Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
25 Cards in this Set
- Front
- Back
|
Total Compensation
|
Includes all forms of financial returns and tangible services and benefits employees receive as part of the employment relationship. Include employee benefits.
|
|
|
Broad View of EE Benefits - Definition
|
Includes any form of compensation except direct wages. Includes govt mandated programs or voluntary company plans.
|
|
|
Broad View of EE Benefits - what is included?
|
-FICA, WC, UI, State Disability (8.7% of payroll)
-Time not worked (11.6%) -ER share of medical and medically related payments (15.2%) -ER share of retirement (6.2%) -ER share of life insurance & death benefit payments(.2%) -Misc benefits (discounts, severance, education - .6%) |
|
|
Narrow View of EE Benefits
|
Does not cover benefits underwritten or paid directly by govt.
3 legged stool of finacial security = bennies from govt programs + from ER plans + from personal benny plans or savings |
|
|
Business reasons for growth of EE benefit plans
|
-attract and retain EE's
-Meet or exceed competitor's bennies -Foster improved efficiency, productivity and moral -concern for EE's welfare or social objectives |
|
|
Collective bargaining reasons for growth of EE benefit plans:
|
Labor Mgmt Relations Act (Taft Hartley) administered by NLRB sets regulatory framework re: administration of collectively bargained plans.
-Requires good faith bargaining re: wages, hours and other terms and conditions of employment |
|
|
Inland Steel v. NLRB
|
Duty to bargain in good faith over wages also included insurance and fringes such as pension benefits.
|
|
|
W.W. Cross & Co. v. NLRB
|
Ruled that wages included a health and accident plan.
|
|
|
Favorable tax legislation reasons for growth of EE Benefit Plans
|
-Most ER contributions are deductible
-ER contributions (w/i limits) are not considered taxable income to EE's -Assets to fund some retirement & capital accumulation plans build tax free until distributed |
|
|
Efficiency of the EE benefits approach as a reason for growth of EE benefit plans
|
-Convenient and simple for EEs
-No need to serach for individual insurance -usually less expensive -marketing via ER provides insurers, banks and health orgs w/ access to large groups makingefficient & cost-effective distribution of their products and services. |
|
|
Other factors for the growth of EE benefit plans
|
-Wage freezes didn't apply to benefits, so ERs increased comp via bennies
-Govt "moral suasion": fear that govt would mandate programs if bennies not offered voluntarily -integration of govt bennies w/ those of ER in determining plan design -Group approach permits coverage of those who might be rejected as individual applicants |
|
|
To evaluate any EE benefit program, consider the overall benefit concerns:
|
1. ER and EE objectives
2. What benefits should be provided? 3.Who should be covered by the benefit plans? 4. Should EEs have benefit options? 5. How should bennies be financed? 6. How should the benny plan be admistered? 7. How should the benny plan be communicated? 8. Future of EE benefits |
|
|
Functional Approach
|
Organized system for classifying, analying risks & needs of EEs, dependents, others into logical categories of exposures to loss and EE needs (med expenses, loss from death or disability, needs for retirement income & capital accumulation, needs from unemployment, for custodial (long-term) care).
|
|
|
Functional Approach in Concept:
|
Application of a systematic analysis method to an ERs total, integrated benefit program - analyze the ability to meet ee's needs and manage loss exposures w/i er's comp goals & cost limits
|
|
|
Need for the functional approach:
|
In planning, designing, and administering benefits:
1. Benefits represent significant element of total comp, so must be effective in meeting ee needs 2. Benefits represent large item of labor cost, so plan effectively & avoid waste in order to help control costs 3. Counters piecemeal approach - review re functional approach in order to prevent overlaps & gaps in benefit coverage 4. Fosters currency, competitiveness, regulatory compliance 5. Permits proper integration of programs addressing several ee needs or exposures |
|
|
Consistency (of functional approach to planning) w/ ERs Total Comp philosophy
|
Balance various elements of total comp package:
-basic cash and wages & salary -current incentive comp -longer-term incentive plans -EE benefits |
|
|
Total Comp Philosophy (3 types)
|
1. Average comp/benefits - follow generally prevailing level in industry and/or community
2. High comp/benefits - try to attract higher levels of EE talent (larger, established ER in mature industry or financial insitution or nonprofit) 3. Low comp/benefits - lower than avg, modest in scale; accepts EE turnover as a trade-off for cost savings (Highly competitive industies, companies subject to cyclical fluctuations). |
|
|
Compensation/service-oriented philosophy:
|
Relate benefits to compensation, service, or both. Greater reward for higher-paid and/or longer service EEs.
|
|
|
Needs-oriented (or benefit oriented) philosophy:
|
Focus on addressing EE (& dependents) needs. (many ERs prefer needs oriented medical benefits, but comp/service oriented pensions, life ins)
|
|
|
Application of functional approach to benefit design, review and revision:
|
1. Classify EE and Dependent needs in functional categories
2. Classify by categories the persons the ER may want to protect 3. Analyze benefits presently available 4. Determine gaps in benefits and any overlapping benefits in terms of 1 & 2. 5. Consider recommendations for changes in present plan to meet gaps or correct overlapping 6. Estimate costs (or savings) for each recommendation 7. Evaluate alternative methods of financing (or securing) benefits 8. Consider cost-saving or cost-containment techniques 9. Decide on appropriate benefits and financing methods, then implement 10. Communicate benefit changes and periodically reevaluate the plan. |
|
|
Analyze benefits presently available:
|
1. Types of bennies
2. Levels of bennies 3. Probationary periods 4. Eligibility requirements 5. Employee contribution requirements felxibility available to EEs 6. Actual EE participation in benefit plans |
|
|
Replacement Ratios
|
Express plan objective (benefit $) as % of final (or avg or normal) pay
Helpful in considering and coordinating income sources during periods of disability. |
|
|
Protection-oriented benefits:
|
Protects against serious loss exposures that might cause immediate financial ruin.
Short probabtionary periods |
|
|
Accumulation-oriented benefits:
|
Rewards longer service
elatively long probationary period |
|
|
Contributory benefit plans:
|
Requires EEs to contribute toward cost of providing benefits, either pay all or partial.
Usually not mandatory Bennies might vary to reflect the degree of EE participation. Reduces ER cost, but impacts participation |
