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PIMSATPIMSAT

Employee BenefitsEmployee Benefits& Services& Services

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Benefits DeterminationBenefits Determination

ProcessProcess

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EMPLOYEE BENEFITS:

Part of the total compensationpackage, 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).

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Wage andWage and

PricePrice

ControlsControls

UnionsUnions

EmployerEmployer

ImpetusImpetus

GovernmentGovernment

ImpetusImpetus

CostCost

Effectiveness ofEffectiveness of

BenefitsBenefits

Why the Growth in Employee Benefits?

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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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Key Issues In Benefits Planning, Design,and Administration

Allowing for

Employee Input

ModifyingEmployee Benefits

Providing

Flexibility

EstablishingSpecific Objectives

CommunicatingBenefits

Information

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Flexible Benefits: Advantages

Employees choose packages that best satisfytheir unique needs.

Flexible benefits help firms meet the changingneeds of a changing workforce.

Increased involvement of employees and familiesimproves understanding of benefits.

Flexible plans make introduction of new benefits

less costly. Cost containment: Organization sets dollar

maximum. Employee chooses within theconstraint.

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Flexible Benefits: Disadvantages

Employees make bad choices and find

themselves not covered for predictableemergencies.

Administrative burdens and expenses

increase.

Adverse selection. Employees pick only thebenefits they will use. The subsequent high

benefit utilization increases its cost.

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Financing Benefits Plans: Alternatives

Non-contributory

Employer pays total costs

Contributory

Costs shared between employer and

employee Employee financed

Employee pays total costs for some benefits

By law the organization must bear the cost for

some benefits

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Benefits

Package

Employer FactorsEmployer Factors1. Relationship to total compensation costs

2. Costs relative to benefits3. Competitor offerings

4. Role of benefits in:

Attraction

Retention

Motivation

5. Legal Requirements

Employee FactorsEmployee Factors

1. Equity: fairness historically and in

relationship to what others receive2. Personal needs as linked to:

Age

Sex

Marital status

Number of dependents

Factors InfluencingFactors Influencing

Choice of BenefitsChoice of Benefits

PackagePackage

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Administering the Benefits Program

Communicating about the benefitsprogram

Claims processing

Cost containment

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Communicating Employee Benefits

Required Communication

Meetings with Employees

Multi-media Presentations

Print Media

Complaint Procedures

Company

Benefits

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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

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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 / Flexiblecompensation plan

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Employees Benefits & Services

Importance of indirect compensation

Factors which influence indirectcompensation

Major types of employee benefits

Costs and containment of benefits

Administrative issues

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Benefits Goals

Attract and retain good employees

Help employees meet security needs Motivate employees

Reduce operating costs

Enhance corporate image

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Benefit Planning

Employee objectives: Demographics, FMLA

Organizational objectives: Strategic &

Financial

Union objectives

Legal obligations.

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External Influences

Wage controls

Expansion of social security Union bargaining

Federal tax policies

Social legislation Inflation

Competition

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Internal Influences

Employee wants: Demographics and

economic class of workers Management needs: Containing costs

Business objectives: Strategic

considerations

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MajorCategories of Benefits

Pay for time not worked

Security plans

Health plans

Employee services

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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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Security Plans

Retirement plans

Unemployment insurance Severance pay

Life insurance

Disability pay

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Retirement Plans

Defined benefit : Benefits vary by age and

length of service according to a formula.Set amount received. Funded mostly byemployer

Defined contribution: Each employee hasan account to which personal and/orcorporate contributions are made.Funded jointly.

Simplified employment pension

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OtherSecurity Plans

Unemployment insurance - Mandated

Severance pay Life insurance

Disability

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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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Employee Services

Subsidized food (cafeterias)

Subsidized child care Tuition aid

Credit unions / societies

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Administration

Costing benefits:Annual cost for all,Cost per employee, Percent of

payroll, cents/hr.

Cafeteria plans

Communicating benefits

Regulations: Civil rights, Age

discrimination,

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