Geico: Total Rewards Program
Leanna Wilcox

Total Rewards- HRM533
Dr. David Fountaine
April 26, 2014
ABSTRACT
This paper will look at the Geico total rewards program to see which parts align with the top five advantages of the total rewards program outlined in the text, The WorldatWork handbook of compensation, benefits and total rewards. A strategy will then be created to ensure that the Geico plan addresses all of the advantages. Looking at the effectiveness of Geico’s communication of their total rewards program, we will make two recommendations for improvement. Finally, we will assume that the Geico employees are unhappy with the current plan, and will offer two changes to their total rewards program.

Geico: total rewards program The top five advantages in a total rewards program as described in the text, The WorldatWork handbook for compensation, benefits and total rewards are as follows; increased flexibility, improved recruitment and retention, reduced labor costs/cost of turnover, heightened visibility in a tight labor market, and enhanced profitability (WorldatWork, 2007).
Increased flexibility is becoming more important to employees and companies, employees want 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 total rewards aligns with increased flexibility in that they offer paid vacation, which increases as employees become more tenured and employees are allowed to use them as they please. Geico also offers paid holidays and floating holidays which employees can use to extend holidays or celebrate a holiday that the company does not recognize. They also offer sick days, personal leave, jury duty, bereavement days and military days in which individuals can take time off with pay. By offering these paid leaves they are allowing employee’s flexibility with their schedule, which in turn will keep the employee happy. Recruitment and retention are a large issue that companies are facing; they are having a hard time finding top performers, skilled IT workers, and workers for entry level positions. It is important for a company to find quality, skilled workers who will stick with them for the long haul; which means on the companies end they must provide a competitive total rewards program that supports a work-life balance for the employee. Geico provides a competitive total rewards program through their health benefits which are offered for the family, an associate assistance program, long term disability and physical fitness assistance. They also offer education and training to help further educate their employees, which they can be reimbursed for and also receive additional bonuses upon completion. Employees can invest in the 401k program and also purchase stock options. Finally, the employees are given paid time off, along with the company supporting their work-life balance. Through all of these areas Geico is able to recruit quality candidates and retain them. Reduced labor costs/cost of turnover; this is often times invisible and far from cheap for organizations (WorldatWork, 2007). Geico is able to reduce their labor costs and cost of turnover by offering a competitive total rewards program to their employees. They offer health benefits, paid time off, education reimbursement, education and training programs, 401k options, work-life balance; with all of these features available to employees it helps Geico to retain their employees which in turn helps to keep their turnover cost down. Employers can no longer afford to simply view their employees as interchangeable parts, if people can find an environment that’s more in sync with their needs, then they will stay put as they feel their needs are being met (WorldatWork, 2007). Having heightened visibility in a tight labor market is important to an employer, because they see what employee’s value and mix that with matching rewards so they can reallocate their investment dollars to match what employees see as important. Geico does this by understanding that employees value their families, so they offer FSA’s, adoption assistance, long-term care plans, and associate assistance programs. The challenge is to develop and implement a flexible program that capitalizes on this diverse workforce. Valuing each employee means understanding that everyone does not want to work the same way or be rewarded the same way (WorldatWork, 2007). This is why enhanced profitability is an important part of the total rewards plan. Geico offers training and development for employees to help further their career path, which in turn offers the opportunity for them to make more money as they grow within the company. They also offer a vast health benefits package and retirement plan, their total rewards package offers something for everyone, which allows the company to keep employees happy.
A strategy to address all advantages A total rewards strategy is a focused game plan that allocates resources and tailors activities to achieve a target performance level within a prescribed time table. It must be unique to the organization that develops it and, when done effectively, will help drive sustainable, competitive advantage in the ever-tightening market for key talent by carefully considering the full list of potential sources of value to employees (Hiles, 2009). Geico will need to continue to communicate with their employees to ensure that they know what is important to their employees and what they find value in, this will help to ensure that they lower their turnover rate and get the most performance out of their employees. They will also need to determine what attracts new employees to Geico, so that they can be sure to offer a robust total rewards program to encourage individuals that Geico is a place they want to be.
In order for Geico to ensure that they are offering flexibility within the workplace, retaining and attracting quality employees, reducing labor and turnover costs, focusing on value in the tight labor market and enhancing profitability; Geico needs to establish a review survey for employees and interviewed candidates. This will allow them to see what employee’s value about their total rewards program and also areas in which they need to improve. Geico can also have a survey for individuals who go through the interview process to see why they chose Geico or why they chose another company; this will help Geico to see again where they can improve areas of their total rewards program.
A strategy has three core elements; objective, scope, and advantage (Collis & Rukstad, 2008). Objective is what the organization is trying to achieve. Geico is trying to achieve a comprehensive total rewards program that attracts and retains high quality employees, while offering cost effective benefits and compensation. Scope refers to whom and what is included in the total rewards program, for Geico this would be the employees and types of compensation they offer along with health benefits, paid time off, and other employee benefits. Advantage is the means an organization will employ to achieve its objective, for Geico they will utilize their administration to communicate with the employees and potential candidates to see what is attractive to them about the total rewards program or how they could become more attractive. By consistently evaluating the total rewards program Geico can continue to be competitive within the market as they can continue to make adjustments to their total rewards program to ensure it is meeting the needs and wants of their employees and prospective employees.
Communication effectiveness Geico’s communication about their total rewards program is effective as it simply outlines the areas of the total rewards program and then breaks each area down further so that future and current employees understand their benefits. The website breaks down the total rewards program into health and well-being, education and training, finance and retirement, time off and leave, and family and life. Then under each area Geico further breaks it down as to what each area provides for the employee and their family. They do a great job of communicating that benefits vary for interns and part-time employees, and that benefits vary by location. Through this communication they are letting employees and future employees know that just because something is listed as a benefit that does not mean it will be provided specifically to them; this saves the organization from being backed into a corner and also lets employees know that not all benefits may be available to them. Benefits represent one of the largest investments a company makes in its talent. High performing companies have adopted total rewards as a way of thinking about attracting, motivating, and retaining employees (Kwon, Hewitt, & Hein, 2013). The two ways in which Geico could improve their communication of the total rewards program is by defining success using measures beyond cost and balancing more inputs when making decisions.
High performing companies define and measure success through employee value and return on investment, they don’t make budget and cost savings a more important goal. They also measure success through employee engagement and employee satisfaction through programs. This is where it is important for Geico to have open communication to ensure employees are satisfied with the programs offered; they have to be sure that if they make changes to the total reward program that they don’t do so just because they want to save money. High performing companies gather input from leaders as well as employees before they make any major changes to the total rewards program. Geico has to take into account employee preferences and the impact rewards have on employees. They can’t just talk amongst the leaders and determine what they think is best for everyone as well as cost effective; they have to actually communicate with their employees to hear what they have to say and take it into consideration if they want to be a high performing company.
Improvements or changes Today, organizations acknowledge the important role rewards programs play in achieving business goals. Employers are also realizing that they can’t merely mimic the reward practices of other organizations: A reward strategy must be deliberately created to support an organizations unique human capital strategy (Gross & Friedman, 2004). Geico could offer a better retirement package for their employees to make it more attractive and helpful in their retirement venture. Currently Geico offers a traditional and Roth 401k and each employee is auto-enrolled for a 3% pretax contribution, however Geico is not matching this contribution. To make the retirement package more attractive Geico could offer to match each employee’s contribution up to 6%, this would make the employee feel as though Geico cares about their future and also encourage employees to stay with Geico for the long haul. Secondly, Geico can look to revamp their time off and leave portion of the total reward program. Currently employees receive 10 days for their first five years of service, 15 days after five years and 20 days after fifteen years; this is a fair accrual of personal paid time off. Where Geico could improve is their sick leave, employees are offered 10 days per year upon hire and then 15 days after five years. However, it states that these days are only for the employee’s personal illness or medical appointments. With work-life balance being so important to employees now a day, Geico could extend these sick days to apply to employee’s children or family member who may need them. FMLA is a great tool for extended time off due to a family illness, however if an employee’s child comes down the flu, they should be able to use a sick day to stay home and tend to their child, or have the option to work from home so as not to have to use a personal day. Today, organizations acknowledge the important role reward programs play in achieving business goals (Gross et al. 2004).
Conclusion
There are several facets of the Geico total reward program that align with the top five advantages of a total rewards program as listed in the text WorldatWork handbook for compensation, benefits, and total rewards. The strategy Geico needs to adopt to ensure that all advantages are met is to establish a review process with employees and potential candidates to ensure that the total rewards program is current and up to date in regards to employee value. Geico can improve their communication of the total rewards program by defining success by measures beyond cost and balancing more inputs when making decisions. Finally, Geico could improve their total rewards program by offering a more robust retirement package and understanding the importance of flexible personal time.

REFERENCES
Collis, D. J. & Rukstad, M. G. (April 2008). Can you say what your strategy is? Harvard Business Review.
Geico: total rewards program. (2014). Retrieved April 27, 2014, from http://careers.geico.com/about- geico/total-rewards-program
Gross, S. E., & Friedman, H. M. (September 2004). Creating an effective total reward strategy: holistic approach better supports business success, Benefits Quarterly.
Hiles, A. (2009). Tough times demand focus-total rewards strategy: Benefits Quarterly.
Kwon, J., Hewitt, A., & Hein, P. (March 2013). Employee benefits in a total rewards framework. Business quarterly: business case for benefits.
WorldatWork. (2007). The WorldatWork handbook of compensation, benefits, & total rewards. Hoboken, NJ: John Wiley & Sons.