Conjoint Analysis: What It Is and Why TR Should Consider Using It

Making sweeping changes to your total rewards program can be a thorny task, due to the intensely personal nature of compensation and benefits for employees.

A basic annual survey may not always cut it. Simply asking your workers to pick and choose — or rank — the most-important benefits can be a next-to-impossible ask:

Top five favorite benefits? “Can I pick them all?”
Rank health insurance, paid time off and retirement match by order of importance? “What if they’re all equally important to me?”

Enter conjoint analysis, a research method whose distinct framework — by focusing on individual features within a larger element or offering and emphasizing give-and-take — can make it a useful evaluation and continuous improvement tool.

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“Total rewards is the largest spend on any human capital balance sheet,” said Frank Giordano, a senior manager in Deloitte’s human capital practice. “If you want to be able to effectively make changes to your programs to save money and increase program satisfaction, conjoint is likely the most-effective methodology to achieve that objective.”

Why Conjoint?

Here’s how conjoint analysis works:

It evaluates the relative importance of specific attributes (i.e., individual benefit programs) within a larger product or service (i.e., an organization’s full complement of total rewards).
It goes deeper by allowing respondents to select preferred levels within those specific attributes (i.e., low- vs. high-deductible health plan, 12 vs. 18 vacation days, or 4% vs. 8% retirement match).
It combines those separate elements to create realistic scenarios, rather than evaluating specific benefit programs in a vacuum. This can provide employers intensive insights into the relative value of compensation and benefits programs since they are influenced by and geared toward the sentiments of their specific workforce.

Conjoint is a “tradeoff analysis,” explained Benjamin Granger, the chief workplace psychologist at Qualtrics.

For instance: It doesn’t just ask employees to pick whether they value dental or vision coverage more. It invites them to specify whether having higher vision co-payments is worth it, if that means a lower dental deductible.

“From a psychological perspective, it’s not realistic to say, ‘How important are all these things to you?’ They’re all important,” Granger said. “From an organizational standpoint, one of the huge benefits of conjoint is that it puts people in a more realistic decision-making scenario. When you have to make necessary tradeoffs, what emerges as the most important?”

Using Conjoint to Strengthen Total Rewards

In her previous role as vice president of compensation and benefits at InterContinental Hotels Group, Americas, Julie Cunningham and her team analyzed their total rewards (TR) offerings using conjoint analysis. The process identified some opportunities for program adjustments — but the team was surprised to learn that, overall, the results seemed to validate their rewards strategy.

The conjoint methodology allowed for stronger data, said Cunningham, who now works as vice president of total rewards and talent at Whole Foods Market.

“Conjoint takes into consideration those slight nuances,” she said. “It allows you to see the margins of error vs. a broader survey, which might not actually capture the sentiment of team members.”

A conjoint study also provided Goldman Sachs leaders with new insights about their employees’ benefit priorities, Granger said — which leaned more toward family support rather than the traditional financial benefits the company expected to top the priority lists.

As a result of the survey, Goldman Sachs launched or expanded family-related benefits such as time off for elder or family care, adoption stipends, fertility treatment coverage and paternity leave.

In-depth data from conjoint analysis often provides surprising results, said Giordano, who has worked on studies for organizations who expected to learn that their youngest employees don’t value their pension programs at all, only to find out the opposite was true.

Conjoint won’t make sense for every TR goal, but in certain instances such as a substantial analysis of how all benefits programs relate to each other, it can be a powerful tool, he said.

“Looking at components or attributes of a program changes the conversation a bit,” Giordano said. “It’s not asking you to make a decision about if you like vision or dental better, but to choose attributes of a program you can flex on. It enables you to get to a place where you are still making a trade-off but getting more of something you value.”

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