T1: Total Rewards Management Module "Can You?"
Identify and describe the pay for performance process
1 - Establish Measures Types of measurements (fin/non-fin) Performance measurement systems - Balanced Scorecard (focuses on financials (shareholders), customers, Internal processes, plus innovation and learning) - Business Excellence Model (combines readily measureable results, with enablers, some of which are not) - Shareholder Value Added (incorporates the cost of capital into the equation) - Activity Based Costing and Cost of Quality (focuses on identification and control of cost-drivers) - Competitive Benchmarking (involves taking a largely external perspective, often comparing perf with that of competitors) No one-size-fits-all approach 2 - Communicate links between measures &assessment If communication is inadequate, employees won't understand what they are being measured against & what is important to the organization) 3 - Assess performance against measures Individual, Team and/or Organization assessment Formal/Informal, Perf appraisals, 360 feedback
Define work-life effectiveness and explain the needs work-life programs satisfy
A specific set of organizational practices, policies and programs plus a philosophy that actively supports efforts to help employees achieve success both at work and at home. Work-life programs satisfy intrinsic needs, such as control over one's work environment
Job Evaluation, Market Based Approach
About 70% used.. Market pricing requires collection & interpretation of market data external to the organization as well as identification of the prevailing rate for a job. Benchmark jobs (a standard job used to make pay comparisons, easily defined & found in other orgs). At least 50% of jobs should be benchmarked when using market pricing to build a base pay structure. If 70% or more of the job content is similar, the job match is considered good & the data may be used for benchmarking purposes. apples to apples comparison needed. monthly/weekly salary, allowances included, medians (middle), averages, etc.
Discuss the value of recognition programs
Acknowledges or gives special attention to employee actions, efforts, behavior or performance and support business strategy by reinforcing certain behaviors that contribute to organizational success. The Value of Recognition Programs Meet an intrinsic psychological need for appreciation Provide positive and immediate feedback Enhance engagement levels Foster continued improvement Accelerate organizational performance Foster communication of valued behaviors Reinforce valued behaviors Formalize the process
Identify and explain the various types of pay for time not worked programs
At work (FLSA - fair labor standards act) breaks, lunch, training, travel, coffee, celebrations Not at Work Vacation, Holidays, personal leave, jury duty, sick leave, bereavement, company shutdown, sabbatical, family/medical, sabbatical, reserve duty/military leave, religious observations Severence
Identify and explain the total rewards approach and advantages of taking the approach
Attract/Motivate/Engage/Retain Organization (Performance & Results) Employee (Experience & Engagement - Satisfaction) Attract - the ability an org has to draw the right kind of talent necessary to achieve org success. Motivate - the ability to cause employees to behave in a way that achieves the highest performance levels (Intrinsic/Extrinsic motivation) Engage - refers to the highest level of commitment or discretionary effort, heightened positive connection Retain - ability to keep employees who are valued contributors to organizational success for as long as mutually beneficial. Advantages Higher profitability, Lower labor costs, Greater flexibility
Job Analysis
Basis for practically everything related to job evaluation & paying employees. Job analysis is done to: Develop a job worth hierarchy Document wk methods&processes 4 training purposes Provide a basis for performance appraisal based on job-related standards Identify job families and career paths Identify qualifications required to perform work for purposes of job posting, advertising, & candidate selection Provide a basis for legal and regulatory compliance Determine whether a job should exist in its present form Identify organizational design elements
Identify and define the two primary elements of benefits programs
Benefits - programs an employer uses to supplement the cash compensation that employees receive. Income Protection Programs Designed to protect the standard of living of the employee and his/her family as well as protect from catastrophic losses Mandatory (Unemployment, workers comp, social security) NonMandatory (Medical, Dental, Vision, Life Ins, Disability, Retirement plans, etc) Pay for time not worked programs Designed to protect the employee's income flow during certain periods when the employee is not working At work (FLSA) and Not at work
Variable Pay - Bonuses
Bonus plans typically refer to rewards given for the completion of a specific task or objective. Referral bonus Hiring (sign-on) bonus Retention (stay) bonus Project completion bonus
Discuss the responsibilities of a work-life professional and an HR practitioner involved in work-life initiatives
Can be one person or two. Work-life professional Advocates, Conducts needs analysis, Input to policy design, Mediator/ombudsman HR Practitioner Designs, Implements, Administers programs Both Presents business case to upper management, Communicates programs to employees
Explain how an employee's career stage or position in range influences the individual pay decision
Career Stages New to Role = Minimum to 1st quartile Emerging = 1st to 2nd quartile Established = Midpoint to 3rd quartile Expert = 3rd to 4th quartile, Maximum Another way to view the base pay investment & advancement through career stages is to add the factor of time to achieve a particular range penetration. How far should a particular performance level take an employee into the range? How long should it take to progress through percentiles?
Describe the seven categories of the work-life portfolio
Caring for dependents (Child/Elder resources, referrals, emergency backup) Supporting health and wellness (Absence of sickness, life balance, stress reduction, resiliency. EAPs, family/medical leave, fitness centers, on-site clinics, etc) Creating workplace flexibility (Flexible work arrangements FWAs, telecommuting, compressed workweek, work redesign, career flexibility) Financial support programs (LTC ins, financial planning, tuition, adoption ass, legal referrals, seminars, employee discounts, etc) Creative use of paid and unpaid time off (family/friends/self, vacation sharing, education, volunteering, emergencies, new fathers/mothers leave) Community Involvement programs (External outreach - community volunteering, matching gift program, cash contribution to nonprofit that emp volunteers) (Internal sharing - shared leave/vacation time, disaster relief fund, catastrophic leave Culture change initiatives (Diversity/Inclusion, women's advancement, mentoring, team effectiveness strategies, work environment initiatives, management flexibility training, older worker initiatives)
Define and explain the elements of total rewards
Compensation - pay provided to employee for services rendered (Fixed & Variable) Benefits - Programs an employer uses to supplement the cash comp. Health, Income Protection, Savings/Retirement programs Work-life Effectiveness - Practices, Policies and Programs actively supporting success for employees at work & at home Recognition - Acknowledges an employees actions, efforts, behaviors (and supports business strategy via positive reinforcement, contributing to org success Performance Management - The alignment of organizational, team and individual efforts toward the achievement of business goals & org success. Includes establishing expectations, skill demonstration, assessment, feedback & continuous improvement Talent Development - Provides the opportunity and tools for employees to advance their skills & competencies in both their short and long term careers. To improve productivity/value to the org.
Identify the needs that each Total Reward element/program satisfies..
Compensation satisfies a financial need for income Benefits satisfy protection needs, such as insurance and retirement security Work-life programs satisfy intrinsic needs, such as control over one's work environment Recognition satisfies the need to receive acknowledgement for achievements Performance management satisfies the need for employee and organization alignment Talent development satisfies the need for workplace planning as well as personal challenge and growth.
Discuss factors influencing compensation including pay-related laws
Competitive environment (Econ/Industry/Specific Jobs) Collective bargaining/unions (more popular in Europe) Global growth (within the company) Economics (health of economy, unemployment levels & general business state) Business strategy (Comp philosophy & strategy) Life cycle of the organization (Startup, Growth, Mature, Decline) Legal compliance (FLSA - fair labor standards act), Minimum wage, overtime, child labor, anticompetitive price fixing, pay equity, etc)
Explain how to measure the effectiveness of talent development opportunities.
Decreased turnover, increased productivity, improved employee engagement levels, improved ability (reduced time) to fill roles internally
Discuss base pay structure components
Components Base Pay Policy - the policy should be consistent with the comp strategy of the org Pay Grades/Bands - the purpose of pay grades/bands is to identify a comp range within which multiple jobs are grouped. Midpoint differential - the difference in wage rates paid at midpoint of two adjacent grades. US 5-25%. larger at higher job levels Midpoint - the midpoint of the pay range typically reflects market rate for the positions in that pay range. Range spreads US 40-50% Broadbanded pay ranges - spread 100%-300%, fewer levels, wider pay bands The number of pay structures or bands may be affected by: Diversity of jobs in the org, Diversity in grading, Balancing of internal equity & external competitiveness, Org culture
Job Documentation
Consists of written info about job content, typically resulting from a job analysis effort. Types: Job Analysis Questionnaire (by incumbent or manager) Job Family Matrices (info on multiple levels within same job family - entry, intermediate, senior, etc) Job Descriptions Most frequently used type. It is a summary of the most important features of a job, describes & focuses on the job itself & not on any specific individual who might fill the job. Include: the general nature of the work (duties/responsibilities), the level of the work to be performed (skill, effort, responsibility, working conditions), job specifications (employee characteristics required for competent performance of the job)
Identify and describe specific factors that influence benefits programs
Corporate philosophy/business objectives (benefit plans must support bus obje) Competitive practices Taxation (benefit levels through the imposition of benefits limits, source/funding ofbenefits, employee/comp cost-sharin) Employee demands Costs Demographic changes (growth of multinational free trade areas/economies, major additions to workforce, aging population, increased # of emails, increased competition Perceived value (by the employees) Desire for choices (by the employees) Regulatory/legal environment Gov is the major factor influencing growth/change of employee benefits. ERISA Employee Retirement Income Security Act (protect the interests of participants/beneficiaries, provide rules on federal income tax effects, establish min standards for pension plans, create fed law for employers with mul loc to provide one contract for the same carrier instead of separate accounts) PPACA The Patient Protection and Affordable Care Act (Expand access to coverage to uninsured Americans, reform delivery system to improve quality and lower overall costs of providing health care)
Variable Pay - Recognition
Criteria broadly defined and subjective, awarded spontaneously, decision made after the fact, focused on behaviors, monetary or nonmonetary, budgeted
Variable Pay - Incentives
Criteria determined in advance, amount of pay can vary, monetary or non-monetary, self-funded or budgeted, non-discretionary, must be re-earned each year or performance period Short-Term One year or less.. Profit-Sharing (normally include a predetermined formula for allocating a share of the profit among participants, typically based on financial performance) Performance-Sharing (similar to profit-sharing but involves more measures than a single financial one, quality/customer satis/productivity, etc) Individual Performance-Based Like performance-sharing plans, may involve more measures than just financial
Discuss external influences that impact an organization's culture and strategies
Economic - Rising/falling conditions in Global economy Labor market - Trends/Movements Cultural norms - Customs, social mores, drivers of diverse makeup, expectations of the global workforce Regulatory - Regulatory/Legal environment, US & Global
Discuss communicating a total rewards package
Employee Value Proposition (EVP) the EVP defines what employees give to the company and what they get in return. It encompasses every aspect of the employment relationship, going beyond the mission/vision, culture and total rewards programs, it is about defining "why people work here". It's also referred to as the employment exchange or deal. Organizations can communicate their value propositions to attract, motivate, engage & retain employees.
Discuss employer and employee shared responsibility and the needs that are met through talent development.
Employer Needs Employees to meet organization's strategy Identify the skills, expertise & competencies required to meet future org needs, Establish how many employees with these skills are needed, Establish when these employees are needed, Determine where these employees will be acquired (develop internally/recruit externally), Consider budgets & cost for training and development, Create a system for managing the process. Employee Needs Career Advancement Important in attraction and retention, the company's reputation in the marketplace, High potential/performing employees are especially sensitive in this regard. Skill Development Provides personal satisfaction, Increases employee's ability to contribute and be productive, Meets the need to maintain and improve skills (particularly imp for Science, Engineering & IT jobs).
Identify and define the two primary elements of compensation
Fixed pay, aka base pay, is nondiscretionary compensation that does not vary according to performance or results achieved, is determined by the org's philosophy & pay structure. Variable pay, aka pay at risk, is compensation that is contingent on discretion, performance or results achieved.
Identify and explain the various types of income protection benefits including health care, welfare & retirement
Health Care Benefits (Medical, Dental, Vision, Prescription drugs, Hearing plans, Behavioral health plans) Welfare Benefits Death Benefits, company provided. Disability, LTD Retirement Benefits Defined Benefit Plans (DB). benefit at retirement is based on a formula that considers pay/service. Final Ave Pay * 1%* years of service Defined Contribution Plans (DC). employee/employer contributions made to individual participant accounts Savings/Thrift (401k), Profit-sharing plans, Money Purchase Plans (employers contribute to plan & buy annuities for employee) Hybrid Plans (Cash Balance plans) Combine elements of both
Job Worth Hierarchy
Helps to establish a relationship between jobs by grouping similar jobs (similar levels of duties) as established in the job evaluation process. Comp professionals can indicate how various jobs can be categorized within the org & it can then be used to form the foundation of the base pay system. It is used to determine & ensure internal and/or external equity both among positions & groups of positions. Job grades/pay structures are then based upon that internal and/or external equity.
Examples of Advancement/Career opportunities
Increased exposure outside the dept, exposure in the community/professional association, publish articles, learn a foreign language, internships, apprenticeships with experts, overseas assignments, internal job postings, job advancement/promotion, career ladders and pathways, succession planning, providing defined & respectable "on and off ramps".
Medical Plan Types
Indemnity (original plans post WWII, reimbursement 4 certain things) Managed Indemnity (cost management feature included) HMO (Health Maintenance Organization, in-network only) POS (Point of service, HMO w/some cov for out of network(40-60% maybe)) PPO (Preferred Provider organization, In & Out of network benefits, in-network Dr's offering discounts) CDHP (Consumer Driven Health Plan) high-deductible HRA (Health Reimbursement Acct, employer funded) HSA (Health Savings Acct, employer/employee funded)
Define and describe the steps involved in base pay structure design
Job Analysis A systematic, formal study of duties & responsibilities that comprise job content, provides key info about the nature & level of work performed. Job Documentation Includes written info about job content or the functions of the job & required knowledge, skills & abilities (KSAs) and behaviors Job Evaluation Analysis/Documentation needed for Job Eval. A structured process to determine the value of an organization's positions relative to each other. Content or Market-based job evaluation approaches. Job Worth Hierarchy To group or categorize jobs relative to other jobs (ex Pay grades/bands). It is the final result of the job evaluation process. Base Pay Structure After the job worth hierarchy is established, a base pay structure can be created and utilized as a framework for pay decisions.
Describe considerations to be aware of when designing total rewards programs
Labor Market (availability of needed talent, location/demographics, competitive wages/rewards) Competition (industry competitors - labor/products and services) Legal/Regulatory (laws, wage and hour laws, government mandates/bodies, employment rights, taxation issues) Technology (self-service web sites, administrative software packages, enterprise software systems) Cost Issues Affecting the Design Process (time, implementation, funding, compliance) Budgeting (rising health care costs, demographic shifts in the workforce will affect the cost of benefit programs and the demand for various programs) Support Staff Needed to Administer the Program (a consideration often ignored, forgotten or miscalculated) Globalization (one size will not fit all in the global marketplace, as org's become more global in their outlook and in providing goods/services, they will be looking at innovative ways of rewarding and recognizing employees.)
Examples of Coaching/Mentoring opportunities
Leadership & management training, access to experts/information networks, exposure to resident experts, formal or informal mentoring programs, training or mentoring others
Identify the various types of talent development opportunities.
Learning opportunities Coaching/Mentoring opportunities Advancement/Career opportunities
Formal Recognition Programs - Essential Elements
Link recognition with the achievement Widely communicated Well-defined program criteria Encourage employee involvement Manager training and support Employ meaningful rewards Reward group or team accomplishments Clearly define monitors Link to performance evaluation
Variable Pay - Incentives cont..
Long-Term More than a year.. typically 3-5 years Equity-based (company stock based) Nonequity-based (determination of the reward is not-based on stock performance) Equity Vesting beyond a year Stock/Share Options Stock/Share Grants Restricted Stock/Shares (vesting period restrictions) Performance Unit Plans (units having a monetary value are awarded to employees based on the attainment of certain internal/external performance measures) Global Equity-Based Rewards (tax implications, various laws of implementing it globally)
Describe how recognition can drive business results
More organizations are focusing their recognition programs strategically to align them with business goals in mind. Are designed to promote employee actions that support and enhance individual, team, division, department or company goals. - Improving/sustaining employee productivity - Improving the quality of work/decreasing error rates - Acquiring new skills, experience, competencies or knowledge - Meeting or exceeding company financial goals, including sales, revenue, profit and market share - Providing superior customer service - Volunteering for additional work
Job Evaluation, Content Based Approach
Non-quantitative/whole job methods - view the job in terms of its importance to the company. Ranking (job to job comparison resulting in an ordering of jobs from highest to lowest in relative worth to org) Classification (Predefined class descriptions are established, then the job is placed in whichever best describes it, like a bookstore) Quantitative/Factor methods - examine the importance of jobs in terms of compensable factors Point Factor (defined factors & degrees to establish job value, corresponding points for that level are then awarded to the job, combined for all factors/total score) Job Component (develops a job worth hierarchy by using statistical analysis, identifies the factors & factor weights that best explain the relative market pay levels of benchmark jobs. Nonbenchmark jobs can then be evaluated using the model produced from the statistical analysis.
Describe the principles of merit pay programs and how they are applied
Objective the essential goal of a merit pay program is to link pay to performance in a manner that is consistent with the mission of the organization. Conditions: variations in employee perf & contribution must be measureable & measured, Managers must be provided with necessary tolls & training the determine the appropriate rewards. Size to motivate employees most effectively to meet or exceed performance standards, the absolute size of the merit increase must be significant enough to make a noticeable different to employees. Timing anniversary date versus common (focal-point) review Implementation under traditional programs, merit increases are built into employees' salaries for as long as they remain with the org. Hence the increases are permanent and their values compounded over time as additional increases are granted.
Describe talent development opportunities and how they should be determined.
Opportunities should be: Clearly defined Able to fit into time and resource commitments Interesting Compatible with day-to-day responsibilities Determining opportunities Opportunities to enhance present job - the manager & employee should consider strengths or behaviors that need to be developed, needs should be prioritized and an action plan created. Employee identifies activities within/outside of the org, both determine if the choices are appropriate for the business & the job, both should decide what the measure of success should be, manager approves after checking the details.. funding/time conflicts. Opportunities to accomplish career plan - consider future needs within their current job, consider emerging/future trends in their area of work, consider developing skills/knowledge/behaviors that will prepare them for future jobs, obtain feedback from others..
Explain drivers of the total rewards strategy
Organizational culture - subject to both internal/external influences, greatly influenced by organization's leadership. Business strategy - Corporate Vision/Mission, Operational excellence, Product/Service leadership, Customer intimacy, Business life cycle HR strategy - HR strategy, Total reward strategy. This strategy determines what the total rewards mix for the organization will be
Discuss the two methods of designing merit increases: performance only and performance and position in range
Performance Only Simple/understandable, Employees with same perf receive same percent increase. Larger amounts go to people higher in the range for the same performance, Employees with same perf receive diff amts/increases. Performance & Position in Range It causes the rates for employees with the same performance to converge on a target quartile or point, Employees who are farther from the target point are moved more quickly, and employees who are near the target point are slowed down. Employees above the control point receive 0%.
Talent Development
Provides opportunity and tools for employees to advance their skills & competencies in both their short- and long-term careers. Organizations support career opportunities to effectively deploy talented employees, enabling them to deliver their greatest value to the organization.
Discuss and give examples of recognition plans and programs including formal and informal recognition programs
Recognition Plan Types - spot awards, managerial recognition, nominations, organizationwide recognition Recognition Programs Results-Driven Programs (Above-and-beyond performance, Peer-to-peer, Specific results/behaviors) Forms of Recognition Cash, Tangible award (tickets, dinners, merchandise, travel), Symbolic award (certificates/trophies), Verbal recognition Cash vs Noncash Recognition Performance-based recognition (cash is better) Value-based recognition (doesn't need to be cash)
Discuss base pay including types of pay adjustments as well as when and why they typically are implemented
Salary/Hourly/Piece Rate (rate of production) Pay Adjustments Merit-based (pay for performance) Skill-based or pay-for-knowledge approach (every addl year of experience for ex) Competency-based (broadens skill-based with success characteristics/attributes/traits/behaviors Step rate (based on longevity, regular intervals - unions) Lump-sum payment (provided in place of an annual increase to base salary as a means of controlling annual fixed-cost increases) General increases (given to all or most employees when an org finds its comp is behind market rates Cost-of-Living (COLAs) (usually made to keep up with the rate of inflation) Adjustments. Equity-based(reflect internal compression issues, between peers with dissimilar lengths of service, mgr/subordinate, etc) Market-based (last year's engineers are making less than new college graduates) Combinations (not uncommon to provide both merit and lump-sum increases or merit and equity adjustments Automatic progression - (links pay increases primarily to some aspect of tenure, like engineers receive an automatic salary review every 18 months in addition to annual increases)
Informal (spot) Recognition Programs - Essential Elements
Set financial limits Establish administrative responsibility Develop program definition Establish eligibility Identify qualifying actions Identify exclusions Establish procedures Ability to track and monitor
Discuss the types of Differential Pay
Shift Differential (most commonly paid to workers working 2nd/3rd shift) Weekend/Holiday Differential (paid in addition to normal rate) Expatriate Differential (paid for the difference in costs between an individual's home country & the assignment location Geographic Differential (pay differences established for the same job based on variations in costs of living/costs of labor - NY vs Alabama for example Language Differential (paid to an individual fluent in more than one language)
Performance Management
The alignment of organization, team and individual efforts toward the achievement of business goals and organizational success. It includes establishing expectations, skill demonstration, assessment, feedback and continuous improvement. Performance Management Process - the process is ongoing, not a one-time event - mutual respect & trust between manager/employee - communication must be two-sided, the mgr/employee - involvement of both in planning/measuring perf - expectations for performance, standards & measures should be clearly defined
Explain the total rewards design process
The design process begins with the corporate vision/mission, which direct the development of the business strategy. The HR strategy builds on the bus strategy and serves as a guiding light in the design of all HR programs. The TR strategy narrows this HR strategy specifically to the six elements of total rewards. This circular process indicates that the process in infinite and repeats itself. A TR program should not become too far removed from the corporate mission. The challenge of total rewards design is to find the proper mix of elements that satisfy the personal and financial needs of the current & potential workforce, given existing business conditions & cost constraints.
Discuss base pay structures including definition, objectives
The pay structure of an organization is a management tool that reflects the collection & organization of internal (point factor)/external(surveys) compensation data to support job values. A pay structure consists of a series of pay ranges that represent jobs of similar internal and/or external worth. Objectives Create alignment between work/rewards, Help to achieve organizational objectives, Reflect the company's desired position with respect to marketplace.
Discuss communicating a total rewards package, cont..
Total Rewards Statement In addition to communicating information targeted to the six elements of the total rewards strategy, some organizations prepare statements summarizing the value of each employee's complete total rewards package. Can help achieve greater employee appreciation/understanding of their total rewards package. However, caution should be taken to avoid arbitrarily setting or estimating a monetary value on intangible benefits that not all employees use or value. - compensation & benefits data combined - value of work-life programs itemized - value of recognition and talent development programs itemized - general information and specific data - individualized, personalized - sent to employees, available real-time electronically, or given to employees by their supervisors & discussed as part of performance reviews.
Discuss the total rewards strategy and the key players involved in strategy development
Total Rewards Strategy identifies.. - The appropriate labor market segments for each employee group where the market is identified according to industry, size, geographic location or performance. The desired competitive position in the market for each employee group. The optimal mix of total rewards elements for each employee group. The way each element will be earned and allocated. Key Players - Senior management/board of directors Human resources leadership Employees Outside consultants
Examples of Learning opportunities
Tuition assistance, corporate universities, new technology training, attendance at outside seminars/ virtual education/conferences, Self-development tools & techniques, on-the-job learning/rotational assignments, sabbaticals
Variable Pay - Commissions
Type of short-term incentive plan specifically for sales employees. Cash payments, based on a predetermined performance and reward schedule. Sales incentive plans matched to type of responsibilities - customer service, customer identification, customer persuasion
Identify and define the types of variable pay
Variable pay rewards for accomplishments & results - Organizational, group or individual results Performance-based compensation Flexible and adaptable Types Incentives Commissions Bonuses Recognition