Category Archives: total rewards

Trading PTO for Perks

It happens all the time: The end of the year rolls around, and busy employees find themselves with handfuls of unused vacation days, and too much work to feel good about cashing them in.

But what if they could still get something of value in exchange for that paid time off?

A new start-up is enabling employees to do just that.

As recently reported in the Washington Post, PTO Exchange has just begun working with Premera Blue Cross to let the health insurer’s workers trade in the value of their unused paid time off for other perks, which could include added contributions to 401(k) accounts, putting money toward college tuition expenses, getting reimbursement for travel expenses or making a donation to a favorite charity.

While Premera Blue Cross is PTO Exchange’s first and only client thus far, co-founder Rob Whalen told the Post that PTO Exchange has heard from “150 interested companies, including large retailers and pharmaceutical firms, and is in advanced discussions with several major [HR] consulting firms.”

Organizations are “trying to offer flexibility to their employees,” Whalen told the paper. “They currently have this benefit on the books, and it’s budgeted—they might as well find ways to use it.”

The notion of offering workers the opportunity to swap paid time off for other perks “is a brand new concept meant to meet an emerging workforce need,” says Craig Dolezal, senior vice president at Lincolnshire, Ill.-based Aon Hewitt.

We could very well see others emerging to provide a similar service, he says.

“Like all innovations in benefits, there typically is a leader that drives a potential solution first, with others more than willing to create their own version once there is a real market need. … If more adopt [the PTO Exchange] model, we will most certainly see others build comparable solutions.”

Whether that happens, of course, is predicated on the idea that exchanging PTO days for other needs or wants passes all legal, administrative, compliance and financial tests, adds Dolezal.

Indeed, employers and HR have much to consider before rolling out such a benefit to the workforce.

“The very first place to focus is on the alignment with an employer’s business, cultural and human capital strategies,” says Dolezal. “Does this type of total benefits flexibility benefit the organization and [its] people? Does the exchange work in concert with [the company’s] broader workforce management approaches?”

If the answer to those questions is yes, then the company “would need to explore the legal and financial viability of the exchange and test the administrative approach,” he says, “to ensure this potentially new benefit can work seamlessly alongside other total rewards programs.”

 

Not So Fast on the Netflix Good News, Says Group

Invariably, any large company — especially one that’s in the news — attracts its detractors as well as its fans. Just try “Googling” “anti-494368457 -- mother and infantWalmart websites” and see what comes up on the nation’s largest employer.

So no surprise, really, that Netflix’s recent announcement — that it would offer unlimited leave to new moms and dads, allowing them to take off as much time as they want during the first year after a child’s birth or adoption — has yielded an “anti-stir.”

A women’s group calling itself UltraViolet just rolled out an ad campaign last week against what it claims are Netflix’s discriminatory practices in not opening its new leave program to the poorest among its ranks instead of just the wealthiest. (Here’s the actual petition for those who want to join the fight.)

According to an emailed announcement about this new uprising, “more than 47,700 UV members have demanded Netflix give its hourly workers the same ‘unlimited’ parental-leave benefits that workers who make $300,000 receive.” As Nita Chaudhary, UV’s co-founder, puts it:

“People are taking notice that Netflix is expecting praise for extending parental leave to its higher-paid employees, yet it doesn’t extend those benefits to the hourly employees who need it most.

“It’s important that Netflix set an example for the rest of employers and companies nationwide: With one in four moms going back to work less than two weeks after giving birth, Netflix can turn the tide by giving ALL employees equal benefits — not just reserve those benefits [for the wealthiest ones].”

The women’s group contends this exemption was somehow left out of the company’s announcement, the latter of which has certainly been reverberating positively throughout the business community, as this feature about the move in Fortune indicates. And this, from BuzzFeed News, indicating other big Silicon Valley companies have been following suit — including Microsoft and Adobe — in announcing similar unlimited paternity leave programs since Netflix’s announcement.

Indeed, I saw no mention of any exemption in the announcement. Nor was it mentioned in Andrew R. McIlvanie’s blog post that included news of the announcement. (Though that post does examine the problem of unlimited leave policies being launched in corporate cultures that don’t support them … which may or may not be the case at Netflix.)

I did reach out to the company about all this, and got the following back from a company spokesperson:

“Across Netflix, we compare salary and benefits to those of employees at businesses performing similar work. Those comparisons show we provide all of our employees with comparable or better pay and benefits than at other companies. For example, medical and life insurance for DVD workers exceeds market standards. All DVD employees including hourly are also eligible for a minimum of 12 weeks off for maternity or paternity leave. We are regularly reviewing policies across our business to ensure they are competitive and help us attract and keep the best employees.”

Nothing on the UV ad campaign. Nothing on any exemption in its new policy. Like so many other big-splash initiatives and subsequent fallout, I guess we’ll just have to let this one play out.

 

Looking to the Future for Total Rewards

It’s been 15 years since the American Compensation Association changed its name to WorldatWork, reflecting the group’s decision to increase its footprint beyond the world of compensation and embrace a broader total-rewards approach.

ThinkstockPhotos-175679126This year, the Scottsdale, Ariz.-based HR association celebrates its 60th anniversary. And with that milestone comes a revamped total-rewards model.

Announced during the opening session of this week’s WorldatWork’s Total Rewards 2015 Conference and Exposition in Minneapolis, the new model now includes the verb “engage” (which joins attract, motivate and retain in describing total rewards’ contribution to the organization) and the addition of “talent development” as a sixth element of the total-rewards strategy.

WorldatWork’s previous model, introduced in 2006, featured the following five elements: compensation, benefits, work/life, performance and recognition, and development and career opportunities.

Anne Ruddy, president and CEO of WorldatWork, noted that the time was right for the association to re-examine its total-rewards model and make it more relevant to the kinds of issues members are facing today.

Models aside, it would seem many of those attending this year’s conference have their sights set on the future. On Monday afternoon, I attended a packed session presented by Steven Gross, a senior partner at Mercer, entitled “Total Rewards 2020: What to Expect in the Next Five Years Based Upon a Lifetime of Experience.”

Five minutes before the session began, attendees were being turned away at the door because the room was already filled to capacity. (Fortunately, for those unable to attend, the session was scheduled to be repeated the following day.)

Gross, who is based in Mercer’s Philadelphia office, gave attendees a quick rundown of the external factors influencing total rewards today, a glimpse of what the future might look like five years from  now and what steps employers ought to take to prepare for that world.

As might be expected, Gross led off his presentation by acknowledging the crucial role changing workforce demographics is playing in shaping the future of total rewards.

“It’s not only about people living longer, but people working longer,” Gross said. “Think about the implications of one quarter of folks over age 65 and 15 percent of folks over age 70 in the workforce”—and the kinds of challenges these changes are going to present to employers.

Generational differences, he said, are also likely to have an impact, as employers face the formidable challenge of addressing “the different sensitivities” of traditionalists, baby boomers, Gen Xers and millennials.

Other external factors Gross cited included income disparities, diversity, globalization and technology.

Gross predicted that, five years from now, companies will be much more focused on “core employees” who are viewed as being crucial to their organization’s success, will continue to put more weight on individual accountability, and will pay greater attention to personalizing rewards to reflect greater workplace diversity.

Going forward, he said, companies will also be much more focused on “best fit rather than just best practice.” (In other words, he explained, does your total-rewards strategy fit the culture of your organization?)

What’s more, he added, do-it-yourself benefits programs will be far more common five years from now, with self-service becoming an even greater fixture of tomorrow’s workplace. (Gross also joined the chorus of those predicting employers will increasingly be getting  out of the “healthcare business.”)

I suppose we’ll know in five years which of Gross’ predictions were on target—and which ones missed the mark.  But of this we can be fairly certain: Tomorrow’s total-rewards landscape isn’t likely to look anything like the one that exists today. As Gross reminded those attending his session, there are simply too many significant forces at work to ensure that that’s the case.

LinkedIn Founder: Sign Up for a ‘Tour of Duty’

The lifetime job guarantee is over. Everyone knows that. But what’s replaced it? Are all of us destined to join “Free Agent Nation,” with employees constantly on the move between companies while companies hire and fire based on the latest economic gyrations? There has to be an alternative, because the prevailing arrangement ill-serves both parties, writes LinkedIn cofounder Reid Hoffman (with coauthors Ben Casnocha and Chris Yeh) in the latest Harvard Business Review.

Today’s laissez-faire arrangement means that although employees have a natural incentive to stay adaptable and marketable, the most entrepreneurial of them end up taking their talents elsewhere, while employers reap some cost-savings but gain little in terms of innovation and adaptability, they write. What’s needed is a “new compact,” they argue, in which both employee and company acknowledge the likely impermanence of their relationship while seeking to build trust and investment anyway:

As allies, employer and employee try to add value to each other. The employer says, “If you make us more valuable, we’ll make you more valuable.” The employee says, “If you help me grow and flourish, I’ll help the company grow and flourish.” Employees invest in the company’s adaptability; the company invests in the employees’ employability. As former Bain CEO Tom Tierney used to tell recruits and consultants, “We are going to make you more marketable.”

The authors cite Hoffman’s own LinkedIn as an example, where he set the initial employee compact as a four-year tour of duty, with a discussion at two years. If the employee “moved the needle” on the business during the four years, the company would help advance his or her career — ideally at LinkedIn, but it could also mean a position elsewhere.

A tour lasting between two to four years is ideal, they write, because that time period tends to sync with a typical product-development cycle, “allowing the employee to see a major project through.” This sort of arrangement works better than typical retention programs, which are saddled with fuzzy goals and fuzzy timeframes that essentially ask the employee to commit to the company without it making a commitment in return, according to the authors. A tour of duty, on the other hand, can serve as a personalized retention plan “that gives a valued employee concrete, compelling reasons to finish her tour and that establishes a clear time frame for discussing the future of the relationship.”

Ideally, tour of duty agreements with key employees will include explicit terms, focused goals and clear expectations. When possible, they write, the agreement should include giving the employee a shot at a “breakout entrepreneurial opportunity” that might involve a new product, reengineering an existing process or “introducing an organizational innovation.” I think this is an intriguing concept that that’s based on a core reality — impermanence is here to stay — yet codifies a mutually beneficial arrangement in which employee and employer make a (time-limited) commitment to one another. Be interesting to see if this gains some traction. Of course, it’s also aimed at highly specialized talent — what about the rank and file, who may not be superstars but with whom you could not run your organization?

Some Cool Philly-isms at Total Rewards

I witnessed two distinct ties to my City of Philadelphia just now while covering WorldatWork’s Total Rewards 2013 conference. Both occurred back-to-back, but it was the latter that convinced me it just might be worth sharing.

152178005--ben franklinOn leaving a session titled Tales from the Trenches: Managing Executive Performance Share Programs, I couldn’t help but notice the conference snack of choice — in fact, the sole snack for this session break — was an assortment of Tastycakes: krimpets, cupcakes, juniors, pies, etc.

For those conference-goers who appeared caught somewhere between bemused, confused and impressed, I proudly shared that the Tasty Baking Co., makers of the treats before them, hailed from this fine city (birthplace of both my sons, though I chose not to share that part with them). Anyway, nice touch, WorldatWork!!

Moments before, at the session mentioned above, moderator James C. Heim, managing director at Pearl Meyer & Partners, was serving as the go-between for Walter Cox, senior manager of executive compensation at Raytheon, and Carley Finkenthal, executive compensation leader at United Technologies Corp. The stories from both panelists on the decisions made and the lessons learned surrounding their performance-share and compensation programs was compelling and seeds for a story down the road — perhaps on our website, perhaps in HRE.

But it was Heim’s wrap-up witticisms that caught my ear and reminded me (and everyone else) what city we happened to be in. Using actual quotes from Philadelphia’s greatest claim to fame, Benjamin Franklin, Heim interpreted each one as if Franklin were alive and well and … well, moderating the panel himself. Here’s “Benjamin Franklin’s Roadmap for Success” as delivered by Heim and designed to make you a better executive-comp guru:

“When in doubt, don’t.” Do not implement a performance-share program if it is not administratively possible to do so.

“Be slow in choosing a friend, slower in changing.” Beware how far down you want to drive performance and be very careful in considering eligibility.

“Well done is better than well said.” Select performance metrics that are demonstrably correlated with long-term shareholder value creation. It’s better to have measures that drive value than measures that are easily explained.

“We must, indeed, all hang together or, most assuredly, we shall all hang separately.” Compare your proposal to industry prevalence data — is it different because it’s better or is it just different? And if it’s better, then don’t be afraid to follow your own lead.

“Being ignorant is not so much a shame as being unwilling to learn.” Model your proposed executive-compensation plan under a variety of scenarios — both proactive and reactive — to better understand the impact of your proposal across a variety of performance scenarios.

“How few there are who have courage enough to own their faults, or resolution enough to mend.” Revisit your plan periodically, and fix it when it needs fixing.

Remember, Heim said, “changing plans sends a powerful message” to the company and to the outside world that you’re on to something bigger and better, and carefully laying out new plans.

 

Troublingly Different Reward Strategies Emerge at WorldatWork

Balancing the AccountsInteresting — some might say disturbing — juxtapositions came out of two different sessions this morning at the first full day of the WorldatWork Total Rewards 2013 conference in Philadelphia.

One, an inspiring keynote address by author and networking expert Mark Scharenbroich, challenged all rewards and HR professionals in the room to get better at making authentic connections with the people they want performing for them.

Author of Nice Bike: Making Meaningful Connections on the Road of Life, Scharenbroich punctuated his points with personal stories from both his life and his work, as well as anecdotes from organizations he has worked with. Throughout his compelling presentation, the message was clear: “Embrace your journey [as HR and rewards professionals] with a passion to serve others — when you do that, people will follow.”

He also noted that “every problem is an opportunity to engage and connect with customers” inside and outside of your organizations.”

Scharenbroich accentuated employees’ needs — everyone’s needs, for that matter — to belong to a group or a cause; that “people will stay where they feel appreciated, recognized and part of the game.”

But in their session directly following the opening keynote, Jay Schuster and Patricia Zingheim, of Schuster-Zingheim & Associates Inc., cited their yet-to-be released research on What CEOs Want from Total Rewards as proof positive that, if you ask the bosses of HR and rewards professionals, as they did, you’ll find they want their rewards programs to be centered on nothing of the kind.

What CEOs want, they said, are proof of individuals’ value in terms of business goals. As Schuster put it early into the session, “If you’re here to hear about pet insurance, you came to the wrong session.”

According to their research, he said, an impressive majority of the CEOs they interviewed (I plan to write about this later and supply all the numbers from their report) “aren’t even interested in best practices and benchmarks” — they don’t want all the paperwork HR comes in with “frequently changing definitions and the wording of performance management and what it needs to consist of.”

They simply want HR to focus on results that make good business sense and compensation plans that reward the individuals and the behaviors and the results that will take them in the direction they want to go.

And more alarmingly, the CEOs they interviewed don’t feel HR executives are delivering on that, not really in the least.

“They think we’re becoming shoe-shiners, not adding real value to the business,” Schuster said.

One good pointer the two did share was that giving company stock to high-performers was very attractive to the CEOs they interviewed. They considered it, in Schuster’s words, “a piece of the pie and a fraction of the action [as opposed to] giving teddy bears.”

So what’s the joint message here for HR and rewards professionals? Obviously, your approach will be your own; just know this indication from CEOs suggests it should be customized in terms of adding value to the business you’re in, not the businesses you’ve studied or benchmarked. One tech company Schuster-Zingheim studied, for instance, adopted a multiple-tier workforce, with three-to-five-year work agreements for core professional talent, keeping pay and benefits in transition as performance is proven. It worked, and continues to work, for them.

Zingheim’s checklist for drafting your own rewards program includes:  How does a program change reflect real business success? Does it add value to the business? Is it cost-effective compared to other organizations? Does your reward structure help to upgrade the performance of your organization? (The list goes on; to be continued when I take this up again.)

Also, the two stressed, take chances. “If you’re going to err,” said Schuster, “err in favor of best performers.”

Lifting Boeing’s Pay Grade

At this week’s Total Rewards 2012 conference in Orlando, speakers from Boeing reminded attendees that there often is more than one way to read a piece of data.

During a session titled “Compensation, Fix Employee Pay! When Compensation Professionals are Asked to Address Low Scores on Employee Surveys,” two Boeing comp professionals—Senior Compensation Specialist Cindy Jorgensen and Compensation Specialist Ron Steele Jr.—talked about their efforts to get to bottom of why employees at Boeing’s South Carolina facility had a low opinion of the company’s pay practices.

Steele told those in the room that Boeing’s pay is extremely competitive in South Carolina—where the company employs about 6,000 workers who are dedicated to the building of its 787 (pictured here). But apparently that wasn’t the consensus among Boeing employees there.

Asked to rate the fairness of pay during a 2011 employee survey, workers at the South Carolina operation gave Boeing low marks. (The survey was conducted with the help of Kenexa.)

At first glance, Steele said, the data pointed to a pay system that needed fixing.  But a closer look suggested there might be other factors at work here.

To figure out what those factors might be,  the comp folks began to drill deeper into the data, looking at (among other things) how the South Carolina findings compared to those found at other Boeing operations and in other industries; and by reading through page after page of verbatim comments from the employee surveys. (Boeing employees “aren’t shy,” Steele said.)

This was followed by a series of employee focus groups, which eventually shed some much-needed light on the issue.

In the end, the group’s persistence paid off.

Jorgensen and Steele concluded that the low scores had less to do with what employees were being paid and more to do with employees who didn’t really understand the pay system at Boeing.

That, in turn, led to a much more meaningful response (my words) focusing on initiatives that could have a positive impact, such as managerial training and employee education.

Giving Data Its Due

HR leaders are increasingly using metrics and analytics to more effectively drive their talent decisions. But can the same be said of those specializing in comp?

At this year’s Total Rewards 2012 in Orlando, executives from Mercer and WorldatWork previewed key data from a recent study that suggests something of a disconnect between how comp leaders view their analytical skill levels and the kinds of intelligence that they’re presently generating.

Not surprisingly, most of the comp professionals surveyed indicated they were using techniques such as internal and external benchmarks (95 percent and 90 percent respectively) and ongoing reporting (87 percent) to help drive their decision making in their organizations. But the percentage of those using more sophisticated methods, such as projections, simulations and predictive modeling, was noticeably lower—at 80 percent, 64 percent and 43 percent, respectively.

Despite this, those in the comp profession believe they have adequate skill levels to effectively use analytics, with roughly 67 percent of the respondents saying they possess the skills to use more advanced analytics.

Though not entirely surprised by the findings, Mercer Partner Brian Kelly says the percentage of comp professionals using more sophisticated techniques was lower than he’d like to see.

“They’re saying they have the skills,” Kelly says, “but they’re still not doing it.”

Mercer Senor Partner Haig Nalbantian says he considers it somewhat ironic that a data-rich function like comp would run the risk of being “left behind” when it comes to analytics.

Mercer and WorldatWork plan to release a more complete report on the study’s findings in the next week or two. But it seems safe to conclude that a first glance at the data already suggests the profession clearly has some work ahead of it.

Holidays Around the World

Mercer’s just come out with a study showing that (no surprise) workers in the U.S. have the fewest statutory holiday entitlements (zero, in fact) while our Western European brethren have access to the most. (Statutory holiday is the amount of paid time off from work that an employer must provide to its employees by law.)

Although workers in the U.K. appear to have the most statutory holiday entitlements (28 days), in actuality they have among the lowest in Western Europe because employers are allowed to include the country’s 8 public holidays into that total, while workers in the rest of Europe are generally allowed to take those days off in addition to their statutory time off.

Austrian workers (those lucky ducks) have the potential for the most holiday time, with 25 days statutory entitlement plus 13 public holidays. With all that time off, no wonder they produce so many championship skiers. Workers in Malta are also well-compensated, from a time-off perspective: 24 statutory days and 14 public holidays.

Employees in the U.S., Canada, Philippines, China and Thailand generally have access to the fewest holiday entitlements. In Latin America, Colombia has the greatest number of public holidays; Mexico the least.

Catching Up on Compensation Trends

A few bits of news crossed my desk today that I thought I’d share just in case you hadn’t seen them. Both offer glimpses into where the nation’s businesses stand on compensation practices that might be handy comparative tools for you and your organization.

The first is this good-news-bad-news release from Challenger, Gray & Christmas (scroll down past that first top item to get to it). It shows that, while companies aren’t increasing their holiday bonuses by much, they’re at least not decreasing them by much either. In the survey of about 100 HR professionals, 63 percent said their companies were giving year-end bonuses this year, compared to 64 percent last year.

Underscoring just how precarious this on-again-off-again recovery still is, 16 percent of respondents said their companies were planning to give smaller bonuses this year, compared to only 4 percent in 2009.

“According to economists, the recovery began in July 2009,” says John A. Challenger, the firm’s CEO. “but, for many companies, the recovery simply means they are no longer hemorrhaging money.”

The second window into where things stand is a new guide for HR professionals that the U.S. Bureau of Labor Statistics will soon be releasing called “Zooming in on Compensation Data.” The release about it calls it “a convenient, hands-on reference document that provides brief explanations of various BLS surveys, with charts … [plus] separate sections for wage and salary administrators, benefits administrators, wage and contract administrators, as well as information on the 21st-century workforce.” Also included is contact information for all eight regional BLS offices.

Lastly, here’s some latest research from Sibson Consulting showing moderation in salary-increase and other compensation planning will be the name of the game for 2011.

In this still-volatile but ever-improving economy, it has to be extremely difficult to know what compensation and total-reward moves are best to keep your company competitive and strategically positioned for the recovery. It also must be nearly impossible to time the moves perfectly. Figured these bits of information couldn’t hurt.