Benefits and Business at Aflac and L.L. Bean
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TOtal REWarDS INSTRUCTOR’S MANUAL Benefits and Business at Aflac and L.L. Bean By Sandra M. Reed, SPHR PROJECT TEAM Author: Sandra M. Reed, SPHR SHRM project contributors: Bill Schaefer, SPHR Nancy A. Woolever, SPHR External contributor: Sharon H. Leonard Copy editing: Katya Scanlan, copy editor Design: Kellyn Lombardi, graphic designer © 2009 Society for Human Resource Management. Sandra M. Reed, SPHR Note to HR faculty and instructors: SHRM cases and modules are intended for use in HR classrooms at universities. Teaching notes are included with each. While our current intent is to make the materials available without charge, we reserve the right to impose charges should we deem it necessary to support the program. However, currently, these resources are available free of charge to all. Please duplicate only the number of copies needed, one for each student in the class. For more information, please contact: SHRM Academic Initiatives 1800 Duke Street, Alexandria, VA 22314, USA Phone: (800) 283-7476 Fax: (703) 535-6432 Web: http://www.shrm.org/education/hreducation 09-0235-IM Case Overview In its 2008 annual Job Satisfaction Survey Report, the Society for Human Resource Management (SHRM) reported that for the past five years, employees rated compensation and benefits among the top three aspects most important to their job. But despite the importance of these aspects, employee satisfaction with their compensation and benefits packages remains low. According to a Conference Board report, “employees are least satisfied with their companies’ bonus plans, promotion policies, health plans and pensions”. Employers are missing critical opportunities to maximize employee job satisfaction and other organizational outcomes through their total rewards programs.1 In the book Dynamic Compensation for Changing organizations: People, Performance & Pay, The Hay Group asserts that traditional pay structures no longer keep pace with the emerging, strategy-focused organizations that exist in today’s globally competitive market. “What shifted were organizational work values, work cultures and business strategies. Although they have been largely overlooked, dramatic changes in the organizational rules have frequently rendered traditional compensation strategies ineffective. Employees today are expected to work in teams rather than solely on their own. They are expected to keep learning new skills and to assume broader roles. They are expected to take more risks and responsibility for results. As a consequence, we are slowly coming to the realization that we may be paying for the wrong things, sending inconsistent messages about the company to its employees, or creating artificial expectations of continued advancement and raises, no matter how well the company performs.”2 Furthermore, in its publication Implementing Total Rewards Strategies, SHRM notes that “the right total rewards system—a blend of monetary and non-monetary rewards offered to employees—can generate valuable business results. These results range from enhanced individual and organizational performance to improved job satisfaction, employee loyalty and workforce morale.”3 Today, HR professionals are responsible for programs far beyond the profession’s administrative personnel roots. They are expected to measure the success or failure of HR practices based on the achievement of organizational outcomes. Brand identity, bottom-line profitability, employee job satisfaction and increased management focus are all outcomes that can be achieved in part through an organization’s total rewards program. This case examines two very different organizations and how they align their total rewards programs with their organizational goals and values. © 2009 Society for Human Resource Management. Sandra M. Reed, SPHR 1 Assignment Details LEVEL OF DIFFICULTY Moderate AUDIENCE Undergraduate SUMMARY OF SPECIFICS n This case study is focused on how two different companies use total rewards to support the organization’s mission and values and achieve strategic outcomes. n It includes an overview of the two companies, Aflac Insurance, a publicly traded company, and L.L.Bean, a privately held retail store. The Aflac case study is based on an interview with Casey Graves, Aflac vice president of Human Resources, about Aflac’s compensation and benefits programs, with emphasis on how total rewards statements and employee communication helped the company improve employee job satisfaction and retention. The L.L.Bean case focuses on how elements of total rewards are used as tools to enhance the strategic review process. n Both companies have extensive employee recognition and rewards programs designed to support specific outcomes, such as employee training and development, work/family balance, and equitable compensation practices, as well as to create a positive work environment for their employees. n The case study ends with a team presentation using PowerPoint with the goal to educate fellow students on the team’s findings and opinions. HR TOPICS COVERED n Total rewards n Total rewards statements n Strategic planning n Corporate values n Corporate social responsibility 2 © 2009 Society for Human Resource Management. Sandra M. Reed, SPHR LEARNING ApplICATIOns And OBJECTIVES By the end of this case study, students will be able to: n Correctly define elements of strategic compensation and benefits administration. n Apply the concepts of traditional and lifestyle benefits administration as a tool to achieve corporate objectives. n Understand that strong shareholder returns and excellent customer service are achieved through employees, not in spite of them, and that employees are more assets than liabilities. TASKS n Students will select either the Aflac or the L.L.Bean case as a basis of study for their team presentation. This exercise is not meant to be a comparison of companies, but rather an exploration of how two different companies use their compensation and benefits structures to achieve organizational outcomes. n Using the material presented in the case studies and publicly available information obtained through independent research, student teams will create a PowerPoint presentation to present to the class. It may be useful to have students prepare a bibliography and summary of the resources used to ensure that the appropriate level of research is conducted to accomplish these objectives. InFORMATION TO BE InCLUDED IN STUDENT PRESENTATIOns Student presentations should include the following information: 1. Company overview. 2. How the company uses its own products or services to enhance the total compensation for its employees. 3. The internal strengths and weaknesses your team identified and how the company responded to these factors from a total rewards perspective. 4. The external opportunities and threats your team identified and how the company responded to these factors from a total rewards perspective. 5. Examples of traditional and non-traditional rewards and how they are used to meet organizational objectives. 6. How the company aligns its benefits with its corporate values. 7. Recommendations by the team regarding an expansion of the benefits programs offered at the company that would further align HR with the accomplishment of organizational goals and values. © 2009 Society for Human Resource Management. Sandra M. Reed, SPHR 3 RECOMMEndED READING It may serve the objectives of this case study to assign this case at the beginning of the semester and require a summary of each of the web sites researched to be completed a week prior to the final presentation. This is more likely to result in the students accessing the data they will need to accomplish the objectives so that learning occurs. n Mathis, R.L., & Jackson, J. H. (2007). Human resource management (12th edition) [Section IV, Compensating Human Resources, Chapters 12-14]. United States: Southwestern Publishing. n Heneman, R. L. (2007). Implementing total rewards strategies. Alexandria, VA: SHRM Foundation. Retrieved from www.shrm.org/hrdisciplines/benefits/ Documents/07RewardsStratReport.pdf. n Aflac corporate web site: www.aflac.com. n L.L.Bean corporate web site: www.llbean.com n Daigle, L. (2005, April 15). Aflac. Retrieved from www.georgiaencyclopedia.org/ nge/Article.jsp?id=h-1754. n Aflac. (2008, January 22).Aflac ranked among the 100 Best Places To Work for tenth consecutive year [press release]. Retrieved from www.aflac.com/us/en/aboutaflac/ PressReleaseStory.aspx?rid=1098780. n Necerra, J. (2004, April ). A tale of two companies. CNN Money. Retrieved from http://money.cnn.com/magazines/fortune/fortune_archive/2004/04/05/366369/ index.htm. n Gorman, L. (2006). L. L. Bean: The making of an American icon. Cambridge, MA: Harvard Business School Press. n L.L.Bean is number one in customer service. (2008). Retrieved from www. marketingvox.com/ll-bean-number-one-in-customer-service-in-2007-035941. n Simon, E. (2006, December 5). Attention workers, eat your vegetables. Herald Tribune. Retrieved from www.heraldtribune.com/apps/pbcs.dll/ article?AID=/20061205/BUSINESS/612050545/1007. n L.L.Bean (2006, August 30). L.L.Bean named one of AARP’s Best Employers for Workers Over 50 [press release]. Retrieved from www.llbean.com/ customerService/aboutLLBean/newsroom/stories/08302006_LLBean_Named_ One_of_AARP_Best_Employers_for_Workers_over_50.html. 4 © 2009 Society for Human Resource Management. Sandra M. Reed, SPHR n L.L.Bean Inc. reports 2006 net sales results. (2007, March 9). PR Newswire. Retrieved from www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/