Hay Group consultants recommended an automated employee services center
In 2002, most of Avaya's 20,000+ employees had little or no understanding of the actual value of their retirement packages, their health-care plans, and other company benefits that account for up to 40% of total rewards. Hay Group consultants recommended an automated employee services center that provides each employee with 24/7 up-to-date information on their pay, their retirement savings, and their benefits.
Results were dramatic: Today more than 90% of the company's employees say they have a better understanding of their total rewards. The solution has been adapted as a recruiting tool. And in 2004 Avaya was awarded first place in Trusted Communication by the Profit Sharing Council of America.
Employees who understand their value
Avaya, a global telecommunications networking solutions provider, has operations in 49 countries and annual revenues in excess of $5 billion. The challenge: its 20,000+ employees did not fully understand the value of their medical and dental insurance, pensions, 401(k) plans, tuition reimbursements, sick days, and other benefits. It risked losing good employees to organizations offering more base pay but less compensation overall—because their benefits may not be as generous as Avaya's. In a competitive labor market with rising benefits costs, that's like tossing money out the window. The communications giant recognized the importance of communicating to its own people about the value of their total rewards.
Avaya had another reason to communicate effectively about its benefits: "Our focus is on a performance-based culture," says Bruce Lasko, Avaya's senior manager of global compensation and benefits. Employees in a performance-based culture must understand the value of their benefits as part of their total rewards—especially in an aggressive industry where benefits may account for up to 40% of total remuneration. Avaya executives wanted to tell employees all about the monetary value of their benefits. And because benefits differ from employee to employee, they needed to find a way to reach each person individually.
Hay Group consultants took the time to understand the tech-savvy culture where nearly every employee has Internet access either at work or at home and developed a recommendation called My Total Rewards. Combining data from a dozen separate sources, My Total Rewards integrates Avaya's compensation and retirement, education, health and welfare and other benefits programs. And it presents to employees the value of these programs in real dollars.
When employees log on to My Total Rewards they see a complete personalized breakdown of their compensation: tables, pie charts, and simple explanations of their base pay, their targeted award amount, their benefits as a percentage of their total rewards, and a breakdown of the employee's and Avaya's costs for each benefit. Employees at every level, exempt and non-exempt, can find everything they need to know about the value of their health care, disability, retirement, and other benefits.
In the My Retirement section, for example, employees can see the current market value of their 401(k) plans as well as Avaya's and their own contributions. This page takes the mystery out of pension plans—showing projected monthly benefits at various retirement ages. My Retirement even shows estimated Social Security benefits upon retirement.
A section called My Retirement Plan Modeling provides a calculator. Employees enter the age at which they want to retire, and they enter assumed 401(k) contributions as well. One click and a pie chart shows how much the employee should expect to earn in retirement from pension, 401(k) and Social Security.
My Stock Programs shows the value of employee-owned company stock, vesting dates, option information, and the current price of Avaya stock. Links to company policies, Frequently Asked Questions, a glossary of benefits and compensation terms, and company events make My Total Rewards a natural Web destination for Avaya employees.
Get them coming in the door
My Total Rewards results are dramatic: More than 92% of employees have logged on to My Total Rewards. In an Avaya employee survey employees were asked, "Before visiting My Total Rewards, were you aware of the value of your total rewards (compensation + benefits)?" Only 53.1% said yes. When asked, "Overall, My Total Rewards has increased my understanding of the value of my 'Total Rewards' package," an impressive 91.3% agreed.
Hay Group customized a version of My Total Rewards for recruiters. This useful, powerful tool allows candidates to log on and see what their estimated value will be—from base pay to health care costs, insurance, vacation time, and other benefits. And Hay Group made an M&A version of My Total Rewards so employees at companies that come to Avaya through mergers and acquisitions can get a good picture of their value in the new organization.
"We get them acclimated on day one," says Lasko. "Whether they're new hires or coming in through mergers and acquisitions, we get them when they're coming in the door."