GE Explorer Series: HR Program

Compensation & Benefits Module

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 UNDERSTANDING TOTAL REWARDS
• Total rewards goes beyond compensation All elements matter – the value perceived can differ

Excellent
Compensation • Base salary health
• Short/Long Term Incentives My pay plan!
• Equity ownership depends on My salary is
individual
performance competitive

Environment Benefits
I love
This is an
• Leadership & Management Style • Health & welfare what I
inclusive
• Working conditions / Flexibility • Traditional benefits do for
team
• Recognition • Non-traditional benefits living!
• Culture • Support programs
• Status

I like to I feel that I

Personal bring value
Job Content learn
Development to the
everyday! company
• Career Opportunity • Impact on business Just got
• Security • Level of responsibility married!
• Mentorship • Meaningful work
• Quality of life • Feedback

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PURPOSE OF A REWARDS PHILOSOPHY
WHAT IS A REWARDS THE GOAL OF OUR
PHILOSOPHY? REWARDS PHILOSOPHY
• A set of principles that guide the • ATTRACT + RETAIN + MOTIVATE +
development & strategy of REWARD our employees to perform
compensation, benefits, and other well and drive the Company’s success
rewards programs.
• Apply global principals that are locally
• It aligns with an organization’s values relevant
and culture

OUR GUIDING PRINCIPLES FOR TOTAL REWARDS

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© 2018, General Electric Company. Proprietary information. All rights reserved.
 OUR CORE REWARDS PHILOSOPHY
REWARDS DECISIONS ARE …

MARKET PERFORMANCE COMPLIANT FINANCIALLY

ORIENTED BASED & EQUITABLE SUSTAINABLE

• Informed by relevant, • Strong • Conform to GE policy, • Influenced by long term

job-related external differentiation…Rewards governance principles, business needs and
market data for delivering high contractual agreements, and shareholder impact
• Externally benchmarked performance local regulations • Aligned with business
for local geographies & • Related to individual and • Based on specific job-related financial planning
related industries business outcomes criteria, business conditions,
and location

ATTRACT + RETAIN + MOTIVATE + REWARD

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MARKET PRICING
External intelligence to inform reward decisions

The principle Data Source

All jobs needs to be assigned a market value in • Reputable HR Consulting firms

order for us to decide on the pay
The goal is to stay competitive for the best talent,
and avoid:
- Underpaying and losing or being unable to
attract the talent
- Overpaying, wasting resources or impeding
desirable turnover
• We gain access to aggregated data by job from these
firms, who ensure that the results are statistically
viable
• Industry & Talent Competitors at Global & Local level
are represented in the sample
• Benchmark data from “self-reported” data sites are not
considered to inform our pay ranges

External intelligence is used to inform decisions in all

elements of Rewards – compensation, bonus design,
benefits & policies, etc.

Every job has a relative ‘value’ which is derived from market data

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PAY RANGES
To inform pay decisions

What are Pay Ranges? Why do we need them?

• The upper and lower bounds of compensation (includes a range • Clarifies the market and internal value for each job, and

minimum, midpoint, and maximum) is called a pay range provides a way to manage employee pay effectively

• They define the spread of what GE has determined is • Quantifies compensation costs & enables budget decisions

appropriate to pay for a job, largely based on market data • Validates compensation strategy & aligns to business goals

from external surveys • Provides a tool to talk with employees about development

• The salary range is determined by market pay rates, • Ensures pay equity

established through market pay studies, for people doing • Allows ease of administration

similar work in similar industries in the same region of the

country.
• Pay rates and salary ranges recognize the level of education,
knowledge, skill, and experience needed to perform each job.

External benchmark data is one of the key inputs into our pay reference range creation process
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COMPA RATIO

Segment 1 Segment 2 Segment 3

0-80% 80%-100% 100% and above

MIN MAX
MIDPOINT

Compa Ratio Pay Range

• A compa-ratio measures the relationship between the • The pay ranges defines the spread of what GE has
salary of an employee (or a position), and the midpoint determined is appropriate to pay for a job, largely based
of the pay range for that employee on market data from external surveys
• Pay ranges will consist of a upper and lower bounds of
Formula compensation, which allows for variation of pay within
(Base Salary) / (Range Midpoint) an accepted range considering factors such as job-
related skills, expertise and experience

August 12, 2020 Presentation Title 7

 PAY RANGES AND INTERNAL CALIBRATION

Segment 1 Segment 2 Segment 3

0-80% 80%-100% 100% and above

MIN MID MAX

• New to the role • Consistently meeting job requirements • Sustained high performance
examples

• Developing knowledge/skills
• Just being promoted from the
lower band
• Fully proficient in the role
demonstrating all the desired
competencies
• Highly competent
• Seasoned and capable
• Has broad and deep knowledge and
serves as expert resource and/or role
model/mentor
• Developing towards next band

Example- Calculating Compa Ratio

Consider base salary: $95k Compa Ratio = (Base Salary) / (Range Midpoint)
Pay Range for the position: = (95,000/100,000)

Compa Ratio = 0.95 or 95%

MIN MID MAX
$80k $100k $120k