Total Rewards

Framework:
Developing a compelling employee
experience for a changing workforce

Guest Presenter: Steve Gross

Senior Partner
Mercer

TalentTakeaways
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AGENDA
The Series

TalentTakeaways
webinar & podcast series

Talent Takeaways Series

AGENDA
The Sponsor

Talent Management Made for Managers

✓ Resource Library

✓ Product Information

✓ Product Tour & Demo

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Webinar Info

✓ We are informal (and fun)

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✓ Q&A Session at end

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AGENDA
The Presenter

Steve Gross is a Senior Partner at Mercer. He

specializes in developing total rewards and human
capital strategies that support cultural change and
pay for performance. Steve is an adjunct professor
at Temple University, and has served as a faculty
member of WorldatWork, SHRM and the American
Management Association. He is a frequent
speaker on compensation and human resource
issues, and has authored over 50 publications
concerning compensation strategies, benefits and
Steve Gross human resource issues including the book,
Senior Partner Compensation for Teams. He holds a MBA from the
Mercer Wharton School of the University of Pennsylvania.

Talent Takeaways Series

AGENDA

PURPOSE
Identify external factors that will influence the experience of the workforce
of the future and discuss how leading organizations are responding

PICTURE
Create an inspiring to thrive environment

PLAN
How to recraft the employee experience

PA R T T O P L AY
Call to action

© MERCER 2017 6
E X T E R N AL FAC TO R S I M PAC T I N G T H E E M P L O Y E E
EXPERIENCE

EVOLVING RAPID SHIFTING

GLOBALIZATION TALENT
WORKFORCE TECHNOLOGICAL EMPLOYEE
SCARCITY
DYNAMICS CHANGE REWARDS

• Global workforce • Lack of workers • Aging workforce, • Automation / AI • Income growth

management with the right skill with seniors working changing the way divergence leading
• Cultural sets longer work is done to social unrest /
sensitivity • Multiple • Flexible work minimum wage
generations environments pressure
• Knowledge of
local practices working side-by-side • Organizational • Unsustainable
• Rapid increases in reputation healthcare trends
independent reshaped by • Pension plan
workers social media declines

© MERCER 2017 7
 EMPLOYEES
EXTERNAL FACTORS INFLUENCING THE EMPLOYEE
EXPERIENCE
M U LT I P L E G E N E R AT I O N S A R E C H A N G I N G
WORKFORCE DYNAMICS

SILENTS (BORN 1928 – 1945)

2% COMPANY LOYALTY, DEPENDABLE & RESPECTABLE
“SAME COMPANY FOREVER ”

BABY BOOMERS (BORN 1946 – 1964)

29% LIVE TO WORK, LOYAL & IDEALISTIC
“OFFICE FACE TIME”

GEN X (BORN 1965 - 1980)

34% WORK TO LIVE, RESOURCEFUL & CYNICAL
“WORK SHOULD NOT DEFINE LIFE”

MILLENNIALS
35%
(BORN 1981 - 1997)
WORK MY WAY, ENTITLED & IMPATIENT
“OWN CAREERS, MEANINGFUL WORK”

Source: PEW Research Center.

© MERCER 2017 8
 EXTERNAL FACTORS INFLUENCING THE EMPLOYEE
EXPERIENCE
INCREASING DESIRE FOR BENEFITS CHOICE AMONG
US EMPLOYEES

PERCENT OF EMPLOYEES WANTING TO

GENERATION
REDUCE/INCREASE VALUE OF SOME BENEFITS

Silents S I L E N T S
(Born (Born
1928-45) 38%
1928 – 1945)

BabyB Boomers
AB Y B O O M E R S
(Born 1946 – 1964)
(Born 1946-64) 48%

Gen X GEN X
(Born (Born 1965 – 1980)
1965-1980) 59%

Millennials
MILLENNIALS
(Born 1981-1997)
(Born 1981 - 1997) 70%

Source: Mercer 2015 Inside Employee Minds Survey.

© MERCER 2017 9
 EMPLOYEES
EXTERNAL FACTORS INFLUENCING THE EMPLOYEE
EXPERIENCE
D E E P E R L O O K AT G E N E R AT I O N A L P R E F E R E N C E S

SILENTS BABY BOOMERS GEN X MILLENNIALS

(Born 1928 – 1945) (Born 1946 – 1964) (Born 1965 – 1980) (Born 1981 - 1997)

1 Base pay Base pay Base pay Base pay

2 Type of work Retirement plan Retirement plan Career opportunities
3 Incentive pay Health care benefits Health care benefits Retirement plan
Working for org. I
4 Incentive pay Incentive pay Health care benefits
respect
5 Retirement plan Paid time off Paid time off Incentive pay
6 Flexible schedule Type of work Flexible schedule Flexible schedule
7 Health care benefits Flexible schedule Type of work Paid time off
Working for org. I
8 Paid time off Career opportunities Type of work
respect
Working for org. I Working for org. I
9 Training opportunities Career opportunities
respect respect
10 Career opportunities Training opportunities Training opportunities Training opportunities

Source: Mercer “Inside Employee Minds”

© MERCER 2017 10
 EXTERNAL FACTORS INFLUENCING THE EMPLOYEE
EXPERIENCE
YOUNG EMPLOYEES DRIVING THE ‘HAPPY BUT
L E AV I N G ’ T R E N D

ALL DIFFERENCE:
EMPLOYEES AGREE WITH THE FOLLOWING: EES MILLENNIALS

Promotions are generally given to the most qualified employees in my organization 43% +11

I trust senior management in my organization to communicate honestly 48% +9

Managers in my organization demonstrate concern for the well-being of employees 51% +9

I believe that I have sufficient opportunity for growth and development in my organization 51% +9

I would recommend my organization to others as a good place to work 58% +6

At the present time, I am seriously considering leaving my organization 37% +7

Source: Mercer 2015 Inside Employee Minds No America Survey

© MERCER 2017 11
HOW WILL
O R G A N I Z AT I O N S
RESPOND?

© MERCER 2017 12
H O W W I L L O R G A N I Z AT I O N S R E S P O N D ?
THREE KEY THEMES

CURATE TRANSFORM
SHIFT FROM AN TALENT
COMPELLING
EVP TO IVP PROCESSES
CAREERS

© MERCER 2017 13
 H O W W I L L O R G A N I Z AT I O N S R E S P O N D ?
EXPECTED CHANGES

Y E S T E R D AY 2017 2022
EVP TO IVP

VALUE
PROPOSITION S TA N D A R D I Z E D PERSONALIZED

EMOTIONAL
SPORADIC REQUIRED
CONNECTION

EMPLOYEE
A U T H O R I TAT I V E PA R T I C I PAT O R Y
RELATIONS
C AR E E R S

CAREERS S TA I D COMPELLING

TALENT
STRATEGY REACTIVE PROACTIVE

DEVELOPMENT CLASSROOM EXPERIENTIAL

PROCESSES

HR
PROCESSES SILOED STREAMLINED

COMPENSATION PERFORMANCE
DISTRIBUTION SHARED
DRIVEN
HR
COMMUNICATION SELECTIVE T R A N S PA R E N T

© MERCER 2017 14
SHIFT FROM AN EVP TO AN IVP
PERSONALIZING AN EVP REQUIRES MAKING
AN EMOTIONAL CONNECTION WITH EMPLOYEES

AFFINITY
PRIDE
PURPOSE

CULTURAL ALIGNMENT

© MERCER 2017 15
SHIFT FROM AN EVP TO AN IVP
POLLING QUESTION

How important is the emotional connection in your EVP?

a) Very important
b) Somewhat important
c) Not important

© MERCER 2017 16
SHIFT FROM AN EVP TO AN IVP
E VA L U AT I N G T H E E M P L O Y E E E X P E R I E N C E
USING PERSONAS

WHY? HOW?
► Multiple lenses for ► Define the multiple
the organization to characteristics/needs
evaluate its of your audiences
programs ► Document
► Understanding how combinations of
the emotional needs, communication
connection differs desires, interests,
by persona engagement
► Confirmation that approaches, etc.
one size does not ► Improve engagement,
fit all make content and
► Direction for crafting approaches relevant
an EVP that ► Use “tried and
provides something proven” techniques
for everyone in HR and internal
communications

© MERCER 2017 17
SHIFT FROM AN EVP TO AN IVP
E VA L U AT I N G T H E E M P L O Y E E E X P E R I E N C E
T H R O U G H M U LT I P L E L E N S E S

SAMPLE PERSONA
PERSONAL
DATA
NEEDS INTERESTS Starters
(Lives paycheck to paycheck)

Suburban Realists
(Single Parent, Works 2nd job)

Long Term Loyals

(Team Leader)
SPENDING / COMM
WEALTH PREFERENCES
Urban Ambitions
EMOTIONS (My time, My place)

Strivers
(High performers)

Managerial Core
(Thinking about retirement)

© MERCER 2017 18
S E G M E N TAT I O N : P E R S O N A S
S AM P L E : P E R S O N A’ S C O N C E R N S
(CLIENT EXAMPLE)
STRIVERS
KEY CARE-ABOUTS
• Thinking about the future
CHARACTERISTICS • “Being smart about how I do things”
• 40 years old • Connected all the time
• 9 years service • Help me get ahead
• $94k annual pay • Balancing my career and my life
• Suburban Married
FINDINGS
• 25% manage 10+ employees
entitled • 15% have been promoted in last 2 years
my future
• 81% participate in medical plans
hopeful
empowered • 86% participate in 401(k)
treat • 57% are not well diversified in 401(k)
getting ahead • 11% are taking loans from 401(k)
savvy • 26% have dependent children
social network
curated

© MERCER 2017 19
S E G M E N TAT I O N : P E R S O N A S
S AM P L E : P E R S O N A’ S C O N C E R N S
(CLIENT EXAMPLE)

STRIVERS: RECOMMENDED ACTIONS

• Clarify promotion opportunity expectations

• Focus communications (simple, don’t sell)

• Offer financial and tax optimization guidance

• Develop program to foster lateral mobility

• Revise spot award programs

© MERCER 2017 20
SHIFT FROM AN EVP TO AN IVP
O R G A N I Z AT I O N S A R E L O O K I N G AT T H E T E C H
S E C T O R F O R W AY S T O E N G A G E

TELECOMMUTING TIME OFF F U N AN D G AM E S

Companies with work from Companiesvwith unlimited Companies with a rec room
home programs PTO

>90% 26% 60%

G L O B AL M O B I L I T Y FREE FOOD H E ALT H & W E L L N E S S

Companies with international Companies offering
v free Companies offering health or wellness
business travelers beverages or snacks programs

84% >90% 40%

% of Tech companies providing benefit

Source: 2015 Bay Area Technology Perquisites & Benefits Study
© MERCER 2017 21
C U R AT I N G A C A R E E R E X P E R I E N C E
CAREER FRAMEWORKS PROVIDE THE
F O U N D AT I O N

53%
Rewards
Approximately 65% of
organizations either have 80% 65%
a career framework or Career Performance
Management Management
plan to implement one.

Organizations are at
various stages of linking 47%
frameworks to HR Workforce Selection
programs (shown in Planning & Retention 72%
green on the right)
Succession
Management

78%

Source: 2016/2017 US Mercer Compensation Planning Report, effective July 2016.

© MERCER 2016
© MERCER 2017 22
C U R AT I N G A C A R E E R E X P E R I E N C E
EMPLOYEES SEEKING VISIBILITY OF
OPPORTUNITIES AND SUPPORT TO GET THERE

Employees want to explore opportunities to move vertically

and horizontally and know how to realize their ambition.

© MERCER 2017 23
C U R AT I N G A C A R E E R E X P E R I E N C E
D E V E L O P M E N T I S A P R I O R I T Y, B U T T H E
LANDSCAPE IS CHANGING

O R G A N I Z AT I O N S
As organizations seek to develop their talent
from within, they’re faced with a rapidly
82% changing L&D landscape:
► Shift from formal to informal learning
Plan to develop and
promote from within ► Focus on experiential learning delivered
at point of need
EMPLOYEES ► Increase in self-directed learning
► Increase in crowd-sourced content
25%
Believe company is doing enough
to keep their skills relevant

Source: Mercer 2016 Talent Trends Study

© MERCER 2017 24
T R AN S F O R M TAL E N T P R O C E S S E S
DRIVING EFFICIENCIES FOR MANAGERS AND
EMPLOYEES

O R G A N I Z AT I O N S
MA N A G ER S WA N T
PR O C ESSES TH AT
R EQ U IR E MIN IMA L 85%
TIME & EFFO R T
Believe talent management
processes need an overhaul

EMPLOYEES
EMPLO YEES WA N T
C ONSUMER -GR AD E,
T E C H N O LOGY-
4%
EN A B LED
IN T E R A C TION S Believe their company’s HR
processes are state of the art

Source: Mercer 2016 Talent Trends Study

© MERCER 2017 25
T R AN S F O R M TAL E N T P R O C E S S E S
ISSUES SURROUNDING PERFORMANCE
MANAGEMENT AND REWARDS

E X P E R I M E N TAT I O N WILL PERFORMANCE

MEASURING ROI
HAPPENING D R I V E B A S E PAY ?

EMPLOYEES LIKE SHOULD

R AT I N G S A N D IS THIS THE END
EMPLOYEES EXPECT
FREQUENT OF MERIT?
AN ANNUAL RAISE?
FEEDBACK

© MERCER 2017 26
© MERCER 2017 26
T R AN S F O R M TAL E N T P R O C E S S E S
R AT I N G S D E B AT E I S C O N T I N U I N G

M O V E D AWAY F R O M
P E R F O R M A N C E R AT I N G S

D E - L I N K I N G PAY
AND PERFORMANCE

MADE CHANGES TO
FEEDBACK MECHANISMS

IN DEFENSE OF
P E R F O R M A N C E R AT I N G S

© MERCER 2017 27
T R AN S F O R M TAL E N T P R O C E S S E S
POLLING QUESTION

Is your organization planning to eliminate performance ratings?

a) Yes
b) No
c) Not sure

© MERCER 2017 28
T R AN S F O R M TAL E N T P R O C E S S E S
C O M P E N S AT I O N T R E N D S S H O W PAY F O R
P E R F O R M A N C E I S H E R E T O S TAY

51% 96% 91%

Working to improve pay Planning to retain
differentiation based on formal performance
performance ratings in 2016 or
beyond
Using individual performance
to drive base salary
63%
Considering individual
performance when making
incentive decisions

Source: 2016/2017 US Mercer Compensation Planning Report, effective July 2016.

© MERCER 2017 29
© MERCER 2017 29
HOW TO RE-CRAFT THE
EMPLOYEE EXPERIENCE

© MERCER 2017 30
HOW TO RE-CRAFT THE EMPLOYEE EXPERIENCE
T H I N K H O L I S T I C A L LY A B O U T T H E E M P L O Y E E VA L U E
PROPOSITION

EMPLOYER
PERSPECTIVE

Compensation Benefits Careers Work/Life

EMPLOYEE
PERSPECTIVE

My financial security
My value today My future value My quality of life
and protection

© MERCER 2017 31
 HOW TO RE-CRAFT THE EMPLOYEE EXPERIENCE
U S E M U LT I P L E L E N S E S AN D AS K T H E R I G H T
QUESTIONS

• Can the rew ards programs designed • What are w orkforce needs in terms
to support the desired strategy be of structure, behavior, capabilities
provided at an AFFORDABLE and performance?
and SUSTAINABLE cost? • How should the rew ards
programs be designed
• If not, how should they COST EMPLOYER and delivered in order to
be modified to be secure those w orkforce
financially viable? PERSPECTIVE PERSPECTIVE
OUTCOMES ?

• What are the labor • What does or should

and related rew ards EXTER N AL EMPLOYEE differentiate it from
environments in w hich PERSPECTIVE PERSPECTIVE competing employment
the COMPANY opportunities?
COMPETES ?
•
How do employees place
• How do they influence or VALUE on the current rew ards
constrain rew ards practices package?
that the company may w ish to adopt?

© MERCER 2017 32
HOW TO RECRAFT THE EMPLOYEE EXPERIENCE
U T I L I Z E W O R K F O R C E A N A LY T I C S

LESS POWERFUL STRATEGIC VALUE MORE POWERFUL

Anecdotes Reactive Ongoing Benchmarks Correlations Simulations Predictive

checks reports & forecasting modeling

© MERCER 2017 33
HOW TO RE-CRAFT THE EMPLOYEE EXPERIENCE
C O M B I N E FA C T S T O D E V E L O P A N E V P T H AT
S U P P O R T S T H E B U S I N E S S S T R AT E G Y

QUALITATIVE “SAY ” “D O” QUANTITATIVE

Employee perception Employee behavior

© MERCER 2017 34
HOW TO RE-CRAFT THE EMPLOYEE EXPERIENCE
E M P L O Y E E P R E F E R E N C E S : U N D E R S TAN D I N G
I M P O R TA N C E V S S AT I S FA C T I O N V S C O S T ( E X A M P L E )

.
© MERCER 2017 35
HOW TO RE-CRAFT THE EMPLOYEE EXPERIENCE
U N D E R S TA N D I N G E M P L O Y E E B E H AV I O R S – T U R N O V E R
(EXAMPLE)

© MERCER 2017 36
HOW TO RE-CRAFT THE EMPLOYEE EXPERIENCE
I N T E G R AT E S AY / D O A N A LY S I S : S T R AT E G Y M A P
(CLIENT EXAMPLE)
Driver of Driver of Driver of Driver of
Element Cost Competitiveness Importance Satisfaction
Retention Promotion Engagement Performance

Promotion
$$ P25 Above. Avg. Below Avg. ▲ n/s ▲ ▲
Opportunities

Lateral
$ P25 Below Avg. Below Avg. n/s ▲ n/s ▲
mobility

Autonomy /
Span of $ P50 Above. Avg. Above. Avg. ▼ ▲ n/s n/s
Control

Base Salary $$$ P75 Above. Avg. Above. Avg. n/s ▲ ▲ ▲

Retirement $$$ P75 Above. Avg. Above. Avg. n/s n/s n/s n/s

Spot Awards $ P25 Below Avg. Below Avg. n/s n/s n/s n/s

© MERCER 2017 37
HOW TO RE-CRAFT THE EMPLOYEE EXPERIENCE
S E T G U I D I N G P R I N C I P L E S ( C O R P O R AT E A N D
PERSONA SPECIFIC)
DEFINE A SET OF GUIDING PRINCIPLES that will facilitate the
organization’s philosophy setting, plan design, and implementation of a
decision making framework.

1. Segmentation (degree of dif f erentiation f or workf orce categories).

2. Role of rew ard element (purpose of each vehicle).

3. Comparator group (competitive business/labor market).

4. Competitive positioning (target percentile).

EXAMPLES

5. Performance orientation (dif f erentiation, point of measurement, metrics).

6. Internal equity (importance of the internal relative value of work).

7. Affordability and sustainability (degree of cost control required).

8. Governance and accountability (decision-making structure).

9. Administration (approach and point of management).

10.Communication and transparency (approach and vehicles f or inf ormation sharing).

11.Success measures (measuring and monitoring results).

© MERCER 2017 38
HOW TO RE-CRAFT THE EMPLOYEE EXPERIENCE
D E V E L O P A B L U E P R I N T ( C O R P O R AT E A N D P E R S O N A
SPECIFIC)
BLUEPRINTS provide an at-a-glance inventory of rewards programs.

Role of reward Competitive

Impact of positioning Metrics
element positioning

Acceptance rate
Attract and retain;
Base pay 25th percentile Risk tolerance turnover; appropriate
reward building skills
skills
Reward individual/
Compensation Annual Base + STI = 75th Performance
unit/ corporate Business results
incentives percentile orientation
performance

Long-term Link to shareholder Base + STI + LTI = 90th Rewards long-term

Stock price growth
incentives value creation percentile growth

Personal risk Leading edge design; Cost and value

Group benefits Desirable employer
management 50th percentile delivered

Retirement income
Facilitate orderly
Benefits Retirement Wealth accumulation 50th percentile adequacy; financial
retirement
management

Cost; commitment
Perquisites Tax efficiency Market practices Employment brand
index

Performance Goal setting/ Support “build” talent

Focused efforts Scorecard results
management accountability strategy

Environment difficult
Work/life Compelling place to Attraction/retention Commitment index;
Careers to
balance work of qualified staff turnover
match by competitors
Workforce
Adequate supply of Balance pay/benefits Support “build” Percentage of outside
planning/pathin
talent w/ career opportunities talent strategy hires
© MERCER 2017 g 39
T R AN S F O R M TAL E N T P R O C E S S E S
E M P L O Y E E C O M M U N I C AT I O N

FOUR AREAS TO GET RIGHT IN EMPLOYEE

C O M M U N I C AT I O N S

Personal and
relevant information Self-engaged
career
mapping

Use of game
mechanics Authenticity
to guide career paths that resonates

© MERCER 2017 40
© MERCER 2017 40
T R AN S F O R M TAL E N T P R O C E S S E S
P E R S O N A L A N D R E L E VA N T I N F O R M AT I O N

• Personalized information
• Dashboards of content at-a-glance

© MERCER 2017 41
© MERCER 2017 41
T R AN S F O R M TAL E N T P R O C E S S E S
U S E O F G A M E M E C H A N I C S T O G U I D E C A R E E R PAT H S

Review your See what careers

Select a game Complete each game personal behavior best match those
traits traits

© MERCER 2017 42
© MERCER 2017 42
HOW TO RE-CRAFT THE EMPLOYEE EXPERIENCE
C R E AT I N G A D A S H B O A R D T O M E A S U R E O U T C O M E S

Percent
Workforce Turnover quick
demographics rates quits
Employee Percent
Buy vs. Promotion
commitment pay-performance
build ratio rates
index related
Employee
Cost of Total HC
satisfaction
turnover investment
score
Performance
Training
distribution Workforce Median span
(e.g., ratings, participation
experience of control
productivity, rates
incentives,
etc.) Bonus
Percentiles –
Hiring rates participation
market pay
rates
Total
Workforce
Training
velocity
costs

© MERCER 2017 43
CALL TO ACTION

© MERCER 2017 44
CALL TO ACTION
W H AT C A N Y O U D O ?

• Focus on employee experience through personas to create individualized

EVP TO IVP

EVP
• Allow for employee participation in program design changes (e.g., focus
groups, surveys, design teams)
• Approach the future of the employee experience based on ability to influence
desired outcomes in terms of retention, engagement, productivity and results
C AR E E R S

• Continue leveraging the career development framework across all HR

programs to drive compelling careers for RSM employees
• Integrate the framework across all HR programs
• Explore development opportunities for employees to build skills and
knowledge
PROCESSES

• Make holistic decisions considering all HR programs, based on RSM best-fit

versus best practices
• Continue performance evolution (feedback, calibration, pay-for-
performance)
• Continue reward transparency
• Explore other alternatives for engaging employees through communication
© MERCER 2017 45
AGENDA
Q&a

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AGENDA
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