Chapter Sixteen Employee Benefits

Learning Objectives Identify the factors involved in determining benefits for a particular organization Describe the major types of benefits that require significant financial contributions from employers Explain the importance of controlling benefit expenditures and identify some cost-control measures Outline the role of the human resources department in administrating benefits

In addition to wage and salaries and incentive plans…. Organizations provide workers with various services and programs known as employee benefits.

Base-pay determination Several factors are involved in determining benefits for a particular organization Base-pay determination Analysis of relevant data (including benefit surveys, cost analysis, and employee preferences) Impact of laws, collective bargaining, and management philosophy

Employee benefits are important for both the employees and the organization They are important to employee well‑being and security. They can be helpful in recruiting and retaining qualified workers. They can help reduce costs in other areas (for example, exercise programs can reduce costs of health care claims).

On the negative side, EB become increasingly expensive to the company. As a percentage of pay, benefits have risen faster than base pay for several decades. In recent recession years, benefit programs in some organizations have been reduced to prevent losses or serious cash‑flow problems.

Types of benefits Mandatory benefits are those required by state law. Social security provides pension payments, unemployment compensation, and workers’ compensation As the number of people eligible for social security grows, social security taxes are rising dramatically.

Many organizations provide Health, life, and disability insurance, and frequently dental and accident insurance Child‑care and elder‑care benefits (are becoming increasingly important) Family leave is a leave of absence to take care of infants, ill family members, or elderly relatives. These benefits have been the focus of considerably more attention due to the increased number of women in the work force and the growing number of elderly people.

Flexible benefit plans: four approches Allow employees to choose a mix of benefits: -Core approach, employees are given a basic benefits package and select from a “menu” those benefits that fit their particular circumstances -Module approach, the employee chooses from several packages of equivalent value -The flexible spending account approach provides each employee with a certain sum of money with which to select benefits. -Combined approaches feature various mixes of the first three approaches.

Impact of the Environment Laws and Welfare State Collective Bargaining and Economic Conditions Work Force Changes

Managing Employee Benefits Benefit Surveys (surveys of the benefits offered by other firms) Employee Preferences (personal interviews and meetings with groups of employees, questionnaires Statistical analysis of employee rankings of various benefit combinations) Benefit Structure and Rules present in the country Managing Costs (cost analyses of benefit expenditures can provide guidance for taking cost-containment measures)

Role of HR Department Assessing Alternatives and Employee Reactions Communicating Information Sensitivity to Equity Issues

Key Terms Employee benefits Social security Unemployment compensation Workers’ compensation Defined benefit pension plan Defined contribution pension plan Vesting Portability Salary-reduction plan Preferred provider organization (PPO) Family leave Elder care Flexible benefit plan Benefit survey