+1443 776-2705 panelessays@gmail.com

 

After reviewing the reading material about the terms differentiation and segmentation, provide two ways an organization can segment it’s workforce, and include how this impacts total rewards (meaning, does employee eligibility for rewards vary based on this differentiation/segmentation?). Use a minimum of one reference from the class materials to support your discussion and interact with at least one classmate. 

Discussion #2

What is a pay policy? What do you think is the pay policy at your organization (describe). Use a minimum of one reference from the class materials to support your discussion. Respond to at least one colleague

Resources:

www.mdcourts.gov I work for this organization. Pay data is published. Please use this as a reference

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Module 4: Designing and Implementing a Total Rewards
Program

Topics

Topic 1: Core Steps of Designing a Total Rewards Philosophy
Topic 2: Segmentation of the Workforce
Topic 3: Implementing the Total Rewards Philosophy
Topic 4: Communicating/Marketing Total Rewards
Topic 5: Conclusions

Topic 1: Core Steps of Designing a Total Rewards Philosophy

Nine core steps in the strategic marketing approach of designing a total rewards program
and implementing it are summarized in table 4.1 below. In this first topic, the focus is on
steps 1-5 (the designing steps) and each is described in sequence. The remaining steps
(6-9) are addressed in topic 3. The steps are presented in a sequential manner, but the
organization may perform some of the steps concurrently. The steps may also vary if the
organization is a start-up organization, one that is long established, or if a total rewards
strategy is already in place.

Table 4.1 Core Steps in Designing and Implementing Total Rewards

 

Designing:

Step 1: Understand the organization
Step 2: Define the requisite KSAs required for success
Step 3: Identify current and potential employees’ “drivers”
Step 4: Design a total rewards philosophy statement
Step 5: Assess financial costs and plans with key leadership

Implementing:

Step 6: Pilot the total rewards assumptions
Step 7: Develop timeline, obtain vendors, assign duties
Step 8: Implement plan
Step 9: Communicate and market

Step 1: Understand the Organization

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Providing rewards for the purpose of attracting, retaining, and motivating employees with
the requisite KSAs in order to enable the organization’s success is the ultimate goal of the
total rewards approach. Therefore, an understanding of the organization’s business
objectives, mission, vision, values, and business model is essential in the process of
designing and implementing a total rewards program. Achieving this understanding
begins with how the business creates marketable products, services, or expertise, and
markets, sells, and delivers them, along with a review of the organization’s mission,
vision, values, and culture (Kaplan, 2005). Also important is being familiar with the
business model, revenue generation strategy, the business life cycle, business design, the
current brand impact, and geographic requirements. Organizations achieve their success
in various ways; some take a centralized approach while others take a decentralized one.
Some organizations have socially conscious values they hold important, while others do
not. Some organizations are in the infancy stage of their growth, others are stagnant, and
still others are experiencing huge growth. Many organizations are structured as not-for-
profit, some are for-profit, some are publicly traded, and others are privately held; and
then there are government agencies and the military. There are tremendous differences
among these organizations, and their differences and uniqueness must be examined.

Some of the questions helpful in understanding the organization and leading to an
effective design of the total rewards strategy are listed in table 4.2 below. Although more
questions may need to be asked to reach a good understanding of the organization, these
are a good start:

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Table 4.2 Questions for Understanding the Organization

1. What are the vision, mission, and objectives of the organization? Will any of them
change in the next three years?

2. What are the values of the organization? What social values have been
demonstrated outside the organization? On what does the organization want to
have an impact? Are there written values and, if so, are they demonstrated?

3. What is the culture of the organization?

4. How does the organization generate revenues today? Will that change over the
next three years?

5. What business cycle is the organization in (stagnant, growth, decline)? Are any
mergers, acquisitions, downsizing, or global expansion planned?

6. What business design supports the organization’s ability to make money? (For
example, is the design a cost-savings or a market-leader approach?)

7. Does the organization have an existing employment brand?

8. If so, what is the value of the organization’s employment brand today in attracting
and retaining employees?

9. Where does the organization want to be geographically?

10. Does the organization have a clear marketing brand and, if so, what is it and how
is it viewed by the public?

The questions presented in table 4.2 are best asked in person and directly to senior
management. Asking the questions in person will allow for follow-up questions and
clarification. In addition, existing documents describing the items mentioned, such as the
vision, mission, business objectives, and values, are likely available and should be
gathered. The purpose of this step is to understand as much about the organization as
possible because the success of the organization is the end result being sought.

Step 2: Define the Essential KSAs Required for Success

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This step makes explicit what knowledge, skills, and abilities (KSAs) are required to
accomplish the business objectives, not only for today but also in the future. It aligns the
total rewards strategy with the business strategy. The specific KSAs (and the people who
possess them) are the target for recruitment, retention, and motivation. The organization
may already have the KSAs identified by level of employee (i.e. leadership, management,
general employee population) and by business function (i.e. marketing, finance,
accounting, operations, human resources, customer service, research and development). If
so, they will need to be validated, keeping the current and future business objectives and
business model in mind. If the KSAs are not already identified, the steps of job analysis,
job description, job specification, and job evaluation (discussed in module 2) are used to
identify them. The KSAs are grouped by KSA set, which is a type of segmentation by KSAs
needed by job function (such as sales, accounting, service, research) and by level within
the organization. The segmentation by KSA set is important because employees or
potential employees of each KSA set may have different drivers for wanting to work for
and remain with the organization (Kaplan, 2005). Of course, other segmentation may
occur as well. In table 4.3, questions about the KSAs are posed that need to be answered.

Table 4.3 Questions About Knowledge, Skills, and Abilities (KSAs)

1. What KSAs are required by level and by function to generate revenues (at each
stage)? This question should be asked of major KSA sets within the organization
by level and function.

2. Will the KSAs needed by level and function change in the near future? How about
in three years?

3. Are there gaps in the existing KSAs that need to be addressed?

4. What has been the turnover by KSA level and function?

5. For each KSA set (by level and function), where are they located geographically?
Are there any cultural differences by KSA set?

The KSA questions can be answered through personal or electronic interviews or surveys.
After the study is done it needs to be verified by the key leadership of each function and
each level of the organization.

Step 3: Identify Current and Potential Employees’ “Drivers”

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The research in this step leads to the identification of the “drivers,” which are the
composite wants, needs, and preferences of current and potential employees. As in
consumer product marketing, in which the product is designed based on the consumer’s
drivers, the reward program will be designed based on the employee’s drivers. This step
requires internal and external research and an evaluation of the two. Internally, what is
working (or not) in attracting, retaining, and motivating employees is explored. Externally,
what is attractive to the larger population is studied, including other organizations,
geographic locations in which the organization may be expanding, and demographic
groups that may not be in the workforce currently but will be in the near future.

A. Internal Research

It is important to include in the research the current demographic and psychographic
composition of the current population of employees and potential employees, again by
level and job function. Table 4.4 provides some of the questions to be answered internal
to the organization.

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Table 4.4 Questions for Internal Research

1. What challenges for recruitment are foreseen in the labor market?

2. What challenges of retention are foreseen within the organization?

3. What is the composition demographically of the current employees? What is the
current geographic disbursement of employees?

4. What is the retention rate overall, and what is the rate by specific KSA set (by level
and function), by department, by division, by geographic location, by
demographic?

5. What is the time to hire a specific KSA set (by level and function), by department,
by division, by geographic location, by demographic?

6. What is the level of satisfaction, in general, of the employees? What is the level of
satisfaction of the employees with each of their rewards?

7. If given a list of rewards (monetary, non-monetary, and work experience), what is
the most important to the current employees in order to retain and motivate
them? There may be items that are relatively inexpensive, or even cost neutral,
that are important to attraction, engagement, and retention. Having the
employees rank their preference for rewards is an effective way to gain this
information, in addition to determining price points if the employee is asked to
pay for a benefit (insurance, for example).

8. Have current employees been tempted to leave in the past six months? If so, what
caused them to think about leaving? What would entice them to leave today?

The data may be gathered though a variety of means: telephone surveys, electronic
surveys, individual interviews, focus groups, or paper-and-pencil surveys. After the
information is gathered, the organization can use statistical modeling techniques that
allow analysis of other existing employee data to better understand employee preferences.
This statistical modeling will help to identify trends by the various categories (level,
functional job groups, and demographics). It will also point out inconsistencies in the
answers. For example, what employees really care about, as measured by things such as
making a decision to leave the company, are sometimes different than what they say they
care about. The statistical modeling provides human resources professionals with more
robust information on which to design their total rewards program. If statistical modeling

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is unavailable the team working on the total rewards program design can read through all
the data, synthesize the key findings, and validate it with focus groups of employees at all
levels of the organization.

B. Research External Data

Reliable normative data, such as Mercer’s What’s Working data on country- and region-
specific employee perceptions and attitudes about work, help to determine how the
information you have gathered internally compares to external data. Information may also
be gained from the Bureau of Labor Statistics; WorldatWork; through local, state, and
national Society for Human Resource Management Societies; and through partnering with
other organizations to benchmark data and practices. Ideally, the same information about
reward preferences of potential employees and what would cause them to leave their
current jobs to work for another organization would be obtained. This information can be
gained through a variety of methods, such as published reports, focus groups, written or
electronic surveys, telephone interviews, etc. Some organizations that conduct employee
satisfaction surveys for large firms share a composite of the results. Telephone interviews
or focus groups allow the facilitator to ask probing or follow-up questions easier than can
be done in a written survey. Table 4.5 poses some of the questions that need to be
answered external to the organization.

Table 4.5 Questions External to the Organization

1. What are outside experts’ reports about challenges for recruitment by job function
and geographic location?

2. What demographic trends are reported (increases, decreases by segments)?

3. What are psychographic trends for reward preferences by demographic segment?

4. What is the economic forecast domestically and globally?

5. What rewards are your competitors offering? What is the competitors’ experience
with attracting, retaining, and motivating employees? The competitive market
survey for rewards was described in an earlier module. Most organizations
conduct this survey on an annual basis, so it may already be current and available.

C. Compare Internal and External Research

After the internal and external data is gathered, the two sets are compared for
consistencies and inconsistencies. As with the other two steps, statistical modeling
programs are available to help synthesize the data and identify trends, consistencies, or

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inconsistencies. The computer programs are also helpful in identifying existing challenges
versus future ones, based on such things as population changes, growth of the current
organization, expansion into new markets, introduction of new products and services,
downturn in the economy, and changes in the business model.

Table 4.6 Comparative Questions

1. Is the internal data consistent with the external data?

2. What, if anything, differs?

3. What issues are there with recruitment, retention, and motivation internal to the
organization that may be influenced by the external population?

4. Given the internal and external research, what challenges must we address
through the rewards programs in order for the organization to be successful?

Step 4: Design a Total Rewards Philosophy Statement

The design of the total rewards philosophy statement is what Kaplan (2005) calls a total
rewards road map. A total rewards philosophy is a statement of the total offerings of
rewards, what some refer to as the employment brand of the organization. This is a
formulation of the total rewards strategy from a big picture perspective, one that
determines the general areas of focus by segment of the population. The resulting
portfolio of rewards is designed to align the rewards strategy and the business strategy,
to reach the goal of attracting, retaining, and motivating employees with the requisite
KSAs to achieve the business objectives.

Given what was learned through the internal and external research, the organization is
now ready to propose what rewards would attract, retain, and motivate the employees
most needed for the company to be successful. They will need to determine the mix of the
monetary, non-monetary, and work experience elements to attract, retain, and motivate
respective employees by level and by job function or other segments they have identified
as important. These are decided with the culture and values of the organization in mind.
Other decisions will be made regarding items such as what rewards will be designed for
each segment, eligibility, how the rewards will be earned and awarded (performance
versus entitlement, individual versus team, fixed versus flexible, offered to all, part time
or full time), competitive positioning of compensation and benefits, and if the rewards will
be administered internally or externally (through outsourcing), and the timing of the

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introduction of the rewards. The organization will also need to ensure that pertinent laws
and regulations affecting rewards and their administration are followed. First, however, a
draft total rewards philosophy statement is prepared so that the financial costs and
commitment can be measured. This step also begins the process of setting baseline
measurements for the key objectives of the rewards philosophy. Table 4.7 below, from the
Constellation Energy Web site (2008), shares excerpts of a sample total rewards
philosophy statement.

Table 4.7 Total Rewards Philosophy Statement: Constellation Energy

We believe our employees are the brightest stars in our constellation. That’s why we
invest almost $1 billion annually in total rewards. At Constellation, total rewards is
more than just pay. It is the combination of pay, benefits, learning and development,
and the work environment. Together, these elements help make Constellation a great
place to work. By integrating our total rewards offering, Constellation delivers to
employees a work experience that rewards their contributions, supports their work
and life needs, and provides the opportunity to learn and to grow.

Pay: Our total compensation philosophy is to pay employees competitively and to vary
rewards based on individual and company performance.

Benefits and Time Off: We offer competitive benefits to our employees on a
partnership basis, including health care choices, a retirement plan, insurance
coverage choices, and flexible spending accounts.

Development: Professional advancement is important to everyone at Constellation.
Employees who continuously update their skills are more satisfied with their work and
contribute more to our collective success.

Work Environment and Community: A positive work environment, opportunities to
give back to the communities where we live and work, and the ability to balance work
and life demands are important to all of us.

Diversity: We’re equally proud of the success of our programs that promote minorities
and women, and we continually reaffirm our commitment to equal employment
opportunities.

Source: Constellation Total Rewards Statement. (2008). Retrieved May 4, 2008, from
http://www.constellation.com/portal/site/constellation/menuitem.37364b5370ec648
75fb60610025166a0/

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Step 5: Assess Financial Costs and Discuss Costs/Objectives/General Plan with Key Leadership

Rewards can be a very large percentage of an organization’s operating expenses. In fact,
for many it is the largest single expense. The step of assessing the financial implications
puts the expense into perspective and helps to gain concurrence and buy-in of the top
leadership and management of the organization. Although costly, offering the right
rewards can maximize the reward dollars spent. Offering the right rewards, while at the
same time eliminating those ones that employees may not value, ensures that time and
money is not wasted. Key leadership must be involved in the total rewards initiative
throughout the process of designing and implementing them, but at specific times the
commitment must be checked. Prior to the final decisions being made, as with the
implementation of any large and important initiative, it is crucial that the decisions are
officially agreed upon. It is advisable to keep a written record of the decisions made in
case reference is needed later.

Topic 2: Segmentation of the Workforce

Before the final steps of implementing the total rewards plan are addressed, the use of
segmentation will be described to ensure an understanding, because it is a key activity
and perhaps one that is new to some human resource professionals. Segmentation is a
term used in marketing (as well as other disciplines) to refer to how the population divides
according to differentiating factors. In human resources, the segments can be
psychographics (individual personality preferences) such as career goals, desired
schedules, and the need or preference for certain benefits or work experience.
Segmentation can also be made by demographics, level of the organization, or job
function. Segmentation by demographic group can include, for example, men, women,
age groups, ethnicity, marital status, or education.

Organizations use segmentation of the population to target their marketing efforts to
groups of consumers who may purchase products or services. The organization offers
unique features in its products or services that the targeted population prefers (for
example, minivans for families, pickup trucks for farmers, or alternative fuel vehicles for
the cost conscious or environmentally conservative). They also design their marketing
efforts to reach the targeted audience by creating advertisements that appeal to the
particular segment they are targeting. To communicate the unique features of the product
or service, key messages and the medium for the communication are chosen to reach and
appeal to the targeted population. In the same way, an organization can segment the
internal and external workforce population, determine the unique features (monetary,

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non-monetary, and work experience) desired by each, and design a total rewards program
customized for the individual segments of the organization or the individuals they are
seeking to hire.

There are many ways in which segmentation of the workforce can be achieved. Three
examples follow. The first is suggested by Mercer (2007), the second by Erickson and
Gratton (2007) in a Harvard Business Review article. The third is an example from a fast
food company dealing with a problem of very high turnover of employees. Keep in mind
that how employee groups are segmented will likely be unique to each organization.
Specific job families, geographies, or skill sets do not consistently map to specific
workforce segments across organizations. Rather, segments that appear in an
organization will depend entirely on the role of different employee groups of the
organization, its geographic disbursement, its individual values, culture, or business
model. The way segments are identified may also vary outside the organization.

Table 4.8 Segmentation by Value Created

In a study by Mercer (2007), they found the following segments to be beneficial as
they attempted to segment the employees. They found the employees could be
grouped into categories that were either performance drivers, performance enablers,
or legacy drivers.

 

The identification of the
segments is only the first step in
the research process. The
individual employees will also
need to be interviewed or
surveyed to determine if there
are common rewards in each
segment the organization could
offer in order to fulfill their
needs and desires.

Segmentation by Value Created

Performance Drivers

Performance drivers are employees who directly
create value for the organization. This segment
could include employee groups or functions such
as marketing in consumer products companies,
research scientists in pharmaceutical
organizations, chefs in restaurants, or athletes in
the National Football League (NFL).

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Table 4.9 Segmentation by Drivers for Engagement

Segmentation: by Drivers for Engagement. Another set of segments comes from
authors Erickson and Gratton (2007), who were able to see segments differentiated by
roles the employees wanted the organization to play for them. Their studies
suggested that work played six general roles, which correspond to six types of
employees, and were based on psychographic characteristics. Each worker segment,
they found, cares deeply about several aspects of the employee-employer relationship
and little about the others.

In
this example, as in the first, segments have been identified, but in this case some of the
drivers have been used to separate the groups. The organization would need to conduct
further study to see if the segments fall into certain demographics, geographics, KSA sets,

Performance Enablers

Performance enablers are employees who support
value creation by facilitating the efficiency of
performance drivers, including human resources or
finance staff at many organizations. Other
examples could include the coaches and trainers in
the NFL and time and motion experts in
restaurants.
Legacy Drivers

Legacy drivers created value for the organization
historically but no longer drive competitive
advantage. For example, production and
circulation functions in a media organization may
become legacy drivers as content is increasingly
delivered online. In the restaurant business this
could be a former celebrity owner, or in the NFL it
could be a coach that once led the team to the
Super Bowl but is no longer in tune with the latest
play strategies.

Segmentation by Drivers for Engagement

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functional job categories, or
levels in the organization. It may
be discovered that, for example,
certain age groups fall into a
specific category or possibly
that individuals in specific job
categories such as accountants,
human resource professionals,
sales staff, customer service
representatives, or information
technology specialists fall into
identifiable categories. If so, this
information would be very
helpful in planning the rewards
philosophy.

Expressive Legacy

Expressive legacy.These employees care about
creating something with lasting value. What
appears to engage them are autonomy,
entrepreneurial opportunities, creative
opportunities, and stimulating tasks that enable
continual learning and growth.
Secure Progress

Secure progress. For these employees, work is
about improving one’s lot in life and finding a
predictable path. They are engaged by fair and
predictable rewards, stability, structure, routine,
and career training.
Individual Expertise and Team Success

Individual Expertise and Team Success. This
group of employees value that work is about being
a valuable part of a winning team. They prefer
collaboration, fun, stability and structure,
opportunity to gain competence, and the
opportunity to leverage their personal strengths.
Risk and Reward

Risk and reward. For this segment, work is one of
multiple opportunities to live a life filled with
change and excitement. They are motivated by the
opportunity to improve personal finances,
flexibility, the opportunity to choose tasks and
positions from a long menu of options, and open-
ended tasks and approaches to getting work done.

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Table 4.10 Segmentation by Specific Desires

Segmentation: by Specific Desires. A third example of segmentation of employees is
similar to the others and continues to demonstrate that there are various groups that
can be identified through segmentation. A study was conducted in a fast food
company to discover how they could improve their recruitment, hiring, and retention
of employees. The organization was facing a very large turnover problem, which was
not only creating recruitment and training costs to soar, but also hindered the ability
to serve customers due to a constant shortage of employees. The following segments
of employees were identified through a series of focus groups with existing
employees. …