The Benefits of Great Benefits How Companies Like Yours Are Using Employee Benefits To Compete And W

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The Benefits of Great Benefits How Companies
Like Yours Are Using Employee Benefits To
Compete And Win
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Agenda

• The dilemma
• What are the issues, andcan benefits make a
  difference?
• Best practices for achieving employee financial
  security and well-being

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Caught in the middle

• Rising benefit costs
• Employees demanding more
• Increased regulation

YOU

• Flat budget
• Budget cuts

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Its all about the people. Roz Alford
Principal ASAP Staffing Secretary WPO Board
of Directors

• Top 4 WPO Concerns
• Finding
• Hiring
• Training
• Retaining
• Marsha Firestone, PhD, President, Women
  Presidents Organization

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Our credentials

• 128 years of experience, 100,000 clients
• Among the nations 401(k) leaders (1)
• 1 Record keeper ESOP plans (2)
• 1 Deferred compensation provider (3)
• Top record keeper of defined benefit plans (4)
• 7 Life insurance (statutory assets)
• 9 Health insurance (premiums earned)
• 3 Non-medical coverage (in-force)
• 5 Dental
• 7 Long-Term Disability
• 4 Short-Term Disability
• 3 Group Life

Source (1) The Principal ranks number one in
total plans for all asset sizes among fully
bundled 401(k) providers 2006 Spectrem Group
analysis of fully-bundled 401(k)
providers(2)Based on number of plans,
PlanSponsor Record Keeping Survey, June 2007 (3)
Based on number of plans recordkept, PlanSponsor
Deferred Compensation Plan Buyers Guide,
Plansponsor.com, 02/08 (4)Investment Advisor
magazine 03/07
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The Principal 10 Best Companies for Employee
Financial Security

• Companies with 5 1,000 employees
• 7 years
• 4,885 nominations
• 70 winning companies
• Judged by panel of independent, industry experts
• Do not need to be a customer of The Principal
• More information at www.principal.com/10best

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The PrincipalThird Party Recognition

• Industry Leadership
• FORTUNE 500 listed on SP 500
• PLANSPONSOR Top 3 recordkeeper
• Boston Research Group Longest client retention
• DALBAR Seal of Excellence (website/statements)
• Institutional Investor 39th largest
  institutional manager in the world
• The Forbes 2000
• Platinum 400 -- Americas Best Big Companies
• Financial Research Corporation Principal Funds
  ranked 5th largest manager of lifecycle funds
• Community Leadership
• United Way of America Spirit of America award
• Ethisphere magazine One of worlds most ethical
  companies
• Corporate Responsibility Officer magazine 100
  Best Corporate Citizens

• Best Places to Work
• FORTUNE 100 Best Companies to Work For
• LATINA Style 50 Best
• National Assoc of Female Execs Top 30
• Computerworld 100 Best
• AARP Best Employers for Workers Over 50
• Working Mother magazine -- 100 Best Companies for
  Working Mothers
• Wellness Councils of America Platinum Well
  Workplace
• National Business Group on Health Healthiest
  Places to Work
• Technology Innovation
• InformationWeek Top 500 IT Innovator
  (Magnificent Seven in 2007)
• Customer Respect Group - Top 10
  Insurance/Financial Services web site

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What do we mean by benefits?

• Retirement benefits
• Health wellness benefits
• Financial protection benefits (employer provided
  and voluntary)
• Accidental death and dismemberment
• Dental
• Disability
• Life
• Long-term care
• Vision

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Top 5 most valued workplace benefits (Gen X and
Gen Y combined)
Source Preparing for Their Future A Look at
the Financial State of Gen X and Gen Y 2008
ASEC and AARP
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What are the issues, andcan benefits make a
difference?
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The issues

• Talent shortage
• Turnover cost
• Ensuring customer satisfaction and loyalty
• Workforce health
• Financial success for the organization

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Attract great employees As Boomers retire,
talent shortage grows
Building the case for benefits
shortage of

3 Million
workers!
Source U.S. Bureau of Labor Statistics
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Attract great employees CASE STUDY Placid
Refining
Building the case for benefits

• Actions
• Reduced employee premiums
• Pays 60-70 of medical co-pay
• Added wellness (100 paid annual physical for all
  family members Increased wellness care covered
  and extended to all family)
• Increased 401(k) match
• Immediate vesting (vs. 5-yr step)
• Results
• Turnover remained 1
• 99 participation in wellness
• 100 participation in retirement plan
• Average deferral is 9

• We compete for these employees. To be
  competitive to hire them and have them stay, you
  have to be competitive and our benefits package
  makes us competitive
• -- Dan Robinson, CEO
• Placid Refining Company

Source The Principal 10 Best Companies for
Employee Financial Security, 2007
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Increased retention/Reduced turnover costs
Benefits help retain employees
Building the case for benefits
1 job satisfaction driver
Why employees leave
Benefits ties for

• Compensation benefits
• Lack of motivation for a particular project
• Stress
• Competitors work environment is a better place
  to work

1st Place
as most important aspect of job satisfaction
-- 2007 SHRM Job Satisfaction report
Source Dr. John Sullivan, Professor and Head of
Human Resource Management at San Francisco State
University
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Increased retention/Reduced turnover costs
Reduce Turnover Costs
Building the case for benefits
Turnover costs can equal up to 50-200 of the
annual salary for the position
Source Talent-Based ROI-Ways to Improve
Employee Impact to the Bottom Line Deloitte
Touche, 2008 and the Saratoga Instiitute, 2008
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Increased retention/Reduced turnover costs
Reduce Voluntary Turnover
Building the case for benefits

• 8.2

21.94
Source The Principal 10 Best Companies for
Financial Security, 2008 Bureau of Labor
Statistics
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Building the case for benefits
Increase customer satisfaction
loyaltyIncrease customer satisfaction loyalty
The Links in the Service-Profit Chain
Operating Strategy and Service Delivery System
Customer Satisfaction
Employee Retention
Revenue Growth
External Service Value
Employee Satisfaction
Customer Loyalty
Employee Productivity
Profitability
Source Harvard Business Review, July/August 2008
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Increase customer satisfaction loyalty
Long-term employees drive satisfaction
Building the case for benefits

• Tamera Robinson
• Vice President of Finance
• Delta Dental Plan of Iowa
• ..experienced staff really impacts
  resultsNinety-eight percent of the time,
  employees are able to resolve issues the first
  time

• ..Our benefits absolutely help us retain our
  employees, and that enables us to provide great
  service to clients. Our clients tell us they
  like working with the same people
• Julie McFarland
• CEO
• McNaughton Gunn

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Why focus on health improvement?Big picture cost
of poor health

• It is projected that more than 70 of Americans
  will be obese by 2012.1 - Only 4 years away
• 2007 - 1.3 trillion in health care costs and
  lost productivity due to 7 chronic conditions
• 2023 - 4.2 trillion - at our current rate of
  increase.2

1 Jim Bell, PhD.c., President of the
International Fitness Professionals of America,
2007 2 Source DeVol and Bedroussian. An
Unhealthy America The Economic Burden of Chronic
Disease -- Charting a New Course to Save Lives
and Increase Productivity and Economic Growth. 
The Milken Institute. October 2007
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Benefits program best practices Employee
wellness can help you control healthcare costs
59.1
31.1
Source Principal Wellness study comparing
claims of participants with 3 or more health
screenings to non-screened individuals.
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Proven, measurable resultsReturn on your
investment

• Reduced health care expenses
• Better trend
• Reduced absenteeism
• Reduced presenteeism
• Reduced disability
• Lower workers compensation costs
• Increased productivity

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Its an investment, not an expense

• The additional cost we put into benefits is
  more than evenly returned in the quality of
  people were able to attract, which creates
  efficiencies we wouldnt otherwise get. This is
  an investment, not an expense
• --Vic Sellier
• CFO VP, Finance Operations
• Argon ST  (2006 winner)

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Improve bottom line results

• Companies that improve their selection of
  health and retirement benefits as an important
  tool for recruiting and retention can increase
  shareholder value by a total of 4.3 percent
• -- Watson Wyatts
• Human Capital Index

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Improve bottom line results

• 20 more revenue per employee
• 16.1 higher market value
• 57 higher shareholder returns

• Companies with effective health coverage and
  productivity programs achieve

Source Building an Effective Health
Productivity Framework Watson Wyatt 2007
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The PrincipalAchieving different results
The formula for success
FISCAL FITNESS for the business
PHYSICAL FITNESS for employees
FINANCIAL FITNESS for employees


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What are key benefits best practices?

• Retirement
• Financial Protection
• Health Wellness
• Communication

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Benefits program best practicesRetirement Best
Practices

• BEST PRACTICE
• Monitor whether employees are diversifying
• Offer investment choices but not too many
• Make participation easy with auto features
• Give employees an incentive to increase
  contributions (Offer a match, etc.)
• Offer lifecycle/lifestyle funds
• Leverage plan metrics

• EMERGING BEST PRACTICE
• Contact employees individually regarding
  diversification
• Phased retirement
• Roth 401(k)
• Replacement ratio as measure of success
• One on one guidance

Source The Principal 10 Best Companies for
Employee Financial Security
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Basics of a great programFinancial Protection
Best Practices

• BEST PRACTICES
• Mandatory enrollment meetings
• Protecting employees income
• Benefit designs to encourage return to work
• Foundation of coverage with options to buy
  additional coverage voluntary benefits
• Choice of benefits

• EMERGING BEST PRACTICE
• Face-to-face meetings
• Needs analysis
• Simple financial planning tools

Source The Principal 10 Best Companies for
Employee Financial Security
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Benefits program best practices Health
Wellness Best Practices

• BEST PRACTICE
• Focus on wellness
• Offer free health screenings
• Establish baseline measures (claims, costs, etc.)
• Pay for preventive care
• Disease management
• Tie wellness participation to insurance premiums
• Offer choice to meet employees varying needs

• EMERGING BEST PRACTICE
• Engagement models of healthcare
• HSA
• HRA
• Co-insurance vs. co-pay
• Cost transparency
• Financial responsibility

Source The Principal 10 Best Companies for
Employee Financial Security
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The Holy Grail . . . Communication!
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Articulate the factsCommunicate true value

• Employees underestimate the true value of their
  benefits by

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Source Mercer Human Resources Consulting,
August 2003
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Articulate the factsEmployees are more
satisfied with benefits when they understand
their value
?
?
Good benefits good communication
Good benefits poor communication
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8
turnover
turnover
Source Watson Wyatt 2007 through HERO Think Tank
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Educate.Educate.EducateCommunication Best
Practices

• BEST PRACTICE
• Age education with workforce
• Distribute personalized benefit statements
• Use a combination of tools email, newsletters,
  video, web, paycheck stuffers
• Use simple language

• EMERGING BEST PRACTICE
• Personalization - Text messages?
• Total compensation statement use as retention
  tool
• Include spouses
• Educate on misused or underused benefits
• Share what youre up against
• One-on-one education

Year round Endeavor!
Source The Principal 10 Best Companies for
Employee Financial Security
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The Emerging Holy GrailThe power of one-on-one
education and guidance
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HelpI need somebody!
Employees have to figure out financial security
for themselves
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Employees are struggling

• 25 of employees are financially stressed1
• Stressed employees spend an average of 20 hours
  per month of work time in personal financial
  problems
• 73 of employees have not had a financial
  analysis completed within the last three years2

1 2005 Final Report 30 million Workers in
America one in four Are Seriously Financial
Distressed and Dissatisfied Causing Negative
Impacts on Individuals, Families, and Employers
E. Thomas Garman, et al.
22nd Quarter 2006 Financial Well-Being Index
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Educate. Educate. Educate Individual guidance
increasing in popularity

• 73 of workers use written materials from work
  however, workers find financial professionals to
  be the MOST USEFUL information source.
• 2007 EBRI
• Retirement Confidence
• Survey

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Educate. Educate. Educate CASE STUDY One on
One Education

• Dale Earnhardt, Inc. (Mooresville, NC)
• Type of business NASCAR racing
• Employees 365 at DEI
• Founded 1980

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Educate. Educate. Educate CASE STUDY DEI

• Actions
• Group education meetings
• Onsite benefits education
• Results
• 70 increase in participation at DEI (from 160
  employees to 272)
• 50 of original 160 increased savings

• The general response has been very positive.
  Employees are happy and seem to be self assured
• -- Marilynne Mancuso
• Director of HR

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Educate. Educate. Educate CASE STUDY DEI

• I need somebody to help meI dont claim to
  be an expertso when it comes to my financial
  future I want somebody helping me
• -- Mark Punie
• DEI Employee

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Educate. Educate. Educate CASE STUDY DEI

• The company wants me to be comfortable to
  concentrate on my jobour leaders aretaking
  us to next level financially to make us all
  winners...
• -- Larry Barnes
• DEI Employee

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Principal Worksite
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Principal Worksite Solutions

• Principal Work SecureSM
• Voluntary Benefits life, disability, dental,
  vision
• Principal Retire SecureSM
• 401(k), Smart Start, Step Ahead, Do-it-for me
  investment options

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Principal Worksite Solutions

• Salaried employee benefit specialist
• 30 minute, one-on-one meeting
• Current personal situation, identifying gaps
• Education and enrollment support
• Milestones roadmap

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What results has it generated?

• Among employers
• 98 of employers agree it increased employee
  understanding of their benefits2
• Among employees
• Over 58,000 11 meetings held over 40,000
  actions taken
• Double digit increases in participation, average
  premium and average deferral rate
• 95 of employees responded that the 11 meeting
  was a valuable use of their time

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The Principal Financial GroupAchieving different
results
The formula for success
FISCAL FITNESS for the business
PHYSICAL FITNESS for employees
FINANCIAL FITNESS for employees


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Disclosures

• Principal Wellness Company does not diagnose or
  treat any medical condition or provide medical
  advice. Materials provided through the Principal
  Wellness program are for general information
  only. The results obtained from participation in
  the health screening and other portions of the
  program depend upon each participants health
  status and how the participant chooses to use the
  information provided. Employers are advised to
  consult their own legal and tax advisors
  regarding any legal or tax implications of
  financial incentives or reward programs, prize
  drawings or giveaways. Savings are not
  guaranteed.

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Disclosures
This presentation is intended to provide accurate
and authoritative information in regard to the
subject matter covered. The accuracy of the
information is not guaranteed and is provided
with the understanding that The Principal is not
rendering legal, accounting, or tax advice.
While this communications may be used to promote
or market a transaction or an idea that is
discussed in the publication, it is not a
marketed opinion and may not be used to avoid
penalties under the Internal Revenue Code. You
should consult with appropriate counsel or other
advisors on all matters pertaining to legal, tax,
or accounting obligations and requirements.
Insurance products and plan administrative
services are provided by Principal Life Insurance
Company, a member of the Principal Financial
Group, Des Moines, IA 50392.  Savings not
guaranteed.  Employers are advised to consult
their own legal and tax advisors regarding any
legal or tax implications of financial incentives
or reward programs, prizes, drawings or
giveaways.  CVS/Caremark is not a member of The
Principal.