JANUARY 17, 2020

STRATEGIC PLAN UPDATE–EMPLOYEE ENGAGEMENT

Agenda

» Employee Engagement - Relationship to Strategic Plan Goals and Measures

» Vendor Selection–Why Gallup?

» Differences from Prior Employee Engagement Studies

» Engagement Definitions

» PERA Benchmark Results

» Leadership Training

» Next Steps

Strategic Plan Business Goals

GOAL #1 GOAL #2 GOAL #3 GOAL #4

Fortify PERA’s financial

resilience and adaptability

Elevate PERA’s identity among

stakeholders to that of a partner

Strengthen organizational health

and performance

Improve retirement security

outcomes through “best fit”

products, services and

education

OBJECTIVES

A. Establish and implement a

framework to monitor and mitigate

funding risk to the System.

B. Solidify a position on environmental,

social, and governance matters.

C. Explore and implement appropriate

down-market strategies to protect

the portfolio.

D. Explore new ways to leverage

investment program strengths to

enhance performance and reduce

costs.

OBJECTIVES

A. Clarify role and value to members,

retirees and beneficiaries, and

related constituency groups.

B. Deepen employer relationships.

C. Become a retirement security

thought leader and collaborative

partner to the policy-making

community.

D. Elevate role and value to the

Colorado business community and

general public.

OBJECTIVES

A. Enhance the organization's ability

to manage change.

B. Create a culture of collaboration,

continuous learning,

improvement, and risk

awareness.

C. Advance technology and

information security

infrastructure.

D. Protect and sustain the quality of

Board governance.

OBJECTIVES

A. Clarify, align, develop, and deliver

products and services to respond to

member and employer needs.

B. Enhance defined contribution

product and service offerings.

C. Adapt service delivery model to

member and employer preferences.

D. Explore the feasibility of expanding

capabilities to other Colorado public

and private sector entities.

Goal 3. Strengthen Organizational Health and Performance

» Objective A: Enhance the organization's ability to manage change.

• Measure 1: Improved employee engagement against a benchmark

» 2019 – Adopt engagement study methodology, with baseline and improvement targets

• Measure 2: Improved effectiveness of the organization’s shared services areas

» 2019 – Adopt engagement study methodology, with baseline and improvement targets

• Measure 3: Completed succession and leadership development plan

» By 2020

• Measure 4: Improved leader development and readiness

» 2021* – 100% of identified staff have a specified development plan

Measures for 2019–2020

Goal 3. Strengthen Organizational Health and Performance(continued)

» Objective B: Create a culture of collaboration, continuous learning, improvement,

and risk awareness.

• Measure 1: Improved employee collaboration and engagement against a benchmark

» 2019 – Adopt engagement study methodology, with baseline and improvement targets

• Measure 2: Enhanced reputation as an employer

» 2019 – Adopt engagement study methodology, with baseline and improvement targets

• Measure 5: Improved overall employee satisfaction with learning opportunities

» 2019 – Adopt measurement methodology, with baseline and improvement targets

Measures for 2019–2020

» Objective C: Advance technology and information security infrastructure.

• Measure 1: Maintained low-cost, high-service distinction among peers as reflected by the

CEM Benchmarking Study

» Target: Total pension administration cost continuously below the peer average

» Target: Total score above the peer average

» Target: Back office activities adjusted cost per member for IT strategy, database and

applications is at least $10 below peer average

Measures for 2019–2020

Goal 3. Strengthen Organizational Health and Performance(continued)

Vendor Selection–Why Gallup?

» Leader in engagement data collection and analytics

» Survey simplicity

» Understand the correlation between employee engagement and:

• Employee and workgroup performance

• Leadership

• Customer engagement

» Online tools for leaders

• Survey result analytics

• Advice

• Learning

Differences from Prior Employee Engagement Studies

» A program, not a project

» Survey frequency

» Number of survey questions

» Results provided at workgroup level

» Action plans tailored to workgroups

» Integration with leadership development

Engagement Related Definitions

Engagement is not a measure of happiness or satisfaction. Engagement is about providing employees with

the direction, clarity, encouragement and growth they need to perform at their best.

Not Engaged

Employees are psychologically unattached to their

work and company. Because their engagement

needs are not being fully met, they’re putting time—

but not energy or passion—into their work.

Actively Disengaged

Employees aren’t just unhappy at

work—they are resentful that their

needs aren’t being met and are

acting out their unhappiness.

Every day, these workers

potentially undermine what their

engaged coworkers accomplish.

Engaged

Employees are highly involved in and enthusiastic about

their work and workplace. They are psychological

“owners,” drive performance and innovation, and move

the organization forward.

The 12 Elements of an Engaged Workplace

Q12. This last year, I have had opportunities at work to learn and grow.

Q11. In the last six months, someone at work has talked to me about my progress.

Q10. I have a best friend at work.

Q09. My associates or fellow employees are committed to doing quality work.

Q08. The mission or purpose of my company makes me feel my job is important.

Q07. At work, my opinions seem to count.

Q06. There is someone at work who encourages my development.

Q05. My supervisor, or someone at work, seems to care about me as a person.

Q04. In the last seven days, I have received recognition or praise for doing good work.

Q03. At work, I have the opportunity to do what I do best every day.

Q02. I have the materials and equipment I need to do my work right.

Q01. I know what is expected of me at work.

Higher Engagement Leads to Better Business Outcomes

Engaged employees are …

2xMORE LIKELY to say that they are

extremely satisfied with their personal life.

4xMORE LIKELY to evaluate their condition

of life as excellent.

11xMORE LIKELY to indicate that they are

extremely satisfied with their current

company as a place to work.

17%Higher Productivity

21%Higher Profitability

10%Higher Customer Metrics

41%Lower Absenteeism

70%Fewer Safety Incidents

28%Less Shrinkage

59%Less Turnover

(in low-turnover organizations)

20%Higher Sales

Business units in the top engagement quartile of those Gallup has studied have …

… than bottom-quartile business units.

Employee Engagement–U.S. Averages

Engaged34%

Not Engaged53%

Actively Disengaged13%

PERA Benchmark Results

Q¹² MeanThe Gallup Q¹² score represents the average, combined score of the 12 elements that measure employee engagement. Each element

has consistently been linked to better business outcomes.

TOTAL RESPONDENTS

269 - 92%

MEAN PERCENTILE RANK

30Database: Finance, Government, and

Nonprofits

Q¹² MEAN

3.77

ENGAGEMENT INDEX

15%

51%

34%

Actively Disengaged

Not Engaged

Engaged

Percentile Rank in Industry - Finance, Government,

and Nonprofits Database< 25th Percentile 25-49th Percentile 50-74th Percentile 75-89th Percentile >= 90th Percentile

PERA Benchmark Results

Engagement IndexThere is a powerful link between employees who are engaged in their jobs and the achievement of crucial

business outcomes.

ENGAGEMENT INDEX RATIO

2.27

ENGAGEMENT INDEX

15%

51%

34%

Actively Disengaged

Not Engaged

Engaged

Engaged

Employees are highly involved in and enthusiastic about their work and

workplace. They are psychological "owners", drive performance,

innovation, and move the organization forward.

Not Engaged

Employees are essentially psychologically unattached to their work and

company. Because their engagement needs are not being fully met,

they’re putting time – but not energy or passion – into their work.

Actively Disengaged

Employees aren’t just unhappy at work – they are resentful that their

needs are not being met and are busy acting out their

unhappiness. Every day, these workers potentially undermine what their

engaged coworkers accomplish.

PERA Benchmark Results – Gallup Q¹² Items

Correlation Between EE and

Leadership Development

» According to Gallup:

• “Managers account for at least 70% of the variance in Employee

Engagement scores across business units”

• “One in 10 people possess high talent to manage”

Leadership Development Training

» Baseline training required for management

» “Engagement Champions” trained to assist managers

» Customized training provided to address workgroup survey results

» Gallup Portal:

• Online access to workgroup EE survey results

• Automated leadership advice based on survey results

• Access to leadership training

Next Steps

» Train “Engagement Champion Coaches” (Completed in December)

» Complete Required Training

• Creating an Engaging Workplace for Staff (45 minutes)

• Creating an Engaging Workplace for Managers (3.5 hours)

» Understanding Engagement

» Creating Engagement

» Leading with a Focus on Engagement

» Steps to Engagement

• Reading and analyzing your report, meeting with your team,

creating action

» “State of the Team” meetings with workgroups and assigned coaches

» Follow-up survey in July–August timeframe