TOTAL REWARDS: A FRESH PERSPECTIVE

1 H E A LT H W E A LT H C A R E E R. T O TA L R E WA R D S : A FRESH PERSPECTIVE . Tracy Bean, Partner Kathi Myers, Principal SEPTEMBER 2018. H E A LT H W E A LT H C A R E E R. THE FUTURE OF WORK. MERCER 2015 3. Copyright 2017 Mercer (US) Inc. All rights reserved. 3. You cannot wait until a house burns down to buy fire insurance on it. We cannot wait until there are massive dislocations in our society to prepare for the Fourth Industrial Revolution. Robert J. Shiller | 2013 Nobel laureate in economics | Yale University professor MERCER 2018 4. Copyright 2017 Mercer (US) Inc. All rights reserved. 4. A Y E A R O F A C T I O N , N O T A N T I C I PAT I O N. L I V I N G PA S T T H E I N F L E C T I O N P O I N T. WHAT WE KNOW WHERE WE ARE AT WHERE WE ARE HEADING. INFLECTION POINT. TECHNOLOGY. Cloud Technology Automation, Robotics Blockchain INTERACTIVE. 3D Printing & Advanced AI & Machine Learning Virtual Assistants DATA LAYER. Manufacturing Wearables The Internet of Things AUGMENTED.

2 BIG DATA MANAGEMENT. HUMANITY. Predictive Analytics AI Board Directors DISRUPTIVE TECHNOLOGY. AI adaptive systems that anticipate needs Rise of the Rise of the Pay Equity Individual Free Agent Vocality of the Personas HUMAN. Multi-generational Workforce Longevity Female voice Building awareness Getting organized Starting to accelerate Copyright 2017 Mercer (US) Inc. All rights reserved. 5. THE FUTURE OF WORK IS CHANGING. Future of Jobs Future of Talent ARTIFICIAL. GLOBALIZATION PENDING RETIREMENT OF. INTELLIGENCE. BABY BOOMERS. MULTIPLE. DIGITALIZATION GENERATIONS AT. WORK. AUTOMATION/. CONSUMERIZATION ROBOTICS RISE OF THE FREE. DIGITAL SOCIAL. AGENT. WORLD. FUT. UR. WO E OF. RK. Now is the time for employers to take a FRESH look at their employee experience to create an environment to thrive . Copyright 2017 Mercer (US) Inc. All rights reserved. 6. THE FUTURE OF WORK: EXAMPLES IN ACTION. A R A P I D LY C H A N G I N G E V O L U T I O N. M A N U FA C T U R I N G MOVED TO OTHER NOW MOVING TO.

3 THROUGH ROBOTICS INDUSTRIES WHITE COLLAR JOBS. Copyright 2017 Mercer (US) Inc. All rights reserved. 7. C O M P E T I T I O N F O R TA L E N T. TIGHTENING SKILL COMPETITION. LABOR MARKETS M I S M AT C H F O R TA L E N T. Globally, many countries are Current employees may Employers must ensure at or approaching a not meet future needs they are poised to attract 10-year low in due to technology and retain talent in a unemployment rates disruption changing the new era skills needed Copyright 2017 Mercer (US) Inc. All rights reserved. 8. M E R C E R ' S G L O B A L TA L E N T T R E N D S 2 0 1 8. WHO WE HEARD FROM. 7,648 VOICES 44 MARKETS 21 INDUSTRIES. Specific trends by | Gender ! Generation ! Job level ! Company size ! Mature vs growth economies Board Directors C-Suite Directors of private and public companies 2 in 5 have been with their company 10+ years, 20% are CEOs 100% believe there will be increased competition 1 in 4 expect their industry to undergo significant for talent this year disruption in the next 3 years HR Employees Majority in companies with 1,000+ employees 1/3 individual contributors, majority with 6+ years tenure Only 1 in 5 say that the Employee Experience is a core 65% say they feel energized in their current role part of their people strategy today MERCER 2018 GLOBAL DATA.

4 Copyright 2017 Mercer (US) Inc. All rights reserved. 9. MERCER 2018 STUDY FINDINGS. TOP TRENDS. CHANGE WORKING WITH PERMANENT PLATFORM DIGITAL. @SPEED PURPOSE FLEXIBILITY FOR TALENT FROM THE. INSIDE OUT. Copyright MERCER 2017. 2018 Mercer (US) Inc. All rights reserved. 10 10. M O LT E N S T R U C T U R E S T H E N E E D F O R. PLASTICITY. Executives: 2 in 5 globally have HR: 1 in 5 have redesigning transformation metrics on scorecard structures as a 2018 priority Copyright 2017 Mercer (US) Inc. All rights reserved. 11. W H AT K E E P S L E A D E R S U P AT N I G H T ? The Global Board Agenda Talent scarcity and Digital/. tech EXECUTIVES'. EXECUTIVES'. EXTERNAL CONCERNS. WORKFORCE ISSUES. 1. Cyber security 1. Lack of critical skills 2. Strength of emerging market 2. Employees' digital economies experience (HR #4). 3. Talent Scarcity 3. Automation at work 4. Changes in labor/migration 4. Aging workforce (HR #2). regulations Copyright MERCER 2017. 2018 Mercer (US) DATA.

5 GLOBAL Inc. All rights reserved. 12 12. ARE YOU READY? Are you getting the Do you have the Have you created Do you provide a best R E T U R N Are you noticing FUTURE S TAY I N G. COMPELLING ON S Y M P T O M S of WORKFORCE POWER. EXPERIENCE INVESTMENT an uninspiring with the skills you with your for your workforce? from your rewards experience? need? employees? program? Copyright 2017 Mercer (US) Inc. All rights reserved. 13. ARE YOU READY? WHAT EMPLOYEES CRAVE WHAT COMPANIES OFFER. Thriving employees are 3 times AFFINITY EVP differentiated by a more likely to work for a company 75% PRIDE 13% purpose-driven mission with a strong sense of purpose . PURPOSE. 17x more likely to feel career-empowered 75% 28% Continuous feedback tool CAREER & WELL-BEING. 3x more likely to say their workplace focuses on Health & well-being as a talent 77% 14% management priority this year health & well-being And nearly 5x more likely Practice some form of to believe they are paid 81% COMPENSATION & BENEFITS 21% internal pay disclosure fairly & competitively MERCER 2017 CULTURAL ALIGNMENT 14.

6 Copyright 2017 Mercer (US) Inc. All rights reserved. 14. W H AT D O E S T H I S. MEAN FOR YOU? MERCER 2015 15. Copyright 2017 Mercer (US) Inc. All rights reserved. 15. W H AT D O E S T H I S M E A N F O R Y O U ? EMPLOYEES ARE LOOKING FOR MORE. C O M P E N S AT I O N H E A LT H A N D STEERING W O R RY I N G MAKING WORK. IS STILL KING WELLNESS MY CAREER ABOUT MONEY WORK . #1 way to 53% want more 1 in 3 do not feel 13 hours per 56% want more positively impact focus on health empowered in month per employee flexible options and me at work and wellness their careers spent worrying at 77% would work on work contract basis Source: Mercer 2017 Global Talent Trends Report Copyright 2017 Mercer (US) Inc. All rights reserved. 16. W H AT D O E S T H I S M E A N F O R Y O U ? EMPLOYER OFFERINGS ARE SHIFTING. Y E S T E R D AY T O D AY TOMORROW. C O M P E N S AT I O N Internally focused Market driven Greater transparency Guaranteed increases Pay for performance Personalization Segmentation Designing for outcomes and Differentiation BENEFITS Static Higher cost Expanded offerings with Guaranteed/low cost Employee responsibility personalized decision support Company responsibility Focus on value-based care WELL-BEING Emphasis on Emphasis on well-being Emphasis on whole person physical wellness (physical, financial, emotional) (community, purpose).

7 Focus on return on Focus on value on Focus on evidence-based investment investment outcomes CAREERS Staid and predictable career Employee-driven Employer-curated careers options career paths Rise of independent Stable, fixed and Flexible work arrangements contractors/free agents predictable work schedules Copyright 2017 Mercer (US) Inc. All rights reserved. 17. W H AT D O E S T H I S M E A N F O R Y O U ? TRADITIONAL REWARD LEVERS AREN'T DRIVING. RETENTION. I am very satisfied with My benefits are very good my organization I am very satisfied with my job and career I am paid fairly Globally, 1 in 3 employees say they are satisfied with their employers, but are still considering leaving Copyright 2017 Mercer (US) Inc. All rights reserved. 18. W H AT D O E S T H I S M E A N F O R Y O U ? TA K E A H O L I S T I C A P P R O A C H. Define the employee experience that will make the right talent want to join, stay and deliver their best performance EMOTIONAL. PURPOSE. EXPERIENTIAL.

8 CAREERS WELL-BEING. CONTRACTUAL. COMPENSATION BENEFITS. C U LT U R E. Copyright 2017 Mercer (US) Inc. All rights reserved. 19. W H AT D O E S T H I S M E A N F O R Y O U ? S H I F T F R O M TO TA L R E WA R D S TO TO TA L VA L U E F O R A N. INDIVIDUAL. Create staying power through a U N I Q U E proposition with purpose Provide me with meaningful and fulfilling work that matters Make me proud to work for a company that makes a positive impact on society through a compelling mission and vision PURPOSE. Help me feel like I belong here Create a DIFFERENTIATED experience Support me with my career journey Provide me with flexibility to make work work for me CAREERS WELL-BEING Help me manage my physical, financial and emotional well-being Provide a COMPETITIVE compensation and benefits offering Pay me fairly and competitively Reward my contributions COMPENSATION BENEFITS Provide programs to manage my health and wealth C U LT U R E. Copyright 2017 Mercer (US) Inc. All rights reserved.

9 20. W H AT D O E S T H I S M E A N F O R Y O U ? F R A M E W O R K A D A P T S TO Y O U R P E O P L E S T R AT E G Y. GOAL. Build Talent GOAL. GOAL Attract talent based Buy talent on mission CAREERS WELL-BEING. PURPOSE. COMPENSATION BENEFITS. Copyright 2017 Mercer (US) Inc. All rights reserved. 21. C R E AT E A C O M P E L L I N G. EXPERIENCE FOR THE. FUTURE OF WORK. MERCER 2015 22. Copyright 2017 Mercer (US) Inc. All rights reserved. 22. C R E AT E A C O M P E L L I N G E X P E R I E N C E. I T S TA RT S W I T H A S T R AT E G Y. An effective strategy should consider the following: MULTI- DATA-DRIVEN TARGETED ENGAGING. PERSPECTIVE . Copyright 2017 Mercer (US) Inc. All rights reserved. 23. C R E AT E A C O M P E L L I N G E X P E R I E N C E. M U LT I - P E R S P E C T I V E : VA RY I N G D E G R E E S. EMPLOYER PERSPECTIVE . What outcomes do we need? EMPLOYEE PERSPECTIVE . What do our employees value? MARKET PERSPECTIVE . What are our competitors doing? COST PERSPECTIVE .

10 Are our programs affordable and sustainable? Copyright 2017 Mercer (US) Inc. All rights reserved. 24. C R E AT E A C O M P E L L I N G E X P E R I E N C E. D ATA - D R I V E N : A N A LY Z E W O R K F O R C E B E H AV I O R S. Say What employees say, as measured through: Do How employees actually behave, as measured through: Leadership and HR Performance/. perspectives productivity Focus groups Engagement Employee surveys Turnover Social media sites Promotability Exit surveys Rewards program utilization Human behavior is complex we seek to crack the code for what will truly drive desired outcomes Copyright 2017 Mercer (US) Inc. All rights reserved. 25. C R E AT E A C O M P E L L I N G E X P E R I E N C E. D ATA - D R I V E N : A N E X A M P L E I N A C T I O N. MANAGEMENT. E M P L O Y E E S S AY D ATA R E V E A L I M P L I C AT I O N. RESPONSE. Exiting employees TOTAL hours worked Implemented a new stated that pay was the not pay rate was the staffing model, resulting Raise the hourly rate reason for high levels biggest predictor of in 5% reduction in of turnover turnover turnover ?