Benefits as a Differentiator

Transcription

1 Benefits as a Differentiator Eileen McCormick VP of Compliance & Benefits ADP Strategic Advisory Services 1

2 SUCCESS Business & Total Rewards Ecosystem Business Goals GROWTH BUSINESS SUSTAINABILTY PROFIT AGILITY GLOBALIZAITON CONTINUOUS Tools & Service Insights Vision & Strategy TALENT Attract, Retain, Perform COMPENSATION BENEFITS DESIGN ANALYTICS COMPLIANCE TIME 3

3 HR World is Undergoing a Dramatic Change Based on ADP s Job Report, 2018 is on track to be the eighth consecutive year in jobs growth. "If it falls short, it is likely because businesses can't find workers to fill all the open job positions." Mark Zandi, Chief Economist of Moody's Analytics. 4

4 Case 1: Long Term Care Facility Manager Business Challenge Revenue / margin constraint Industry legacy of high turnover to lower costs Shortages of clinical staff and related scheduling issues Under staffing may create safety, performance, and brand risks 60% anticipated growth HR Challenge Cut turnover by 50% Minimize increase in labor cost without compromising quality of care Improve workplace convenience, flexibility to expand labor pool Attract younger associates into Long Term Care Protect employment and service brand Compensation Challenge Educating C-Suite Revenue Model Not Sustainable Designing incentive pay for reliability, availability, and outcomes Development of career progression for junior staff Competitive pay for Rn s in urban locations Source: ADP Strategic Advisory Services 5

5 Case 2: Fortune 500 Manufacturer Business Challenge 50% of IT Staff eligible to retire within 5 years Critical legacy IT platforms sustain production Write down of legacy systems would materially impact financials and create operation risks HR Challenge Compensation Challenge Competition for top IT talent to replace retirees New IT staff neither trained nor motivated to maintain legacy systems Midwestern suburban work location perceived as undesirable, proximity to manufacturing operations is critical De-layered IT organization complicates staff development and knowledge transfer Silicon Valley Pay expectations Pay in-equity between experienced and newly hired associates Redefinition of retirement to permit potential part-time work for older associates Source: ADP Strategic Advisory Services 6

6 Case 3: Retail / Restaurant Chain Business Challenge Turnover / reliability of staff impacting service and brand reputation Chronic understaffing in best markets Scheduling laws, tip credits, and new wage/hour regulations pose risk Staff may serve multiple employers HR Challenge Build associate availability and brand loyalty Reduce staff turnover; replace contingent/part-time worker staffing model Drive teamwork to provide outstanding customer experience Build associate ownership for results Maintain target Revenue/Labor ratios Compensation Challenge Design profit sharing that rewards unit profitability and satisfaction scores Design incentives that reward availability and reliability Manage pay differential between highly tipped wait staff and kitchen staff Source: ADP Strategic Advisory Services 7

7 What Do These Cases Have In Common? Real Business Risk Financial Performance Quality and Service Brand Reputation Complex Staffing Issues Engagement / Teamwork / Culture Generational Factors Labor Shortages / Turnover Exempt and non-exempt Geographic factors impacting pay Source: ADP Strategic Advisory Services Compliance Pay Equity Compensation decisions can t be made in silos! Work Force Practices / Time Off 8

8 Total Rewards Spend & Expectations Average company in 2018 with 10,000 employees with 5,000 employees enrolled in health care will spend: $440M for payroll $8,527 ER health care cost PEPY $42M total ER health care cost annually $3.5M total ER health care cost PEPM Approach to talent management is changing From employees as financial assets - to people with different needs 9

9 ADP Research Institute Shows 60-70% of Turnover is Voluntary 10

10 Culture is Tied to Business Outcomes The C-suite lays out the budget and strategy HR & Benefit Leaders who are the Talent and Culture architects of a company Own the power and dynamics of the culture and brand which is critical in building/retaining talent. Look at your overall benefit spend then look at how much you are investing in your overall benefit communications; it s typically <1% 11

11 Your Benefit Offering is Your Tell 12

12 Relative Value of Best Places to Work Stock Price vs. S&P 500 Source: Does Company Culture Pay Off? Analyzing Stock Performance of Best Places to Work Companies, Andrew Chamberlain, Ph.D., Chief Economist, Glassdoor Economic Research Report March

13 HR Puzzle on How to Retain Talent Money Culture Family Health Employee Experience Job Stagnation Personal Health Trust Manager Source: Research brief from Guardian's 4th Annual Workplace Benefit Study, Mind, Body, and Wallet The Impact to Employee Well-Being

14 Employee Engagement Employees in the top quartile of employee engagement realize improvements in these areas: 41% lower absenteeism 17% higher productivity 21% higher profitability 10% higher customer metrics Source: Gallup, January 2017 study, its talking about the State of American Workplace, 16

15 Winning the war for talent Generational preferences are an important part of a benefit strategy Companies need to provide benefits compatible with employees values for working and living 17

16 Most Important Benefits to Majority of Employees 2016 Strategic Benefits Survey Assessment and Communication of Benefits SHRM 18

17 Winning the War for Talent Winning the war for talent 84% benefits satisfaction = job satisfaction 74% benefits satisfaction = job loyalty 50-70% of employees do not understand their benefits Source: The Guardian Workplace Benefits Study 4 th Annual A Crack in The Foundation, 2016 Alec Levenson, Senior Research Scientist, Center for Effective Organizations, Marshall School of Business, USC 19

18 Employee Knowledge of Employer-Sponsored Benefits Available to Them 2016 Strategic Benefits Survey Assessment and Communication of Benefits SHRM 20

19 Right Sense of Care, Communication and Connection Winning the war for talent Critical to understand role of benefits as part of Total Compensation strategy Salary & bonus preservation for younger employees - Cash flow, affordability/price tag Keeping health plans lean (pay down college debt) Older employees look at Tax Benefits & Family Health Risk better awareness Personalize for the generations as well as targeting certain groups GET DIGITAL centralize buying experience, Mobileize Discretionary + non-discretionary benefits YEAR ROUND communication calendar for education, understanding and appreciation Expanding the on-going, mission critical packaging, educating and marketing for: Engagement Understanding Consumerism Health & Wellbeing 21

20 Greater use of HDHP with HSA Employees with unexpected $3,000 medical expense: 34% put credit card, 37% pay over time, 6% 401K loan, 1 in 20 bank loan Wider access to supplemental health benefits like hospital indemnity, critical illness and accident insurance are needed Employee benefits remain an integral part an employee s financial security 22

21 ADP Research / Vitality Report on U.S. Labor Markets Winning the war for talent All Full-time U.S. Employees Job Holders Job Switchers 4.3% 4.9% Observations: Bureau of Labor Statistics data understates wage growth due to retiring high wage baby boomers Information Industries 5.0% 6.2% Education & Healthcare 3.8% 5.8% yr olds 6.9% 10.1% Employment Growth Wage Growth West Region 2.4% 4.8% ADP research data shows that wages for incumbent job holders are rising much faster There are substantial rewards for job hopping especially workers in the year age band Midwest Region 1.8% 4.3% Age 24 and Younger 8.6% Source: ADP Workforce Vitality Index Q4 2017, showing wage growth for Full-Time Incumbent Employees and Full-Time Job Hoppers Annual turnover for year old workers is 31.2% versus 18.4% for the age band 23

22 Start By Understanding Your Employee Demographics ADP Data Cloud Vantage EV5.04 Benefits FY

23 Turnover is a Key Engagement Measure 25

24 Projected Workforce Turnover is Turning into a Science Flight Risk Predictor 26

25 Benchmarking to industry peers If health plan elections slip behind key competitors or gaps are found, might: change contributions tweak the plan design If the data indicates that employees aren t recognizing the value of their benefits, HR may change its communications strategy. 28

26 Campaigns to Different Groups Campaigns Templates Schedule Target Independent Employee Segments Mobile Print Text Voice Chat Measure Engagement Success 29

27 Centralize Employee Digital Experience Access to benefits, pay, W-2 and 1095-C Statements Access pay statements View net pay and gross yearto-date Review earnings, deductions, and direct deposits Texting of Aline pay card transactions & balances Perform benefits annual enrollment View benefits information 30

28 Mobile: Login Cycle to Drive Communications 31

29 Participant Engagement 32

30 Termination Metrics 33

31 Turnover Rate vs. Industry Peers 34

32 Top Termination Reasons, Continuous Feedback Loop Correctly understand workforce data to establish retention and engagement goals 35

33 Place holder to transition to demo 37

34 Do You Have a High Performance HR Strategy? A research report 2017 Employee Benefits Remaining Competitive in a Challenging Talent Marketplace The Society of Human Resource Management 38

35 For any follow up Questions you can reach me at: Eileen McCormick Vice President, Compliance & Benefits ADP Strategic Advisory Services (714)

36 Simplify Technology and Service Deliver Benefit Hub Phase 2 One Place to Manage User Configuration Manage Your Data Manage Employees & Dependents Partner Connections Your Daily Tasks One Place to View Engagement Volumes Call Center Activity Cost Score Card 41