Total Rewards Practices Survey. Detailed Response Analysis

Transcription

1 Total Rewards Practices Survey Detailed Response Analysis Fall 2017

2 Table of Contents Building Total Relationships With Your Employees 3 Survey Background 4 Demographics of Survey Participants 5 Executive Summary - Total Rewards Philosophies 6 Executive Summary Health and Welfare Benefits 7 Executive Summary Retirement Benefits 8 Executive Summary Voluntary Benefits 9 Executive Summary Compensation Practices 10 Survey Exhibits on Total Rewards Philosophies 11 Survey Exhibits on Benefit Practices 19 Copyright 2017 Deloitte Development LLC. All rights reserved. 2

3 Building Total Relationships with your employees For many years, employers have designed compensation and benefit programs in an independent one-size-fits-all approach. More recently, employers are recognizing the need to design and communicate the value of the total package of pay and benefits. But what comes next? A new generation is entering the workforce, bringing a very different set of expectations and values. Not only is a competitive package of pay and benefits table stakes, workforce preferences are leading to unique benefits offering customization and portability. And, workers want to feel that their employer cares for them in new ways that include their wellbeing, career advancement, development, and recognition. In order to attract and retain the top talent of the next generation of workers, employers will need to offer a Simply Irresistible employment experience. And rewards programs will be a crucial element to building that experience. This survey report provides a benchmarking baseline to help you understand how your programs compare to other employers. The next step is to consider what employees value and to optimize your programs accordingly, ultimately creating an experience that stands apart as a differentiator in attracting and retaining the high talent workers of tomorrow. Discover Define Deliver Copyright 2017 Deloitte Development LLC. All rights reserved. 3

4 Survey Background Deloitte Consulting LLP and Empsight International LLC teamed up to conduct a Total Rewards Practices survey in the fall of The survey was designed to help organizations understand how their Total Rewards programs compare to others by collecting data with respect to total rewards philosophies, compensation and benefit practices and future strategies. In addition, the survey examined innovation and trends in areas such as wellness, private exchange adoption, pay practices and implications relating to movement to the gig economy. Nearly 200 organizations responded to the survey. However, responses to every question were not required for survey submission, so response rates vary in the report that follows. Throughout this report, we focus on the metrics collected and current issues and trends faced by employers today. We hope you find this information helpful as you plan for the future and design your programs to offer employees a simply irresistible employment experience. If you have any questions, don t hesitate to reach out to members of the survey team at Deloitte Consulting LLP and Empsight International LLC. Deloitte Consulting LLP: Jason Flynn Patricia Ryan Yon-Loon Chen Principal Specialist Leader Senior Manager Deloitte Consulting LLP Deloitte Consulting LLP Deloitte Consulting LLP jasflynn@deloitte.com patryan@deloitte.com yonlchen@deloitte.com Empsight International LLC: Jeremy Feinstein Managing Director Empsight International, LLC jeremy.feinstein@empsight.com Andrew Coccia Senior Manager Deloitte Consulting LLP acoccia@deloitte.com Kelley Lewis Specialist Master Deloitte Consulting LLP kellelewis@deloitte.com The statements in this report reflect our analysis of survey respondents and are not intended to reflect facts or opinions of any other entities. All survey data and statistics referenced and presented, as well as the representations made and opinions expressed, unless specifically described otherwise, pertain only to the participating organizations and their responses to the survey. Copyright 2017 Deloitte Development LLC. All rights reserved. 4

5 Demographics of Survey Participants A wide range of industries are represented in the survey with Consumer & Industrial Products (24%) representing the top participating industry [Exhibit 1]. Respondents from organizations with 5,000 or more fulltime employees represented the largest survey segment at 36%, followed closely by smaller organizations. Organizations of different sizes were fairly evenly represented [Exhibit 2]. Exhibit 1. Please indicate your organizational industry. Industry Category Percent of Total Consumer & Industrial Products 24% Energy & Resources 6% Financial Services 14% Life Sciences & Health Care 9% Professional Services 13% Public Sector, Education & Not-for-Profit 9% Taft-Hartley Plan 1% Technology, Media & Telecommunications 12% Other 12% Exhibit 2. How many U.S.-based full-time employees do you have? Number of Full-time Employees Percent of Total 5,000 and above 36% 500-4,999 33% Fewer than % Copyright 2017 Deloitte Development LLC. All rights reserved. 5

6 Executive Summary Total Rewards Philosophies Most organizations are not fully integrating their compensation and benefits programs yet but they are moving in this direction. Only around one in five surveyed organizations currently employs a fully-integrated Total Rewards program approach. However, improved integration is on the corporate agenda. Of the remaining organizations, three out of four are interested in increasing the integration of their compensation and benefits programs for the future. The drive toward integration directly correlates with the size of company, with larger organizations more likely to follow a fully integrated philosophy (about 24% of large organizations indicated that Total Rewards is fully integrated vs. 16% of small organizations). The survey results also indicate that the desire to integrate Total Rewards varies significantly by industry. For example, organizations in the financial services industry are far more likely to fully integrate their total rewards programs than those in the life science & healthcare industry. In our experience, those taking a fully integrated approach have greater resources to innovate and often have a business imperative to adapt more quickly to marketplace change. They are also less likely to be unionized, allowing them to adopt new ways of doing things more readily. Based on our survey: 36% of Financial Services organizations are fully integrated 25% of Energy & Resources organizations are fully integrated Only 9% of Life Science & Health Care organizations are fully integrated Integration Defined Fully Integrated All rewards programs are benchmarked and designed holistically. Partially Integrated Compensation and some rewards programs are benchmarked and designed together. Non-Integrated Compensation and benefits are benchmarked and designed separately. Copyright 2017 Deloitte Development LLC. All rights reserved. 6

7 Executive Summary Health and Welfare Benefits Benefits continue to be a key component of the recruitment and retention strategy. Per employee health costs remain high, with the average gross (1) cost of around $11,400 per year in 2016 and was expected to grow by around 4.3% in This cost varies by industry and appears to decrease slightly as employer size increases. On average, employers are requiring employees to share in 22.4% of this cost through payroll deductions. Many employers did see their healthcare costs rise when the required ACA mandates were implemented. However, as time goes on, the challenges related to complying with mandated ACA requirements lessen. Participants are seeking opportunities to control medical claim costs through wellness programs and telemedicine, but appear to have been less willing to make fundamental shifts in benefit philosophies by adopting high performance or narrow networks or private exchanges. Adopted Telemedicine - 76% of respondents report offering, or planning to offer Cost Controls Not Adopted Narrow Networks - 86% of companies use the standard vendor network While moderate challenges still exist, fewer than one in four employers reported that compliance with the Shared Responsibility rule, planning for the Cadillac Tax, and 30-hour rule requirements was very challenging. We believe that, having dealt with these mandates for a few years now, most employers have tailored solutions to meet their needs or have plans in place to mitigate issues such as the Cadillac Tax, should they come to pass. (1) Gross spend is defined as employer plus employee costs for coverage, excluding cost sharing at the point of service Wellness - 91% of respondents offer some type of wellness benefit Private Exchanges - 82% of companies are not currently considering offering Dental, Life, and Short/Long Term Disability plans continue to be offered as part of the core health and welfare program, consistent with prior practices: Dental PPOs prevail with 86% of respondents reporting that PPOs carry the greatest enrollment of dental subscribers Life insurance sees little change, with 66% providing life insurance plans offering a multiple of salary (vs. a flat amount) The majority of the organizations offer STD plans at 60% /3 % income replacement and LTD at 60% Copyright 2017 Deloitte Development LLC. All rights reserved. 7

8 Executive Summary Retirement Benefits Survey results indicate there is opportunity to increase employee education around saving for retirement. It s no surprise that defined contribution plans are the most prevalent source of retirement benefits offered by the survey respondents. Interestingly, our survey shows that one-third of the respondents continue to offer both defined benefit and defined contribution plans. Almost 70% indicate they have no changes planned for these programs in the near term. Whether it is due to a lack of planning tools, knowledge or other reasons, our survey reflects that the majority of employees in a defined contribution plan may not be saving enough for retirement. Approximately one-fourth of employees are contributing less than 5% of their pay and 44% are contributing 6% or less. Our results show that employers have the opportunity to continue to drive home the key messages concerning the importance of saving for retirement and determining what may be keeping employees from saving more. While most Defined Benefit plan sponsors do not anticipate making any changes to their retirement plan in the next 1-2 years, the majority of those that are considering changes anticipate taking actions to transfer risk out of the plan. These actions include offering lump sum windows and purchasing annuities, reducing the overall size of the plan obligations and reducing administrative expenses and burdens. Of the few employers that offer retiree medical benefits today, 40% allow new hires to grow into eligibility for retiree medical plans. The survey also indicates that the majority of companies offering retiree medical benefits are maintaining the status quo on benefits and eligibility. There is some indication that a significant minority of employers have implemented, or are considering implementing, some changes to their retiree health benefits to reduce costs and coverage. Copyright 2017 Deloitte Development LLC. All rights reserved. 8

9 Executive Summary Voluntary Benefits Voluntary benefits can both fill a gap and complement the employer s core benefit offerings. For example, voluntary benefits can provide a financial safety net to help employees with expenses that may not be covered by their core medical plan, e.g., cancer or critical illness. They may also make new and interesting benefits available to employees at a group negotiated rate. According to our survey, 47% offer voluntary benefits to their employees. The top three most popular offerings are employee purchase/ discount programs, critical illness, and group legal which are offered by more than half of the survey respondents. In addition to voluntary benefits, other employee incentives or company provided perquisites ("perks") are becoming increasingly popular ways to attract and retain employees. More companies in today s world are going casual in their workplace attire. Our survey shows that employee discounts for programs or services, casual dress days and flexible work schedules are the most popular perks. Such benefits serve to motivate and satisfy employees while typically being low cost or no cost to the employer. Copyright 2017 Deloitte Development LLC. All rights reserved. 9

10 Executive Summary Compensation Practices According to our survey, the primary basis for salary structure differentiation was geography or a combination of geography and industry. The median number of salary structures used by companies was 3.0. Merit pay The overall median merit increase forecast for 2017 was 3.0% across all employee levels. The majority of employees (67%) are eligible for short term incentives and the average award was 10.3% as a percent of base salary. Bonuses Almost 40% of survey respondents indicated that bonus payments were the same in 2016 as in 2015, while 22% indicated that they were higher, and 17% indicated they were lower. Short term incentive payouts The most frequently reported maximum short term incentive payouts (STIP) as a percent of target range was %, which was reported by 31% of the survey respondents. Additionally, 80% of companies budgeted between 0% and 14.99% of total annual budget/spending for short term incentives. Approximately 45% of surveyed organizations tie individual performance ratings to the individual component of short term incentives, while 38% tie individual performance to pre-defined individual objectives. The most frequently used operational components to determine short term incentives include: operational performance quality, productivity targets, customer satisfaction and service, while the most frequently used financial components to determine short term incentives include: operating income, net income, and EBITDA. Long term incentives The most frequently used Long term incentive (LTI) vehicle across all levels was Restricted Stock Units (RSUs), while senior management also tends to receive performance shares and stock options. The median LTI target as a percent of base for senior management was 25%. Shift differentials More than half (53%) of the survey respondents pay shift differentials. Payment as a dollar amount is twice as prevalent as payment as a percentage. Only 9% of the organizations pay shift differentials as both a dollar amount and a percentage. Copyright 2017 Deloitte Development LLC. All rights reserved. 10

11 Survey Exhibits on Total Rewards Philosophies Copyright 2017 Deloitte Development LLC. All rights reserved. 11

12 Total Rewards Philosophies Integration of Total Rewards Strategy Respondents were almost equally split in having a rewards program that is either partially integrated or not integrated at all [Exhibit 3]. Only a small percentage of respondents have moved to a holistic approach in the design of their rewards program. As may be expected, the level of integration varies by industry [Exhibit 4]. Exhibit 3. How integrated are your compensation and benefit strategies as part of an overall Total Rewards Strategy? Exhibit 4. The approach to having an integrated Total Rewards strategy varies by industry Copyright 2017 Deloitte Development LLC. All rights reserved. 12

13 Total Rewards Philosophies Integration of Total Rewards Strategy Integration appears to be a direct correlation with the size of the organization; large organizations are slightly more likely to adopt a fully integrated Total Rewards approach [Exhibit 5]. Exhibit 5. Level of Integration by Company Size (# of employees) Copyright 2017 Deloitte Development LLC. All rights reserved. 13

14 Total Rewards Philosophies Integration of Total Rewards Strategy Nearly three out of four organizations (74%) surveyed indicated that they planned to move to a fully integrated or more integrated program philosophy [Exhibit 6]. Exhibit 6. Are there future plans to move to a more integrated philosophy if your program is not yet fully integrated? Copyright 2017 Deloitte Development LLC. All rights reserved. 14

15 Total Rewards Philosophies Position to Market Organizations were asked to describe their desired position relative to the market for four categories: base pay, total cash compensation, benefits, and total compensation & benefits. The majority of the survey respondents desire to be at the Market Median for all four categories. A minority of the respondents have chosen to be significantly above market for any of the four categories. Interestingly, a third of respondents wish to be above or significantly above market with respect to benefits. Exhibit 7. What is your company s desired position relative to the market for base pay, total cash compensation, benefits, and total compensation & benefits? Copyright 2017 Deloitte Development LLC. All rights reserved. 15

16 Total Rewards Philosophies Position to Market When comparing an employer s desired position with respect to pay vs. the market, the size of the employer does matter. Over one-third of small employers desire to pay above the market for total compensation and benefits, while only 13% of large employers and 29% of midsized employers choose this approach. Exhibit 8. Level of desire to pay above the market for total compensation and benefits by company size (# of employees) Copyright 2017 Deloitte Development LLC. All rights reserved. 16

17 Total Rewards Philosophies Actual vs. Philosophy Participants were asked to indicate if their actual practice on base salary, total cash compensation, benefits, and total compensation & benefits was at, above, or below their desired market position [Exhibit 9]. Exhibit 9. Level of desire to pay above the market for total compensation and benefits by company size (# of employees) Copyright 2017 Deloitte Development LLC. All rights reserved. 17

18 Total Rewards Philosophies Other Considerations Most organizations surveyed do not plan to enhance their value proposition for contract or contingent workers [Exhibit 11]. Exhibit 10. Are you taking steps to enhance the employer value proposition of contract, contingent, or other off balance-sheet workers other than through higher pay? We are working with staffing agencies to ensure a minimum level of benefits are available to workers 10% We offer access to paid time off or other rewards allowable under applicable regulations 18% We are not planning to make changes at this time 72% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Level of response Copyright 2017 Deloitte Development LLC. All rights reserved. 18

19 Survey Exhibits on Benefit Practices Copyright 2017 Deloitte Development LLC. All rights reserved. 19

20 Medical Plans Per Employee Gross Costs and Employee Cost Share Exhibit 11. What is your expected 2016 per employee medical and Rx gross cost (employee + company share) for enrolled employees? Number of Full-time Employees Total Cost 5,000 and above $10, to 4,999 $11,211 Fewer than 500 $12,009 Number of respondents: 33 Average for all respondents = $11,389 Median for all respondents = $10,752 Exhibit 12. On average, what percent of total medical/rx costs do employees share in terms of payroll contributions (e.g. 20%)? Employee Share of Total Medical/ Rx Costs Percent of Respondents 0% - 15% 23% 16% - 20% 37% 21% - 30% 23% 31% - 40% 9% >40% 8% Number of respondents: 35 Average for all respondents = 22.4% Median for all respondents = 20% Copyright 2017 Deloitte Development LLC. All rights reserved. 20

21 Medical Plans continued Anticipated 2017 Cost Growth After Plan Design Changes Exhibit 13. After design changes (if applicable) and other strategies are implemented, how much do you anticipate your per employee costs will change in 2017 vs. 2016? Per Employee Costs Increase for 2017 Percent of Respondents Decrease Cost 11% No Cost Increase 33% 1% 5% Increase 22% 5% - 10% Increase 17% Increase of 10% or more 17% Number of respondents: 36 Average for all respondents = 4.3% Median for all respondents = 2.5% Copyright 2017 Deloitte Development LLC. All rights reserved. 21

22 Medical Plans continued Private Exchanges are Beginning to Catch On Exhibit 14. Please indicate your position as it relates to Private Exchanges for your Active Employee Population. Response Percent of Total Not considering a Private Exchange at this time 82% In the process of studying the feasibility of a Private Exchange Currently participating in a Private Exchange for active employees Very likely to (or decided) to implement a Private Exchange in 2017 or 2018 Number of respondents: 88 7% 7% 4% Copyright 2017 Deloitte Development LLC. All rights reserved. 22

23 Medical Plans continued Moderate Challenges Still Exist with ACA Compliance Exhibit 15. Please indicate the level of challenge involved in addressing the following provisions of the Affordable Care Act. (1=not challenging, 5=very challenging) Meeting the % threshold under Shared Responsibility Rules Average Level of Challenge 3.2 Information Reporting Requirements (e.g forms) High Value ("Cadillac") tax Administering the 30-hour requirement / look back rules Copyright 2017 Deloitte Development LLC. All rights reserved. 23

24 Medical Plans continued Telemedicine and Non-Standard Networks Exhibit 16. Do you offer a telemedicine benefit? Response Percent of Total Yes, through our health plan 37% Yes, using a stand-alone provider or providers 14% No, but we are considering adding this in 2017 or 2018 No, and we are not considering adding this benefit at this time Number of respondents: 88 25% 24% Exhibit 17. Do you use any nonstandard networks? Response Percent of Total No, we use the standard vendor network 86% Yes, a narrow network offered by the health plan 14% Yes, a narrow network that was customized for us 0% Number of respondents: 88 Copyright 2017 Deloitte Development LLC. All rights reserved. 24

25 Wellness Programs Over Half of Employers Surveyed Offer Wellness Programs and Incentives Exhibit 18. Do you offer wellnessrelated programs? Response Percent of Total Yes, with penalties for not participating 4% Yes, with incentives for participating 58% Yes, but no incentives or penalties apply 29% No, we do not offer wellness programs 9% Number of respondents: 77 Exhibit 19. If yes, what is the maximum annual incentive amount an employee with single coverage can earn if they participate in all wellness programs? Employee Incentive Percent of Total <$250 30% $250-$500 30% $500-$1,000 28% $1,000-$2,000 9% over $2,000 3% Number of respondents: 33 Average $497 Copyright 2017 Deloitte Development LLC. All rights reserved. 25

26 Medical Plans Tobacco and Spousal Surcharges are Becoming More Prevalent Exhibit 20. Do you have a penalty/surcharge for tobacco use? Number of Full-time Employees Percent with a Surcharge/Penalty 5,000 and above 54% 500-4,999 27% Fewer than 500 8% All employers, regardless of size 30% Number of respondents: 87 Average charge: $788 Exhibit 21. Do you have surcharge for working spouses covered on your plan but eligible for other coverage? Number of Full-time Employees Percentage with a Surcharge 5,000 and above 39% 500-4,999 20% Fewer than % All employers, regardless of size 24% Number of respondents: 89 Average charge: $1,200 Copyright 2017 Deloitte Development LLC. All rights reserved. 26

27 % of Respondents Dental Plans Types of Dental Plans Offered Most Employers Offer Dental PPO Plans Exhibit 22. What type of dental plan do you offer? 86.1% 2.5% 3.8% 7.6% Indemnity plan (no network) Mixed Model (can change between HMO/PPO each month) Dental HMO Dental PPO Copyright 2017 Deloitte Development LLC. All rights reserved. 27

28 Dental Plans continued Cost and Payroll Contributions Exhibit 23. What is your expected 2016 per employee dental gross cost (employee + company share) for enrolled employees? Number of Full-time Employees Total cost 5,000 and above $1, to 4,999 $788 Fewer than 500 $889 Number of respondents: 23 Average for all respondents = $900 Median for all respondents = $940 Exhibit 24. On average, what percent of total dental costs do employees share in terms of payroll contributions? Employee Share of Total Dental Costs Percent of Respondents 0% 20% 1% - 19% 10% 20%-25% 23% 26%-50% 30% over 50% 17% Number of respondents: 30 Average for all respondents = 32.6% Median for all respondents = 22.5% Copyright 2017 Deloitte Development LLC. All rights reserved. 28

29 Life Insurance Basic Life and Accidental Death & Dismemberment Exhibit 25. Please provide the amount of basic (employer-paid) life insurance offered for your most prevalent class of employees. Plan Details Percent of Total 2 x annual earnings, max 35% 1 x annual earnings, max 30% Flat dollar amount 17% No basic life insurance offered 6% Other 12% Number of respondents: 72 Exhibit 26. Please provide your basic life / AD&D premium rate per $1,000 of coverage. Plan Details Premium Costs Basic Life average rate $0.107 Range of rates by respondents $ $0.30 Number of respondents: 28 Basic AD&D $0.022 Range of rates by respondents $ $0.05 Number of respondents: 24 Copyright 2017 Deloitte Development LLC. All rights reserved. 29

30 Disability Insurance Short Term and Long Term Disability Plans Exhibit 27. Please provide the following Short Term Disability Plan features. Percentage Income Replacement Percent of Total 40% - 50% 12% 60% 24% 66.67% 28% 70% - 75% 20% 100% 16% Number of respondents: 25 Average of all respondents = 69% Median of all respondents = 67% Exhibit 28. Please provide the following Long Term Disability Plan features. Elimination Period Percent of Total 90 days 33% 180 days 64% Other 3% Percentage Income Replacement Percent of Total 40% 5% 50% 14% 60% 61% 67% 17% 70% 3% Employer Premium Subsidy Percent of Total 0% 19% 50% 8% 60% 4% 100% 69% Number of respondents: 36 Copyright 2017 Deloitte Development LLC. All rights reserved. 30

31 Retirement Benefits Types of Retirement Plans Offered Exhibit 29. What type(s) of retirement plans do you offer today? Plan Percent of Respondents Defined Benefit Only 6% Defined Contribution Only 62% Both Defined Benefit and Defined Contribution 32% Number of respondents: 65e Copyright 2017 Deloitte Development LLC. All rights reserved. 31

32 Retirement Benefits continued Defined Benefit Plans Exhibit 30. What is the primary type of Defined Benefit Pension Plan that you offer today? Plan Percent of Respondents Final Average Pay Plan 44% Hybrid Plan (e.g. Cash Balance, Pension Equity, Stable Value, etc.) 32% Career Average Pay Plan 8% Other 16% Number of respondents: 25e Exhibit 31. What changes do you anticipate making to the Defined Benefit plan in the next 1-2 years? Change Transfer risk out of plan (e.g., lump sum window, purchasing annuities, etc.) Percent of Respondents 23% Change investment strategy 4% Close plan to new entrants 8% Freeze benefit accruals 4% Terminate pension plan 4% No changes anticipated 69% Other 15% Number of respondents: 26 Copyright 2017 Deloitte Development LLC. All rights reserved. 32

33 Retirement Benefits continued Defined Contribution Plans Exhibit 32. Which features apply to the Defined Contribution (DC) plan? Please check all that apply. Feature Percent of Respondents Employer Match 90% Non-Elective Employer Contributions 41% Money Purchase Plan 2% Number of respondents: 68 Exhibit 33. What is the average employee deferral rate? (%) Average Employee Deferral Rate Percent of Respondents 0%-4.99% 26% 5%-5.99% 18% 6%-6.99% 18% 7%-7.99% 16% 8%-8.99% 9% >9% 13% Number of respondents: 55 Copyright 2017 Deloitte Development LLC. All rights reserved. 33

34 Retirement Benefits continued Defined Contribution Plans Exhibit 34. What is the most common employer match formula? For example, 50% of the first 6% up to a maximum of 3% of pay." Formula Percent of Respondents 50% of first 6% 14% 50% of first 4% 5% Other 81% Number of respondents: 57 Exhibit 35. What changes do you anticipate making to the Defined Contribution Plan in the near future? Change Percent of Respondents No changes anticipated 85% Redesign plan to increase benefits 6% Other 9% Number of respondents: 65 Copyright 2017 Deloitte Development LLC. All rights reserved. 34

35 Retirement Benefits continued Retiree Medical Plan Designs Exhibit 36. Is your Pre-65 Retiree Medical Plan open or closed? Plan Status Percent of Respondents Open 59% Closed 41% Number of respondents: 32 Exhibit 37. Is your Post-65 Retiree Medical Plan open or closed? Plan Status Percent of Respondents Open 60% Closed 40% Number of respondents: 20 Copyright 2017 Deloitte Development LLC. All rights reserved. 35

36 Retirement Benefits continued Post-65 Retiree Medical Cost Control Actions Exhibit 38. Are you considering (or have you implemented) any of the following alternatives for your Post-65 Retiree Medical Plan? Plan Design Considerations Modifying contribution policies Not Considering Considering in the Next 1-2 Years Already Implemented 60% 20% 20% Modifying plan designs 50% 31% 19% Modifying eligibility for participation Eliminating coverage for current retirees Eliminating coverage for future retirees Private Exchanges (to facilitate enrollment in Medicare plans) Adopting Group Medicare Advantage Plans Implementing Employer Group Waiver Plan (EGWP) for Rx 56% 19% 25% 94% 6% 0% 74% 13% 13% 52% 24% 24% 56% 31% 13% 69% 25% 6% Number of respondents: 17 Copyright 2017 Deloitte Development LLC. All rights reserved. 36

37 Vacation and Sick Time Programs Exhibit 39. If your organization offers a traditional structure for time off, enter the total number of vacation days an employee is eligible for each calendar year. Percentile Average 25 th 50 th 75 th New Hire years years years years years Exhibit 40. Indicate the number of sick days that full-time employees receive annually. Days Percent of Respondents 0 15% 3 3% 5 15% 6 23% 9 3% % Unlimited 3% Other 18% Number of respondents: 39 Copyright 2017 Deloitte Development LLC. All rights reserved. 37

38 Paid Time Off Exhibit 41. If your organization offers PTO instead of (or in addition to) a traditional vacation/sick program, enter the total number of days an employee is eligible for each calendar year. Salaried (percentile) Hourly (percentile) Average 25 th 50 th 75 th Average 25 th 50 th 75 th 0-1 Years Years Years Years Years Years Exhibit 42. Are holidays included in the PTO time above or are they separate? Percent of Respondents Separate 84% Included in PTO Days 16% Number of respondents: 37 Copyright 2017 Deloitte Development LLC. All rights reserved. 38

39 Paid Holidays Exhibit 43. How many paid holidays does your organization offer annually? Percent of Days Respondents 6 12% Number of respondents: % 8 18% 9 22% 10 18% 11 12% % Exhibit 44. How many floating/personal days does your organization offer annually? Days Percent of Respondents 0 41% 1 15% 2 18% 3 8% 4 8% 5 3% 6+ 3% Other 4% Number of respondents: 66 Copyright 2017 Deloitte Development LLC. All rights reserved. 39

40 Severance Exhibit 45. How are severance benefits paid at your organization? Days Number of weeks per year of service up to a tier, then flat amount thereafter Percent of Respondents 5% Formula is based on job level 25% One month per year of service 5% One week per year of service 20% Two weeks per year of service 13% Three weeks per year of service 2% No formula 10% Number of respondents: 40 Other 20% Exhibit 46. What is the maximum number of weeks that can be accrued by an individual? Days Percent of Respondents Other or no formal severance plan 36% less than 12 3% 13 2% 26 10% 39 3% 52 23% 78 3% 104 2% No maximum 18% Number of respondents: 39 Copyright 2017 Deloitte Development LLC. All rights reserved. 40

41 Other Voluntary Benefits Exhibit 47. Do you make any of the following benefits available for purchase on a fully voluntary basis? Benefit Percent of Respondents 529 Plans 15% Cancer Insurance 21% Critical Illness Insurance 52% Employee Purchase / Discount Programs 58% Financial Counseling 27% Group Auto / Home 40% Group Legal 52% High Limit Disability 8% Hospital Indemnity 17% Identity Theft Protection 27% Long Term Care 23% Permanent Life Insurance 17% Personal Accident Insurance 27% Pet Insurance 38% Umbrella Insurance 2% Number of respondents: 48 Copyright 2017 Deloitte Development LLC. All rights reserved. 41

42 Perquisites Exhibit 48. Besides annual incentive plans, what other employee incentives, or company provided perquisites ("perks"), does your company offer? Benefit Percent of Respondents Casual dress days 78% Cell phone allowance 47% Certification or licensure pay / reimbursement 26% Company car / car allowance 28% Employee discounts on products and services 83% Financial planning benefit 39% Flexible work schedule 81% On-site day care 11% On-site fitness 58% Paid parking 36% Subsidized meals 22% Tuition reimbursement* 36% Working from home 69% Number of respondents: 36 * The average annual tuition reimbursement, based on survey responses, is $4,000 per year. Copyright 2017 Deloitte Development LLC. All rights reserved. 42

43 Compensation Practices Salary Structure Design Exhibit 49. How many salary structures do you use in your organization? Number of Structures Percent of Total Not applicable 36% 1 19% 2 11% 3 9% 4-5 8% % >10 8% Number of respondents: 53 Average number of salary structures employed = 5.8 Median number of salary structures = 3.0 Exhibit 50. What is the primary basis for salary structure differentiation? Differentiator Percent of Total Geography 14% Combination of Geography & Industry 17% Key Functions 16% We do not use salary structures 21% Critical Workforce Segment 4% Business Unit 10% Other 18% Number of respondents: 71 Copyright 2017 Deloitte Development LLC. All rights reserved. 43

44 Compensation Practices continued 2017 Salary Structure Forecast and 2017 Merit Forecast Exhibit 51. What is your forecasted salary structure increase for 2017, if known? (Excludes Zeros) Bonus Number of Respondents Average increase Median Increase Hourly % 3.00% Salaried % 3.00% Exhibit 52. What is your Merit & Total Increase Forecast for 2017, if known? (Excludes Zeros) Survey Element # of Cos. Mean 25 th Percentile Median 75 th Percentile Overall Forecasted Merit Increase Budget for % 2.90% 3.00% 3.00% Executive % 2.86% 3.00% 3.00% Management % 2.90% 3.00% 3.00% Professionals % 2.93% 3.00% 3.00% Support / Non-Exempt % 2.93% 3.00% 3.00% Survey Element # of Cos. Mean 25 th Percentile Median 75 th Percentile Forecasted Total Salary Budget Increase for % 3.00% 3.05% 3.88% Executive % 3.00% 3.00% 3.50% Management % 3.00% 3.00% 3.50% Professionals % 3.00% 3.00% 3.50% Support / Non-Exempt % 3.00% 3.00% 3.50% Copyright 2017 Deloitte Development LLC. All rights reserved. 44

45 Compensation Practices continued Short Term Incentives Exhibit 53. What percent of employees are eligible for Short Term Incentives (STI) overall and by level? STI Eligible % STI Received Award % Average Award as % of Base Pay Overall 67.3% 62.7% 10.3% Executives 77.2% 70.6% 37.6% Management 75.9% 68.7% 14.9% Professionals 63.2% 58.9% 8.2% Support / Non-Exempt 48.2% 41.3% 3.8% Number of respondents: 57 Copyright 2017 Deloitte Development LLC. All rights reserved. 45

46 Compensation Practices continued Short Term Incentives Exhibit 54. How did bonus payouts in 2016 (for 2015 performance) compare to the prior year (2015 bonuses for 2014 performance) for the average incumbent who received a bonus? Bonus Percent of Respondents Higher 22% Lower 17% About The Same 39% Did not payout in % Do not have short term incentive program 10% Number of respondents: 69 Copyright 2017 Deloitte Development LLC. All rights reserved. 46

47 Compensation Practices continued Short Term Incentives Exhibit 55. Please summarize the weighting of short term incentive payouts by individual, company, and business unit performance by level. Metric Executives Management Professionals Individual Performance Company Performance Support / Non- Exempt 37% 42% 43% 37% 63% 63% 60% 51% Business Unit Performance 26% 19% 13% 17% Number of respondents: 43 Exhibit 56. What are your company's maximum short term incentive payouts (STIP) as a percent of target? Incentive Percent of Respondents 300% and above 4% Number of respondents: % 2% % 31% % 6% % 15% % 17% % 6% % 19% Copyright 2017 Deloitte Development LLC. All rights reserved. 47

48 Compensation Practices continued Short Term Incentives Exhibit 57. What is your organization's approximate total annual budget/spending for short term incentives, expressed as a percentage of operating income? (Operating income is earnings before interest and taxes, or EBIT. Nonprofits should use net surplus, or revenue minus expenses.) Incentive Percent of Respondents 0%-4.99% 33% 5%-9.99% 14% 10%-14.99% 33% 15%-19.99% 4% 20%-24.99% 8% >25% 8% Number of respondents: 24 Copyright 2017 Deloitte Development LLC. All rights reserved. 48

49 Compensation Practices continued Short Term Incentives Exhibit 58. How is the Individual component of the Short Term Incentive determined? Component Percent of Respondents Tied to Individual Performance Rating 39% Tied to Pre-defined Individual Objectives 32% Other 6% Not Applicable 23% Number of respondents: 80 Exhibit 59. How are Operational Components of the incentive determined? Component Percent of Respondents Operational Performance 42% Quality 30% Productivity Target 25% Customer Satisfaction 25% Service 20% Safety Performance 17% Unit or Department 16% Other 6% Employee Engagement 5% Brand Health 3% Number of respondents: 64 Copyright 2017 Deloitte Development LLC. All rights reserved. 49

50 Compensation Practices continued Short Term Incentives Exhibit 60. How are Financial Components of the incentive determined? Incentive Percent of Respondents Cash Flow 14% Earnings Per Share (EPS) 11% Earnings before Interest and taxes (EBIT) 11% EBITDA 17% Net Income 17% Operating Income 26% Return on Capital 3% Revenue 34% Other 20% Not Applicable 14% Number of respondents: 65 Copyright 2017 Deloitte Development LLC. All rights reserved. 50

51 Compensation Practices continued Long Term Incentives and Targets Exhibit 61. What types of long term incentives (LTI) does your organization award by level? LTI Senior Management Middle Management Exempt Non-Exempt Not Eligible for LTI 28.3% 51.7% 73.3% 73.3% Stock Options 21.7% 8.3% 5.0% 3.3% Stock Appreciation Rights (SARs) 3.3% 3.3% 1.7% 0.0% Restricted Stock Units (RSUs) 30.0% 26.7% 11.7% 6.7% Employee Stock Ownership Plan (ESOP) 10.0% 10.0% 8.3% 6.7% Long term Cash 13.3% 6.7% 1.7% 1.7% Performance Shares 28.3% 10.0% 0.0% 0.0% Other 8.3% 3.3% 0.0% 0.0% Number of respondents: 60 Exhibit 62. What were your Long Term Incentive Targets for 2016 (as a percent of base salary) by level? Level # of Cos. Mean 25 th Percentile Median 75 th Percentile Senior Management % 0.0% 25.0% 55.0% Middle Management % 0.0% 0.0% 20.0% Exempt % 0.0% 0.0% 0.0% Non-Exempt % 0.0% 0.0% 0.0% Copyright 2017 Deloitte Development LLC. All rights reserved. 51

52 Compensation Practices continued Shift Differentials Exhibit 63. Does your company pay shift differentials? Response Percent of Total No - We don't pay Shift Differentials 47% Yes - In Dollar Amounts 29% Yes - In Percents 15% Yes - Both Dollar Amounts & In Percents 9% Number of respondents: 68 Exhibit 64. Which job levels are eligible for Shift Differentials (also known as Shift Premiums)? Job level Percent of Total Non-Exempt 97% Exempt Supervisors 18% Non-Exempt Supervisors 38% Other 9% Number of respondents: 34 Note: for all survey questions related to shift differentials, respondents were asked to use the following definition of shifts: 1 st Shift = day shift (e.g., 7 am to 3 pm) 2 nd Shift = evening shift (e.g., 3 pm to 11 pm) 3 rd Shift = night shift (e.g., 11 pm to 7 am) If 12 hour shifts are in place, respondents were asked to complete 1 st shift as first 12-hour shift and 2 nd shift as second twelve hour shift and leave 3 rd shift blank. Copyright 2017 Deloitte Development LLC. All rights reserved. 52

53 Compensation Practices continued Shift Differentials Exhibit 65. Shift Differential Practices Practice Yes No 1) Require a minimum number of hours to be worked within the shift zone for the time to be eligible for shift premium payment? (Ex: must work at least 2 hours in the defined shift zone) 2) Do you pay shift premium for early arrival and late departure time (hours outside of the defined shift zone)? 3) Do you require the employee to arrive at or after a certain time within the zone to be eligible for shift premium? 4) Do you pay more than one premium concurrently - such as paying shift, plus weekend, plus holiday shift during a single shift span of time% 5) Do you pay shift premium on non-worked time such as Paid Time Off, Shift Guarantee (fill time), holiday (non-worked benefit time)? 6) Do you limit total premium to a multiple of base pay such as no more than 2x or 3x base pay? 44% 56% 39% 61% 45% 55% 55% 45% 23% 77% 10% 90% Number of respondents: 32 Copyright 2017 Deloitte Development LLC. All rights reserved. 53

54 About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a detailed description of DTTL and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright 2017 Deloitte Development LLC. All rights reserved. 36 USC