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	Enwisen Thought Leadership and Customer Success

	Leveraging On-Demand Total Rewards Statements to Attract and Retain Talent – and that is Only the Beginning…

How Yahoo! increased appreciation of total compensation, successfully introduced medical premium cost sharing and increased employee retention.

By Barbara Levin, Vice President of Marketing, Enwisen

Why On-Demand Total Rewards Statements?

Today, more than 30% of most employees’ total rewards packages are composed of non-cash compensation – 401(k) matching, stock options, tuition reimbursement, paid time off and the like. At a glance, this might seem like a good thing because benefits are becoming, according to most studies, increasingly important in maximizing employee retention. In fact, a recent SHRM/CNNfn Job Satisfaction Survey showed that benefits were the #1 ranked factor in determining overall employee job satisfaction.

So why does this create a dilemma for employers? Because unfortunately, the majority of employees do not understand their total compensation and benefits. This means that employers risk having talent leave for jobs that might pay slightly more while leaving valuable, but unrecognized, non-cash compensation – the value of unvested stock options, for example – on the table.

And we all know that using a pay stub to communicate total compensation is ineffective. Paystubs show only what you, the employer, have taken out. They do not show what you have contributed – such as the lion’s share of the employees’ health premiums, 401(k) matching contributions and much more.

That is why a growing number of companies are moving toward web-based Total Rewards Statements (TRS) – which can often be refreshed every month or pay-period for about the same dollars/effort as a one-time printed statement.

According to a survey by The Cedar Group, the number of firms with 500 or more employees that provide online total compensation statements is expected to grow from 20% in 2004 to beyond 60% in 2007.

With rewards information that is always up to date, and tools such as stock option calculators, these on-demand statements can have a measurable impact on a company’s ability to attract/retain employee talent and more.

Yahoo!, one of the most recognized brands in the world, with more than 11,000 employees worldwide and annual revenues of more than $5.2 billion, is an early adopter of online Total Rewards Statements, and has achieved a broad range of success with their use. Here is Yahoo’s story.

Yahoo! – An Early Adopter with Continued Success

According to Loree Farrar, Yahoo’s Vice President of Global Rewards, Yahoo! first began looking at the concept of an on-demand TRS back in 2004 as a means of executing on key strategic goals related to its workforce.

“Our first goal,” explained Farrar, “was to increase retention. We wanted to ensure that we were able to keep our top talent in a rapidly improving labor market.

“Second, we wanted to ‘get a bigger bang for our benefits buck.’ Through surveys and manager input, we had frequent indications that our Yahoos did not understand the value of their non-cash compensation. For example, it was important to help our Yahoos understand their equity. Our average employee had a stock option package worth 1½ – 2½ times their base pay – and yet they focused their concerns on salary.

“Last,” Farrar continued, “we needed to pave the way for medical premium cost sharing. We were preparing to introduce cost sharing to our workforce for the first time during our 2005 fall open enrollment, and we understood that it would be very difficult to ask our Yahoos to help pay for something if they didn’t understand its full value.”

The Yahoo! Approach

To meet its goals, Yahoo! developed the following requirements for the TRS project, determining that the solution had to:

Be easily customizable to reflect the GUI of other Yahoo! benefits sites – deepening the internal brand

Provide a single point of access to all benefits and rewards-related sites

Incorporate data from multiple data sources

Deliver tailored messages created by Yahoo! Comp and Benefits teams

Include modeling and “what if” capabilities – so Yahoos could, for example, model changes to their 401(k) or see what unvested stock options might be worth in “X” months or years

Yahoo! also wanted a hosted application vs. a statement that was custom-built from the ground up. “We wanted a solution that could be up and running quickly, with a low total cost of ownership and minimal drain on our HR and IT resources. However, it still had to be easily adaptable to our branding, business needs and data sources. We also recognized that our needs would evolve over time, and we wanted to work with a vendor who would be adding functionality across the product vs. us having to custom-build our own enhancements as we became more sophisticated in our utilization,” said Farrar.

Yahoo! selected Enwisen’s AnswerSource Total Rewards Statement and worked with Enwisen to create Yahoo’s My Life/My Rewards – a secure, web-based TRS that is available 24x7 from home or work and is refreshed with updated compensation data every pay period.

Phase I Impact – A Tremendous Response that Met Goals

My Life/My Rewards went live several months prior to Yahoo’s fall 2005 open enrollment, and was viewed by 96% of Yahoos upon launch And Yahoo achieved its goals:

	Voluntary turnover for the 3-month period after launch was significantly lower when compared to the same period from the prior two years
	There was a measurable spike in 401(k) enrollment – a continuing trend
	And medical premium cost sharing was implemented with very little pushback from employees

“Most important,” commented Farrar, “was that we had a tremendous response from our employees, line managers and C-Level executives (see box next page). The keys to success were the fact that the TRS was easy to understand, branded to look like Yahoo!, accurate, timely and secure.”

Upon each refresh, Farrar’s teams create personalized welcome messages based on location and situation, so Yahoos! logging on to the site might be greeted with messages such as, “Did you know that since you aren’t participating in the 401(k) plan, you are throwing away good money?” or “Yahoo! offers you other great bennies, including a beautiful fitness center, subsidized cafeteria, free lattes and other drinks, 24-hour foosball and more …” As a result, the site – which is now deployed for nearly 7,000 domestic employees – continues to be one of the most popular of Yahoo’s benefits-related portals.

Just a Few of the Hundreds of Emails HR Received
After the Launch of Yahoo’s TRS

This is awesome! … as a manager, it is often difficult to explain total compensation to my direct reports ... the value of what folks get, especially around stock and benefits, is shown so much more easily ... the personalization, for me, makes me feel so much more love from the company I work for!!!

Frankly. I am embarrassed I did not yet do 401k or ESPP. Now that I know their value, I will sign up this week!

I love this simple, clear communication of information! As an employee, a manager and a shareholder, I say THANK YOU.

This is the most impressive, clear, and complete benefits summary I've ever seen.

As an employee, I think it’s wonderful to see this snapshot, but as a manager, it gives me another tool to have my directs see all of their benefits – and what y! really does for them – all in one place. Great idea!

This is fantastic. Easy to read, really accessible and the pie chart next to the numbers is really helpful context for all the other great info. You rock!

Phase II – Helping Managers More Effectively Communicate with Employees

In May of 2006, Yahoo! rolled-out Phase II of its TRS project – a Manager View enhancement to Enwisen’s Total Rewards Statement. “In order for our managers to view their employees’ total compensation data, they had to go to HR to request reports. With the Enwisen solution, they can now view their direct reports’ compensation (with private HIPAA information excluded) in any number of ways – by entire department, individually, two employees side-by-side – they have full flexibility,” explained Farrar. “Additionally, because our TRS brings in multiple data sources, managers can see total compensation all in one place – equity positions, sales commission and year-to-date bonuses, for example.

“It was important that our managers had a way to facilitate effective compensation-related conversations with employees for the purpose of compensation planning, performance reviews and day-to-day manager-employee relationship building,” continued Farrar. “Now, they can see who is doing well on their sales commissions or who needs extra coaching. Or, be proactive in retaining their talent by identifying high contributors who are fully vested and might need some additional incentive. The possibilities for adding value are many.”

In the lessons learned area, Farrar commented that in the future, her team needs to do more to communicate the Manager View value to the general employee population – as they did have some initial reaction from employees who were surprised that the upstream direct report line had access to their compensation information. But, Farrar indicated that this is simply a part of managing change and ensuring that employees understand how this will help managers be more responsive to their individual needs and goals.

Conclusion

“We are very proud of this project. My Life/My Rewards has had a positive and far-reaching impact on our goals in the areas of retention; improving service and communications to our workforce; increasing understanding, awareness and adoption of benefits; health care cost containment; manager effectiveness and more. Our Chief People Officer has said that she thinks it is the most successful technology-driven solution she has ever seen, and I would have to agree,” Farrar concluded.

For More Information:

www.enwisen.com
(800) 685-5578x240

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