JOHN BREMEN: The organizations that have truly gotten serious about understanding the workforce demographics, segmenting them, and developing integrated total rewards and employ value propositions around them, believe it or not, have a five times greater chance of having high levels of employee engagement and twice the chance of having outperformance in terms of financial results than organizations who don't.

RYAN JOHNSON: Welcome to this special edition of Work Span TV. I'm Ryan Johnson from World at Work, talking with John Bremen today about treating employees as consumers of total rewards. Now John, this is kind of an interesting concept. A couple of years ago, it was fashionable to think about employees as customers, and now we're talking about consumers. Tell me what you're seeing here.

JOHN BREMEN: There was a notion that came out probably five to seven years ago about treating employees as customers, and it never really took on. I think that's because certain senior level executives believed that calling or relating an employee to a customer might create too much of an entitlement mentality. The reality is customers are different than employees. Organizations think about serving customers and meeting the needs of customers. I think historically, they've been less focused on meeting the needs of employees.

But more recently, organizations have found that, in fact, their employees are consumers of many aspects of their experience. They are consumers of the employer's brand. They are consumers of the employer's programs. They are consumers of the employer's culture. They are consumers of many different aspects of the work experience. And as it turns out, they are also consumers of total rewards.

And what we learn in times of great economic change, when employee populations and labor forces really go through a transformation, that as it turns out, employees do shop around for different aspects of the employee value proposition. Some look for mission and vision. Our clients who have missions, such as saving 100,000 lives a month, or creating lasting memories for families, or saving lives abroad-- these organizations are able to attract people who are really tied to that mission.

Other organizations, it's clear people are just there for the money, pure and simple. Others yet, they like the collaborative culture. Others yet, it's about their life's work. It's about the job. If you let employees do a certain job, they'll do it for life as long as you just pay them enough. So the idea is if we can understand the preferences of various segments of the employee population, we can tailor the aspects of our total rewards program and our employee value proposition around that.

RYAN JOHNSON: Obviously, it sounds like you're borrowing terminology from the marketing realm.

JOHN BREMEN: Yes, it's not borrowing, whatsoever. It's actually shamelessly adapting, if you will. We are, in effect, taking concepts that have been known to the marketing world for as long as there have been marketers and as long as there has been marketing about segmentation, differentiation, preferences, and such. And what we learn is, just like our external consumers have different preferences, so do our internal consumers.

And recently, we were talking to a senior executive at one of our clients-- a large global diversified organization. And he was sitting, reflecting, musing about the current labor market. He said, you know, we really have taken the time to understand and to get to know our external consumers very well, but we really don't know our internal consumers. We really don't know what makes our employees tick. And we're about to invest in a fairly significant change in our total rewards program. Shouldn't we really understand whether it's going to work before we do it?

This has kind of represented a sea tide change where an organization that had the marketing skills focused more on their external customers is now bringing that inside and using it to focus on their internal consumers as well. And what they found in doing that was their employees really had a very different set of preferences than they thought-- by conducting surveys, by doing conjoint analysis, just by asking the employees what was important to them. How did they rank different rewards and how did they value each reward? Was it worth-- every dollar we spend, is it worth $1 of rewards? Is it worth $1.50? Is it worth $0.30? We should be doing more of the programs that are worth $1.50 for every dollar we spend and fewer for every $0.30 that we spend.

RYAN JOHNSON: Seems like an absolute no-brainer the way you describe it in borrowing these marketing terms. Are you seeing any resistance to this concept?

JOHN BREMEN: You ask yourself why companies haven't been doing this for as long as there's marketing. I think 10, 15 years ago, there was a really good reason, which was you didn't have access to this data. There really was no good way to collect this information. We didn't understand indifference curves, rewards for internal consumers, for employees. We didn't know how to go about getting the data. We didn't have a sense that you could actually use conjoint analysis to measure how much an employee values a reward economically. To know for every dollar we spend, it's only worth $0.30 versus $1.50-- that's pretty new technology.

So I don't think it's so much resistance. It's more companies not understanding that this is available. And the only resistance we find is there are organizations who really believe they know and understand their employees when, in fact, they may not.

We've had a couple clients who were about to terminate certain specific programs, either related to their culture or their total rewards. And at the last minute, they said, we should really find out how important these things are to our folks. And as it turned out, those were the top reasons people worked for those companies. And so they averted disaster before it was too late by asking employees what was important to them, measuring it. And sometimes you can do it by asking directly. Sometimes you do it indirectly. But it's just important to understand it before you do it.

RYAN JOHNSON: The concept is very compelling, of course, John. If I'm a comp analyst, a comp manager that might be watching this video, and I'm trying to get my organization to think about employees as consumers, what are some of the first steps I might think about?

JOHN BREMEN: The first thing we have to do is just generate awareness about this topic. And the way I like to think about it is the average company with 20,000 employees spends between $2 and $3 billion a year US on their total rewards programs. If I was a young up-and-coming comp analyst or comp manager, director of total rewards, I would ask my executives whether there's anything else in this company we would be willing to spend $3 billion a year on without first understanding whether it's going to work.

Is there a piece of equipment we would buy for $3 billion without first making sure it was effective in the process it was meant to be effective in? Would we spend $3 billion on a new technology system that we first did not clearly define the requirements? Would we spend $3 billion on anything without thoroughly understanding the impact it's going to have on the organization economically and its potential effectiveness? That's all we're talking about. It's a matter of raising awareness of the issue, and also, as a practical point, understanding how we can collect this information.

Some organizations collect this information through their engagement studies. Some do it through sophisticated conjoint analysis. Some do it through focus groups. Some have firms come in and conduct blind research on their employees as if they were customers buying soap or cereal or a car or any other product. There's myriad of ways to collect it, but the main point is we have to first be willing to open up a dialogue about shaping our programs around the ultimate consumers of them.

RYAN JOHNSON: I want to thank John Bremen. And of course you can read John's article in the May 2013 issue of Work Span. John Bremen from Towers Watson. Let me get your coauthor. I can make sure his name's in there.

JOHN BREMEN: Sure. Tom Davenport and I have been doing research on this, and we're very excited to have the article published.

RYAN JOHNSON: So John Bremen and Tom Davenport, the May 2013 issue of Work Span. And for World at Work, I'm Ryan Johnson.

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