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 “Health and Well-Being”. Geico offers a variety of medical plans to their employees such as PPO’s, HMO’s, dental, and vision. Geico offers three free sessions from their employee assistance program and basic long-term disability insurance which is paid for after three years of employment. Premium long-term disability insurance is available at an additional cost. Many Geico facilities offer on-site fitness centers, athletic programs, and local gym membership discounts.
This facet is aligned with increased flexibility advantage of a total rewards approach. The second facet is “Education and Training” which is aligned with the “Improved Recruitment and Retention” total rewards approach. The dynamic of this approach focuses on organizations obtaining and retaining employees by implementing a total rewards strategy that would address these issues. Geico’s “Education and Training” total reward facade offers paid training in sales, customer service, claims, and auto damage.
Employees participate in Geico’s Insurance Studies Program Sales to prep for state licensing and underwriting exams. Geico offers tuition reimbursement for full-time employees towards their undergraduate education. Geico University promotes continuous growth and development for their employees by offering e-learning and instructor led courses in various subjects. Geico’s internal job board and promote from within corporate culture increases the value of the “Education and Training” facet.
The third facet is “Finance and Retirement” which is aligned with the “Reduced Labor Costs/Cost of Turnover” total rewards approach. The dynamics of this total reward focuses on organizations reducing turnover by offering competitive total rewards packages versus the competition. Geico’s “Finance and Retirement” offers competitive salaries, promotions, and company awards. Roth and 401(k) Plans are offered and a competitive Profit Sharing Plan.
The fourth facet is “Time Off and Leave” which is aligned with “Heightened Visibility in a Tight Labor Market” total rewards approach. The dynamic of this approach is the lack of talent in the global workforce to immediately replace critical positions. It is essential for organizations to not overwork their employees and provide a work/life balance culture. Geico’s “Time Off and Leave” facet maintains a work life balance by offering annual vacation days to full-time employees which increases following fifteen and twenty years of services. Part-time associates accrue leave based on the number of hours worked which is a very rare benefit. Full-time and part-time employees receive six paid holidays and four floating holidays which can be used as additional days off. Personal leave, military leave, bereavement leave, and jury duty leave is offered as well.
The fifth facet is “Family and Life” which is aligned with “Enhanced Profitability” total rewards approach. Geico summarizes their total rewards package and highlights their big perks. The aspect of “Enhanced Profitability” focuses on organizations maximizing their total rewards program and not placing much emphasis on costs. Geico’s “Family and Life” total rewards facet focuses on additional benefits the company offers that would be beneficial to employees. These benefits consist of FSA’s, Adoption Assistance, casual dress days, auto insurance discounts, low-cost parking, commuter programs, travel discounts, retail discounts, and corporate philanthropy through the Corporate Community Citizens Program. Adopting a total rewards strategy may allow an employer to moderate its labor costs by trading off various components of the employment package (Kaplan, 2005). Organizations may emphasize relational rewards such as flexible work schedules which tend to cost less than transactional rewards.
Total Rewards Strategy
Geico needs a strategy that addresses all of these advantages. (These are the top five advantages on pp. (15—17.) The company should follow the following strategy toward this end: “Increased Flexibility” consists of various benefits that meet the needs of a diverse organization. Flexible benefits are an important part of total rewards because they help improve the employee experience by providing them with more choices when it comes to perks (Wilkinson, 2007). Geico can capitalize on “Increased Flexibility” by communicating to existing employees and prospective candidates how each flexible reward is beneficial to them. Most employees may not appreciate total rewards an organization offers because they do not understand them. Geico can take advantage of “Improved Recruitment and Retention” by tailoring their total rewards package towards the demographics of the workplace.
Demographics play a significant role in the type of total rewards an organization offers. A younger workforce’s should differ from the needs of an older workforce. Today’s employees value relational rewards such as career development and learning (Kaplan, 2005). Gender influences the type of total rewards package as well. A predominantly female population may value relational benefits such as flexibility versus a male dominated workforce (Kaplan, 2005). Geico can take advantage of “Finance and Retirement” by separating themselves from the competition. A one dimensional total rewards program does not work in today’s workforce due to the increased diversity and various needs that will be beneficial to their career, work, and personal life. According to Kaplan (2005), total reward packages need to be a mixture of transactional and relational rewards.
Transactional rewards consist of monetary benefits such as compensation. Relational rewards consist of benefits associated with the emotional aspects of an employment relationship (Kaplan, 2005). Relational rewards reduce retention and increases individual commitment. Competitors copy these types of rewards which make it difficult for organizations to differentiate themselves by their compensation and benefits programs alone (Kaplan, 2005). Organizations that customize their total rewards package differentiate themselves from their competitor, attract talented candidates, and improve retention rates (Kaplan, 2005). Geico can take advantage of “Heightened Visibility in a Tight Labor Market” by maximizing their total rewards package in a competitive market.
As previously stated, the dynamic of this approach is the lack of talent in the global workforce to immediately replace critical positions. Certain jobs within an organization have a more direct impact versus others. Geico should focus on the critical workforce segments which have more influence on the design of the total rewards program. The critical workforce does not necessarily have to receive more rewards than non-critical positions. Many of the total rewards valued by critical workforce segments should include intangibles such as mentoring, career planning, and flexibility that can be offered to the entire workforce without necessarily creating an additional expense (Phoenix, 2006).
Geico can take advantage of “Enhanced Profitability” by making sure employees are maximizing the total rewards available to them. Companies are transitioning from base pay salary compensation as the main benefit to attract and retain talent (Thurston, 2006). Geico’s total rewards program needs to be aligned with the financial strategy of the organization. An organization’s total reward package does not necessarily have to involve more cost. The strategy should consist of the organization offering highly valuable benefits that do not come at a substantial cost.
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 improve visualization of the total reward program such as adding online tools that allows employees and prospective candidates to view the benefits of each total reward. For example, a retirement model would allow employees to better appreciate the company’s retirement benefits. The second change is to update total reward information frequently. Total rewards communications should be updated frequently and made available to employees at all times (Sammer, 2007). Frequently updated information gives employees a reason to review that information (Sammer, 2007).
Total Rewards Improvements
Hypothetically, 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 understand what type of products the employees want. Geico can research employees buying habits to determine which transactional rewards are popular and unpopular. Geico can also review the use of relational rewards such as enrollment rates for learning and development courses.
The second change is to discuss the current total rewards package with employees. Connecting employer perceptions of employee of the total rewards packages requires a much more comprehensive approach than the traditional annual satisfaction survey (Phoenix, 2006). Geico should encourage communication between management and employees regarding total rewards. Continuous feedback allows an employer reach out to its employees on a frequent basis (Phoenix, 2006). Management would utilize this feedback to solicit views about the total rewards package.
Kaplan, S. L. (2007). Business Strategy, People Strategy and Total Rewards. Benefits & Compensation Digest, 44(9), 1-19. Phoenix, T. (2006). Rewards Transformation: Understanding the Internal Total Rewards Marketplace. Benefits & Compensation Digest, 43(9), 1-14. Sammer, J. (2007). Tell Them About It. HR Magazine, 52(11), 73-76. Thurston, L. D. (2006). Focus on total employee rewards and effective communications key to corporate success. Caribbean Business, 34(50), 31. Wilkinson, A. (2007). Defining a Now Era of Benefits. Employee Benefits, 3-4. WorldatWork. (2007). The WorldatWork handbook of compensation, benefits, & total rewards. Hoboken, NJ: John Wiley & Sons.
Determine which facets of the GEICO total rewards program align with the five (5) top advantages of a total rewards program outlined in Chapter 2 of the textbook and discuss your reasoning.
After reviewing GEICO’s website the first facet that stood out to me was the fact with the economic problems in the US was they had not had a decline in their workforce, which shows this is a company that values its employees. GEICO’s total rewards program is based on a compensation and competitiveness and it relates to other companies that are in the same market, like All State and State Farm. GEICO pays its employees based off their experience and skill level. Every position from entry level to executive was compensated well, because of the value they place on their employees and competitor’s pay rate.
Work-life is the second facet of the total rewards program. This part of the total rewards program are made up of practices, programs, policies and a philosophy that supports efforts to help them accomplish success at work and home, which is important to those that have families (WorldatWork, 2007). GEICO supports its employees by being prepared to support their employees when they are not able to work. With employees knowing that GEICO is prepared for the absence of employees this shows the focus that GEICO has on the work –life balance of its employees.
Acknowledgement, recognition and giving attention to employees because of the work, actions, behavior or effort is the Performance and Recognition (WorldatWork, 2007). Performance and Recognition is the third facet of the total rewards program. GEICO keeps its moral in the work place up by rewarding or recognizing its employees for doing a great job. When GEICO gives its employees recognitions or awards they are open for everyone to see because they are place on the company’s website.
The fourth facet of the total rewards program for GEICO is benefits, which helps maintain quality of life for their employees. According to WorldatWork, (2007), Benefits are platforms used by employers to offset the cash compensation that employees receive. Health insurance, savings plans, retirement and wage protection are benefits that provide security for employees and families. Health and dental, vision, short and long term disability and gym memberships are the benefits that GEICO provides to its employees after their first pay period.
The fifth facet of the total rewards program is career opportunities and development. Career Opportunities are plans and chances for employees to advance inside of an organization. When an organization supports an employee’s movement internally there is normally a plan in place to develop them so they can give their greatest value to a company (WorldatWork, 2007).
Development is learning that is made to improve the employee’s skills and competencies. The development makes the employees able to perform better than before and gives them the opportunity at advancement. Education and the need for development are very valued at GEICO. Employees and family members of GEICO are able to be reimbursed up to $5,200 dollars a year for tuition, books, and fees. GEICO also has a university that employees attend for training and updates in their field (GEICO Careers, 2012).
Create a strategy for ensuring that the GEICO plan addresses all of the advantages.
In order for GEICO to set up a strategy the company has to know what the end goal is and focus on it. In order for that to be done the company has to know what skills are needed and place trained and experienced employees in the right position to add value and help create a smooth working environment. GEICO should also find out what motivates the employees they bring onboard to get the most out of them.
Risk and reward management is another part of strategy that has to be used to balance the rewards. Those in positions of authority have to know the importance of skills and the cost of it and place employees in the right position. In most cases the more you pay the better output comes from employees. In order for performance to be managed correctly, the staff has to be well trained in their fields. This helps identify those that need training, different ways to improve production, and provide the organization with a way gauge the pay rates for their skill set. If these two strategies are followed this would save GEICO money, create a smooth working environment, and provide employees that are not the most skilled with something to strive for.
Evaluate the effectiveness of the communication of GEICO’s total rewards program based upon the Website’s descriptions of the benefits. Recommend two (2) areas for improvement.
One of the two changes that I would make at GEICO is in the rewards program. When looking online in their press release section most of the recognition goes to those in management. I have not held a position in the civilian world, but being in the military I do know that enlisted personnel are the ones that make things go and I am pretty sure that is how things work in the civilian sector too. In the civilian sector I see corporate like the officers of the military and those that’s not in corporate like the enlisted. Instead of just focusing on recognizing those in management GEICO should ensure that show recognition to those that do the dirty work and make things go.
The second change that I would make in GEICO’s total rewards program is in benefits. I have chosen this benefit because of health care and the cost of it. I would base the health care packages on cost and the needs of the employees. I would find out what benefits mean the most to employees and give the employees choices of benefits that work for them. I would do this as a trail to see if it worked and to see if it saved both the employee and the company in the long run.
Assuming employees are unhappy with the current plan, offer two (2) improvements or changes to GEICO’s total rewards program.
The first change that I would make to help improve the total rewards program is to try and save employees as much as possible. I would tackle this benefit because the cost of health care is forever on the rise and if done it would be one way to increase the quality of life of my employees. I figure If I can increase the quality of life of my employee this will also increase their satisfaction with the company and in turn increase they will be more committed to the company and be more productive. I would also see if employees would like to work 32 hours a week instead of 40 and keep full benefits to offset health care cost.
The next change that I would recommend is the ability to work from home. I have chosen this improvement because of the price of gas and its ability to create a better work life balance. I think this would be a great program because it will cut the cost for employees and it will also give them to better opportunities to attend to personal things. I am currently in a position where I am able to work from home and I love it because I currently live 20 miles away from my work place and with rising gas prices I am able to cut back on cost. This recommendation also comes from me because it works well when my daughter comes into town for the holidays, spring break, and summer vacation.
Even though organizations have rewards programs in place and want to meet every employee’s needs, I think that it something that is almost impossible because everyone doesn’t have the same need. However, I think that an organization can make up for rewards programs just by showing employees that you are working for them just as they are working for you. In most cases I think it’s not always about money but by just showing employees that you recognize the work that they are doing.