Discussion #1 After reviewing the reading material about the terms differentiation and segmentation, provide two ways an organization can segment it’s workforce, and include how

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 1/25

Module 4: Designing and Implementing a Total Rewards Program

Topics

Topic 1: Core Steps of Designing a Total Rewards Philosophy

Topic 2: Segmentation of the Workforce

Topic 3: Implementing the Total Rewards Philosophy

Topic 4: Communicating/Marketing Total Rewards

Topic 5: Conclusions

Topic 1: Core Steps of Designing a Total Rewards Philosophy

Nine core steps in the strategic marketing approach of designing a total rewards program and

implementing it are summarized in table 4.1 below. In this first topic, the focus is on steps 1-5 (the

designing steps) and each is described in sequence. The remaining steps (6-9) are addressed in

topic 3. The steps are presented in a sequential manner, but the organization may perform some

of the steps concurrently. The steps may also vary if the organization is a start-up organization,

one that is long established, or if a total rewards strategy is already in place.

Table 4.1 Core Steps in Designing and Implementing Total Rewards

Designing:

Step 1: Understand the organization

Step 2: Define the requisite KSAs required for success

Step 3: Identify current and potential employees' "drivers"

Step 4: Design a total rewards philosophy statement

Step 5: Assess financial costs and plans with key leadership

Implementing:

Step 6: Pilot the total rewards assumptions

Step 7: Develop timeline, obtain vendors, assign duties

Step 8: Implement plan

Step 9: Communicate and market

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 2/25

Step 1: Understand the Organization

Providing rewards for the purpose of attracting, retaining, and motivating employees with the

requisite KSAs in order to enable the organization's success is the ultimate goal of the total

rewards approach. Therefore, an understanding of the organization's business objectives, mission,

vision, values, and business model is essential in the process of designing and implementing a total

rewards program. Achieving this understanding begins with how the business creates marketable

products, services, or expertise, and markets, sells, and delivers them, along with a review of the

organization's mission, vision, values, and culture (Kaplan, 2005). Also important is being familiar

with the business model, revenue generation strategy, the business life cycle, business design, the

current brand impact, and geographic requirements. Organizations achieve their success in various

ways; some take a centralized approach while others take a decentralized one. Some organizations

have socially conscious values they hold important, while others do not. Some organizations are in

the infancy stage of their growth, others are stagnant, and still others are experiencing huge

growth. Many organizations are structured as not-for-profit, some are for-profit, some are publicly

traded, and others are privately held; and then there are government agencies and the military.

There are tremendous differences among these organizations, and their differences and

uniqueness must be examined.

Some of the questions helpful in understanding the organization and leading to an effective design

of the total rewards strategy are listed in table 4.2 below. Although more questions may need to

be asked to reach a good understanding of the organization, these are a good start:

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 3/25

Table 4.2 Questions for Understanding the Organization

1. What are the vision, mission, and objectives of the organization? Will any of them

change in the next three years?

2. What are the values of the organization? What social values have been demonstrated

outside the organization? On what does the organization want to have an impact? Are

there written values and, if so, are they demonstrated?

3. What is the culture of the organization?

4. How does the organization generate revenues today? Will that change over the next

three years?

5. What business cycle is the organization in (stagnant, growth, decline)? Are any

mergers, acquisitions, downsizing, or global expansion planned?

6. What business design supports the organization's ability to make money? (For example,

is the design a cost-savings or a market-leader approach?)

7. Does the organization have an existing employment brand?

8. If so, what is the value of the organization's employment brand today in attracting and

retaining employees?

9. Where does the organization want to be geographically?

10. Does the organization have a clear marketing brand and, if so, what is it and how is it

viewed by the public?

The questions presented in table 4.2 are best asked in person and directly to senior management.

Asking the questions in person will allow for follow-up questions and clarification. In addition,

existing documents describing the items mentioned, such as the vision, mission, business

objectives, and values, are likely available and should be gathered. The purpose of this step is to

understand as much about the organization as possible because the success of the organization is

the end result being sought.

Step 2: Define the Essential KSAs Required for Success

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 4/25

This step makes explicit what knowledge, skills, and abilities (KSAs) are required to accomplish the

business objectives, not only for today but also in the future. It aligns the total rewards strategy

with the business strategy. The specific KSAs (and the people who possess them) are the target for

recruitment, retention, and motivation. The organization may already have the KSAs identified by

level of employee (i.e. leadership, management, general employee population) and by business

function (i.e. marketing, finance, accounting, operations, human resources, customer service,

research and development). If so, they will need to be validated, keeping the current and future

business objectives and business model in mind. If the KSAs are not already identified, the steps of

job analysis, job description, job specification, and job evaluation (discussed in module 2) are used

to identify them. The KSAs are grouped by KSA set, which is a type of segmentation by KSAs

needed by job function (such as sales, accounting, service, research) and by level within the

organization. The segmentation by KSA set is important because employees or potential

employees of each KSA set may have different drivers for wanting to work for and remain with the

organization (Kaplan, 2005). Of course, other segmentation may occur as well. In table 4.3,

questions about the KSAs are posed that need to be answered.

Table 4.3 Questions About Knowledge, Skills, and Abilities (KSAs)

1. What KSAs are required by level and by function to generate revenues (at each stage)?

This question should be asked of major KSA sets within the organization by level and

function.

2. Will the KSAs needed by level and function change in the near future? How about in

three years?

3. Are there gaps in the existing KSAs that need to be addressed?

4. What has been the turnover by KSA level and function?

5. For each KSA set (by level and function), where are they located geographically? Are

there any cultural differences by KSA set?

The KSA questions can be answered through personal or electronic interviews or surveys. After

the study is done it needs to be verified by the key leadership of each function and each level of

the organization.

Step 3: Identify Current and Potential Employees' "Drivers"

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 5/25

The research in this step leads to the identification of the "drivers," which are the composite

wants, needs, and preferences of current and potential employees. As in consumer product

marketing, in which the product is designed based on the consumer's drivers, the reward program

will be designed based on the employee's drivers. This step requires internal and external research

and an evaluation of the two. Internally, what is working (or not) in attracting, retaining, and

motivating employees is explored. Externally, what is attractive to the larger population is studied,

including other organizations, geographic locations in which the organization may be expanding,

and demographic groups that may not be in the workforce currently but will be in the near future.

A. Internal Research

It is important to include in the research the current demographic and psychographic composition

of the current population of employees and potential employees, again by level and job function.

Table 4.4 provides some of the questions to be answered internal to the organization.

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 6/25

Table 4.4 Questions for Internal Research

1. What challenges for recruitment are foreseen in the labor market?

2. What challenges of retention are foreseen within the organization?

3. What is the composition demographically of the current employees? What is the

current geographic disbursement of employees?

4. What is the retention rate overall, and what is the rate by specific KSA set (by level and

function), by department, by division, by geographic location, by demographic?

5. What is the time to hire a specific KSA set (by level and function), by department, by

division, by geographic location, by demographic?

6. What is the level of satisfaction, in general, of the employees? What is the level of

satisfaction of the employees with each of their rewards?

7. If given a list of rewards (monetary, non-monetary, and work experience), what is the

most important to the current employees in order to retain and motivate them? There

may be items that are relatively inexpensive, or even cost neutral, that are important to

attraction, engagement, and retention. Having the employees rank their preference for

rewards is an effective way to gain this information, in addition to determining price

points if the employee is asked to pay for a benefit (insurance, for example).

8. Have current employees been tempted to leave in the past six months? If so, what

caused them to think about leaving? What would entice them to leave today?

The data may be gathered though a variety of means: telephone surveys, electronic surveys,

individual interviews, focus groups, or paper-and-pencil surveys. After the information is gathered,

the organization can use statistical modeling techniques that allow analysis of other existing

employee data to better understand employee preferences. This statistical modeling will help to

identify trends by the various categories (level, functional job groups, and demographics). It will

also point out inconsistencies in the answers. For example, what employees really care about, as

measured by things such as making a decision to leave the company, are sometimes different than

what they say they care about. The statistical modeling provides human resources professionals

with more robust information on which to design their total rewards program. If statistical

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 7/25

modeling is unavailable the team working on the total rewards program design can read through all

the data, synthesize the key findings, and validate it with focus groups of employees at all levels of

the organization.

B. Research External Data

Reliable normative data, such as Mercer's What's Working data on country- and region-specific

employee perceptions and attitudes about work, help to determine how the information you have

gathered internally compares to external data. Information may also be gained from the Bureau of

Labor Statistics; WorldatWork; through local, state, and national Society for Human Resource

Management Societies; and through partnering with other organizations to benchmark data and

practices. Ideally, the same information about reward preferences of potential employees and

what would cause them to leave their current jobs to work for another organization would be

obtained. This information can be gained through a variety of methods, such as published reports,

focus groups, written or electronic surveys, telephone interviews, etc. Some organizations that

conduct employee satisfaction surveys for large firms share a composite of the results. Telephone

interviews or focus groups allow the facilitator to ask probing or follow-up questions easier than

can be done in a written survey. Table 4.5 poses some of the questions that need to be answered

external to the organization.

Table 4.5 Questions External to the Organization

1. What are outside experts' reports about challenges for recruitment by job function and

geographic location?

2. What demographic trends are reported (increases, decreases by segments)?

3. What are psychographic trends for reward preferences by demographic segment?

4. What is the economic forecast domestically and globally?

5. What rewards are your competitors offering? What is the competitors' experience with

attracting, retaining, and motivating employees? The competitive market survey for

rewards was described in an earlier module. Most organizations conduct this survey on

an annual basis, so it may already be current and available.

C. Compare Internal and External Research

After the internal and external data is gathered, the two sets are compared for consistencies and

inconsistencies. As with the other two steps, statistical modeling programs are available to help

synthesize the data and identify trends, consistencies, or inconsistencies. The computer programs

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 8/25

are also helpful in identifying existing challenges versus future ones, based on such things as

population changes, growth of the current organization, expansion into new markets, introduction

of new products and services, downturn in the economy, and changes in the business model.

Table 4.6 Comparative Questions

1. Is the internal data consistent with the external data?

2. What, if anything, differs?

3. What issues are there with recruitment, retention, and motivation internal to the

organization that may be influenced by the external population?

4. Given the internal and external research, what challenges must we address through the

rewards programs in order for the organization to be successful?

Step 4: Design a Total Rewards Philosophy Statement

The design of the total rewards philosophy statement is what Kaplan (2005) calls a total rewards

road map. A total rewards philosophy is a statement of the total offerings of rewards, what some

refer to as the employment brand of the organization. This is a formulation of the total rewards

strategy from a big picture perspective, one that determines the general areas of focus by segment

of the population. The resulting portfolio of rewards is designed to align the rewards strategy and

the business strategy, to reach the goal of attracting, retaining, and motivating employees with the

requisite KSAs to achieve the business objectives.

Given what was learned through the internal and external research, the organization is now ready

to propose what rewards would attract, retain, and motivate the employees most needed for the

company to be successful. They will need to determine the mix of the monetary, non-monetary,

and work experience elements to attract, retain, and motivate respective employees by level and

by job function or other segments they have identified as important. These are decided with the

culture and values of the organization in mind. Other decisions will be made regarding items such

as what rewards will be designed for each segment, eligibility, how the rewards will be earned and

awarded (performance versus entitlement, individual versus team, fixed versus flexible, offered to

all, part time or full time), competitive positioning of compensation and benefits, and if the

rewards will be administered internally or externally (through outsourcing), and the timing of the

introduction of the rewards. The organization will also need to ensure that pertinent laws and

regulations affecting rewards and their administration are followed. First, however, a draft total

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 9/25

rewards philosophy statement is prepared so that the financial costs and commitment can be

measured. This step also begins the process of setting baseline measurements for the key

objectives of the rewards philosophy. Table 4.7 below, from the Constellation Energy Web site

(2008), shares excerpts of a sample total rewards philosophy statement.

Table 4.7 Total Rewards Philosophy Statement: Constellation Energy

We believe our employees are the brightest stars in our constellation. That's why we invest

almost $1 billion annually in total rewards. At Constellation, total rewards is more than just

pay. It is the combination of pay, benefits, learning and development, and the work

environment. Together, these elements help make Constellation a great place to work. By

integrating our total rewards offering, Constellation delivers to employees a work experience

that rewards their contributions, supports their work and life needs, and provides the

opportunity to learn and to grow.

Pay: Our total compensation philosophy is to pay employees competitively and to vary

rewards based on individual and company performance.

Benefits and Time Off: We offer competitive benefits to our employees on a partnership

basis, including health care choices, a retirement plan, insurance coverage choices, and

flexible spending accounts.

Development: Professional advancement is important to everyone at Constellation.

Employees who continuously update their skills are more satisfied with their work and

contribute more to our collective success.

Work Environment and Community: A positive work environment, opportunities to give

back to the communities where we live and work, and the ability to balance work and life

demands are important to all of us.

Diversity: We're equally proud of the success of our programs that promote minorities and

women, and we continually reaffirm our commitment to equal employment opportunities.

Source: Constellation Total Rewards Statement. (2008). Retrieved May 4, 2008, from

http://www.constellation.com/portal/site/constellation/menuitem.37364b5370ec64875fb6

0610025166a0/

Step 5: Assess Financial Costs and Discuss Costs/Objectives/General Plan with Key Leadership

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 10/25

Rewards can be a very large percentage of an organization's operating expenses. In fact, for many

it is the largest single expense. The step of assessing the financial implications puts the expense

into perspective and helps to gain concurrence and buy-in of the top leadership and management

of the organization. Although costly, offering the right rewards can maximize the reward dollars

spent. Offering the right rewards, while at the same time eliminating those ones that employees

may not value, ensures that time and money is not wasted. Key leadership must be involved in the

total rewards initiative throughout the process of designing and implementing them, but at specific

times the commitment must be checked. Prior to the final decisions being made, as with the

implementation of any large and important initiative, it is crucial that the decisions are officially

agreed upon. It is advisable to keep a written record of the decisions made in case reference is

needed later.

Topic 2: Segmentation of the Workforce

Before the final steps of implementing the total rewards plan are addressed, the use of

segmentation will be described to ensure an understanding, because it is a key activity and

perhaps one that is new to some human resource professionals. Segmentation is a term used in

marketing (as well as other disciplines) to refer to how the population divides according to

differentiating factors. In human resources, the segments can be psychographics (individual

personality preferences) such as career goals, desired schedules, and the need or preference for

certain benefits or work experience. Segmentation can also be made by demographics, level of the

organization, or job function. Segmentation by demographic group can include, for example, men,

women, age groups, ethnicity, marital status, or education.

Organizations use segmentation of the population to target their marketing efforts to groups of

consumers who may purchase products or services. The organization offers unique features in its

products or services that the targeted population prefers (for example, minivans for families,

pickup trucks for farmers, or alternative fuel vehicles for the cost conscious or environmentally

conservative). They also design their marketing efforts to reach the targeted audience by creating

advertisements that appeal to the particular segment they are targeting. To communicate the

unique features of the product or service, key messages and the medium for the communication

are chosen to reach and appeal to the targeted population. In the same way, an organization can

segment the internal and external workforce population, determine the unique features (monetary,

non-monetary, and work experience) desired by each, and design a total rewards program

customized for the individual segments of the organization or the individuals they are seeking to

hire.

There are many ways in which segmentation of the workforce can be achieved. Three examples

follow. The first is suggested by Mercer (2007), the second by Erickson and Gratton (2007) in a

Harvard Business Review article. The third is an example from a fast food company dealing with a

problem of very high turnover of employees. Keep in mind that how employee groups are

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 11/25

segmented will likely be unique to each organization. Specific job families, geographies, or skill

sets do not consistently map to specific workforce segments across organizations. Rather,

segments that appear in an organization will depend entirely on the role of different employee

groups of the organization, its geographic disbursement, its individual values, culture, or business

model. The way segments are identified may also vary outside the organization.

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 12/25

Table 4.8 Segmentation by Value Created

In a study by Mercer (2007), they found the following segments to be beneficial as they

attempted to segment the employees. They found the employees could be grouped into

categories that were either performance drivers, performance enablers, or legacy drivers.

Segmentation by Value Created

Performance Drivers

Performance drivers are employees who directly create

value for the organization. This segment could include

employee groups or functions such as marketing in

consumer products companies, research scientists in

pharmaceutical organizations, chefs in restaurants, or

athletes in the National Football League (NFL).

Performance Enablers

Performance enablers are employees who support

value creation by facilitating the efficiency of

performance drivers, including human resources or

finance staff at many organizations. Other examples

could include the coaches and trainers in the NFL and

time and motion experts in restaurants.

Legacy Drivers

Legacy drivers created value for the organization

historically but no longer drive competitive advantage.

For example, production and circulation functions in a

media organization may become legacy drivers as

content is increasingly delivered online. In the

restaurant business this could be a former celebrity

owner, or in the NFL it could be a coach that once led

the team to the Super Bowl but is no longer in tune

with the latest play strategies.

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 13/25

The identification of the segments is only the first step in the research process. The individual

employees will also need to be interviewed or surveyed to determine if there are common rewards

in each segment the organization could offer in order to fulfill their needs and desires.

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 14/25

Table 4.9 Segmentation by Drivers for Engagement

Segmentation: by Drivers for Engagement. Another set of segments comes from authors

Erickson and Gratton (2007), who were able to see segments differentiated by roles the

employees wanted the organization to play for them. Their studies suggested that work

played six general roles, which correspond to six types of employees, and were based on

psychographic characteristics. Each worker segment, they found, cares deeply about several

aspects of the employee-employer relationship and little about the others.

Segmentation by Drivers for Engagement

Expressive Legacy

Expressive legacy.These employees care about creating

something with lasting value. What appears to engage

them are autonomy, entrepreneurial opportunities,

creative opportunities, and stimulating tasks that

enable continual learning and growth.

Secure Progress

Secure progress. For these employees, work is about

improving one's lot in life and finding a predictable

path. They are engaged by fair and predictable rewards,

stability, structure, routine, and career training.

Individual Expertise and Team Success

Individual Expertise and Team Success. This group of

employees value that work is about being a valuable

part of a winning team. They prefer collaboration, fun,

stability and structure, opportunity to gain competence,

and the opportunity to leverage their personal

strengths.

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 15/25

In this example, as in the first, segments have been identified, but in this case some of the drivers

have been used to separate the groups. The organization would need to conduct further study to

see if the segments fall into certain demographics, geographics, KSA sets, functional job

categories, or levels in the organization. It may be discovered that, for example, certain age groups

fall into a specific category or possibly that individuals in specific job categories such as

accountants, human resource professionals, sales staff, customer service representatives, or

information technology specialists fall into identifiable categories. If so, this information would be

very helpful in planning the rewards philosophy.

Risk and Reward

Risk and reward. For this segment, work is one of

multiple opportunities to live a life filled with change

and excitement. They are motivated by the opportunity

to improve personal finances, flexibility, the

opportunity to choose tasks and positions from a long

menu of options, and open-ended tasks and approaches

to getting work done.

Flexible Support

Flexible support. These employees see work as a

source of livelihood but not yet (or not currently) a

priority. They want flexibility, well-defined vacation and

family benefits, and well-defined work routines. They

also like the ability to plug in and out of tasks and

assignments with ease, and virtual, asynchronous tasks

and assignments. They want to have fun.

Low Obligation and Easy Income

Low obligation and easy income. This final segment

sees work as a source of immediate economic gain.

They are engaged with jobs that are relatively easy to

come by and that have well-defined work routines,

lucrative compensation, and benefit packages. They

also desire stability, security, and recognition.

4/6/22, 1:10 PM Module 4 Commentary

https://learn.umgc.edu/d2l/le/content/631655/viewContent/25083777/View 16/25

Table 4.10 Segmentation by Specific Desires

Segmentation: by Specific Desires. A third example of segmentation of employees is similar

to the others and continues to demonstrate that there are various groups that can be

identified through segmentation. A study was conducted in a fast food company to discover

how they could improve their recruitment, hiring, and retention of employees. The

organization was facing a very large turnover problem, which was not only creating

recruitment and training costs to soar, but also hindered the ability to serve customers due

to a constant shortage of employees. The following segments of employees were identified

through a series

Collepals.com Plagiarism Free Papers

Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.

Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS

Why Hire Collepals.com writers to do your paper?

Quality- We are experienced and have access to ample research materials.

We write plagiarism Free Content

Confidential- We never share or sell your personal information to third parties.

Support-Chat with us today! We are always waiting to answer all your questions.