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Human Resource ManagementLecture 19
MGT 350
Last LectureCosts of Providing Employee Benefits
Legally Required Benefits
Social Security
Unemployment Compensation
Workers’ Compensation
Traditional health insurance
Family and Medical Leave
Voluntary Benefits
Perks
•
Topic
Employee Benefits
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
Retirement Benefits
Defined Contribution Plans:
• Employee and employer may contribute to account based on rules established for contributions
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.
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.
Retirement Benefits
Individual Retirement Accounts (IRAs)
• Currently designed for lower-income workers who don’t have pension programs at work
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.
Paid Time OffDisability 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.
Types of Pension Plans
• Contributory (joint pay)• Non-Contributory (employer pays)• Classified by Amount of Benefits to be Paid
Defined Contribution Plan
• Basis Upon Which the Employer Pays• Benefits Depends Upon Accumulation
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.
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.
An Integrative Perspective on Employee Benefits
• Flexible benefits programs allow employees to choose which benefits they want and help to keep costs down.
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
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.
Silver Handshake
• An early-retirement incentive in the form of An early-retirement incentive in the form of increased pension benefits for several years or increased pension benefits for several years or a cash bonus.a cash bonus.
Major Concerns
• Rising Costs• Controlling Costs• Legal Concern
Health Maintenance Organizations
• Federal Regulation• Changes in Pricing
– Advances in Medicine– Malpractice Insurance– Labor Costs– Over Utilization of Facilities– Elder Care– Transplants/AIDS/Other
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 BenefitsFlexible benefits
Modular plans
Core-Plus Options Plans
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