Geico

Advantages to a Total Rewards Approach There are several advantages to using a total rewards approach to compensating the workforce. The top five are described in the text (pp. 15—17). The following paragraphs discuss the facets of the Geico total rewards program that align with these advantages: The first facet is Increased Flexibility. A total rewards approach, which combines transactional and relational awards, offers tremendous flexibility because it allows awards to be mixed and remixed to meet the different emotional and motivational needs of employees. Flexibility is a two way street. Both employers and employees want more of it. As the importance of flexibility has become more understood, more companies are allowing employees to determine when they work, where they work, and how they work. Total rewards recognizes that employees want and in many instances demand, the ability to integrate their lifestyle and their work. (WorldatWork, (2007). Geico cares about their employees’ life, now and in the years to come. Their total rewards approach offers several flexible plans for their employees. As a full-time GEICO associate, they are offered a competitive and comprehensive Total Rewards Program. It includes a variety of options to preserve their health and well-being, build wealth, secure their financial future, and enjoy more out of life. The second facet is improved recruitment and retention. A total rewards strategy is critical to addressing the issues created by recruitment and retention. It can help create a work experience that meets the needs of employees and encourages them to contribute extra effort, developing a deal that addresses a broad range of issues and spending rewards dollars where they will be most effective in addressing workers’ shifting values. Today’s workers are looking beyond the “big picture” in deciding where they want to work. Work and personal life should be seen as complementary priorities, not competing ones. Geico has created a work life balance for its employees. As part of its total reward approach, Geico has a great Time Off and a Leave Programs. Geico believes that Time well spent outside the office is important to us all. They realized that much of life happens outside the office walls. There are holidays, family events, appointments and emergencies. That is why they included a variety of leave programs so that their employees can maintain a healthy work/life balance. (http://careers.geico.com). The third facet is reduced labor costs/costs of turnover. The cost of turnover, often the reason for recruitment and retention, is sometimes invisible. It can be very costly. Estimates of the total cost of losing a single position to turnover range from thirty percent of the yearly salary of the position for hourly employees according to Cornell University study to 150 percent as estimated by the Saratoga Institute study and independently by Hewitt Associates. In addition, the cost of turnover includes indirect such as losses from customers and sales, as well as decreased efficiencies as productive employees and the remaining workers are distracted. (WorldatWork, (2007). Geico believes in building and securing their employees financial future. Geico takes their compensation and retirement for their employees seriously. Saving for tomorrow starts today, and GEICO offers their employees several ways to ensure their futures are bright. Through competitive salaries, merit-based promotions, company profit-sharing awards, and other savings options, their employees can build wealth and secure a promising financial future. (http://careers.geico.com). The fourth facet is heightened visibility in a tight labor market. Talent shortages have become a chronic condition of business life, and experts agree that the tight labor market is going to get tighter. Employees can no longer afford to simply view their employees as interchangeable parts. Organizations are realizing that every employee matters even more when there are not enough employees to fill the available jobs. By gaining a clear understanding of what employees value, and mixing and matching rewards within a comprehensive framework, companies can reallocate their investment dollars to match what employees say they values most and can communicate the total package versus a patchwork of individual components. (WorldatWork, (2007). As part of their total rewards approach, Geico offers its employees the opportunity to grow within the company. They offer an education and development program to their employees and their families. They believe in lifelong learning. They offer tuition reimbursement, eligible full-time associates may enroll in the tuition reimbursement program to further their undergraduate education at an accredited community college or four-year university; an insurance studies program, they encourage and assist associates in developing and improving their insurance-related professional qualifications. Their companywide training program provides eLearning and instructor-led courses to help their employees develop personally and professionally, in 2008, Geico delivered over one million hours of training to their associates. They also have a Virtual Mentor program. The GEICO Virtual Mentor program connects their employees with members of the management team via their corporate intranet. Employees may receive advice to their specific career-related questions. The program includes a mentoring blog and wiki, and an "Ask the Mentors" message board. Lastly, the Job Post. The Job Post system allows their employees to view and apply for internal job openings. You can search jobs by state, location, department and position title. With their promote-from-within culture, associates can build rewarding and lasting careers. (http://careers.geico.com). The fifth facet in the total reward approach is enhanced profitability. A big misconception about total rewards packages is that they are more expensive. That’s because a number of companies equate the notion of rewards with more, more pay, more benefits, and more combinations of rewards. What companies need to realize is that by remixing their rewards in a more cost effective way, they can strengthen their programs and improve employees’ perception of value without necessarily increasing their overall investment. It is largely a matter of reallocating dollars rather than finding more dollars. (WorldatWork, (2007). The challenge is to develop and implement a flexible program that capitalizes on a diverse workforce. Valuing each employee includes understanding that everyone does not want to work the same way or be rewarded the same way. To achieve excellence, employers need a portfolio of total rewards plans. That is the type of total rewards approach that Geico offers it employees. Their benefits package will help insure their employees’ future and Geico’s growth. Geico has invested in their employees’ quality of life, now and in the years to come, by offering the following flexible programs to their employees: their Health and Well-being, they offer a variety of benefits to help meet the needs of the employee and the family. Building and securing their financial future at Geico. They offer their associates several ways to ensure their futures are bright. A Time Off and Leave Programs which offers a variety of leave programs help their employees maintain a healthy work/life balance. The Family and Life Programs because they understand the family's needs and their total rewards program will help support them. The Education and Development program- Geico believe in lifelong learning, and offer a range of educational and career development programs. Amenities and Perks, from onsite conveniences to community service events; their employees can do more than just work at the company. Geico offer a competitive and comprehensive Total Rewards Program that includes a variety of options to preserve their employees and their families’ health and well-being, build wealth, secure their financial future, and enjoy more out of life. (http://careers.geico.com).
Total Rewards Strategy Geico needs a strategy that addresses all of these advantages. The company should follow the following strategy toward this end: Geico needs to focus on alignment, ask employees what they want, measure and manage costs and risks, strengthen performance management systems, sharply differentiate between top performers and everyone else, make greater use of incentive based pay, review incentive funding metrics and targets, make communication an d education a priority, use long term incentives throughout the organizations, and manage rewards in a truly integrated way. A total rewards strategy statement helps crystallize the spirit of the total rewards plan. It should provide specific, motivating direction when choosing what to focus on and choosing what not to focus on. (http://careers.geico.com). Attitudes toward reward programs have changed in recent times. For many years, reward programs were viewed primarily as a “necessary evil” to attract and retain competent employees. Today, organizations acknowledge the important role reward programs play in contributing to business success. Put simply, an effective total rewards strategy enables organizations to deliver the right amount of rewards, to the right people, at the right time, for the right reason. Organizations now have a broader understanding of the concept of ‘rewards' – largely as a result of better understanding of their human capital strategy, or the ‘people' side of business design – the selection, development, deployment, motivation, management and retention of people to carry out the business strategy. (Lawler, E.E. III, Mohrman, S.A., Benson, G. (2006). Human capital strategy has many components: how work is processed, how information and knowledge are shared, how decisions are made and how people are managed. It also includes the types of employees (characteristics, skills, education, attitudes, etc.) and how those people are rewarded. Each organization's human capital strategy is unique because it is based on their business strategy and business context. A reward strategy must be deliberately created to support this human capital strategy. Organizations are realizing they can't merely replicate the reward practices of other organizations (i.e.: taking a ‘best practice' approach) but need to figure out what works specifically for them – i.e.: a ‘best fit' approach. (Lawler, E.E. III, Mohrman, S.A., Benson, G. (2006).
The Communications Plan In examining the effectiveness of the communication of Geico’s total rewards program based upon the Websites’ descriptions of the benefits, the following two changes for improvement are recommended: The first change is to reintroduce the total rewards program by making an initial announcement using the grapevine, emails, or posters that announce meeting and/or materials to all employees. This way all employees will know what is in the total rewards program and what and how to benefit from the program. They should communicate the program through several complementary media to reinforce the messages. They should provide employees with written materials such as announcement letters, decision guides, and plan documents. Depending on the complexity, cost and importance of the program, they should decide whether it makes sense to personalize3 the materials for each employee. They should hold employee meeting throughout the company, present the plan to all employees at once, after initial introduction, hold small group or departmental meetings to encourage employees’ discussion and answer any questions about the program. If necessary, address individual employee’s issues in one on one meeting. (WorldatWork, (2007). The second change is to gather and respond to employee feedback by talking with managers and group presenters to find out how perceptive employees are to the program, talk to key employees regarding their perceptions, coordinate focus groups, monitor frequently asked employee questions. Respond to the feedback to gather follow-up communications. They should respond to employee concerns in a timely fashion to help reinforce the company messages and eliminate noise and gossip. They should follow up the feedback with media backup by targeting materials to management explaining issues employees had difficulty understandings, questions and answers bulletin board on company intranet, articles in upcoming employees or managers communications, add information on company intranet, send out confirmation statements. (WorldatWork, (2007). Geico should use written communication and audiovisual communications because visual aids make verbal communications more effective, especially when detailed information or numbers are involved. They are most effective for walking employees through enrollment processes, providing plan highlights to specialized audiences, or sending motivational messages from management. The final step in the effective communication of total rewards in making certain the company have a team with the required skill sets in place to efficiently manage the development and implementation of the campaign. Complex information must be understood. Language barriers must be overcome. The needs of varying audience levels must be met. There is no question whether Geico needs to communicate with employees about total rewards programs offered by their company. The program can only be as successful as the communication campaign.

Total Rewards Improvements Many of the Geico employees are unhappy with the current total rewards plan. The following changes that should improve the total rewards program are recommended: The first change is to implement a better compensation plan. A compensation plan that comprises of three major components: pay level (base wage or salary), pay increases, and incentives (cash bonuses) (Gerhart & Rynes, 2003). This process starts with job analysis gathering information about the attributes of specific roles and the people holding them. The end product of this analysis is a job description a summary of the role’s duties and responsibilities and a job specification details explicating the knowledge, skills, abilities, and other attributes of the person needed to perform those duties and responsibilities. Next, the organization determines the value of the work spelled out in the job descriptions and specifications. Value depends on how important a particular job is to the employer’s competitive strategy and how similar organizations view this same role. The organization conducts job evaluations to determine the internal value of jobs relative to the company’s strategy. Salary surveys are conducted to look at average salaries paid and to determine the external value of these same jobs relative to the rates paid by similar organizations. The company then combines the data from the job evaluations and salary surveys to define pay grades for each position. Pay grades specify a range of values assigned to a job. The uppermost value is called the maximum, while the lower most basis of a job’s qualifications rather than the qualifications plus the job description. Skill-based pay enables a company to reward employees for performing multiple tasks in one role rather than just those indicated in a job description. In one well designed field study (Murray & Gerhart, 1998), an organization that used skill-based pay in one facility enjoyed 55% higher productivity and 17% lower labor costs than a comparable plant that did not use skill-based pay. The second change is to implement an evaluation of the total rewards system. To assess and see if employees are pleased with the total rewards program, Geico must conduct an evaluation of the total rewards program. Probably the most often overlooked phase of total rewards implementation is evaluation. In this phase, the project team compares the actual results of the executed total rewards strategies against the desired results. The hope is that by conducting this evaluation, you can show top management that the company’s investment in its total rewards system has paid off. Of course, conducting an evaluation can be unnerving if you fear that the selected reward strategies are in fact not delivering as anticipated (Corby, White, & Stanworth, 2005). To get the most from the evaluation phase, encourage your project team to measure the outcomes of the executed total rewards system and to interpret the findings correctly. To decide which outcomes of your total rewards system to measure, revisit the system’s objectives and then consider which data sources will provide the information you need to evaluate those outcomes. For example, if the new rewards program was intended to improve employee satisfaction, the project team can measure this outcome through workforce surveys. “Outcomes and Data Sources” shows examples of the kinds of outcomes you may want to measure and the sources that might generate the data you need.

References

Corby, S., White, G., & Stanworth, C. (2005). No news is good news? Evaluating new pay systems. Human Resource Management Journal, 15: 4-24.
Gerhart, B., & Rynes, S.L. (2003). Compensation: Theory, Evidence, and Strategic Implications.
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Employee Involvement, TQM, Reengineering, and Knowledge Management in the
Fortune 1000. San Francisco, CA: Jossey-Bass.
Murray, B., & Gerhart, B. (1998). An Empirical Analysis of a Skill-Based Pay Program and
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“Total Rewards Program,” Retrieved on July 19, 2012 from http://careers.geico.com/working_ At_geico/total_rewards_program.
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