1. Benefits Determination Process Compensation Management Prepared by: Mr. Zaheed Husein Mohammad Al-Din, Sr. Lecturer, BBS Adapted from: Compensation, Ninth Edition (By: George T. Milkovich, Jerry M. Newman)

2. Topics for Discussion Why the Growth in Employee Benefits? Reasons for Expansion in List of Employee Benefits Benefit Planning and Design Issues Benefit Administration Issues Approaches in Fringe Benefits Components of Wage Factors Influencing Choice of Benefit Package Administering the Benefit Program Cost Containment

3. Why the Growth in Employee Benefits? Wage and Price Control Unions Employer Impetus Cost-Effectiveness of Benefits Government Impetus

4. Reasons for Expansion in List of Employee Benefits Paternalistic or Humanistic Considerations Statutory Requirements Concern for Security Hazards of Industrial Life Tax Aspects Utilization of Leisure Time Competitive Considerations

5. Benefit Planning and Design Issues Seeks to answer: Role of Benefit in Overall Compensation Package Ways to deal with undesirable turnover Other relevant questions

6. Benefit Administration Issues Who should be protected or benefited? How much choice should employees have among an array of benefits? How should benefits be financed? Are your benefits legally defensible?

7. Approaches in Fringe Benefits 1. Innovation 2. Flexibility 3. Harmonization

8. Components of Wage 1. Basic Wage 2. Variable Dearness Allowance 3. Other Allowances and Commissions

9. Factors Influencing Choice of Benefit Package Employer Factors 1. Relationships to total compensation costs 2. Costs relative to benefits 3. Competitor Offerings 4. Role of Benefits in: ◦ Attraction ◦ Retention ◦ Motivation 5. Legal Requirements Employee Factors 1. Equity: fairness historically and in relationship to what others receive 2. Personal Needs as linked to: ◦ Age ◦ Sex ◦ Marital Status ◦ Number of Dependents

10. Administering the Benefit Program Administrative Time is spent on three functions: 1. Communicating about the benefits program 2. Claims Processing 3. Cost Containment

11. Cost Containment Prevalent Practices Include: 1. Probationary Periods 2. Benefits Limitations 3. Copay 4. Administrative Cost Containment

12. End of Topic