To protect the confidential and proprietary information included in this material, it may not be disclosed or provided to any third parties without the approval of your organization and Hewitt Associates LLC.

Seeing Past the Green:

Evaluating Total Rewards

Agenda

• Outcomes

• Who is Hewitt Associates?

• Components of Employment Offers

—Total Rewards

• Questions and Answers

Outcomes

• to create a better understanding regarding the many components of Total Rewards

• provide you with a checklist of “factors to consider”

when evaluating employment opportunities

• share a tool for evaluating employment offers

Hewitt Associates LLC

Global Human Resources Management Consulting

and Benefits Administration Firm

• Serve over 4.3 million employees

• 2,400 clients (more than 2/3 of the Fortune 500)

• Largest Benefits Outsourcing firm the U.S.

• Over 13,000 associates in 80 offices worldwide

• Annual revenue of 1.5 billion dollars

Our Vision

“To be the most influential advisor

and dominant service provider

in the people business -

and as a result,

the best organizations and

people want to work with us.”

Why will most experienced candidates choose one employer over another?

Most common response:

The People

What do you mean by “The People?”What do you mean by “The People?”

They seem to like the firm and Itrust them. I like the way theydescribe & exemplify their firm.

Firm values

I am impressed with the style ofcommunication portrayed bymanagement.

Management philosophy

They seem to care about my careerdevelopment/training. I can seemyself doing their job in a fewyears.

Job content/career growth

Their Total Rewards structuresupports the firm values anddirection of the business.

Total Rewards Philosphy

Aspects of Corporate Culture

Firm Values

— Alignment with personal values

— Values demonstrated in day to day operations

Aspects of Corporate Culture

Management Philosophy — Communication— Leadership style— Envisioned future— Open door philosophy

Aspects of Corporate Culture

Job Content/Career Growth

— Daily activities

— Training opportunities (internal/external)

— Career opportunities

Aspects of Corporate Culture

Total Rewards Philosophy

— Total pay

— Benefit package

— Work Environment

– Office environment

– Open communication

– Interactions with co-workers

– Work-life balance

There’s a lot more to

“The People”

than you see at first

glance!

What do many college students think is the most

important part of their offer package?

MONEY!!!

Total Rewards Overview

Total Pay is only a part of an organization’s Total Rewards Program

Base Pay

Benefits

VariablePay Recognition

WorkEnvironment

Total Pay

Total Rewards

Components of Total Pay

•Base Pay

•Variable Pay

— Commissions

— Sign-on Bonuses

— Performance Bonuses

— Shift-Differentials

— On-Call Pay

— Profit Sharing

— Equity Vehicles (options, grants, appreciation rights)

• Recognition

Other Factor to Consider

•Benefits

•Work Environment

Base Pay

VariablePay

Recognition

WorkEnvironment

Benefits

Question???

On average, how much do organizations pay for their benefits packages?

Answer:

between 30% and 40% of total pay costs per employee!

Benefits to Consider

Health CareHealth Care

Retirement PlansRetirement Plans

Dental and Vision CareDental and Vision Care

Vacation Days/HolidaysVacation Days/Holidays

Disability InsuranceDisability Insurance

Employee Assistance Plans Employee Assistance Plans

Tuition ReimbursementTuition Reimbursement

FlextimeFlextime

Dependent Life InsuranceDependent Life Insurance

Flexible Spending Accts.Flexible Spending Accts.

Employee Life InsuranceEmployee Life Insurance

Wellness ProgramsWellness Programs

Child Care AssistanceChild Care Assistance

Adoption AssistanceAdoption Assistance

Low-Interest/No-Interest LoansLow-Interest/No-Interest Loans

Free/Subsidized Meal ServiceFree/Subsidized Meal Service

Overview of Health Care Plans

Plan Out of pocket

expensePCP Payment Provider

Networks

HMO Least expensive. Required Co-payment, usually $10 per visit. Care outside networknot covered.

PPO/POS Usually a littlemore thenHMO, less thanindemnity.

UsuallyRequired

In-Network: Co-payment, usually$10 per visit.Out-of-Network: deductible andonly a certain percentage ofexpenses covered.

Can receive care fromoutside networkproviders at reducedbenefits.

Indemnity Most expensive NotRequired

Deductible applied per coveredperson per calendar year.

No networks

Overview of Retirement Plans

• Eligibility

• Company match

• Vesting schedule

• Pension plans

Comparing Retirement Plans

COMPANY ACOMPANY A

Base salaryBase salary $30,000 $30,000

401(k) 401(k) (10% contribution)(10% contribution) 3000 3000

Match Match (5% match(5% match)) 1500 1500

Tax Tax (27% of taxable income)(27% of taxable income) (7290)(7290)

Take home pay $19,710Take home pay $19,710

401(k)401(k)

Your contributionYour contribution 3000 3000

Company matchCompany match 1500 1500

Total 401(k)Total 401(k) $4500$4500

COMPANY BCOMPANY B

Base salaryBase salary $30,000 $30,000

401(k)401(k) (not eligible)(not eligible) 0 0

Match Match (no match)(no match) 0 0

Tax Tax (27% of taxable income)(27% of taxable income) (8100)(8100)

Take home pay $21,900Take home pay $21,900

401(k)401(k)

Your contributionYour contribution 0 0

Company matchCompany match 0 0

Total 401(k)Total 401(k) $0 $0

Question???

How important is it to get an early start on investing for retirement?

Answer:

VERY!

Here’s Why

Scenarios: Jack & Jill - both 21 year old college graduates,

earning $30,000

Jack

• $50 (2%) per month

invested in his 401(k)

w/100% match

• joins the Peace Corp 8

years later and stops

investing

Jill

• marries college sweetheart,

starts a family right away

• $0 per month invested in her

401(k) until age 29, when she

invests $100 per month for the

next 36 years w/ no match

Question???

Who has the most money saved when they retire at

age 65 (assuming a 10% return on investment)?

Answer:

JACK!

Jack saved a total of $9,600 ($4,800 + $4,800 company match) from age 21 to 29 and his investment grew to $531,468

Jill saved a total of $43,200 (no company match) from age 29 to 65 and her investment grew to $424,182

What is Work Environment?

• Corporate Philosophies and Culture

• Management and Communication Style

• Performance Management Philosophies and Processes

• Physical Location/Facilities

• Employee Input/Feedback

•Work-Life Balance

How Important is Work Environment?

• When asked, most employees site the following engagement factors as being most important:

1. Work Activities - “I like what I do and I have the

opportunity to do what I am best at.”

2. Opportunity - “I know what opportunities are available

and I have the chance to develop through increased

challenges and responsibilities.”

3. Total Rewards - “I am fairly paid for the contribution I

make and compared with other companies, I am

competitively paid.”

Company A Company B Company C Company D Company E

$50,000 $36,000 $29,000 $36,000 $41,000Variable Pay (averages)

Commisions $26,000Profit Sharing $3,500 $2,900 $4,320 $1,230

Performance Bonus $1,000 $1,500Over Time/Flex Time $2,000

Total Base + Variable $54,500 $62,000 $31,900 $41,820 $42,230

Benefits & ExpensesHealth Care

-Medical ($3,500) ($5,000) ($1,000) ($1,000) ($3,000)-Dental ($1,000) ($1,200) ($400) ($225) ($800)-Vision ($650) ($800) ($350) ($100) ($600)

Vacation $1,000 $1,160 $2,160 $820Wellness Program $800401(k) Match $500 $1,000 $500 $500Pension Plan $1,000 $1,200Tuition Reimbursement $2,000Lunch ($2,000) ($2,000) $2,000 $2,000 ($2,000)Exercise Facility $1,000 $1,000Day Care ($5,000) ($5,000) ($1,000) ($2,000) ($5,000)Employee Assistance Program $600Employee Referal Program $1,500 $1,500 $1,000

$1,000Travel ($2,325) ($4,650) ($775) ($1,550) ($3,875)Parking ($1,750) ($1,750)

($11,475) ($20,400) $2,635 $5,285 ($12,105)

NET $43,025 $41,600 $34,535 $47,105 $30,125

Concierge (Parties, Golf, Dry Cleaning, Pick Up Kids, etc.)

Base Pay

Total Benefits + Expenses

Company A Company B Company C Company D Company E

Variable Pay (averages)Commisions

Profit SharingPerformance Bonus

Over Time/Flex Time Total Base + Variable

Benefits & ExpensesHealth Care

-Medical-Dental-Vision

VacationWellness Program401(k) MatchPension PlanTuition ReimbursementLunchExercise FacilityDay CareEmployee Assistance ProgramEmployee Referal Program

TravelParking

NET $0 $0 $0 $0 $0

Concierge (Parties, Golf, Dry Cleaning, Pick Up Kids, etc.)

Base Pay

Total Benefits + Expenses

Review

Considerations when entertaining employment offers:

Base Pay

Benefits

VariablePay Recognition

WorkEnvironment

Total Pay

Total Rewards

To protect the confidential and proprietary information included in this material, it may not be disclosed or provided to any third parties without the approval of your organization and Hewitt Associates LLC.

QUESTIONS???