You have recently been hired as a Total Rewards Director for Emerging Pharmaceuticals, a growing pharmaceuticals manufacturer on the West Coast of the United States with 25 global locations

You have recently been hired as a Total Rewards Director for Emerging Pharmaceuticals, a growing pharmaceuticals manufacturer on the West Coast of the United States with 25 global locations. Emerging Pharmaceuticals was started by a group of private investors in 2011 and has skyrocketed in revenue over the last 3 years. Projected revenue for Emerging Pharmaceuticals is expected to top $5 Billion by the end of the calendar year.

 

Your job is new to the organization, created because the organization has increasingly been losing talent to Medtronic, one of Emerging Pharmaceuticals’ main competitors. Turnover of new hires with less than 2 years of employment at Emerging Pharmaceuticals is 25%. The vice president of human resources at Emerging Pharmaceutical feels it’s important to compare the health, wealth and work/life offerings of Emerging Pharmaceuticals with Medtronic and is expecting you to develop a Total Rewards strategy for the coming year that will retain critical employees, respond to the needs of multiple generations in the workforce, and keep costs under control.

Emerging Pharmaceuticals Workforce

The workforce at Emerging Pharmaceuticals has tripled since its inception in 2012, growing to a total of 15,000 employees working in jobs such as scientists, research analysts, IT techs, sales, administrative support, call centers, patient advocates, clinical trial specialists, patent attorneys, and middle- and senior-level management. The employee demographics with employment types are shown below.

 

Global Full-Time Employees                                                                                                Global Part-Time Employees

Age and Status Demographics

Total in Current Calendar Year

Age and Status Demographics

Total in Current Calendar Year

Total of all employees

15,000

Total part-time employees

330

30 and under

  2,640

30 and under

105

31-50

10,018

31-50

125

51 and above

  2,012

51 and above

100

Total Females

  7,042

Total Females

247

Locations

Locations

U.S.

10,100

U.S

220

Asia- Pacific

     865

Asia- Pacific

  23

Canada

     895

Canada

  27

U.K.

   2003

U.K.

  45

Latin America

     807

Latin America

  15

 

Employment Type

Employment Type by Position 

Total in Current Calendar Year

Administrative Support Staff

6,600

Professional

4,375

Clinical/Scientists/Research Analysts

2,450

 

Middle Managers

1,200

Senior Management

   375

 

Employee Value Proposition

The employee value proposition (EVP) at Emerging Pharmaceuticals in the early stages was focused on challenging work, competitive pay and opportunities to advance. In response to the increasing exodus of employees to Medtronic, the vice president of human resources hired an external consultant to conduct employee focus groups. She is concerned with the results, especially in employees aged 31-50 with at least 2 children, which make up 37% of the workforce. The vice president learned of employee concerns about selections and costs in the health plans; disenchantment with the 401(k) plan, which has no employee match; and questions about career paths, advancement opportunities, and work hours. The high level of organizational growth has put pressure on all positions in the organization.

Here are the aggregated results of the focus groups’ responses:

 

TOPIC CATEGORIES FROM EMPLOYEE RESPONSES

% RESPONDED

AS IMPORTANT

Work remotely

10%

Tuition reimbursement

8%

Healthy lifestyle reward/Voluntary benefit options

6%

Financial Wealth Options/Pension Match

5%

Paid Time Off/ Family Time Options

8%

Market “right” pay for position

10%

Opportunities to use skills/abilities

3%

Job-specific and company-sponsored general training

8%

Professional development opportunities

9%

 

Workplace safety

2%

Community engagement/Corporate social responsibility

5%

Recognition of job performance/variable pay options

8%

Employee respect and diversity in the work environment

6%

Trust between employees and Sr. Management

5%

Teamwork within department

7%

The vice president read comments such as:

       I never get home before dinner and we have a new baby at home. I leave for work at 6 a.m., fight highway traffic to be in by 8, and extra work always ends up on my desk towards the end of the day. I can’t seem to get out of the office until 7 p.m. and home by 8:30.

By the time I get home my son is already asleep. I wish the company had a way for me to work from home. 

       I don’t see how I can move up in the organization when management positions require a degree, and the tuition reimbursement for school is so low. Thirty-five hundred a year doesn’t go very far. Just the textbooks can cost $1,000.

       There are some real safety hazards in my lab; OSHA would have a field day. 

       While I understand that the organization had to implement a “working spouse” surcharge for my health insurance, my husband and I are really into a healthy lifestyle. We don’t smoke, we exercise and eat right and there’s no incentive for us – my husband’s health plan is not as good and we are concerned about coverage because we’re trying to save for our first home. But now I have to pay another $50.00 per month to cover him in our plans. How come there are no rewards for people like us who really work to take care of ourselves?

       The company claims they care about providing good rewards for us, but there are no voluntary benefit options, the pension plan has no match, and I don’t know how I can save enough to retire. Are the profits just going to the “people at the top” and leaving the rest of us behind?

       The paid time off schedule only goes up to 18 days after 10 years of employment, with no sick time. I guess we’re supposed to leave after 10 years. Is this a way to get rid of older employees?

       I always go the “extra mile” at work and my manager doesn’t seem to notice.

       I like my job, but a couple of people I worked with left recently for better pay at another company.

After reading all of the employee feedback, you and the vice president decide to compare Emerging Pharmaceuticals Health, Wealth and Work/ Life Total Rewards structure with information from Medtronic and make some revisions to the total rewards strategy for Emerging Pharmaceuticals.

 

Health Options for Emerging Pharmaceuticals

Emerging Pharmaceuticals offers two health plan options to employees: the Value Preferred Provider Plan (Value PPO) and the Choice Plus

Preferred Provider Plan (Choice+ PPO). The Value PPO has lower bi-weekly costs but higher out-of-pocket costs at the time of service. The Value PPO uses a narrow network of providers with higher penalties for out of network providers. The Choice+ PPO has higher bi-weekly costs, but lower out-of-pocket costs. The Choice+ PPO offers a broader network of providers for participant choice.

Emerging Pharmaceuticals promotes the use of generic drugs and has established a $5.00 co-pay for generic prescriptions, and the organization is considering a partnership with Care Compare, a benefits selection tool that helps employees search for and compare the cost of procedures at various providers or facilities. If an employee uses Care Compare, Emerging Pharmaceuticals offers a financial incentive for selecting the lowestcost provider.

Medical (bi-weekly costs)

Value Preferred Provider Plan (lower premiums but high outof-pocket costs)

Choice+ Preferred Provider Plan (higher bi-weekly premiums but lower out-of-pocket costs)

Employee Only –  $57.50 

Employee Only – $86

Employee Plus One- $157.50

Employee Plus One-$141.50

Employee plus two or more- $257.50

Employee plus two or more – $500

 

Health Plan Designs – Value Preferred and Choice+ Plans

Plan Design Elements

Value PPO – 80 % Coinsurance- In-Network 

Value PPO – 80 % Coinsurance- Out of Network

Choice+ PPO- 100% CoInsurance- In Network

Choice+ PPO- 100% Co-

Insurance- Out of Network

Office Visit Copay

$25

$75

$10

$20

Urgent Care

$35

$85

$20

$45

Emergency Room

$250

$250

$100

$100

Inpatient

$500

$1,250

$250

$250

Out-of-Pocket

Maximum

 

 

 

 

Employee

$1,000

$3,000

$750

$1,250

Employee plus one

$2,000

$5,000

$1,500

$2,500

Employee plus two

$3,000

$7,000

$2,250

$3,750

Note: All plans are subject to a working spouse surcharge for spouses of employees who have the option of coverage with their own employer. The surcharge is an additional $25.00 per paycheck.

Note: There are no wellness incentives for Emerging Pharmaceutical’s medical plans.

Dental (bi-weekly costs)

Comprehensive Plan- Preferred Provider

Basic Plan- Network Only

Employee Only –  $12.50 

Employee Only – $7.50

Employee Plus One- $18.00

Employee Plus One-$14.50

Employee plus two or more- $40.00

Employee plus two or more – $25.00

 

Dental Plan Designs – Basic and Premium Plan

Plan Design Elements

Basic Plan

Premium Plan

Diagnostic/Preventive Care

$100 deductible per person, all other work covered by the plan

$150 deductible per person, all other work covered by the plan.

Basic Restorative Procedures

75% coinsurance

50% coinsurance

Major Restorative Procedures

No coverage

50% coinsurance

Orthodontia

No Coverage

50% coinsurance, lifetime max to $1,500

Calendar Year Maximum

$800 per person

$2,000 per person

Plan Design Elements

Plan Co-Pays

Vision Exam

$20 copay

Prescription Glasses

(instead of contact lenses)

$30 copay. Prescription glasses (frames and lenses) covered 1x each calendar year to max of $140

Contact Lenses (instead of prescription glasses)

$165 allowance for contact lenses

1x each calendar year

One Plan Design for All Employees

Employee only – $6.67

Employee Plus One – $11.00

Employee Plus Two – $13.65

Vision (bi-weekly costs)     

Emerging Pharmaceuticals Insurance Enrollment Summary – U.S. Location

Medical Plan and Level of Coverage

Full Time

Part Time

 

Total

Employees

 

 

 

 

Value Preferred Provider Plan

 

 

 

Employee only

285

7

292

Employee plus one

400

10

410

Employee plus two or more

2,500

34

2534

 

 

 

 

Choice Plus 

 

 

 

Employee only

315

6

321

Employee plus one

500

10

510

Employee plus two or more

2,000

65

2065

 

 

 

 

 

MEDTRONIC 2018 Health Plans Side by Side Comparison

CHP with HSA

PPO Plan

Company-Provided Account Contribution

HSA Contribution

N/A

$500/ Employee only

$750/ Employee + spouse OR

Employee + children

$1250/family

Deductible

$1,400/ Employee only

$500 Employee only

$2,800/ Employee + spouse OR

$1,000/family

Employee + children

$3,600/family

Out-of-Pocket Maximum (includes deductible)

$3,500/ Employee only

$3,500/ Employee only

$7,000/Employee + spouse OR

$7,000/family

Employee + children

$9,000/family

Primary Care Provider Visit

20% co-insurance, after deductible

$20 copay

Specialist Visit

20% co-insurance, after deductible

$40 copay

Co-insurance

20%

20%

Preventive Care

0%

0%

100% covered by plan

100% covered by plan

Emergency Room

20% co-insurance, after deductible

$150 copay

Online Care/Virtual Visit

100% covered by Plan, after deductible

100% covered by Plan, you pay nothing

Medtronic Mounds View Clinic

100% covered by Plan, after deductible

100% covered by Plan, you pay nothing

 

Salary Comparison

Job Title

Emerging Pharmaceuticals Pay Range 

Medtronic Pay Range

Average at domestic locations

Average at domestic locations

Scientists

Average

$93,500

Range

$82,000 to $100,000

Average

$103,900

Range

$92,000 to $112,000

Research Analysts

Average

$76,000

Range

$63,000 to $95,000

Average

$86,547

Range

$71,000 to $125,000

Clinical Specialist

Average

$69,000

Range

$63,000 to $90,000

Average

$78,000

Range

$70,000 to $128,000

IT Developers

Average

$90,000

Range

$85,000 to $120,000

Average

$95,370

Range

$89,000 to $132,000

Non- Clinical Manager

Average

$54,000

Range

$48,000 to $68,000

Average

$61,750

Range

$55,000 to $74,000

Clinical Manager

Average

$100,000

Range

$75,000 to $110,000

Average

$105,000

Range

$75,000 to $120,000

 

             

Wealth Benefits at Emerging Pharmaceuticals

The 401(k) plan has only been in effect for 3 years. The first 2 years of operations, Emerging Pharmaceuticals had no 401(k) in place, and when the organization was ready to start a plan, contributions were not retro to the earlier years of operations, even though the organization had some positive revenue results. The vice president of human resources read some comments from employees about the absence of retro funding, but has not thought about the impact of the employee feedback to this point.

 

The WEALTH PLAN at Emerging Pharmaceuticals has two primary elements: a core contribution, and employee savings. Emerging

Pharmaceuticals makes a core contribution to the 401(k) at the end of each calendar year. The core contribution is 3% of eligible pay for each eligible employee. The definition of eligible pay includes annual salary and anything considered to be regular wages. Pay not eligible for a core contribution is pay earned because of a performance bonus, lump sum for unused PTO, or workers’ compensation payments. Emerging Pharmaceuticals makes the core contribution whether you are saving as an employee or not. Employees are not eligible for the pension plan until after completing 1,000 hours of service at Emerging Pharmaceuticals.

Employees can save up to the IRS limits each year and should consider options to save as much as possible. Contributions are made on a pre-tax basis and there is a catch-up contribution of an additional $6,000 for employees age 50 and older.

 

Work-Life Benefits at Emerging Pharmaceuticals

The work-life benefits at Emerging Pharmaceuticals include paid time off, paid holidays, tuition assistance, and limited remote opportunities.  The major holidays are in addition to paid time off and include New Year’s Day, Memorial Day, July 4th, Labor Day, Thanksgiving, the day after Thanksgiving, and Christmas Day. Paid time off is front-loaded according to years of service and is a use-it-or-lose-it benefit. Paid time off is also used for illness. There is no separate illness bank of time. The paid time off schedule is developed off of years of service and, because Emerging Pharmaceuticals is a young company, the table of time only shows 10 years. There are no provisions for time-off banks beyond 10 years. If an employee has paid time remaining in their bank of time after December 15th of any year, the time will be lost. Paid time off banks are reset on or around January 1st of each year. There is no carryover provision and no provision to “buy out” any paid time off.

The schedule for Paid Time Off is as follows:

Continuous Years of Service

PTO in Days

PTO in Hours

Monthly Accrual in Hours

3 years or less

10

80

6.15

After 3 years

12

96

7.38

After 6 years

15

120

9.23

At 10 years and every year thereafter

18

144

11.07

 

NOTE: As the Total Rewards Manager, you should think about how a short term list of time off affects retention of employees.

 

Remote Work Options

Remote work options at Emerging Pharmaceuticals are only available to scientists or analysts who develop data analytics for drug/patient outcomes. The remote work option requires daily huddles by Skype for Business and attendance at unit meetings at least once a week. Emerging Pharmaceuticals will provide the appropriate computer equipment and connections. Employees are required to be online by 8:00 a.m. each day and may be required to work on the weekends as requested. There is no reimbursement for home-based Wi-Fi, which is vital to work remotely from home.

Tuition Reimbursement

The tuition reimbursement program is available to eligible employees. Employees must have completed at least 1 year of service and will be reimbursed for education that is considered either an “upskill” related to the employee’s current position, or coursework as part of an undergrad or graduate degree (doctoral-level education is not included) at an accredited U.S. college or university. The yearly benefit is 100% up to $2,000 for an undergraduate degree and up to $3,500 for a graduate degree

QUESTION

Based on the case study analysis address the prompts in the Final Project Guidelines and Rubric document (Section I, Parts A–C) and the Milestone One Guidelines and Rubric document.

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