PIMSAT

Employee Benefits & Services

McGraw-Hill/Irwin
2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Benefits Determination Process

McGraw-Hill/Irwin

2002 by The McGraw-Hill Companies, Inc. All rights reserved.

EMPLOYEE BENEFITS: Part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments (e.G., Life insurance, pension, workers compensation, vacation).
McGraw-Hill/Irwin
2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Why the Growth in Employee Benefits?

Wage and Price Controls Employer Impetus

Cost Effectiveness of Benefits Unions Government Impetus

McGraw-Hill/Irwin

2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Strategic Reasons for Offering Benefits

  

Help attract employees Help retain employees Elevate the image of the organization with employees and other organizations Increase job satisfaction

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Key Issues In Benefits Planning, Design, and Administration

Modifying Employee Benefits Allowing for Employee Input Providing Flexibility

Establishing Specific Objectives

Communicating Benefits Information

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Flexible Benefits: Advantages

    

Employees choose packages that best satisfy their unique needs. Flexible benefits help firms meet the changing needs of a changing workforce. Increased involvement of employees and families improves understanding of benefits. Flexible plans make introduction of new benefits less costly. Cost containment: Organization sets dollar maximum. Employee chooses within the constraint.
2002 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

Flexible Benefits: Disadvantages



Employees make bad choices and find themselves not covered for predictable emergencies. Administrative burdens and expenses increase. Adverse selection. Employees pick only the benefits they will use. The subsequent high benefit utilization increases its cost.
2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Financing Benefits Plans: Alternatives



Non-contributory

Employer pays total costs Costs shared between employer and employee Employee pays total costs for some benefits By law the organization must bear the cost for some benefits
2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Contributory

Employee financed

McGraw-Hill/Irwin

Employer Factors
1. 2. 3. 4. Relationship to total compensation costs Costs relative to benefits Competitor offerings Role of benefits in: Attraction Retention Motivation Legal Requirements

Factors Influencing Choice of Benefits Package

5.

Benefits Package
Employee Factors
1. 2. Equity: fairness historically and in relationship to what others receive Personal needs as linked to: Age Sex Marital status Number of dependents
2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Administering the Benefits Program

Communicating about the benefits program Claims processing Cost containment

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Communicating Employee Benefits

    

Required Communication Meetings with Employees Multi-media Presentations Print Media Complaint Procedures

Company Benefits

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Administrative Trends


Significant movement to outsourcing

Retirement record keeping Complete enrollment and historical tracking Premium reconciliation 24 x 7 access for all functions Intranet, internet, and extranet capabilities

Retaining strategic function internally

2002 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

Employees Benefits & Services

     

Fringe Benefits. A component of total compensation. Benefits Planning & Design- Ability of org. Role of Benefits.-Best Suited. Benefits Communication-Your security- You are valued. Benefits---Medical / Welfare /Disability /Death /Retirement /Severance / Deferred Income / Life Insurance / Travel Accident / Property & Liability Protection/pension. Services---Pay for time not worked / Vacations / Transportation / Club membership/ Cafeteria / Flexible compensation plan

McGraw-Hill/Irwin

2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Employees Benefits & Services

 

  

Importance of indirect compensation Factors which influence indirect compensation Major types of employee benefits Costs and containment of benefits Administrative issues

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Benefits Goals
    

Attract and retain good employees Help employees meet security needs Motivate employees Reduce operating costs Enhance corporate image

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Benefit Planning
Employee objectives: Demographics, FMLA Organizational objectives: Strategic & Financial Union objectives Legal obligations.

 

 

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

External Influences
      

Wage controls Expansion of social security Union bargaining Federal tax policies Social legislation Inflation Competition
2002 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

Internal Influences


 

Employee wants: Demographics and economic class of workers Management needs: Containing costs Business objectives: Strategic considerations

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Major Categories of Benefits

   

Pay for time not worked Security plans Health plans Employee services

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Pay for Time not Worked

  

Rest periods, lunch breaks, coffee breaks Sick leave Leave of absence, Family Leave Mandated Holiday and vacations

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Security Plans
    

Retirement plans Unemployment insurance Severance pay Life insurance Disability pay

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Retirement Plans


Defined benefit : Benefits vary by age and length of service according to a formula. Set amount received. Funded mostly by employer Defined contribution: Each employee has an account to which personal and/or corporate contributions are made. Funded jointly. Simplified employment pension
2002 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

Other Security Plans

   

Unemployment insurance - Mandated Severance pay Life insurance Disability

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Health benefits

      

Hospitalization Physician services in hospital Major medical Workmens compensation: Mandated Prescription, eye glasses, dental plans Medical spending accounts Medical savings accounts

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Employee Services
   

Subsidized food (cafeterias) Subsidized child care Tuition aid Credit unions / societies

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2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Administration

  

Costing benefits:Annual cost for all, Cost per employee, Percent of payroll, cents/hr. Cafeteria plans Communicating benefits Regulations: Civil rights, Age discrimination,
2002 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

McGraw-Hill/Irwin

2002 by The McGraw-Hill Companies, Inc. All rights reserved.