ASSIGNMENT

• What are the Best in Class Non-Monetary Benefits
• Other Types of Compensation
• Making Learning a Key Element of a Total Rewards Package
• Favorite Perks
• Compensation Metrics

Module 3: Core Elements of Non-monetary Rewards and Work Experience

Topics

Topic 1: What are Non-monetary Rewards?
Topic 2: Key Elements of Work Experience
Topic 3: Governmental Compliance Issues
Topic 4: Understanding Demographic and Psychographic Differences
Topic 5: Role of Non-monetary Rewards and Work Experience in Total Rewards Design
Topic 6: Conclusions

Topic 1: What are Non-monetary Rewards?

A Society for Human Resource Management study (SHRM, 2005) found that both employers and HR professionals see benefits or non-monetary rewards as a driving factor for job satisfaction. In this module, non-monetary rewards are defined as the set of rewards known broadly as benefits. The array of benefits that supplement monetary rewards are evolving quickly, as the competition for employees increases. While there is a wide range of non-monetary rewards offered, most center around those that protect against the cost of illness or health emergencies, provide income protection in the case of disability, and and provide general well being for the employees and their families. The more typical non-monetary rewards offered today are shown in the center column in table 3.1 below.

Companies listed on Fortune magazine’s list of “100 Best Companies to Work for in America” seem to recognize the importance of offering a wide assortment of benefits. They offer the assortment in order to meet the needs of the employees and address many of the needs in Maslow’s hierarchy (Maslow, 1954).The companies appear to use a total rewards approach to compensation to attract, retain, and motivate their employees. In addition to what has become rather standard as a set of rewards including medical, dental and vision insurance; paid time off; and ample room for career growth, some mix of the following benefits is often present: education reimbursement, employee training, on-site child care services, financial counseling, and retirement benefits (Bates, 2003).

But it is important to remember, just as with consumer purchasing decisions, that what is valued by one employee is not necessarily valued by all. Therefore employers must research what the requisite employees in their organization desire. One way in which information about preferences is gathered is through surveys or interviews, and more than one method of gathering data about the important decisions of rewards is better. Information internal to the organization and outside the organization is recommended. Table 3.2 summarizes a report from a survey conducted by Aon (2002) demonstrating the average range of preferences when individuals taking the survey were asked to rank the benefits from most preferred to least preferred, if given a choice. In this survey, the data revealed that the benefit most often ranking the highest was medical insurance and the lowest was wellness programs. As you read the list of preferences, think about how you would rank your own preferences. Surveys similar to the A on survey can provide information to organizations that can be compared against internal or other external research.

When making the decision to offer a benefit, organizations must be careful that the benefit can be continued after it is implemented. Once offered, there can be negative repercussions if it has to be taken away. Employee scan quickly grow accustomed to having benefits and can develop a sense of entitlement to them. In one of the offices of Hewlett-Packard, for example, employees receive free fresh fruit throughout the day, and have now come to expect it, thereby making it difficult for the company to stop doing it. Another large company decided, as a cost-cutting measure, to eliminate the annual free holiday turkey for its thousands of employees. The news created such wide spread negative reaction that the decision was quickly reversed.

There are a few benefits for which there is entitlement by law. Many employees mistakenly believe that their major benefits are mandatory, or required by law to be provided. In fact, however, few benefits are required by law. While the benefits listed in Table 3.3 (the major federally mandated benefits) are certainly more than those offered to employees prior to World War II, they represent only a small portion of the benefits most organizations offer today.

Compare the list of government-mandated benefits to the list of typical optional benefits in table 3.4 below. With this list it is easy to see how the cost of benefits can be as much as 40 percent of the overall payroll cost.

In addition, there are benefits that are offered that seem to be designed for specific employees’ interests and enjoyment. The list in table 3.5 provides some examples offered by various organizations.

At Google.com, the company that was No. 1 on the list of Fortune magazine’s top 100 companies to work for in 2007 (Fortune, 2008), even more non-monetary rewards are offered in addition to most of those listed in tables 3.3, 3.4, and 3.5. The benefits are offered in an attempt to take away as many of the distractions as possible from the employee and also to make employees turn away recruitment calls. For example, if an employee has a baby, she receives $500 toward take-out food to help provide extra time for the work that a new child brings. There is a laundry facility in which employees can wash their clothes for free, on-site doctors for free checkups, and a bookmobile. To complement these benefits that help to eliminate any distractions, there are additional benefits that support the values of the organization. For example, if an employee purchases a hybrid car, there is a $5,000 stipend toward the purchase. Knowing how many workers love their pets, the environment is pet friendly, allowing pets in as long ascertain behavioral standards are met. There are also rewards and recognition for innovation. One employee recently received a bonus of a million dollars for her innovative contributions. Google is not stopping with this list, however, and is considering new offerings such as sabbatical programs and rotation of positions in order to keep the longer-term employees fresh and motivated (Fortune, 2008).

One aspect of the reward offerings that is a key to their effectiveness is that of communication, to help employees understand the philosophy of the organization about its employees and the rewards offered. Another company on Fortune’s 100 Best Companies List is Wawa. The Company Spotlight of Wawa shares Wawa’s philosophy and purpose for offering the non monetary rewards it does for the employees. It is an example of how Wawa communicates why they offer the benefits it does.

One of Wawa’s benefits seems to be customized for a relatively young employee population, a generous tuition reimbursement program after only six consecutive months of full-time employment. With all the rewards reviewed thus far, it may be that one would think that organizations merely “throw” benefits at employees. This is not the case. Total rewards is not about how many different benefits an organization can offer, but rather what benefits can be offered that help drive the organization’s strategies. What rewards will align with and reinforce the culture of the organization while still being financially feasible?

Topic 2: Key Elements of Work Experience

In addition to non-monetary rewards, there are other important aspects of the work experience that help to satisfy the needs, wants, and desires of employees. The plan is to get them in the organization and keep them there. A recent job satisfaction survey published by Monster.com revealed that while inadequate compensation is the leading reason that employees cite for leaving a job, other top-ranking reasons include lack of career advancement, insufficient recognition, and inadequate professional development opportunities. Good relationships with coworkers and managers, desirable working hours, and attractive benefits were the top reasons employees cited for remaining in a job. Increasingly, the one segment that allows an organization to distinguish itself from others is this third element of the total rewards approach, the work experience. If the money is available, an organization can compete with its monetary and-non monetary rewards, but it is what one has named “a signature experience” that is difficult to replicate (Erickson & Gratton, 2007). A signature experience is a program, policy, or practice unique to a company that creates an appeal that is not found elsewhere. Some of the important signature experiences or dimensions of the work experience are detailed in the third column of table 3.1.