Dave Peterson Assistant Vice President,

Total Rewards, HRIS and Equity Hologic, Inc.

San Francisco: March 18, 2014

Describe the “Perfect Storm” which led NetScout to refine its employee benefits strategy

Explain the process for making changes to our benefits program offerings and identifying new programs for attracting, retaining and motivating talent

Inform you about things you can start doing now…

Let you ask questions!!!!

Have fun!

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Public Company: 1,200 employees; 700 in the US

Operations in 20+ countries (Americas, EMEA, APAC)

Headquarters: Westford, Massachusetts ◦ 250 in Westford; 130+ in India; 90 in San Jose, CA; dozens of customer facing

employees working from home offices

Revenue: $350M

Turnover: 12% - 13%

Small HR Staff

One primary global H&W broker / consultant

Fiscally conservative

Paternalistic w/benefits

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NetScout Systems, Inc. Company Profile

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NetScout Global Benefits Strategy

Employee Needs

Market Trends

Financial Affordability

Promote Consumerism

Annual review

Balancing Act

Provide

coverage

which is

equitable

across all

geographies

– Rising Employee

– Heath Care Premiums

– Rising NetScout

– Health Care Costs

– High Claims Experience

– Rich PPO/HMO

– Plan Design

– Rx Inflation

– Internal: Revenue Down, Cost Cutting

– High Company Benefits

Contributions

– External: Recession

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Step #1: Update cost structure of plan

Step #2: Identify existing or research NEW innovative low-cost programs to soften large cost increases in health coverage; programs targeted to different generational groups

Step #3: Communication; refresh awareness of other, existing low cost plans

Step #4: Assess and reassess………

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Solving our Perfect Storm: We Had to do All of the Following Activities

• Update cost structure of plan (employer vs. employee contributions)

• RFP (multiple plans)

• Identify NEW, innovative low-cost programs to soften large cost increases in health coverage

• Communication;

• Education

• Awareness

• Assess and reassess………

Programs targeted to different generational groups

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Step 1 Step 2 Step 3 Step 4

Solving our Perfect Storm: We Had to do All of the Following Activities

RFP of our popular medical plan ◦ Rejected by 3 major carriers due to poor claims experience

◦ Marketing threat caused incumbent medical carrier to reduce renewal

Re-branding / marketing of medical plans

Revise our medical plan contribution strategy ◦ Premier: Best in class PPO; 80% enrolled; increased medical premiums by 40%

◦ Core: Comprehensive PPO coverage; no rate increase

◦ Basic: Roll-out NEW High-Deductible PPO; priced less that Premier/Core

◦ Long-term goal: Migration away from Premium Plan

Same approach to Dental coverage

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Step #1: Program Cost Structure Changes

Negotiated the elimination of 401k Administration fees

◦ Saved the company over $25,000

Successful RFP of Life/Disability Insurances

◦ Saved the company $70,000+ by switching carriers

◦ No changes to cost/coverage for employees

◦ Transparent to employees

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Step #1: Cost Structure Changes (Con’t)

The Squeaky Wheel

Gets The Grease!!!

We saved nearly

$100K!!

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Identification of different generational groups

Research “What Makes Each Group Tick”…

Exploration of existing programs that can be further promoted to employees

Research new, creative programs for employees

Goal: soften the blow of significant cost increases in employee contributions to health benefits; continue to promote employee retention, motivation, etc…..

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Step #2: Identification of Existing or New, Low Cost or No Cost Benefit Plans

Plan Element Baby Boomers Generation X Generation Y “Millennials”

Approximate Age 46-64 30-45 Up to 29

NetScout Population 36% 56% 8%

Technology is…. The microwave oven; ATM What you can hold in your

hand (Cell, PDA) Internet at your finger tips;

Social Networking

Rewards/Benefits Base Pay Bonus Base, and Bonus and

Flexible Work Arrangements

Motivated by: Being valued, needed;

money; strong company leadership

Career Advancement; Leadership Opportunities

Career Advancement; Working with bright people / mentors

What is Work? Work hard to be valued; work

is a career – then retire Wants company to value their

contributions Wants to value their own

contributions

Long Term Care: LTC with John Hancock; 8% initial enrollment

Financial Planning: Ongoing education offerings (from our 401k and EAP providers) for generation appropriate information; additional webinars from 401k advisor

Legal Plan: Expanded promotion to (hopefully) ensure employees have necessary protection (wills, living wills, etc.)

NEW Disability Coverage: Supplemental STD and LTD for high earners

Critical Illness: Launched voluntary Critical Illness

Still Evaluating: Care.com (adult day care)

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Baby Boomers Benefits/Rewards Programs

Flex Schedules: be more accommodating

Financial Planning: HR sponsorship of programs such as (1) saving creatively for retirement; (2) saving for college expense, etc.

Training: Expand web-based development / skills training

NEW: College Coach (www.getintocollege.com); workshops, counseling for aiding in the overall college selection, application, and payment process

Retirement: Roth/401K program; financial planning webinars from 401k plan advisor

Evaluating: Child day care programs (e.g., Care.com); would require add to company expense ($6k - $10K)

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Generation X Benefits/Rewards Programs

Patent Program: For Junior Engineers; established multiple, $1K awards for achievement, etc.

Financial Planning Education: HR sponsorship of education offerings such as (1) saving money for buying a first house, (2) how to roll over $$ to the company sponsored 401k plan, (3) how to create a budget, (4) credit card/debt management, etc.

Social Networking: HR worked with IT on an expansion of employee internet for social networking-type module within system

Education Assistance: Refreshed marketing of the education assistance program; invited local schools to benefits fairs, etc.

NEW Medical Plan: Low cost, high deductible medical plan option launched

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Generation Y Benefits/Rewards Programs

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Its ok to LOL………………

Health/Wellness: Reminders of discounts / reimbursement (Weight Watchers, Fitness Center, etc.)

Financial Education: Semi-annual webinar series hosted by 401k plan advisor

Walking Program: Offered annually; team-based; web-based tracking system; GPS for winning team

Free Drinks: All sites have free beverages (non alcoholic); free ice-cream in summer months

Total Reward Statements: US employees each year

Café Specials: offer “Healthy Wednesday” menu each week in Home Office

Employee Recognition: host annual luncheon to all managers about the program

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Existing Cross-Generational Benefits Many of these are No Cost/Low Cost to the Company!!

Health Risk Assessments: Launched annually since 2010

Casual Fridays: Wear that favorite Hawaiian shirt each Friday

Tailgate Fridays: Monthly tail gait Fridays during Football season

Matching Donations: NEW program; Company will match up to $50 per person per year

Dry Cleaning on Wheels: Drop off/pick up dry cleaning services

Banking Services: Discounted banking services

ESPP: 45% US enrollment

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MORE Existing Cross-Generational Benefits Many of these are No Cost/Low Cost to the Company!!

Yoga Classes: taught by an employee on-site

Telecommute: becoming more flexible to this

Pizza Pictionary Fridays: quarterly; subsidized

Work Location: discussions underway about offering baby boomers to work from San Jose, CA (vs. Westford, MA) in the winter months

ESPP: Global offering under consideration

401k auto enrollment: mixed opinion on this

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Additional Benefits Under Consideration

Equity Incentive Plans: Revamped annually since 2011; eligibility and participation reduced

401k Vesting: Gave it some consideration; no changes at this time

Pets at work…………(we love them, but……)

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Reward Programs We are Not Considering Changing

One size does not fit all

Different generations have different preferences and comfort levels with technology

◦ Younger workers (preference for on-line information)

◦ Older workforce (rely more heavily on printed material)

Implement on-site, face to face meetings

Outsource elements if possible!

Exploration of Social Media…………

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Step #3: Benefits Communication

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Benefits Communication Program Elements

Method Description

Benefits Statements Created annually; summarizes annual summary of selections and costs

EAP Information Sessions

Ongoing promotion of EAP offerings

Benefits Guide Colorful guide of all US benefits; posted on Intranet (our broker created for us!)

CEO Open Enrollment Newsletter

Drafted by broker, modified by HR, signed by CEO; sent to all US employees via USPS

Open Enrollment Info Sessions

Face to face meetings describing the program changes, highlights, process, key dates

401k Webinars Offered each spring and fall; presented by 401k plan advisor; no cost to the company

Benefits Fairs Offered at two largest sites each fall during open enrollment

All Types/Other Posters, postcards, emails; be creative / have fun with it

Have you considered adding an HR Communications Manager to your team?

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Generation Differences: Most benefits programs appeal to most employees; however differentiation is important!

Existing Programs: We (and likely you too!) have many great, low cost or no cost programs which are included in your existing programs

New Programs: You may have modest enrollment in the newer, voluntary programs….but its refreshing to offer NEW programs

Leverage Technology: For education, administration, and overall management

Diverse Communications: One size does not fit all, you have to do it all – but YOU do not have to do it all!!

Negotiate with Vendors: Squeaky wheel gets the grease

Ask for Help: Don’t be afraid to ask a professional

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What Did We Learn?

2013 Health Renewal (1.0%)

2014 Health Renewal (7.0%)

Turnover is flat……slightly less pressure on retention

20% of the US population now in a CDHP

Health Care Reform: work with broker/consultant on process

Promotions: stress, fitness, financial

Making progress on this internationally…

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