You are paying up to 30% of your payroll for benefits and pensions. Are you getting full value? Have you considered different funding arrangements? Have you considered flexible spending accounts? How about considering an ASO plan if you are over 100 employees? How about integrating a wellness program into your benefits program and receive a 20 to 1 payback in terms of reduced benefit costs, increased productivity, improved lost time, and increased employee health?

1. Getting Compensation Right
1:30 – 2:20 Tues Feb 8, 2011
Chris Hylton, MA
CG Hylton & Associates Inc.
800 449-5866 chris@hylton.ca
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2. Agenda
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 What is compensation, total compensation
 Developing a salary grid
 What to do with holidays, entitlements employees have for
working statutory holidays
 How many vacation days are fair, what if employees don’t
use all their vacation benefits?
 What benefits are most important, and what does a
competitive benefits package contain?
 Tips and advice on shopping around for the best deal on
benefit packages

3. 3
Do you have any compensation or
benefit issues we can try and solve
for you in this session?

4. What is Compensation?
4
 Any ideas?

5. Creating a Compensation Plan
Compensation is an exchange of money
or something of value for work delivered
There are many methods of
compensation for staff
Regardless of the method used,
customizing the Plan to fit your
organization is a must

6. How Do I Customize a Plan?
To Customize you need to:
 Know what your mission is
 Know what is important to
your organization's success
 Know what kind of culture you
have or want to promote
 Make sure the budget is
capable & use the staff for
this

7. Without this link, you may have
Conflict between you goals and
compensation
No compensation for things that contribute
to the organizations success and visa-
versa
No compensation for desired behaviors
and visa-versa

8. Therefore, you need to develop a
Compensation Philosophy
With this:
• You can see a clear linkage between
the organization’s mission, goals, and
desired behaviours and the
compensation system
• You know where you want your
salaries to be in relation to the market

9. To Create Mission & Goals
9
 Use S W O T
 Develop consensus
 Approval from Council

10. Types of Compensation
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 Non cash
 Cash

11. Non cash compensation
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 Work environment
 Management culture
 Job Autonomy
 Input into decision making
 Variety of tasks on the job
 Training
 Benefits

12. Work Environment
 Is environment pleasant,
harassment free?
 Are tools & equipment able
to meet the needs of
employees?
12

13. Management
Management Culture Autonomy
 Does the  Can employee make
management trust & decisions on their
support the workers? own?
 Does the  Can employee
management help the manage their time
worker to succeed? while getting the
 Are expectations results desired?
clear?
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14. Decision making / Variety
 Do employees  Is there nice
have real input variety in each
into decisions job?
that affect their
position and
results?
14

15. Training / Career Development
Remember
 Is sufficient  All of these
training provided items have to be
to allow the tied to the
worker to mission,
complete their organization’s
position or definition of
operate the success, culture
equipment they and be
15

16. Various Cash
Compensation Options
 Flat rates
 Ranges
 Merit raises
 Skill or knowledge
based pay
 Autonomous work
group
 Incentive pay
 Bonus schemes
16

17. Creating the compensation
sandwich
 many choices you decide
how to create your
“compensation sandwich”
 Ingredients used depends
on org mission, definition
of success, culture and
the ability to pay
17

18. Developing a Consistent
Salary Scale
To do this you need:
Internal Equity - how jobs are paid in
relation to other jobs within the
organization
External Equity - how jobs are paid in
relation to other companies

19. What is more important
19
 Internal Equity?
 External Equity?
 There is no right answer, don’t by shy

20. To achieve Internal Equity…
You need a job evaluation plan to
ensure all jobs are measured with
the “same ruler”
 A Factor Point System is the Most Effective
unless Your Organization Is Small( Under 10
People)
 For organizations less than 10 people , a job
ranking system is probably better. This
assumes the organization is not going to
grow

21. A Ranking System …
 Ranks the positions according to how much
they contribute to the accomplishment of the
organizations mission
 It allows you to determine which is worth
most
 It is only effective if the organization is small
(under 10 people)
 Clear communication is vital

22. Salary Surveys
22
 Great way to determine if your pay levels
are competitive
 Address external equity issues
 You can do yourself or we can provide you
with an online survey for your group
 Data collected online confidentially, reports
are viewed and printed off online
 Job descriptions are online at NOC

23. We like to use the NOC
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 It is free, online, easy to access
 Has virtually every job listed
 Provides a 4 digit no for each job
 You can use the number for org charts
 Makes the whole process transparent
 Cuts down on the complaining
 http://www5.hrsdc.gc.ca/noc/english/noc/2006/We

24. To achieve External Equity…
You need to define your market.
 Market is defined as to who you compare to, it’s
your choice. Eg. same department or employer
in your area, similar band/company in an other
province.
 You need to define where you want to be in the
market (plus or minus x %)
 Use your market comparison for cost of living
adjustments as well

25. Now you have consistency
because….
Internal equity – all positions are
measured with the same ruler (job
evaluation plan)
External equity – you use the same
market for all jobs.
Remember: in creating the above you
used your organizations mission,
success factors and culture.

26. Role of Consultant?
 Assist with the identification of factors
 Link factors to mission, organization’s
success, culture and budget
 Do salary survey
 Create the plan, assist with
implementation and provide ongoing
support; at least a year after
implementation

27. Vacations, Stat Hols
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 What are the rules
 Does an employee have to work a stat hol?
 What if an ee does not use their hols?
 What is the easiest thing for an employee to
steal?
 What is the easiest thing for an employer to
give?
 http://www.labour.gov.on.ca/english/es/pubs/guide

28. Benefits Agenda
 Overview of Benefits
 Premiums vs Claims
 Retirement Plans

29. What will you do when...
An employee dies or becomes disabled? Will
you feel a sense of financial obligation to the
employee and their family?
Trying to attract and retain good employees?
You or your employees travel extensively for
business or pleasure?
You or your employees are confronted with an
expensive dentist bill?

30. Concept of Group Insurance
Nobody expects to die, be injured,
or become ill tomorrow
However, if this does occur it can cause a
catastrophic financial loss
A benefits plan is a low cost solution that can
provide protection for the employee &
employer from catastrophic financial losses
due to death, injury or illness

31. Typical Group Benefits
 Employee and  Health
Dependent Life
Insurance
 Vision
 Accidental Death and
Dismemberment
 Dental
 Optional Term Life
 Short Term Disability
 Health Spending
 Long Term Disability Account
 Employee Assistance
Program

32. Why Life Insurance?
Life insurance "creates cash" for needs
such as:
funeral & burial charges
probate fees
taxes at death
income replacement
mortgage
children's education
wealth & estate creation

33. Why Accidental Death &
Dismemberment?
 At dismemberment...
for changes to one's lifestyle
 At death...
extra income to deal with an
"unexpected" loss

34. Why Disability Insurance?
Where would the money come from
if you became disabled?
 Savings
 Loans
 Spousal income
 Sale of assets

35. Why Disability Insurance?
Did you know that: Your chances of winning the
Lotto 649 draw is 1 in 13.9 million
 The odds of being disabled for >90 days during
your working career are 8 x higher than the
chances of dying during the same period
 The average length of a disability which lasts
over 90 days is almost 3 years

36. Why Disability Insurance?
The average disability which goes over 90 days lasts
an average of 2.9 years:
4.0
3.4 3.4 3.5 3.5
3.5 3.2 3.3 3.3
3.1
3.0 2.8 2.8 2.9
2.7
2.4
2.5 2.2 2.1 2.2
Years
2.0
1.5
1.0
0.5
0.0
25 30 35 40 45 50 55 60
At Age
Women Men

37. Advantages of STD or LTD
vs Workers Compensation
STD WCB
24 hour coverage Y N
Covers an illness Y N

38. Do you need Workers Comp?
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 For activities on reserve no
 For activities off reserve yes
 What about the provincial or federal highway
which runs thru the reserve?
 What does your group benefits booklet say?

39. EI Rate Reduction
 Most STD or WI plans are eligible for the EI
Rate Reduction
 Savings of $.30/$100 of payroll
 Savings applied to employer portion of premium
 5/12 of savings must be re-distributed to the
employee in the way of:
 cash rebate
 new employee benefits
 enhance existing employee benefits

40. Why Health & Dental?
 A "Maintenance Contract" for the
organization's most valuable resource
 Peace of mind for employees
 A better standard of living
 Tax free
 Owners & Execs

41. Dental Options
 Deductibles
 Calendar Year Maximums
 $750 to much higher amounts
 Periodontal Scaling Units
 6, 10, or 14 units per 12 months
 Recall Examinations
 2 per 12, 1 per 9, or 1 per 12 months
 Oral Hygiene Instruction

42. Typical Reasons for Calls to EAP
42
Work
place Family
18% 8%
25%
Alcohol Substance Abuse
25%
Depression
22% Stress

43. Reasonable Cost
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 EAP costs fraction of average medical or
dental plan
 $200 per ee per mo for Dental insurance
 $5 per ee per mo for EAP
What Price?

44. Exclusions in your Benefits Plan
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 Read the fine print
 What is excluded in your plan
 Travel Medical duration, working
 War zones
 Terrorism
 Non commercial aircraft
 If you have ees working or flying in any of the
above pay extra to waive the exclusion!

45. How Much Does a Plan Cost?
 Demographics of the group
 Level of coverage for each of the
benefits
 The volume of benefits
 Prior experience of group
 Group size
 If members are Treaty or not

46. Demographics and Rates
Employee data is the
most critical part of pricing
Basic Monthly LTD Rates Per $100 Basic Monthly Life Rates Per $1000
4
1.2
Basic Monthly Rate
3
Basic Monthly Rate
0.8
2
0.4
1
0
0
Age Age Age Age Age
Age Age Age Age Age
20 30 40 50 60
20 30 40 50 60
Age Group Age Group
Males Females Males Females
Source Great-West Life

47. 2. Claims vs Premiums
 Your plan is priced on the basis of your
demographics and your usage
 If you are older and heavy users you will
pay more than if you are young and light
users

48. Cost Saving Tips
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 Broker commission
 Carrier charges for administration
 Reserve charges
 ASO or fully insured
 Group size, join together related groups, you
can still vary plan design by group, and have
individual premium statements, save lots
 Tax effective plan design
 Use a good broker

49. Advantages to Employer
 Established corporate policy in the
event of death or disability
 Attract and retain key employees
 Increased morale
 Reduced absenteeism and increased
productivity among employees
 Tax incentives
 Hassle-free administration

50. Advantages to the Employee
 Basic protection for the employee and
family
 Much less expensive
 Higher standard of healthcare than
otherwise possible
 Tax free compensation
 Covers the “uninsurables”
 Hassle free administration

51. Employee as
smart shopper
 Best plans today encourage
employees to become
smart shoppers
 Deductibles, co-pays

52. Health Spending Account
 Health Spending
 dental 20% of
Account basic and 50% of
major restorative
 Funded by savings
 50% of ortho, or
 $ sit in ee name
over max
 used for medical  vision over $200
dental expenses,
not covered by plan
 many other
applications
 tax free to ee

53. New Types of Coverage
 Critical Care
 Convalescent Care
 New AD&D benefits
 EAP
 Long Term Care

54. Impact of Mental Health on Costs
Employees with depression had annual drug
claims 2 1/2 times larger than employees who
do not suffer from depression
co-morbidity: neurotic pain, anxiety disorders,
sleep disorders, stomach hyperacidity and mild
to moderate pain.
“there can be no health without mental health”
Source: Centre for Mental Health in the Workplace and Great West Life

55. The impact of depression in the workplace
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
Amount Paid ($) Per Claimant
All Claimants Claimants with Depression Claimants without Depression
Source: Centre for Mental Health in the Workplace and Great West Life

56. Co-morbidities of depression
70%
60%
1 - Neurological Pain
50% 2 - Anxiety Disorder
3 - Sleep Disorder
40% 4 - Mild-Moderate Pain
5 - Stomach Hyperacidity
6 - Inflamation, Muscle / Bone
30% 7 - Asthma / COPD
8 - Infection, General Bacteria
20% 9 - Blood Pressure
10 - Elevated Cholesterol
10%
0%
Percent of Amount Paid for Claimants with Depresson
Source: Centre for Mental Health in the Workplace and Great West Life

57. Role of Consultant?
 Look at plan design & rates
 Look at plans that ensure that owners
never pay anything out of pocket that
may be run thru the company
 Obtain quotes from other carriers
 Consultant is “free” as our fees are paid
by commission by the carriers in the
rates

58. What we need to do
Benefits Review
 Booklet  Idea of any
 Employee data plan design or
 Experience administration
 Letter of authority changes you
 Premium History would like to
make

59. Retirement Plans
 RSP plan, employer and employee funded
 Defined Benefit Pension, employer funded
 Pros and cons

60. RSP or DC Plan
 Money contributed by employer, say 5% of
salary
 Matched by employee
 Invested
 Grows over time
 Employee gets monthly income at retirement

61. Money for free
 INAC has matching funding for many groups
 For taxable staff CCRA gives employees back
most of their pension or RSP contributions!!!
 For Owners pensions are a great way to get
surplus money held in the Corporation out of
the Corporation tax free
 Set up an IPP and recapture the difference
between what the owner paid to his/her RSP
and the increased cost of the IPP

62. Our offer to you
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 Please call if you have any HR, or workplace
issue that you are overwhelmed with
 We can help you
 We also are pleased to do Free Workshops for
your organization (some limits apply) Let us
know what your needs are and we will make it
happen!

63. CG Hylton - Services
 HR Consulting
 Benefits,
Pensions,
 Job Descriptions
EAP
 Salary Grids
 Strategic Planning
 Wellness at Work
 Drug and Alcohol
 Staff Morale
programs
 Training and  Dept re-orgs
Workshops
 Leadership
compensation
Tel 403 264 5288
chris@hylton.ca
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64. Thank you for the opportunity to
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meet today!
Tel 403 264 5288
or 800 449 5866 (800 4hylton)
chris@hylton.ca