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Snell bohlander-human resource management chapter 11
 

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Snell bohlander-human resource management chapter 11 Snell bohlander-human resource management chapter 11 Presentation Transcript

  • Employee Benefits Human ResourceManaging Human Resources ManagementBohlander • Snell 14 edition 14th edition Snell • Bohlander© 2007 Thomson/South-Western. PowerPoint Presentation by Charlie CookAll rights reserved. The University of West Alabama
  • ObjectivesAfter studying this chapter, you should be able to: 1. Describe the characteristics of a sound benefits program. 2. Indicate management concerns about the costs of employee benefits and discuss ways to control those costs. 3. Identify and explain the employee benefits required by law. 4. Discuss suggested ways to control the costs of healthcare programs. 5. Describe benefits that involve payment for time not worked.© 2007 Thomson/South-Western. All rights reserved. 11–2
  • Objectives (cont’d)After studying this chapter, you should be able to: 6. Discuss the recent trends in retirement policies and programs. 7. Indicate the major factors involved in the management of pension plans. 8. Describe the types of work/life benefits that employers may provide.© 2007 Thomson/South-Western. All rights reserved. 11–3
  • The Chief Objectives of Benefits Programs• Improve employee work satisfaction• Meet employee health and security requirements• Attract and motivate employees• Reduce turnover• Maintain a favorable competitive position© 2007 Thomson/South-Western. All rights reserved. 11–4
  • Requirements for a Sound BenefitsProgram Strategic Benefits Planning Communicating Allowing forEmployee Benefits Employee Information Involvement Providing Benefits for a for Diverse© 2007 Flexibility Thomson/South- WorkforceWestern. All rights reserved. 11–5
  • Providing for Flexibility• Flexible Benefits Plans (Cafeteria Plans)  Benefit plans that enable individual employees to choose the benefits that are best suited to their particular needs.  A basic or core benefits package of life and health insurance, sick leave, and vacation ensures that employees have a minimum level of coverage.  Employees use “credits” to “buy” whatever other benefits they need.© 2007 Thomson/South-Western. All rights reserved. 11–6
  • Communicating Benefits Information• In-house publications (employee handbooks and organizational newsletters)• Group meeting and training classes• Audiocassettes/videotapes• Bulletin boards• Payroll inserts/pay stub messages• Specialty brochures• Employee self-service systems (ESS)© 2007 Thomson/South-Western. All rights reserved. 11–7
  • Highlights in HRM 1 Crafting an Effective Benefits Communication Program In building an identity: • Design materials that are eye-catching and of high interest to employees. • Develop a graphic logo for all material. • Identify a theme for the benefits program. In writing benefits materials: • Avoid complex language when describing benefits. Clear, concise, and understandable language is a must. • Provide numerous examples to illustrate benefit specifics. • Explain all benefits in an open and honest manner. Do not attempt to conceal unpleasant news. • Explain the purpose behind the benefit and the value of the benefit to employees. In publicizing benefits information: • Use all popular employee communication techniques. • Maintain employee self-service (ESS) technology to disseminate benefits information and to update employee benefits selections. • Use voice mail to send benefits information. • Employ presentation software such as PowerPoint or Lotus Freelance to present information to groups of employees.©• 2007 Thomson/South- answer employee questions. Maintain a benefits hotline toWestern. All rights reserved. 11–8
  • Highlights in HRM 2A PersonalizedStatement ofBenefits Costs© 2007 Thomson/South-Western. All rights reserved. 11–9
  • Benefits Issues Concerns of Management Concerns of Management Union demands for additional benefits Union demands for additional benefits Benefits offered by other employees Benefits offered by other employees Tax consequences of benefits Tax consequences of benefits Rising costs of providing benefits Rising costs of providing benefits Benefits coverage for domestic partners Benefits coverage for domestic partners© 2007 Thomson/South-Western. All rights reserved. 11–10
  • The High Cost of Providing Benefits• According to a 2003 U.S. Chamber of Commerce study, the cost of employee benefits in that year averaged 42.3 percent of payroll.• The average distribution of these benefits was $18,000 per employee per year.• The current trend is for employers to require employees to pay part of the costs of certain benefits (for example, through copayments or higher deductibles), especially medical coverage.© 2007 Thomson/South-Western. All rights reserved. 11–11
  • Domestic Partner Benefits• Domestic Partner (Apple Computer)  A person over age 18 who shares living quarters with another adult in an exclusive, committed relationship in which the partners are responsible for each other’s common welfare.• A standard definition of domestic partnership contains the following: A minimum age requirement A requirement that the couple live together A specification of financial interdependence A requirement that the relationship be a permanent one A requirement that each not be a blood relative© 2007 Thomson/South-Western. All rights reserved. 11–12
  • Types of Employee Benefits Required By Law Required By Law Discretionary Discretionary Social Security Social Security Health care Health care Unemployment Insurance Unemployment Insurance Payment for time not worked Payment for time not worked Workers’ Compensation Workers’ Compensation Supplemental Supplemental Unemployment Benefits Unemployment Benefits Unpaid leave (FMLA) Unpaid leave (FMLA) Life and LT care insurance Life and LT care insurance Retirements and pensions Retirements and pensions© 2007 Thomson/South-Western. All rights reserved. 11–13
  • Types of Employee Benefits• Benefits Required by Law  Social Security  Unemployment insurance  Workers’ compensation insurance• Payment for time not worked  Holidays  Vacations  Sick leave  Jury duty, military service, and bereavement leaves  Severance pay© 2007 Thomson/South-Western. All rights reserved. 11–14
  • Types of Employee Benefits (cont’d)• Supplemental Unemployment Benefits (SUB)• Insurance  Group life  Long-term care  Health care  Dental  Legal• Retirement Benefits  Pre-retirement counseling  Pension plans© 2007 Thomson/South-Western. All rights reserved. 11–15
  • Social Security Insurance Social Security Act (1935) Social Security Act (1935) A payroll tax on both employees and employers A payroll tax on both employees and employers Old Age and Survivors Insurance (OASI) Old Age and Survivors Insurance (OASI) Provides long-term disability benefits Provides long-term disability benefits Must work 40 quarters in an occupation Must work 40 quarters in an occupation covered by Act to qualify for benefits covered by Act to qualify for benefits Benefits paid are determined by an Benefits paid are determined by an individual’s life-time earnings individual’s life-time earnings© 2007 Thomson/South-Western. All rights reserved. 11–16
  • Unemployment Insurance• Federal payroll tax on employer and employee  Tax is refunded to states which individually administer unemployment compensation programs.• Unemployment benefits vary from state to state.  Involuntarily unemployed workers are eligible for up to 26 weeks of unemployment benefits.  Benefit is based on an employee’s recent earnings.  Unemployed workers are required to seek “suitable employment.”© 2007 Thomson/South-Western. All rights reserved. 11–17
  • Workers’ Compensation Insurance• Workers’ Compensation Insurance  Federal- or state-mandated insurance (funded by an employer payroll tax) provided to workers to defray the loss of income and cost of treatment due to work- related injuries or illness.  Factors influencing the employer’s insurance rate:  The risk of injury or illness for an occupation  Each state’s level of benefits for injuries sustained by employees varies.  The company’s frequency and severity of employee injuries (the company’s experience rating).© 2007 Thomson/South-Western. All rights reserved. 11–18
  • Workers’ Compensation Insurance Injury is a cost of doing business Injury is a cost of doing business Covers Employers Covers Employers Covers Employees Covers Employees Assumed employment risk Assumed employment risk Cost of injury Cost of injury Negligent co-workers Negligent co-workers Temporary, Permanent, Temporary, Permanent, Partial or Total Disability Partial or Total Disability Contributory negligence Contributory negligence Survivor’s Insurance Survivor’s Insurance© 2007 Thomson/South-Western. All rights reserved. 11–19
  • Consolidated Omnibus BudgetReconciliation Act (COBRA)• The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA)  Mandates that employers make health coverage—at the same rate the employer would pay— available to employees, their spouses, and their dependents on termination of employment, death, or divorce.  The coverage must be offered for between 18 and 36 months depending on qualifying guidelines.© 2007 Thomson/South-Western. All rights reserved. 11–20
  • The Family and Medical Leave Act (FMLA)• An employer must grant an eligible employee up to 12 workweeks of unpaid leave in a 12-month period for the following reasons:  Birth of and care for a newborn child.  Adoption or foster care placement of a child.  Care for an immediate family member (spouse, child, or parent) with a serious medical condition.  Serious health condition of the employee.• Employees on leave retain their benefits and the right to return to their job or an “equivalent job.”© 2007 Thomson/South-Western. All rights reserved. 11–21
  • The Older Workers Benefit Protection Act• Older Workers Benefit Protection Act (OWBPA) of 1990  Prohibits age-based discrimination in early retirement and other benefit plans by imposing strict guidelines on employers who seek to have employees sign release forms waiving their right to pursue age discrimination claims under the ADEA.  Requires that a valid waiver must be voluntary and written in a manner that is understandable to the parties involved.  Employees have the right to consult with an attorney before signing the waiver.© 2007 Thomson/South-Western. All rights reserved. 11–22
  • Healthcare Cost Containment• Health Maintenance Organizations (HMOs)  Organizations of physicians and health-care professionals that provide a wide range of services to subscribers and dependents on a prepaid basis.• Preferred Provider Organization (PPO)  Physicians who establish an organization that guarantees lower healthcare costs to the employer.  PPOs allow employees to select from a list of physicians (participating doctors) their doctor of choice.© 2007 Thomson/South-Western. All rights reserved. 11–23
  • Healthcare Cost Containment (cont’d)• Consumer-Driven Health Plan (CDHP)  A high-deductible insurance medical insurance plan, financed by employer contributions to an employee’s limited individual healthcare spending account  Also known as:  Defined-contribution health plans  Medical savings accounts (MSAs)  Health savings accounts (HSAs)  Flexible spending accounts (FSAs)  Health reimbursement accounts (HRAs).© 2007 Thomson/South-Western. All rights reserved. 11–24
  • Highlights in HRM 5 Employers Methods for Containing Healthcare Costs • Pre-admission certification for surgical procedures. • Financial incentives for outpatient surgery and testing. • Mail-order prescription drug program and medical drug discount cards. • Mandatory second opinions for surgical procedures. • Alternative approaches to healthcare treatment such as herbal therapy or homeopathy. • Educational programs encouraging healthcare consumers to assume more responsibility and accountability for the cost and quality of their healthcare. • Promoting web sites or printed materials that list common conditions, treatment, drug prices, and effectiveness. • Implementation of step therapy programs. • Multi-tier hospital coverage networks that allow employees to choose from a variety of hospitals with small, moderate, and steep copayments at the point of service. • Use of variable copayments (for example, $10 for physician and $25 for specialists). • The consolidation of healthcare plans offered by employers. • Requiring employees to pay an additional cost if a working spouse refuses coverage from his or her employer. • Customized healthcare benefits design allowing employees to purchase riders to increase the level of benefits provided. • Promotion of wellness and employee assistance programs. • Automated benefits functions. • Promoting quality, patient safety, and positive outcomes in health plans by using a variety of health plan assessment tools such as the Joint Commission on Accreditation of Healthcare Organizations.© 2007 Thomson/South- • Implementation of a disease management program.A survey of methods used by employers to control healthcare costs can be found in “Despite RisingWestern. All rights reserved.Health-Care Costs, Few Companies Have Cut Benefits,” HRFocus 81, no. 9 (September 2004): 3–5. 11–25
  • Payment for Time Not Worked Vacations with pay Vacations with pay Time Not Severance pay Severance pay Paid holidays Paid holidays Worked Sick leave Sick leave© 2007 Thomson/South-Western. All rights reserved. 11–26
  • Other Discretionary Benefits• Supplemental Unemployment Benefits (SUBs)  A plan that enables an employee who is laid off to draw, in addition to unemployment compensation, weekly benefits from the employer that are paid from a fund created for this purpose.  SUB benefits are considered deferred compensation and not current earnings.  The fund is derived from employer contributions based on the total hours of work performed by employees.© 2007 Thomson/South-Western. All rights reserved. 11–27
  • Retirement Programs• Silver Handshake  An early-retirement incentive in the form of increased pension benefits for several years or a cash bonus.• Preretirement Programs  Counseling  Seminars  Workshops  Retirement tryouts© 2007 Thomson/South-Western. All rights reserved. 11–28
  • Types of Pension Plans• Contributory plan • Defined-benefit plan  Contributions to a plan  The amount an are made jointly by employee is to receive employees and upon retirement is employers. specifically set forth.• Noncontributory plan • Defined-contribution  Contributions to a plan plan are made solely by the  The basis (amount) an employer. employer contributes to the pension fund is specified.© 2007 Thomson/South-Western. All rights reserved. 11–29
  • Contemporary Pension Plan Options• 401(k) Savings • Cash-Balance Savings Plans Plans  A tax-deferred  Employer contributes a savings plan. percentage of employee’s  Employees save pay each year. through payroll  Account balance earns deductions. interest each year.  Employers may  Experts predict it will match a portion of replace traditional pension employee savings. plans.© 2007 Thomson/South-Western. All rights reserved. 11–30
  • Federal Regulation of Pension Plans• Employee Retirement Income Security Act (ERISA).  Private pension plans are subject to ERISA regulations that provides standards and controls for pension plans:  Plans must comply IRS tax standards to qualify.  Plans must meet actuarial standards to qualify for Pension Benefit Guarantee (PBGC) insurance.  Plans must meet Department of Labor standards for treatment of plan participants.© 2007 Thomson/South-Western. All rights reserved. 11–31
  • Federal Regulation of Pension Plans• Vesting  A guarantee of accrued benefits to participants at retirement age, regardless of their employment status at that time.  ERISA requires that plans must provide that employees will have vested rights in their accrued benefits after certain minimum-years-of-service requirements have been met.• Pension Plans and Underfunding  Inadequate funds to cover retirement obligations along with pension plan failures could overwhelm the PBGC.© 2007 Thomson/South-Western. All rights reserved. 11–32
  • Employee Services: Creating a Work/LifeSetting• Employee Assistance Programs (EAPs)  Services provided by employers to help workers cope with a wide variety of problems that interfere with the way they perform their jobs.  Typically provide diagnosis, counseling, and referral for advice or treatment for problems related to alcohol or drug abuse, emotional difficulties, and financial or family difficulties.• Child and Elder Care  Care provided to a child or an elderly relative by an employee who remains actively at work.© 2007 Thomson/South-Western. All rights reserved. 11–33
  • Other Benefits and Services Awards Awards Food Services Food Services Recreational and Recreational and On-Site Health On-Site Health Social Social Services Services Credit Unions Credit Unions Legal Services Legal Services Purchasing Purchasing Financial Financial Assistance Assistance Planning Planning Transportation Transportation Housing and Housing and Pooling Pooling Moving Moving© 2007 Thomson/South-Western. All rights reserved. 11–34