HRM10eCH13.ppt

7/23/2019 HRM10eCH13.ppt

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PowerPoint Presentation by Charlie CookThe University o !est Alaba"a

t e n t h e d i t i o n

GaryGary

DesslerDessler

Cha#ter Cha#ter $%$% PartPart && Co"#ensation Co"#ensation

Benefits and ServicesBenefits and Services

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After studying this chapter, After studying this chapter,

you should be able to: you should be able to:

1. Name and define each of the main pay for time not

worked benefits.

2. Describe each of the main insurance benefits.

3. Discuss the main retirement benefits.

4. Outline the main employees’ services benefits.

. !"plain the main fle"ible benefit pro#rams.

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Benefts

$enefits– Indirect fnancial and nonfnancial payments

employees receive or continuing theiremployment with the company.

%ypes of employee benefit plans– Supplemental pay: sick leave and vacation

pay

– Insurance: workers’ compensation

– Retirement: ensions

– !mployee services: child"care acilities

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#he Benefts icture #oday

Most full-time employees in the United Statesreceive benefits.

Virtually all employers—99%—offer somehealth insurance coverage.

Benefits are a maor e!pense "about one-third of #ages and salaries$ for employers.

mployees do seem to understand the valueof health benefits.

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$nnual %ealth &are &ost Increases

(ig)re $%'$&ource' ric &armenter' ()ontrolling *ealth-)are )osts'+

(ompensation and $enefits )eview ' September, ctober //' p. 00

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rivate"Sector !mployer&ompensation &osts' (une

)**+(ig)re $%'2&ource' (1otal mployer )osts 2ose to .34 in Second 5uarter'+

$N* $ulletin to +ana#ement ' September 44' //6' p. 96

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,aws $-ecting !mployee Benefts

)etirement plans– !mployee Retirement Income Security $ct o /012!RIS$3

– !conomic 4rowth and #a5 Relie &onciliation $ct o)***

– (o6 &reation and 7orker $ssistance $ct ,ealth plans

– #he 8ew6orn 9other’s rotection $ct o //

– #he 9ental %ealth arity $ct o //

– $ge ;iscrimination in !mployment $ct– %ealth Insurance orta6ility and $ccounta6ility $ct o

// 2%I$$3

– <amily and 9edical ,eave $ct 2<9,$3

– $mericans with ;isa6ilities $ct 2$;$3

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#ypes o !mployee Benefts

&ay for time not #or7ed

8nsurance benefits

2etirement benefits

Services

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Issues in ;eveloping Benefts lans

$enefits to be offered.

(overa#e of retirees in the plan

Denial of benefits to employees durin# initial

-probationary periods

/inancin# of benefits.

$enefit choices to #ive employees.

(ost containment procedures to use.

(ommunicatin# benefits options to

employees.

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,egally Re=uired or Regulated Benefts

Table $%'$

While not required under federal law, all these benefits are regulated

in some way by federal law, as explained in this chapter.

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ay or #ime 8ot 7orked

0nemployment insurance– rovides or 6enefts i a person is una6le to

work through no ault o his or her own.

– ayroll ta5 on employers that is determined 6yan employer’s rate o personnel terminations.

– #a5 is collected and administered 6y the state.

acations and holidays

– 8um6er o paid vacation days varies 6y

employer.– 8um6er o holidays varies 6y employer.

– remium pay or work on holidays.

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ay or #ime 8ot 7orked 2cont’d3

&ick leave– rovides pay to an employee when he or she

is out o work 6ecause o illness. )osts for misuse of sic7 leave

&ooled paid leave plans

arental leave

– #he <amily 9edical ,eave $ct o //+ 2<9,$3 Up to 4 #ee7s of unpaid leave #ithin a one-year period

mployees must ta7e unused paid leave first. mployees on leave retain their health benefits.

mployees have the right to return to their ob ore:uivalent position.

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8orth&arolina

State

>niversity<amilyIllness,eave

Re=uest

(ig)re $%'%&ource' Used #ith permission.

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&everance pay – $ one"time payment when terminating an

employee.

– Reasons or granting severance pay:

;cts as a humanitarian gesture and good publicrelations.

Mirrors employee<s t#o #ee7 :uit notice.

;voids litigation from disgruntled former employees.

Meets =or7er ;dustment and 2etraining >otification"(plant closing+$ ;ct re:uirements.

2eassures employees #ho stay on after the employerdo#nsi?es its #or7force of employer<s good intentions.

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&upplemental unemployment benefits &0$– ayments that supplement the laid"o- or

urloughed employee’s unemploymentcompensation.

1he employer ma7es contributions to a reserve fundfrom #hich SUB payments are made to employees forthe time the employee is out of #or7 due to layoffs'reduced #or7#ee7s' or relocations.

SUB payments are considered previously earned

compensation for unemployment calculation purposes.

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Insurance Benefts

5orkers’ compensation– rovides income and medical 6enefts to

work"related accident victims or theirdependents' regardless o ault.

@eath or disabilityA a cash benefit based on earnings per#ee7 of employment.

Specific loss inuriesA statutory list of losses

– &ontrolling worker compensation costs Screen out accident-prone #or7ers.

Ma7e the #or7place safer.

1horoughly investigate accident claims.

Use case management to return inured employees to#or7 as soon as possible.

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Insurance Benefts 2cont’d3

,ospitali6ation7 health7 and disabilityinsurance

– rovide or loss o income protection andgroup"rate coverage o 6asic and ma?or

medical e5penses or o-"the"?o6 accidentsand illnesses.

;ccidental death and dismemberment

@isability insurance

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ercent o !mployers @-ering %ealthBenefts

Table $%'%&ource' ;dapted from S*2M,S*2M oundation //6 Benefits Survey.

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,ealth maintenance or#ani6ation ,+O– $ medical organiAation consisting o

specialists operating out o a community"6ased health care center.

&rovides routine medical services to employees #ho paya nominal fee.

2eceives a fi!ed annual contract fee per employee fromthe employer "or employer and employee$' regardless of#hether it provides that person #ith service.

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referred provider or#ani6ations Os– 4roups o health care providers that

contract to provide medical care services atreduced ees.

mployees can select from a list of preferred individualhealth providers.

&referred providers agree to discount services and tosubmit to certain utili?ation controls' such as on thenumber of diagnostic tests they can order.

mployees using non-&&-listed providers may pay allof the service costs or the portion of the costs above thereduced fee structure for services.

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@ther &ost"Saving Strategies

1. 5ellness pro#rams2. Disease mana#ement

3. *bsence mana#ement

4. On8site primary care

. !liminatin# cost8inefficient plans

9. +ovin# toward O

(ig)re $%'&&ource' Shari )audron' (*ealth )are )ostsA *2<s )risis *as 2eal Solutions'+ 5orkforce' ebruary //' p. 6/.

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New trends in health care cost control'– >se o cost"containment specialists

– 4etting employees more involved andempowered

– $utomating health care plan administration nline selection soft#are

– >sing defned contri6ution health care plans

– @utsourcing health care 6enefts

administration– Reducing or eliminating retiree health care

coverage

– (oining 6enefts purchasing alliances

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Other insurance issues– 9ental health 6enefts and the 9ental

%ealth arity $ct o //

– #he regnancy ;iscrimination $ct

– &@BR$ re=uirements– ,ong"term care

– 4roup lie insurance

– rovision o 6enefts or part"time and

contingent workers

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Retirement Benefts

&ocial &ecurity /ederal Old *#e and&urvivor’s :nsurance

– $ ederal payroll ta5 20.13 paid 6y 6oththe employee and the employer on the

employee’s wages 2etirement benefits at the age of 3

Survivor<s or death benefits paid to the employee<sdependents

@isability payments to disabled employees and their

dependents.

– #he 9edicare program

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Retirement Benefts 2cont’d3

%ypes of pension plans– &ontri6utory: employees contri6ute to the

plan.

– 8oncontri6utory plans: employer makes all

contri6utions to the plan.

– Cualifed plans: plans that meetre=uirements or ta5 6enefts or employercontri6utions.

– 8on=ualifed plans: plans not meetingre=uirements or avora6le ta5 treatment.

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%ypes of pension plans cont’d– ;efned contri6ution: contri6utions o

employees and employers are specifedDplan payouts are not.

– ;efned 6eneft plans: plan payouts arespecifedD however' contri6utions must 6esuEcient to insure payouts.

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4;1k lans– ;efned contri6ution plans 6ased on sectionF*2k3 o the Internal Revenue &ode.

&lans are funded by preta! payroll deductions.

)ontributions are invested in mutual stoc7 funds andbond funds.

1he conomic Cro#th and 1a! 2elief 2econciliation ;ctof //4 "C122;$ raised limits on employeecontributions.

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Other types of defined contribution plans– Savings and thrit plans mployees contribute a portion of their earnings to a

fundD the employer usually matches this contribution in#hole or in part.

– ;eerred proft"sharing plans mployers contribute a portion of profits to the pension

fund' regardless of the level of employee contribution.

– !mployee stock ownership plans 2!S@s3

5ualified' ta!-deductible stoc7 bonus plans in #hichemployers contribute company stoc7 to a trust foreventual use by employees.

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!mployee )etirement :ncome &ecurity *ct!):&* of 1<=4

– Restricts what companies must do in regard topension plans. In unioniAed companies' theunion can participate in pension planadministration.

– ension Benefts 4uarantee &orporation2B4&3

8nsures pensions of a :ualified plan that terminates #ithout

sufficient funds to its meet obligations. Cuarantees only defined benefit plans' not defined

contribution plans.

=ill only pay an individual a pension of up to about EF'///per year.

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!mployees’ vestin# ri#hts under !):&*– articipants have a right to ** o accrued

6enefts ater fve years o service.

mployers may phase in vesting over a period of three to

seven years.– $n employer can re=uire that an employee

complete a period o two years’ service6eore 6ecoming eligi6le to participate in

the plan. 8f an employer re:uires more than one year of service

before eligibility' the plan must grant employees full andimmediate vesting rights at the end of that period.

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>ey policy issues in pension plannin# – 9em6ership re=uirements Setting the minimum age or minimum service at #hich

employees become eligible for a pension.

– Beneft ormula @etermining pension payouts for individual employees.

– lan unding unding the plan "contributory or noncontributory$.

–Gesting Meeting 28S; re:uirements for employer and employee

contributions that cannot be forfeited for any reason bythe vested employee.

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ension alternatives– !arly retirement windows

Specific employees "often age G/-plus$ are offered theopportunity to voluntarily retire earlier than usual.

1he financial incentive is generally a combination ofimproved or liberali?ed pension benefits plus a cashpayment.

– @lder 7orkers’ Beneft rotection $ct

2@7B$3 8mposes limitations on #aivers that purport to release a

terminating employee<s potential claims against theemployer based on age discrimination.

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ension alternatives cont’d– Increasing porta6ility

@efined benefit plans to defined contribution plans

;llo#s #or7ers #ho leave the firm before retirement to

receive initial benefits at a younger age.– &ash 6alance pension plans

@efined benefit plan in #hich the employer contributes apercentage of employees< pay to the plan every year'and employees earn interest on this amount.

&rovide the portability of defined contribution plans #iththe employer funding of defined benefit plans.

)onversion to cash balance plans can have a disparateimpact on older #or7ers nearing retirement.

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ersonal Services

(redit unions– Separate 6usinesses esta6lished with theemployer’s assistance to help employeeswith their 6orrowing and saving needs.

!mployee assistance pro#rams !*s– rovide counseling and advisory services:

&ersonal legal and financial services

)hild and elder care referrals

;doption assistance Mental health counseling

Hife event planning

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!mployee $ssistance rograms

>ey steps for launchin# a successful !* pro#ram include'

– ;evelop a policy statement.

– !nsure proessional staEng.

– 9aintain confdential record"keepingsystems.

– Be aware o legal issues.

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<amily"<riendly Benefts

On8site or subsidi6ed

child care

!lder care

/itness and medical

facilities

/ood services

/le"ible work

schedulin#

%elecommutin#

!ducational subsidies

&abbaticals

?oan pro#rams for

home office e@uipment

&tock options

(oncier#e services

%rauma counselin#

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!5ecutive er=uisites

+ana#ement loans

Aolden parachutes

/inancial counselin#

)elocation benefits

&abbaticals &everance pay

Outplacement

assistance

(ompany cars (hauffeured limousines

&ecurity systems

(ompany planes and

yachts

!"ecutive dinin# rooms

hysical fitness

pro#rams

?e#al services

%a" assistance

!"pense accounts

(lub memberships

&eason tickets

(redit cards

(hildren’s education

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<le5i6le Benefts rograms

%he cafeteria fle"ible benefits approach

– !ach employee is given a 6enefts und 6udgetto spend on the 6enefts he or she preers.

1he fund limits the total cost for each benefits pac7age.

Core plus option plans establish a core set of benefits#hich are mandatory for all employees.

/le"ible spendin# accounts

– !na6le employees to pay or medical andother e5penses with preta5 dollars 6ydepositing unds in their accounts rom payrolldeductions.

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(ig)re $%'*

%RScorecard

or %otelaris

International&orporationH

Note' B*n abbreviated e"ample showin# selected

,) practices and outcomes aimed at implementin#

the competitive strate#y7 -%o use superior #uest

services to differentiate the ,otel aris properties

and thus increase the len#th of stays and the return

rate of #uests and thus boost revenues and

profitability

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SampleSurvey o

!mployee8eeds

&ource' Michelle Buc7ley' ()hec7up for *ealthBenefit fferings'+ (ompensation and $enefits

)eview ' September,ctober ///' p. 06.(ig)re $%'+

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<le5i6le 7ork $rrangements

/le"time– $ plan where6y employees’ workdays are

6uilt around a core o mid"day hours whenall workers are re=uired to 6e present.

– 7orkers can arrange their own starting andstopping hours 6eore and ater the coreperiod.

&ositive effects on employee productivity' ob

satisfaction' satisfaction #ith #or7 schedule' andemployee absenteeism.

&ositive effect on absenteeism #as much greater thanon productivity.

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<le5i6le 7ork $rrangements 2cont’d3

(ompressed workweeks– Increase productivity

Hess disruption from shift changes

Honger time-off-#or7 periods

2educed absenteeism

– ,onger workdaysD ewer workdays:

our-day #or7#ee7s' #ith four 4/-hour days.

1#o days on' t#o days off' three days on' then t#o daysoff' t#o days on' and so forth.

1hree 4-hour shifts' and then off for the ne!t four days.

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@ther <le5i6le 7ork $rrangements

Cob sharin# – $llowing two or more people to share asingle ull"time ?o6.

5ork sharin#

– $ temporary reduction in work hours 6y agroup o employees during economicdownturns as a way to prevent layo-s.

%elecommutin#

– !mployees work at home using telephonesand the Internet to transmit letters' data'and completed work to the home oEce.

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ey #erms

beneits

s)##le"ental #ay beneits

)ne"#loy"ent ins)rance

sick leave

severance #ay

s)##le"ental )ne"#loy"ent beneits

workers/ co"#ensation

health "aintenance organiation 1H34

#reerred #rovider organiations 1PP3s4

gro)# lie ins)rance

ocial ec)rity

#ension #lans

deined beneit #ension #lan

deined contrib)tion #ension #lan

&0$1k4 #lan

savings and thrit #lan

deerred #roit6sharing #lan

e"#loyee stock ownershi# #lan 173P4

7"#loyee 8etire"ent Inco"e ec)rity Act

178IA4

vesting

Pension 9eneits :)arantee Cor#oration1P9:C4

early retire"ent window

cash balance #lans

e"#loyee assistance #rogra"

le;ible beneits #lan<caeteria beneits #lan

=ob sharing

work sharing

teleco"")ting

Documents

HRM10eCH13.ppt