Rethinking Total Rewards John Cardella Chief People Officer Ceridian Canada June 15, CPBI National Conference Rethinking Total Rewards: Aligned. Targeted. Powerful.

Rethinking Total Rewards Building the Business Case Economic vs Psychological Motivators Total Rewards (TR) and Generational Differences A Model for Success Ceridian Canada: a TR Case Study Summary Questions? Agenda

Rethinking Total Rewards Workforce is shrinking and competition for top-performers is fierce Workforce is changing –Different demographics desire different options –One size no longer fits all – customization to suit unique needs Working world is changing –Growing recognition of the importance of work-life balance –“Traditional” family structure is less and less common as are “traditional” working arrangements –Fewer resources available to companies for pay increases –Global competition for talent Total Rewards responds effectively to these new needs when done right! Building the Business Case

Rethinking Total Rewards –TR responds to an employee’s needs, lifestyle and performance –Companies that link reward strategy to business strategy deliver higher Total Shareholder Return (TRS) (Watson Wyatt, 2003) –Organizations that customize rewards program to motivate top performers achieve nearly 20% higher five-year TRS and lower turnover than companies that do not. (Watson Wyatt, 2003) Building the Business Case (cont.)

Rethinking Total Rewards More than 77% of surveyed employers said they had implemented a TR strategy or were planning to do so (Watson Wyatt, 2004) Top reasons given for implementing a TR strategy: –Attraction & retention of high-performing, high-potential employees –Aligning rewards with organization’s business strategy –Focusing employees on business goals –Enforcing consistent pay practices –Optimizing allocation of reward dollars Common Practice

Rethinking Total Rewards That could depend on what their values and needs are at a given point in their life. Motivators … Who Needs What? Physiological Needs Safety Needs Social Needs Ego/Esteem Needs Basic Financial Rewards Financial Security, Predictability, Benefits Service to Others Work/Life Balance Team Environment & Supportive Management Self Actualizatio n Status and Recognition Autonomy Adventure/Risk Taking Opportunities for Upward Movement Intellectual Challenge Creativity Abraham Maslow’s Hierarchy of Needs Motivators

Rethinking Total Rewards TR include everything the employee perceives to be of value resulting from the employment relationship Total Rewards EconomicPsychological Base pay Performance-based rewards Pension Benefits Challenging & meaningful work Culture Camaraderie Openness to innovation Promotion and support of work-life balance Compatible values Respect for individual differences Advancement Learning opportunities

Rethinking Total Rewards Generational Differences Traditionalists (born between 1927 and 1945) –Value hard work & honour –Dedicated to helping the organization succeed and to delivering customer service excellence –See technology as a nuisance –Respect for authority – don’t question –Duty before pleasure –Great team players –Draw a clear line between work and leisure

Rethinking Total Rewards Generational Differences Baby Boomers (born between 1946 and 1964) –Optimistic & idealistic – ‘ can-do ’ attitudes –Driven – had to compete in every step of their careers due to their sheer numbers –Often seen as the ‘ me generation ’ – personal achievement & wealth acquisition are paramount –Many plan to work beyond the age of 65 - will seek more ‘ meaningful ’ work

Rethinking Total Rewards Generational Differences Generation X (born between 1965 and 1977) –Self-reliant & pragmatic –Value quality relationships – excellent relationship- builders –Respect for others – won’t compromise respect to crank out a product –Other values include diversity, techno-literacy, fun & informality, flexibility & work-life balance –Corporate goals often take a backseat to individual goals & visionary corporate leaders viewed with suspicion

Rethinking Total Rewards Generational Differences Generation Y (born between 1978 and today) –Confident, resilient & ambitious –Community-oriented –Enthusiastic about and adept at incorporating technology into the workplace –Entrepreneurial & resourceful; achievement-focused –Taught to speak up –More accepting of diversity than any generation before them –Culture of readily-accessible information has contributed to demanding attitude

Rethinking Total Rewards Generational Differences TR survey results reveal different preferences for different age groups (Watson Wyatt, 2003) Under 30’s30-50 yr olds50+ yrs Opportunities to learn new skills in current job Base pay above market averageTailoring jobs to match ind. abilities and interests Flexible work schedulesOpportunities for promotion Work at homeTailoring jobs to match ind. abilities and interests Retirement plans Tailoring jobs to match ind. abilities and interests Opportunities to learn new skills in current job Base pay above market average Opportunities for promotionFlexible work schedulesOpportunities to learn new skills in current job

Rethinking Total Rewards Are employers doing it right?

Rethinking Total Rewards A Model for Success TR must be designed to support the mission, strategy and culture of the organization Clear definition and common understanding of the behaviours to be rewarded TR strategy must take into account dynamic exchange between workplace and worker – rewards in exchange for time, talent, effort and results

Rethinking Total Rewards A Model for Success Integrate strategy toward employees who are critical to your organization’s success – top-performers/high- potentials Total Rewards must resonate with employees in many different phases of career and lifecycle External research helps to support value of TR strategy but research MUST also be conducted within your organization – only 38% of companies do so today! ASK your employees what is important to them!

Rethinking Total Rewards Challenges Only 24% of surveyed employees believe that excellent performance is rewarded at their company– perception is everything! (Watson Wyatt, 2004) Communication of the program is essential – only 1/3 of surveyed employees say the rewards strategy has been communicated to them. (Watson Wyatt, 2004) Senior leaders and people managers must support the strategy in order for it to be effective.

Rethinking Total Rewards Ceridian Canada – A TR Case Study We’re a top employer – solid & well-researched Total Rewards strategy is an important part of that mix! Ceridian conducts employee focus groups based on the results from the annual Hewitt 50 Best Employers Survey. And we ACT on our findings!

Rethinking Total Rewards Ceridian Canada – Our TR Strategy Annual Total Rewards Statement provided to each individual employee outlining a summary and value of THEIR individual rewards. Increasing emphasis on differentiating rewards based on performance Broad participation in short-term & long-term incentive programs DPSP Annual Bonuses Stock options Recognition programs to reinforce desired behaviours

Rethinking Total Rewards Summary Total Rewards is NOT a radical, leading-edge concept – it’s a best practice! Total Rewards not about one or two exceptional benefits, but rather a portfolio –assemble the pieces in such a way that it attracts, motivates and retains the type of employees your organization needs to thrive Total Rewards strategy MUST be driven by business strategy Know your top performers but ask what is important to all employees Not all benefits are an employer expense – progressive environment/psychological rewards are key to attracting and retaining top performers