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Employee Benefits. 3770 Beardshear Hall. Human Resource Services ... Structuring employee benefit packages that meet the needs of a diverse workforce ...

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Employee compensation and benefits l.jpg

Human Resource Services

Employee Compensation and Benefits

Mike Otis, Associate Director

Human Resource Services


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Human Resource Services

Agenda

Typical HR Organization

Compensation Goals

Compensation Approaches

Benefits Exercise

Employer Challenges

General Benefit Concepts

Health Benefits

Welfare Benefits

Retirement Benefits

Closing Thoughts


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Human Resource Services

Typical HR Structure


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Human Resource Services

Goals of Compensation Plans

Employers are able to attract and retain employees who will contribute to the organization’s success

Employees feel they are compensated/rewarded fairly/equitably for their efforts and contributions to an organization’s success


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Human Resource Services

Total Compensation

Supportive Corporate Culture

Executive Sponsorship

Employee Satisfaction

  • Rewards

  • Bonus

  • Salary Increases

  • Promotions

  • Equity Offerings

  • Awards

  • Recognition

  • New job assignments

  • Benefits

  • Health Plans

  • Retirement Plans

  • Vacation/ time off

  • Paid Training

  • Working Hours

  • Salary

  • Pay

  • Overtime (if in non-exempt classification)


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Human Resource Services

What Factors Determines Pay

Employer considerations

Where employers compete for talent – local or national

What talents an employer competes for – the skill/knowledge level

How strongly the employer wants to compete

Lead the market

Meet the market

Lag the market


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Human Resource Services

What Factors Determine Pay?

What job duties will be performed determines classification as either Exempt or Non-exempt (Governed by Fair Labor Standards Act (FLSA))

Non-exempt employees.

Eligible for overtime pay for hours worked in excess of 40

Employer must have record of time worked

Exempt employees

Typically executive, professional, or administrative positions

Must meet minimum weekly pay guideline

Not entitled to overtime

Must meet both salary test and duties test


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Human Resource Services

Rewards/Recognition

Benefits

Benefits

Job Classifications

Compensation Structure

Compensation Philosophy


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Human Resource Services

Compensation Structure Example


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Human Resource Services

Utopia Enterprises – Your Employer of Choice!

We provide a “buffet” of benefit choices to meet your individual needs!!


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Human Resource Services


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Human Resource Services

Employer Challenges

Structuring employee benefit packages that meet the needs of a diverse workforce – one size does not fit all

Helping existing employees understanding the “value” of their benefits

Administering benefit programs – costly and time-consuming. Not a profit-making venture!

Continued rising health care costs

Limited budgets – Benefits average 25% - 40% of Payroll in most organizations

Government restrictions/legislation/public policy


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Human Resource Services

General Concepts

Publicly traded companies will tend to structure pay/benefits that incorporate more equity (stock options, savings match in company stock, bonus tied to company performance, etc)

Non-publicly traded companies/organizations will spend more on non-cash incentives

Governmental organizations will on average spend more on benefits in lieu of salary


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Human Resource Services

Core vs. Non-Core Benefits


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Human Resource Services

Health Benefits

General types of health coverage

Medical

Prescription Drugs

Dental

Vision

Most health benefit employee contributions will be deducted from pay pre-tax


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Human Resource Services

Wellness Programs

Many employers are starting to see the value from incorporating wellness initiatives into their work places

disease management

health risk assessments

fitness programs

on-site clinics and pharmacies

Prevention vs. Payment

Improve productivity/reduce absenteeism/presenteeism

Difficult to measure the Return on Investment (ROI) of wellness programs


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Human Resource Services

Welfare Benefits

Provide safety and monetary security beyond health

Typical benefits

Basic life

Supplemental (optional) life

Accidental Death and Dismemberment (AD&D)

Dependent life insurance

Short-term disability (STD)

Long-term disability (LTD)


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Human Resource Services

Vacation

May be provided under separate program or combined under a PTO (paid time off) plan with sick days


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Human Resource Services

Retirement Benefits

Defined Benefit Plans (traditional Pension)

Based on a formula that determines a future benefit

Defined Contribution Plans (think 401(k))

future value depends on contributions from employee and/or employer

403(b)/ 457 Not-for-profit employers

401(k) For-profit employers

Other Types - Deferred Compensation Plans

IRS restrictions


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Human Resource Services

Comments on Retirement

Defined Benefit (Pension) plans are the exception rather than the rule

Many employers now will automatically enroll employees in 401(k)/403(b) plans

Understand the time-value of money – compounding

“DIVERSIFY” investments – Many employees are too conservative or too risky


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Human Resource Services


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Human Resource Services

Conflicting Priorities for Savings/Retirement

Car payments/car insurance

Mortgage/rent/student loans

Utilities

Food/beverages

Clothing

Entertainment

Life expenses in general


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Human Resource Services

Other Voluntary Benefits

Offered as optional benefits – typically employee pays full cost

Voluntary benefit programs typically offered at a discount price resulting from group purchasing power

Employer may offer the option of payroll deduction

Examples are auto/homeowners insurance, pet insurance, computer purchase discounts


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Human Resource Services

Laws Affecting Employee Benefits and Compensation

Fair Labor Standards Act (FLSA)

Employee Income Retirement Security Act of 1974 (ERISA)

Age Discrimination and Employment Act (ADEA)

Family Medical Leave Act (FMLA) of 1996

Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001

Health Insurance Portability and Accountability Act of 1996 (HIPAA) (and amendments)

Pension Protection Act of 2006

many, many others


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Human Resource Services

Closing Thoughts

  • How employees are “compensated” takes many forms – salary, benefits, working conditions, challenging/stimulating work, co-workers, etc. The right “mix” for each person is different

  • Pay policies will differ for every employer – some will focus on cash compensation and some will focus on Total Compensation

  • The employer’s main goal is structuring compensation and benefit programs is to be able to attract and retain the right employees needed to help the employer be competitive


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Human Resource Services

Closing Thoughts

Employee benefits have huge budget impacts to employers

Benefits are the “hidden paycheck” for employees

Employees need to understand the “total compensation” an employer provides – not just the “salary.” Employers need to sell Total Compensation – not just salary

Employees need to be “educated consumers” of benefit programs – especially health care and retirement programs

Employees should take advantage of retirement plan offerings and save early (time value of $$) – and always save enough to at least take advantage of employer’s matching contribution


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