1. Human Resource Management Lecture 19 MGT 350

2. Last Lecture Costs of Providing Employee Benefits Legally Required Benefits Social Security Unemployment Compensation Workers’ Compensation Traditional health insurance Family and Medical Leave Voluntary Benefits Perks

3. Topic Employee Benefits

4. Retirement Benefits Vesting rights – right to pension benefits even if one leaves the company. Defined Benefit Plans Plan specifies the dollar benefit workers receive at retirement. Usually based on some formula of years of service and average final compensation

5. Retirement Benefits Defined Contribution Plans: Employee and employer may contribute to account based on rules established for contributions

6. Retirement Benefits Money Purchase Pension Plan Type of defined contribution plan Organization commits to depositing fixed amount of money or percentage of employee’s pay annually.

7. Retirement Benefits Profit-Sharing Plans Variation of defined contribution plan. Company amount contributed depends on profit level in the organization. Contribution is optional, not required.

8. Retirement Benefits Individual Retirement Accounts (IRAs) Currently designed for lower-income workers who don’t have pension programs at work

9. Paid Time Off Vacation and Holiday Leave –Vacation time is usually related to the length of time on the job. –Some companies also allow personal days that can be used for any reason.

10. Paid Time Off Disability Insurance Programs Provides salary continuation for: –Short-term disabilities (sick leave) –Long-term disabilities (coverage usually effective after 6 months). Some companies provide financial incentives to employees to not use their sick leave. Long-term disability plans usually replace a portion of the employee’s salary, often 60 percent.

11. Types of Pension Plans Contributory (joint pay) Non-Contributory (employer pays) Classified by Amount of Benefits to be Paid

12. Defined Contribution Plan Basis Upon Which the Employer Pays Benefits Depends Upon Accumulation

13. Survivor Benefits Group Term Life Insurance: Benefit is usually based on one to five times annual rate of pay. Travel insurance: Life insurance for business travel-related deaths.

14. Survivor Benefits The service side of benefits –social and recreational events –employee assistance programs –housing –tuition reimbursement –uniforms –company-paid transportation –parking Employers often can provide services at no cost or at a significant reduction from the usual cost.

15. An Integrative Perspective on Employee Benefits Flexible benefits programs allow employees to choose which benefits they want and help to keep costs down.

16. An Integrative Perspective on Employee Benefits Flexible spending accounts –employees can set aside a designated dollar amount before taxes for specified services health-care premiums medical expenses dependent child-care group legal services

17. An Integrative Perspective on Employee Benefits Modular plans: Employees choose a pre-designed package of benefits from several options. Core-Plus Options Plans Employees given core coverage (e.g. medical, life, disability) with option to select other benefits.

18. Silver Handshake An early-retirement incentive in the form of increased pension benefits for several years or a cash bonus. An early-retirement incentive in the form of increased pension benefits for several years or a cash bonus.

19. Major Concerns Rising Costs Controlling Costs Legal Concern

20. Health Maintenance Organizations Federal Regulation Changes in Pricing – Advances in Medicine – Malpractice Insurance – Labor Costs – Over Utilization of Facilities – Elder Care – Transplants/AIDS/Other

21. Summary Vesting rights – right to pension benefits even if one leaves the company. Enables pension rights to be portable. Sets up Pension Benefit Guaranty Corporation (PBGC) Defined Contribution Plans Profit-Sharing Plans Vacation and Holiday Leave Disability Insurance Programs Survivor Benefits Flexible benefits Modular plans Core-Plus Options Plans