not have short term incentive program 10%



Exhibit 55. Please summarize the

weighting of short term incentive

payouts by individual, company, and

business unit performance by level.

Exhibit 56. What are your company's

maximum short term incentive payouts

(STIP) as a percent of target?

Incentive Percent of Respondents

300% and above 4%

250 - 300% 2%

200 - 249% 31%

175 - 199% 6%

150 - 174% 15%

125 - 149% 17%

110 - 124% 6%

100 - 109% 19%


Metric Executives Management ProfessionalsSupport /

Non-Exempt

Individual Performance

37% 42% 43% 37%

Company Performance

63% 63% 60% 51%

Business Unit Performance

26% 19% 13% 17%




Exhibit 57. What is your organization's

approximate total annual budget/spending

for short term incentives, expressed as a

percentage of operating income? (Operating

income is earnings before interest and taxes,

or EBIT. Nonprofits should use net surplus, or

revenue minus expenses.)

IncentivePercent of

Respondents

0%-4.99% 33%

5%-9.99% 14%

10%-14.99% 33%

15%-19.99% 4%

20%-24.99% 8%

>25% 8%





Exhibit 58. How is the Individual

component of the Short Term Incentive

determined?

Exhibit 59. How are Operational

Components of the incentive

determined?

ComponentPercent of

Respondents

Tied to Individual Performance Rating 39%

Tied to Pre-defined Individual Objectives 32%

Other 6%

Not Applicable 23%



ComponentPercent of

Respondents

Operational Performance 42%

Quality 30%

Productivity Target 25%

Customer Satisfaction 25%

Service 20%

Safety Performance 17%

Unit or Department 16%

Other 6%

Employee Engagement 5%

Brand Health 3%



Exhibit 60. How are Financial Components

of the incentive determined?Incentive


Cash Flow 14%

Earnings Per Share (EPS) 11%

Earnings before Interest and taxes (EBIT) 11%

EBITDA 17%

Net Income 17%

Operating Income 26%

Return on Capital 3%

Revenue 34%

Other 20%

Not Applicable 14%






Exhibit 61. What types of long term incentives (LTI) does your organization award by level?

Exhibit 62. What were your Long Term Incentive Targets for 2016 (as a percent of base salary) by level?

Long Term Incentives and Targets

LTISenior

ManagementMiddle

ManagementExempt Non-Exempt

Not Eligible for LTI 28.3% 51.7% 73.3% 73.3%

Stock Options 21.7% 8.3% 5.0% 3.3%

Stock Appreciation Rights (SARs) 3.3% 3.3% 1.7% 0.0%

Restricted Stock Units (RSUs) 30.0% 26.7% 11.7% 6.7%

Employee Stock Ownership Plan (ESOP) 10.0% 10.0% 8.3% 6.7%

Long term Cash 13.3% 6.7% 1.7% 1.7%

Performance Shares 28.3% 10.0% 0.0% 0.0%

Other 8.3% 3.3% 0.0% 0.0%


Level # of Cos. Mean25th

PercentileMedian

75th

Percentile

Senior Management 25 37.9% 0.0% 25.0% 55.0%

Middle Management 25 12.5% 0.0% 0.0% 20.0%

Exempt 21 1.3% 0.0% 0.0% 0.0%

Non-Exempt 21 0.3% 0.0% 0.0% 0.0%



Exhibit 63. Does your company pay shift

differentials?

Exhibit 64. Which job levels are eligible for

Shift Differentials (also known as Shift

Premiums)?

Shift Differentials

Note: for all survey questions related to shift differentials, respondents were asked to use the following definition of shifts:

1st Shift = day shift (e.g., 7 am to 3 pm)2nd Shift = evening shift (e.g., 3 pm to 11 pm)3rd Shift = night shift (e.g., 11 pm to 7 am)

If 12 hour shifts are in place, respondents were asked to complete 1st shift as first 12-hour shift and 2nd shift as second twelve hour shift and leave 3rd shift blank.

Job levelPercent of

Total

Non-Exempt 97%

Exempt Supervisors 18%

Non-Exempt Supervisors 38%

Other 9%


ResponsePercent of

Total

No - We don't pay Shift Differentials 47%

Yes - In Dollar Amounts 29%

Yes - In Percents 15%

Yes - Both Dollar Amounts & In Percents 9%




Exhibit 65. Shift Differential Practices

Practice Yes No

1) Require a minimum number of hours to be worked within the shift zone for the time to be eligible for shift premium payment? (Ex: must work at least 2 hours in the defined shift zone)

44% 56%

2) Do you pay shift premium for early arrival and late departure time (hours outside of the defined shift zone)?

39% 61%

3) Do you require the employee to arrive ‘at or after’ a certain time within the zone to be eligible for shift premium?

45% 55%

4) Do you pay more than one premium concurrently - such as paying shift, plus weekend, plus holiday shift during a single shift span of time%

55% 45%

5) Do you pay shift premium on non-worked time such as Paid Time Off, Shift Guarantee (fill time), holiday (non-worked benefit time)?

23% 77%

6) Do you limit total premium to a multiple of base pay such as no more than 2x or 3x base pay?

10% 90%


Shift Differentials

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