Monroe College
School of Business and Accounting
Professor: Mauricia Thomas-Francis

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Course Name: Human Resource Management
Course Number & Section #: MG211-201
Submitted By: Nita D. Pascal
Student ID#: 0156616
Date of Course: Spring 2014 Semester: August 2, 2014
Title of Assignment: Case Analysis: AFLAC Insurance

Table of Contents

Executive Summary
In light of the current economic situation, employee benefits have become a major concern and are surfacing in many conversations of HR professionals. Human capital is by far an organization’s most valuable asset and at that a huge expense. In an attempt to keep cost low, to remain competitive, many organizations are forced to either reduce or completely disregard certain elements of their total rewards programs. This has not always been an easy decision, because on the flip side of the coin, the availability and quality of a company's benefits remains one of the major factors affecting an employee's morale, influences their decision to remain in the business and more so can determine whether or not a qualified employee accepts a job in the first place.
What if a certain organization offered rewards that incurs next to nothing or absolutely no costs at all for the employees, and allows them to receive a benefit which cost couple of hundreds of dollars a year? At Aflac insurance company, the reality of this is attainable. Aflac has long understood the importance of rewarding employees with meaningful benefits, handsomely pays off. Not only does this strategy drive company success, it helps the company ascertain and achieve its goals. In her case study, author Sandra Reed outlines that Aflac believes that an organization can create a competitive advantage by including employees as central issues when determining strategic business plans. The result will be a practical benefit strategy that considers the physical, financial and career health of an organization’s employees. Communicated as part of the employee value offer, this strategy will help Aflac to better recruit, retain and engage talent. (Reed, 2009, p. 3).
This paper serves to do an analytic overview of the insurance company of Aflac concerning its effective use of rewards benefits packages to attract and retain talented employees in the light of realising its corporate objectives.
Aflac is a fortune 500 Company; gaining presence is all 50 states of the United States. Aflac Japan became licensed in 1974 and is the number one insurance there, and has maintained this status ever since. Aflac employees enjoy a supportive work environment and organizational culture with an open-door management philosophy, excellent benefits, competitive salaries, award-winning training and development classes, advancement opportunities, Georgia's largest on-site child-care centers, a monthly employee magazine, community activities, an annual Employee Appreciation Week, and an annual holiday party for Aflac employees and their families. (Aflac, Aflac Historry, 2013).
The following research questions have been formulated to help the researcher analyse and provide insightful answers to this case study. 1. How did a company like Aflac use its own products and services to enhance the overall compensation package for its employees? 2. How did the company align its benefits with its corporate values? 3. How does employee satisfaction influence customer loyalty? How can Aflac achieve customer satisfaction?
From the following questions developed, a conceptual map was also formulated which provided a guideline as to the direction in which the case analysis would take. (see Appendix)
This case analysis also examines and presents a literature review which accounts for the work that accredited scholars have published as it relates to the various benefits and compensation and its link towards customer satisfaction and overall business success.

Introduction & Context
Introduction

Its Corporate Philosophy sums it nicely when it stated “Since its beginning, Aflac has believed that the best way to succeed in our business is to value people. Treating employees with care, dignity and fairness are founding principles of Aflac.”
Certainly, Aflac’s business strategy goes beyond creating one of the most popular brand icons to prompt growth, but its success is also embedded in its reward programs, tied into its organizational goals and values. The insurance company offers not only extrinsic rewards to its employees but also intrinsic rewards. << Give reference and explain intrinsic and extrinsic Rewards>>>
Today, HR experts are accountable for programs far beyond the basic administrative requirements, since Human Resource now plays a strategic role in the modern organization. (Reed, 2009) stated that “an organization’s total reward package consist of a few fundamental areas including that of meeting the bottom-line profitability, maintaining brand identity and employee job satisfaction”. As a means of building company loyalty, HR professionals are charged with the responsibility of ensuring that employees remain motivated and satisfied, which would eventually lead to strong employee morale.
Employees are the most expensive asset of the organization and HR is the department responsible for the cultivation of the asset. The first step for the business to achieve its bottom line is ensuring that it keeps the employees happy in order to yield high productivity results. The following case Analysis examines the operation of the Aflac Insurance Company and how it uses its compensation and benefits structures to achieve organizational results.
Background of the Organization
Three brothers John, Paul, and Bill Amos, founded the American Family Life Assurance Company also known as Aflac in 1955. They were three hard-working brothers who knew that Americans needed financial protection when an illness or accident strikes. With a commitment to be there for policyholders dealing with a medical situation, fuelled the birth of Aflac, which is now the largest insurance provider of individual insurance in Japan and the leading provider of supplemental insurance in the United States.
Aflac is a Fortune 500 company, with over 465,000 employer accounts in the United States. The insurance company can boast of the numerous awards and recognition it received for ethics, diversity and leadership skills. Including is its acknowledgment from Ethisphere Magazine recognizing Aflac as the “World’s Most Ethical Company” for eight consecutive years. In December 2010, the U.S. Green Building Council (USGBC) awarded Aflac its Leadership. And in July 2012, Black Enterprise magazine included Aflac in its list of the Top 40 Best Companies for Diversity for the ninth consecutive year. (Aflac, 2013)
Aflac employs more than 4,500 people and has more than 71,000 licensed independent agents throughout the United States and Japan according to the New York Stock Exchange business summary.
Aflac endorses a range of different insurance policies including cancer plans, care plans, medical/sickness riders, living benefit life plans, general medical indemnity plans, and ordinary life insurance. . It is best known for its payroll deduction insurance coverage, which pay cash benefits when a policyholder has a covered accident or illness. (Aflac, 2013)
On January 1, 2000, the American public got its first glimpse of a new, innovative marketing campaign for a little-known supplemental insurance company in Columbus, Georgia. When a little white duck with little to say, but a lot of personality, stormed upon the scene, it made advertising history and transformed Aflac into an international powerhouse. Aflac’s name recognition soared from 11 percent to 94 percent where it remains today. (Aflac, 2013)
More than 50 million people worldwide have chosen Aflac insurance because of the confidence they get from knowing they will have financial assistance when an illness or serious accident occurs Aflac is committed to a healthy environment and sustainable business practices.

Problem Definition
Problem Statement/Problem Background
In its 2012 annual reports Job Satisfaction Survey Reports, the society for Human Resource Management (SHRM) reported that from since 2002, compensation and benefits were among the top five consistent aspects towards job satisfaction. Despite the significance of these aspects, employee satisfaction still remains low. (SHRM, 2012)
The insurance Company Aflac seems to be doing a great job in giving the employees what they need from a benefits perspective, while trying to balance cost, all within a rapid growth.
This paper aims to analyse Aflac corporate’s strategy to build an understanding as to how it uses its rewards programs to achieve organizational outcomes.

Aims and Objectives
This research seeks to achieve the following objectives: * To outline the components of strategic compensation and benefits that companies such as Aflac practices. * To make the correlation between employees job satisfaction and outstanding customer satisfaction, based on the treatment from the organization, and also to understand the importance of employees serving as assets for an organization. * To analyse how Aflac applies concepts of traditional and non-traditional benefits as a tool to achieve corporate objectives.
Literature Review
What an employee puts into a business and what that employee receives in return goes hand in hand and becomes a win-win situation for the parties involved. These two elements are important determinants for an organization to remain abreast in this competitive environment. This brings us to addressing the topic of proper management of compensation and benefits alongside balancing these costs to yield profits in the end.
Defining Employee Compensation and Benefits
According to authors Denisi and Griffin, in their book Human Resource Management, 2nd edition, compensation is “the set of rewards that organizations provides to individuals in return for their willingness to perform various jobs and tasks within the organization”. They went on further to define benefits as “various rewards, incentives, and other items of value that an organization provides to its employees beyond wages, salaries, and other forms of financial compensation”. (Denisi & Griffin, p. 194). Surveys have proved that various benefits packages are regarded in the top five aspects that contribute to employee satisfaction. (SHRM, 2012) This issue of benefits cost has become a bit bothersome for many companies, thus many seek to reduce them. Denisi and Griffin page 204 under the subheading: the Cost of Benefits stated that Data from the U.S Chamber of Commerce provides insights of compensation cost. According to these figures, the typical employee costs the company almost $50,000 a year in total compensation. $20,000 of these benefits includes pay for mandated benefits, insurance, pensions, vacation time and so forth. The authors went on to point out that “it is quite clear that organizations are spending huge amounts of money on benefits, and in an effort to hold the tide, are even asking employees to bear more of the costs of the benefits. Despite that fact benefits continue to be a large part of labour cost in the United States”. (Denisi & Griffin, p. 204)
The authors also pointed out the following purposes of benefits programs and the impact it has on both employees and the organization itself. Many experts believe that organizations willing to spend more money on total compensation are able to attract better-qualified people and convince employees to work harder, saving the company money. The general concept underlying this approach is known as efficiency wage theory; that is regarded as when an organization saves money when its benefits and compensation package attracts better- qualified people and motivates its employees to work harder and remain in the organization. Little data exist to support this position, but some organizations appear to view wages and benefits as a means of attracting better applicants. (Denisi & Griffin).
In his edition on Compensation and Benefits Review, Associate Professor of ICFAJ Business School of India, Pankaj M. Madhani states that
“Organization culture and compensation system design function as complementary elements in achieving the strategic goals of the organization. When compensation systems are not aligned with organizational culture, it causes many unintended consequences. The organization culture can be shaped by the type of compensation system used and the kinds of behaviours and outcomes the organization chooses to reward and punish. When compensation structures (fixed pay vs variable pay) are synchronized, the culture acts as an asset and generates competitive advantage. Depending on how the compensation system is designed, developed, communicated and managed, it can positively; or negatively influences an organization’s culture”. (Madhani, July,4,2014).
Defining Job Satisfaction
Incomplete Need to site work by accredited scholar

Generally when a workforce is satisfied with its working environment, compensation, gets along with co-workers, they are more likely to be satisfied with their job, therefore remaining at that company and also be more productive. These factors should not be overlooked because they are the key factors that influence employee’s turnover, employee’s performance, and their productivity. The bottom line is employees are more likely to remain in a firm that provides better benefits. Most people are unlikely to take a full time job with companies that don’t offer the least basic benefits. It is important then to strategize carefully because the cost is high, but the effects may be even higher.
Objectives Review
In these hard economic times, Companies are adopting various methods to keep abreast in terms of competitive advantage. It is of outmost importance that HR organizations find the gaps and opportunities that they can effectively use to set them apart from the competitive environment and alleviate the notion of employee abrasion. More so, HR professionals need to strategize in such a way, that the company’s objectives can be achieved through the use of total rewards. Being able to adopt a right rewards system can assist a company in “killing two birds with one stone” (not sure if I can use that) not only would it increase job satisfaction but also it will be steering the company in the right direction in achieving bottom-line profitability. Aflac is one of these companies who seem to reap the benefits of using this system to its fullest advantage.
Components of Strategic compensation and benefits undertaken at Aflac
Author Sandra Reed conveys what the Vice President of human resources in charge of compensation and benefits at Aflac, Casey Graves, says about the their strategy “the needs of the company’s employees continue to be the driving factor behind Aflac’s total rewards programs” (Reed, 2009, p. 3).
Aflac guarantees its social commitment to its employees by proving to them that their lifestyles are important to the company. It is about creating positive work environments that is conducive to productivity, by providing one of the largest on-site childcare facilities in the United States.
Aflac also reflects its commitment by providing its own products and services to enhance the total compensation for its employees by providing its product and services at little or no cost. The Company pays a 100 percent of cancer insurance to all its employees, a benefit that mirrors’ the company’s philanthropic commitment to the community. This distinction is in sync with the community because it not only shows that it cares about its employees, but also because it invested in the community by showing that it cared for the families of the employees as part of its corporate social responsibilities. (Reed, 2009, p. 5)

Connection between Aflac satisfied employees resulting in excellent customer service
The insurance industry is very competitive putting pressure on insurance companies to figure out how to attract the best talent in the industry. In (Reed, 2009), the case states that at Aflac, the company strives to deliver quality service to its 4,500 employees while staying competitive in the insurance market. It prides itself on being ahead of the line from a consumer perspective and desires to mirror that philosophy in its treatment of employees.
By being the best in the insurance industry, their commitment to their employees, that they would be treated fairly, is proportionate with how they treat their customers. The benefits provided by Aflac are a way of conveying to employees that they are important to the organization. The case study by Reed went on further to outline responses from an employee survey conducted stating that, approximately 90 percent of the employees were attracted to and remain at Aflac because of the company reputation. Also 89 percent of the employees considered Aflac’s total rewards statement an effective communication tool. (Reed, 2009, p. 5). The employees of Aflac having a high sense of love from Aflac, transfers that type of tender loving care back to the customers, in return, the customer satisfaction increased making Aflac a leader in the insurance industry.
Traditional and Non-Traditional Rewards Being Used to Realise Organizational Objectives
Traditional total reward outcomes for Aflac consisted of brand identity, bottom-line profitability, employee job satisfaction, and increased management focus. Non-traditional rewards consisted of tying customer loyalty and satisfaction with employee motivation and well-being as a valued employee of Aflac. “Volunteer of the month” was on such way in which employees would be motivated. Aflac used this to recognize employees for the good deeds. These results were based on the needs of Aflac to engage their HR organization to measure Aflac’s total reward outcomes. They achieved these outcomes through focused recruiting, retention, diversity, and training. The insurance industry has one of the lowest unemployment rates in the country making it difficult to find and retain qualified employees. The company made this challenge work for them in the sense that it focus on providing value-added programs that would help improve job satisfaction, support organizational initiatives and provide opportunities for professional development, which is used to prepare current employees for future promotions. (Reed, 2009)

Aflac aligns its benefits with its corporate values
The case study by Sandra Reed states that the total rewards focused aligned with one of Aflac’s guiding principles, “provide an enriching and rewarding workplace for our employees (Reed, 2009, p. 3). Aflac needed the employees to continue to be the driving force behind the total rewards program. Also as mentioned earlier, Aflac provides its own product of insurance by providing its employees 100% cancer insurance coverage, a cost that can run into the hundreds of thousands of dollars for treatment, a clever way to intertwine company products with total rewards. It goes to show that Aflac cares about its employees and is guided on fairness as well by designing benefits packages that reflects the needs of a multi-generational workforce. (Reed, 2009)

Methodology
The researcher was able to do a comprehensive study of both qualitative and quantitative data????. This mixed method was essential, as both a statistical and theoretical perspective were needed to understand the subject in order to do a more precise analysis concerning Aflac Benefits and Business Strategy.
Information was gathered within two weeks, during the period of July 22- 31.
The first approach of gathering information was an online research to be familiarized with Aflac Company. It seemed appropriate then to use the required student edition text book to gain a better understanding on the chapter concerning compensation and benefits. While indulging further into the case study, the researcher found it useful to gather information from Google scholar which presented reports and other case analysis which provided insightful information relating to the case. Trusted and popular Business sites proved to be also beneficial.

Implications of Aflac’s strategy

Recommendations
The total rewards of Aflac are tremendous and worth emulating; however, the researcher presents a few recommendations to the company that may be useful to maximize their goals of having the best total rewards programs in the insurance industry. * Aflac seems to concentrate a lot on rewards that tie in customer satisfaction with employee motivation to attract and retain its employees. The employees that don’t deal directly with customers may need to be rewarded some other ways. Incentives such as bonuses or profit sharing can help retain these employees. This is one way of increasing their intrinsic motivation to remain with Aflac. * Given this competitive insurance industry, Aflac needs to keep ahead. One way it can manage this is by the continuous use of employee needs assessment. It gives employees the feel that the company is not being made stagnant in its benefits package and also makes Aflac relevant in this competitive environment.

Conclusions
The importance of total rewards in the strategic framework of a company ensures they remain competitive, profitable, and sustainable into the future. Aflac proved this through its own example by becoming the most recognized companies in its industry.
Aflac is among these companies that understood the importance of benefits to employees and how much they mattered to them, and that these benefits played a critical part in the realisation its bottom line.
Awarding benefits and compensation remains a crucial and influential lever in how well a company is able to manage its biggest expense item, that being labour capital. In fact, the 2013 Aflac report found that employee satisfaction with benefits continues to greatly influence overall job satisfaction, productivity and whether to remain working for you, or not. (Aflac, Executive Summary 2013, 2013)

Appendices
Diagram of conceptual map

Works Cited