The Evolution of Work and Next Practices in

The Evolution of Work and Next Practices in Total Rewards Presented to the Rocky Mountain Total Rewards Association by Mark Englizian September 15, 2016 1

i 4 cp discovers… the human capital practices that correlate with top quartile business performance © 2014 Institute for Corporate Productivity, Inc. 2

Member Network

Defining High Performance § § Revenue growth Market share Profitability Customer satisfaction Focus of Research: § § What do high-performance organizations do differently? Do those practices correlate with market performance?

HPOs Excel in 5 Core Areas Talent performance Leadership engagement Culture agility Market innovation Market Strategy execution Source: Institute for Corporate Productivity (i 4 cp)

The People-Profit Chain™ Accounts for 28% of Variance in Market Performance A model to improve organizational performance up to 3 X Sustainable High Performance depends on the consistent ALIGNMENT of Market, Strategy, Culture, Leadership and Talent!

Driving the Evolution of Work § § § § § 3 M Adobe Ally Financial Amway Avaya Banner Health Baxter BNSF Cardinal Health Cargill Celgene Choice Hotels Cigna Coca Cola Corning Fed. Ex Gilead Grant Thornton Hitachi HP § § § § § HSBC Jack in the Box Land O'Lakes Macy's Mc. Donald's MGM Resorts Nexteer Automotive Pandora Pitney Bowes Qdoba Ricoh Americas Starbucks Starz Entertainment Sunlife TD Bank T-Mobile VF Corporation Western Union Wolters Kluwer Xerox § A partial list of companies included in the interviews 7

Summary of Four Big Trends Δ Worker expectations for control & flexibility Δ Use of non-traditional work to increase capability, capacity & agility Δ Transition from ineffective annual performance reviews to regular discussions Δ Control cost of employment and simultaneously improve power of the employee value proposition

Four Big Trends #1: Worker Expectations for Control & Flexibility 9

How Does This Trend Impact The Practice of Total Rewards? ∆ Transparency of structures, titles, eligibility and comp analysis (diversity/gender pay gaps) ∆ Recognize the intrinsic value of well designed and well executed recognition, training and care programs ∆ Are traditional job descriptions constraining? ∆ Tenure and retention re-defined

Four Big Trends #2: Use of Non-Traditional Work to Increase Capability, Capacity & Agility 11

A Clash of Trends The Gig Economy & Worker Independence § 34% of the U. S. workforce freelances, and “by 2040 the economy will be scarcely recognizable” (Fast Company, 2015). Regulation § NLRB rulings on coemployment and other issues; FLSA revisited; etc. § Obama Jobs Czar and GE Chief Executive Officer Jeffrey Immelt, “reassured stockholders in a letter Friday the company is still a solid investment despite most government policies perpetuating a cycle of “slow growth, poor job creation, populism, low productivity, higher regulation, poor policy and more slow growth. ” 12

How Does This Trend Impact The Practice of Total Rewards? ∆ Adopt a total "workforce" mind-set and metrics ∆ Embed in your recruiting and compensation systems the cost differential between FTE and non-traditional worker ∆ Short term and project based incentives for the next generation worker ∆ Parse out value-added, mission critical work requiring technical expertise that can/should be acquired in bursts

Four Big Trends #3: Transition from ineffective annual performance reviews to regular discussions 14

Customer-Focused Performance Metrics § HPOs integrate customercentrism into performance evaluations more significantly (2. 5 x) § HPOs emphasize customer accountabilities 3. 5 x more for promotion decisions 15

Got Coaching? Only 37% of highperformers have coaching as a part of their PM process – but it has a high correlation to market performance. 16

How Does This Trend Impact The Practice of Total Rewards? ∆ Design customer-centric BU incentive plans ∆ Use performance feedback primarily for development and job fit ∆ Go beyond ratings, get creative in measuring and reporting on customer impact (internal and external) ∆ De-centralize the annual pay review; calibrate for succession planning ∆ Use new technologies to strengthen teams and improve results

Duane Edwards Founder & CEO TEAMATICS. COM I believe in the power of great teams and their ability to transform the lives of their members and the performance of their organizations. But so many teams and their leaders know that they are not there yet. Too many managers lack the skills and experience they need to build an outstanding team. Too often thousands of dollars are wasted by companies on training that is not used, and on consultants that address the needs today but are not there tomorrow as the team changes and faces new challenges. Teamatics was founded to help you create a great team. We combine proven, bestin-class management techniques with innovative approaches, all within a cloud software application. Teamatics is there for you whenever you need it, providing insights and tools to continually improve your team. If you believe in the transformative power of teams, Teamatics is for you. 18

Four Big Trends (Next Practice) #4: Control cost of employment and simultaneously improve power of the employee value proposition 19

20

How Does This Trend Impact The Practice of Total Rewards? ∆ Define and measure your total cost of employment ∆ Focus on improving efficiency ∆ Measure effectiveness ∆ Optimize employee value proposition ∆ Get comfortable with opportunities to re-purpose your spend; and sell your plan to the HRLT and EOC

Mark Englizian Strategic Business Advisor mark. englizian@i 4 cp. com (425) 698 -3800 © 2014 Institute for Corporate Productivity, Inc. 22