MGTO 231Human Resources ManagementBenefits 福利

Dr. Kin Fai Ellick WONG

Prologue

Job 1 Job 2 Job 3

Some jobs list a brief summary of benefits, some do not.

So, what are included in a benefit package?

Why don’t we simply pay more base salary and eliminate the benefit package?

How benefits can be designed in a way that is consistent with the business strategy?

Outline

Some basic concepts of benefits

Types of benefits

The strategic aspect of benefits

Managing benefits

Basic concepts

The three components of compensation systemsBase compensationPay incentives Indirect compensation / benefits

They are complementary to each other

Benefits = indirect compensationGroup membership rewards that provide

security for employees and their family members

It is an indirect compensation because it provides a plan rather than cash

Attractive benefit packages help recruit and retain talented employees

Who gave the contributions?

ContributionsPayments made for benefits coverageMay come from the employer, employee, or

bothVacations: employerSome types of insurance: paid partly by

employer and partly by employees

Outline

Some basic concepts of benefits

Types of benefits

The strategic aspect of benefits

Managing benefits

Major types of benefits

Legally required benefits Health insurance Retirement Housing allowance Insurance Education allowance Paid time off

Legally required benefits

Hong Kong government requires employers to give the following benefits maternity leave, rest days, sickness allowance,

statutory holidays and annual leave provided under the Employment Ordinance and the keeping and maintenance of records as required by the Ordinance

MPF Part IV of the Employees' Compensation Ordinance

which provides for compulsory insurance in relation to compensation for work injuries

Health insurance

Hospital costs, physician charges, and the cost of other medical services

Most UST staff Are allowed to claim $250 for each medical

consultation, with a total less than about $19,000 per year

It is usually separated from other types of insurance

Retirement

Retirement benefit provides income to employees after they retire

The implementation of Mandatory Provident Fund (MPF) follows this idea

Housing allowance

This allowance provides extra funding for employees to buy or rent a flat

This type of benefits usually applicable to employees at senior positions

Example: In government, the lowest position that is granted with this allowance is about $50,000 per month; the allowance is about $13,000 per month (2001) $11,000 per month (2002)

Insurance

Protect employees and their family from financial difficulties as a result of Disability Death

Education allowance

For children This type of benefits provides employees’ children

with reasonable funding for education This type of benefits is usually applicable to

employees at senior positions For employee themselves

Employers may contribute all or part of the tuition fee (may only be applicable to some specified courses or programs)

Workplace English Campaign (職業英語資助計劃 )

Paid time off

Sick leave Vacations

I have 42 days per year

Outline

Some basic concepts of benefits

Types of benefits

The strategic aspect of benefits

Managing benefits

Designing a benefit package

Three issues should be consideredOrganizational objectivesTotal compensation strategyCharacteristics of the workforce

Organization’s objectives Some organizations’ objectives are to minimize

the compensation differences between low-level and high-level employees, then benefit mix should be the same for all employees

Some are to increase the differences to encourage low-level employees to move upward, then benefit mix for the top-management should be more attractive than that for the low-level employees

Total compensation strategy Corresponding to the “below-market vs. above-

market compensation”, that is to consider the packages offered by others

In hi-tech firm, retirement benefits are generally not so emphasized, thus, an effective total compensation strategy for a hi-tech firm could be the one that increases base compensation, but does not offer retirement benefits

Deciding the percentage of the total compensation package that will be allocated to benefits compared to other components of the package

Workforce’s characteristicsWorkforce consists largely of parents with

young children child-care, family-friendly benefits

Old employees retirement planYoung employees leave, social gathering

Outline

Some basic concepts of benefits

Types of benefits

The strategic aspect of benefits

Managing benefits

Flexibility of benefits

The degree of freedom employees have to decide the benefit package to their personal needs, as different employees may have different needs

Similar to Centralized vs. decentralized pay

Two critical issues in administering benefits

How to manage a flexible benefit system? How to let employees know about the

benefits (problems of communications), the packages are becoming more and more complicated?See my benefit package

Conclusion

Why don’t we simply pay more base salary and eliminate the benefit package?Not all benefits are monetary e.g., leaveCreating a sense of protection: benefits occur

at the right moment when the employees need them (e.g., medical insurance)

Showing the care from the organizations