Total rewards overhaul

A small Ottawa company takes holistic approach to optimize attraction and retention

When Michael D’Amico joined Ottawa-based Iogen slightly more than one year ago, he decided the bio-tech company’s total rewards were in need of an overhaul. The benefits offered to employees, while solid, had developed intermittently, says the senior vice-president of HR and organizational effectiveness.

“There’s never been a holistic perspective of taking a real step back and designing it from a total rewards perspective,” he says.

“I don’t feel at all that our programs are weak or significantly lacking as far as being competitive. Our attraction results this past year were excellent. And we’re certainly not having issues with people leaving because they feel the total rewards program is uncompetitive and they’ve got better opportunities elsewhere. But that doesn’t mean we want to leave it as is. There are opportunities to optimize.”

D’Amico isn’t a rookie to the total rewards game. He was involved with an implementation at his previous employer, Cognos (now owned by IBM), which has about 4,000 employees. While Iogen only has about 320 employees, putting together a package is a pretty similar process, regardless of the size of a company, he says.

“The principles very much apply, wherever you are. It’s understanding the different value propositions that might be unique to your company versus other companies. You have different talent markets, different types of employees. You need to understand what’s going to work for your employees.”

Small size, big growth

Being relatively small, Iogen doesn’t have an excessive amount of financial resources available so it needs to make sure it’s spending appropriately when it comes to the employee value proposition, he says.

“It’s so easy to put out programs and spend money on them but if employees aren’t valuing them to the same extent, you’re splitting your total rewards pie and you’re certainly not optimizing how you’re using your resources.”

Iogen has also been experiencing rapid growth — 50 per cent last year and a predicted 20 per cent to 25 per cent this year — so it needs to put in place systems, processes and structures that will be scalable. And attraction and retention are equally important.

“We’re still a pretty small company where we don’t have vast bench strength that larger companies might have, and losing a couple of key people in one area would be very impactful to us, so we need to make sure we’re thinking retention for top performers,” says D’Amico.

And being in Ottawa makes compensation and benefits even more challenging. Many employees compare their packages to the government, but they may not take a total rewards perspective or know the trade-offs, says D’Amico. For example, while the vacation policy may be better, how does the government compare when it comes to bonuses, stock options and employee opportunities?

Several benefits to assess

To start the process, D’Amico conducted focus groups with 10 or 12 different segments of employees last year. The company also conducted an employee survey this summer and plans to make that an annual initiative. The next step is to do a formal analysis around Iogen’s programs, how competitive they are externally, and then look to rework and evolve those, as required, to optimize the value proposition, says D’Amico.

Vacation is one of several offerings Iogen is putting under the microscope because there are inconsistencies that need to be addressed or tweaked, he says.

But “rather than going in and doing it independently, we want to make sure we fit it into a total rewards review and we’re doing it properly. So as much as we could have taken the quick-fix approach and said, ‘Let’s change it,’ we’ve taken that step back to make sure we do it right.”

Other elements to be considered include all cash programs, salary, bonus opportunities and stock options.

“We’re going to make sure we are very confident we understand our competitive positioning on these things, and understand if we need to evolve those programs,” he says.

Salary surveys are done annually but, again, there is room for improvement, says D’Amico. The company will probably have multiple pay ranges for the same job level once the total rewards review is done, whereas now there is one pay structure for each job level.

“We’re going to get more granular, so we can feel we’re more exact on understanding where we fit versus the market and have multiple pay ranges. Several of our programs are going to see evolution as a result of this,” he says.

Other benefits at Iogen include a group registered retirement savings plan, extended health care, dental care, vision care, life insurance, disability coverage, an employee assistance program, flexible work arrangements, social activities and a strong focus on personal and career development.

“I certainly don’t consider total rewards to be limited to just compensation and benefits,” says D’Amico.

“The work environment, developmental opportunities, are all part of what we feel are real differentiators here. People get to work on very leading-edge technologies.”

Variety of metrics

The formal review starts in November, with help from HR consulting firm Mercer, and is anticipated to take 12 to 14 weeks. Iogen hopes to actually implement program evolution and some of the deliverables in the new year.

Once the review is complete and changes are made to total rewards, Iogen will use a variety of metrics to gauge the program’s success. Certainly attrition and understanding why people leave the company is a strong one, says D’Amico. Iogen will also assess hiring-success metrics and participation data.

“We’ve got programs that are not being highly participated in by employees and that’s a sign there’s an awareness issue or they’ve not being valued the way we thought they’d be,” he says.

Gauging the return on investment will depend on what specifically is being looked at, but there will be anecdotal input and close monitoring, he says. But from the start, Iogen has considered the review an investment, which includes the hiring of a total rewards manager.

“There is a notable cash aspect that we’re investing in doing this work. And that’s how it’s been positioned with senior management and the board — this isn’t a cost, it’s an investment,” he says.

“The results will drive opportunities for us, and then we’ll have to look at it strategically to say, ‘What are the costs to these opportunities, what are the trade-offs to doing all of them right away or taking a staggered approach?’ We’re not going to end up being market leaders in every aspect, so we’ll have to make some decisions.”

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