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Benefits. OS352 HRM Fisher Nov. 13, 2003. Agenda. Collect Exercise 3 Current state of benefits Trends in benefits. Comments on Exercise 3. Data can be messy A system like SAP facilitates, but does not guarantee, consistency
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Benefits OS352 HRM Fisher Nov. 13, 2003
Agenda • Collect Exercise 3 • Current state of benefits • Trends in benefits
Comments on Exercise 3 • Data can be messy • A system like SAP facilitates, but does not guarantee, consistency • Different people entering position description and qualification data • Does not eliminate rating errors • Still have to make judgment calls
Legally Required Benefits • Social Security • Retirement Income • Disability Income • Medicare • Survivor Benefits • Workers’ Compensation • Unemployment Insurance • Unpaid Leave • Adds up to approximately 24% of salary
Voluntary Benefits • Employers do not have to offer • Health Insurance • Retirement • Paid vacation, holidays • Can add up to an additional 20% of salary • Highest in manufacturing • Lowest in retail • Most employers do offer these benefits. Why?
Health Benefits • 43.6 million Americans uninsured in 2002 (Schaefer & McGinley, 2003, Wall Street Journal) • Costs rising for everyone (12% next year) • Balancing costs of monthly premiums, co-pays, benefit caps, deductibles, prescription coverage • Some companies focusing on wellness benefits to reduce costs • $114 for normal weight employees • $573 for overweight employees • Dallas city employees (www.workforce .com)
Retirement Benefits • Defined benefit vs. defined contribution • Some companies offer both • 401(k) is most common defined contribution plan • Cash balance plans • 401(k) plans usually come with “employer match” benefits • Average match was 2.5% of payroll in 2001 (www.workforce.com) • Down from 3.3% in 1997 • May vary based on seniority
Personal Services Benefits • Examples include • Organization-sponsored sports teams (32%) • Food services/subsidized cafeteria (26%) • Legal assistance/services (25%) • Travel planning (20%) • Dry cleaning (13%) • Massage therapy (11%) • Concierge services (2%) • Pros and cons of offering these kinds of benefits? Data Source: SHRM Foundation 2003 Benefits Survey
Who is covered by employee benefits? • Traditionally, employee, spouse, and children • Married couples with kids now only 25% of households • Part-time employees often not covered • Domestic partner benefits • Opposite sex • Same sex • Extended family benefits
Which benefits to provide? • Organizations must consider which benefits will help them achieve their strategic goals. • For example: • A database applications company in Palo Alto, CA that has just gone public. Has 45 employees, expects to be hiring more. In a highly competitive job market. 85% of employees are 21-34 years old. • Compare this to a municipal government in the Midwest. • Which benefits would you include in the overall package? Why?
Flexible vs. Fixed Benefits Programs Flexible (Cafeteria) • Employees select the benefits they want. • May be less costly. • Supports corporate diversity strategy. • Increased fairness perceptions. • But, administratively complex. Fixed • All employees receive the same benefits. • Simple administration. • But, one-size-fits-all approach may not meet employees’ needs.
For next class • Topic: Labor relations • Read Chapter 14 • How does the presence of labor unions affect an organization’s approach to HR? • Expect to see take-home essay questions next week (due Dec. 8)