Total Rewards Leader Board In-Person Meeting

My personal thanks to each one of you who attended for your excellent contribution and participation.  Please see the summary of the all day meeting in Scottsdale below.

March 26, 2018 i4cp Total Rewards Board Meeting Summary 

People investment ratio calculator (Patrick Murray)

Patrick Murray provided an update on the pilot project, offering an overview of the calculator, which can evaluate pay ratio in a variety of ways. Currently in development, the calculator seeks to quantify organizations’ total expenditure on talent, and reports on these key people investment categories: 

-       Cash comp (salaries and wages, overtime, bonus/incentive payouts

-       Health, welfare and retirement (including life and disability, medical, dental and Rx, wellness and fitness,                  qualified retirement plans, non-qualified plans premiums, claims, company contributions and admin costs.

-       Learning and development (program and vendor expenses.) 

Patrick solicited feedback from the board members in attendance, asking for suggestions as we move forward with creating this tool. Recommendations for factors to include/account for: equity compensation; relocation costs; and independent contractor costs. Another suggestion was to perhaps include a drop-down menu of reward type options, enabling users to select the reward factors that are most relevant for their organizations. 

In addition, Louise Slark wondered if the calculator would offer some type of predictive quality that would allow users to look at their comp through the lens of high performance or organizational effectiveness or engagement, for example. Louise also mentioned that she liked the three standalone components the calculator currently features, as it “allows you to segment compensation and look at it in different ways.” 

Louise, as well as Tim Price, director of compensation at Genentech, and Guy Sasso from HSBC Bank, volunteered to coordinate with i4cp as we continue to develop the calculator. 

 

Salary Administration Without Ratings 

This discussion centered on how the objective of conversations about rewards (and performance ratings) have changed over the years. In fact, roughly half of the board members in attendance noted that their organizations are undergoing a fairly significant overhaul, in terms of compensation and rewards. With this in mind, we asked board members to share the biggest challenges in doing so.   

Uzma Burki, VP of Rewards, Bill and Melinda Gates Foundation – 

“One issue we have in terms of compensation is that we are assessing performance based on the four Cs, one of which is ‘contribution.’ Employees automatically think of that term as pertaining to their performance. How did we create that disconnect?” 

Louise Slark/Choice Hotels International – 

“I’d be interested in knowing, if you do away with ratings, forced ranking and open it up and allow managerial discretion, how you know or ensure that you’re differentiating pay decisions on the back end? I’d be happy to take off all the controls, but how do I know that outcome is going to continue, especially if I’m not sure if all our managers are in a position to make those decisions?” 

Guy Sasso, U.S. head of rewards and group head of performance, HSBC Bank – 

“Do employees appreciate not having a rating/ranking? And do top performers know they’re top performers [if they don’t have a rating/ranking]?” 

 

New Healthcare Paradigm  

As part of a group exercise, members were asked to split into groups, rate their organizations’ level of concern over healthcare costs on a scale of 1 to 5, and then discuss why they’re concerned, what has driven those costs in the past five years, what they’re focusing on in terms of solutions, and what they think the future holds with regard to healthcare. 

Collectively, board members rated a 3.5 level of concern over healthcare costs on a scale of 1 to 5. 

Why are you concerned? 

-       Pharmacy costs

-       Spike in catastrophic cases, such as premature babies, heart attacks, diabetes, cancer and other diseases or           physical conditions.

-       The increasing recognition and treatment of mental health issues

-       The costs associated with an aging workforce.

 

Cost drivers over the past five years 

-       Greater use of health savings account and high-deductible plans.

-       Cost sharing, which puts more burden on employees.

-       Increased utilization of prescriptions and drugs.

-       Rise in number of onsite healthcare facilities.

-       More consumer education re: healthcare options.

-       Telemedicine and virtual health consulting.

-       More focus on wellness programs geared toward the individual.

-       Homeopathic medicine

-       Concierge care

-       Consolidation in the healthcare industry

 

Focus of solutions? 

-       What will benefit employee health as well as the bottom line?

-       A holistic approach that includes mental as well as physical health.

-       Increased investment in telemedicine

-       Onsite wellness rooms

 

What does the future hold? 

The consensus was that employers will continue taking the same steps they’re taking now, which encompasses multiple, separate efforts, as there is no “silver bullet” to cutting healthcare costs. Generally, the board feels that accountable care organizations will be more prominent in the years to come, and that employers will continue pushing to achieve a deeper understanding of what drives both physical and mental well-being. 

 

Collaboration and Team Rewards 

This portion of the meeting focused on findings from i4cp’s recent Essential Talent Practices for Purposeful Collaboration, the third in our Purposeful Collaboration series. Key findings presented by Mark Englizian included: 

  1. HPOs are 2x more likely than LPOs to recognize or reward employees who regularly engage in collaborative behaviors that make their colleagues more effective.
  2. Related: 40% of organizations found that not rewarding collaboration was one of the top barriers in their organization, and LPOs were 2x more likely to report this. 

Mark McGraw also summarized a recent case study of i4cp member Avanade Inc., based on interviews with Toni Handler, global head of organizational and leadership development, and Andrea Lelli, director of global compensation and benefits. The Seattle-based IT consulting and services provider has implemented a program – which includes about 90% of its 30,000-plus employees – that focuses on more closely connecting rewards and bonuses to team and organizational performance over individual achievements. 

Those participating in the plan get bonuses if the company achieves certain goals. If the organization underachieves, most employees are still afforded the opportunity to receive a portion of their bonus if they achieve their personal goals, with the executive team determining specific payout amounts if the organization performs below expectations. A portion of workers’ bonuses is linked to their individual performance, with managers and employees determining agreed-upon individual goals to incentivize workers. In the past, no bonuses were awarded if the company didn’t reach at least 85% of its financial targets.  

 

Next Meetings: June 12 (Sunnyvale CA); June 27 (conference call); October 15 (Location TBA)

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Member Attendees: Derek Potter (T-Mobile); Peter Manias (Microsoft); Haru Shimura (Federal Reserve); Jill Sanford (Gilead Sciences); Bernie Swartout (Ford Motor Co.); Sharawn Connors (Flex); Uzma Burki (Gates Foundation); Ashley Case (Asurion); Gordon Blasius (Waste Management); Ivor Solomon (Genentech); Tim Price (Genentech); Guy Sasso (HSBC); Bonnie Kelly (Cox Automotive); Louise Slark (Choice Hotels).

Guest Attendees: Jennifer Armstrong-Owen (Impinj); Becky Bareford (Federal Reserve Richmond); Lisa Yeager (Intel); Monica Lopez (Black Hills); Brian Brinkley (Premise Health); Claire White (TIAA).

i4cp Team: Mark Englizian; Patrick Murray; Mark McGraw; Erik Samdahl.

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This meeting is exclusively for members of the Total Rewards Leader Board. If you'd like to participate, please contact us to see if you qualify. If you are an i4cp member, please log in to access the registration/meeting details.
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