HRM 5th chapter 11 employee benefits

Employee Benefits Managing Human Resources Belcourt * Bohlander * Snell Copyright © 2008 by Nelson, a division of Thomson Canada Limited All rights reserved 5th Canadian edition PowerPoint Presentation by Monica Belcourt, York University and Charlie Cook, The University of West Alabama Objectives After studying this chapter, you should be able to: Describe the characteristics of a sound benefits program Indicate management concerns about the costs of employee benefits and discuss ways to control those costs Identify and explain the employee benefits required by law Discuss suggested ways to control the costs of healthcare programs Copyright© 2008 by Nelson, Describe benefits thatainvolve payment for time not division of Thomson Canada worked Ltd 11–2 Objectives (cont’d) After studying this chapter, you should be able to: Discuss the recent trends in retirement policies and programs Indicate the major factors involved in the management of pension plans Describe the types of work/life benefits that employers may provide Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 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 favourable competitive position Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–4 Requirements for a Sound Benefits Program Strategic Benefits Planning Communicating Employee Benefits Information Providing Copyright© 2008 for by Nelson, Flexibility Canada division of Thomson Ltd Allowing for Employee Involvement a Benefits for a Diverse Workforce 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 Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–6 Flexible Benefits Plans: Advantages and Disadvantages ADVANTAGES • Employees select benefits to match their individual needs • Benefit selections adapt to a constantly changing (diversified) workforce • Employees gain greater understanding of the benefits offered to them and the costs incurred • Employers maximize the psychological value of their benefits program by paying only for highly desired benefits • Employers limit benefit costs by allowing employees to “buy” benefits only up to a maximum (defined) amount • Employers gain competitive advantage in the recruiting and retention of employees Copyright© 2008 by Nelson, a division of Thomson Canada Ltd Figure 11.1 11–7 Flexible Benefits Plans: Advantages and Disadvantages (cont’d) DISADVANTAGES • Poor employee benefits selection results in unwanted financial costs • There are certain added costs to establishing and maintaining the flexible plan • Employees may choose benefits of high use to them that increase employer premium costs Copyright© 2008 by Nelson, a division of Thomson Canada Ltd Figure 11.1 11–8 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) Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–9 Highlights in HRM 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 aas PowerPoint or Lotus Freelance to present Copyright© 2008 by Nelson, information to groups of employees Highlights 11.1 division ofaThomson Canada • Maintain benefits hotline to answer employee questions Ltd 11–10 Types of Employee Benefits Required Required By By Law Law Discretionary Discretionary Canada Canada/Quebec /QuebecPension PensionPlans Plans Health Healthcare care Employment EmploymentInsurance Insurance Payment Paymentfor fortime timenot notworked worked Workers’ Workers’Compensation Compensation Provincial ProvincialHospital Hospitaland andMedical Medical Services Services Copyright© 2008 by Nelson, a division of Thomson Canada Ltd Severance SeverancePay Pay Life Lifeand andLT LTcare careinsurance insurance Retirements Retirementsand andpensions pensions 11–12 Canada and Quebec Pension Plans • Covers all employees between ages of 18 and 70 • Used to pay retirement pensions, disability benefits and survivor benefits • All contributions come from employers and employees Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–13 Employment Insurance • Benefits paid to claimants who are unemployed and actively seeking employee • Amount paid is determined by the number of hours of employment in the past year, and the regional unemployment rate • Additional benefits may be extended for situations involving illness, injury, quarantine, and for maternity, paternity or adoption leave Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–14 Workers’ Compensation Insurance • Workers’ Compensation Insurance  Provincial and territorial insurance (funded by an employer payroll tax) provided to workers to defray the loss of income and cost of treatment due to workrelated injuries or illness  Factors influencing the employer’s insurance rate:  The risk of injury or illness for an industry  The company’s frequency and severity of employee injuries (the company’s experience rating) Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–15 Reducing Workers’ Compensation Costs: Key Areas Perform an audit to assess high-risk areas within a workplace Prevent injuries by proper ergonomic design of the job and effective assessment of job candidates Provide quality medical care to injured employees by physicians with experience and preferably with training in occupational health Reduce litigation by effective communication between the employer and the injured worker Manage the care of an injured worker from the injury until return to work Provide extensive worker training in all related health and safety areas Copyright© 2008 by Nelson, a division of Thomson Canada Ltd Figure 11.3 11–16 Provincial Hospital and Medical Services • Many employers offer third party benefit coverage for additional benefits, beyond provincial health care Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–17 Discretionary Major Employee Benefits • Health care benefits • Payment for time not worked • Severance pay • Life insurance • Retirement programs Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–18 Payment for Time Not Worked Vacations Vacationswith withpay pay Severance Severancepay pay Time Not Worked Paid Paidholidays holidays Sick Sickleave leave Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–19 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 Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–20 Types of Pension Plans • Contributory plan  Contributions to a plan are made jointly by employees and employers • Noncontributory plan  Contributions to a plan are made solely by the employer Copyright© 2008 by Nelson, a division of Thomson Canada Ltd • Defined-benefit plan  The amount an employee is to receive upon retirement is specifically set forth • Defined-contribution plan  The basis (amount) an employer contributes to the pension fund is specified 11–21 Federal Regulation of Pension Plans • Vesting  A guarantee of accrued benefits to participants at retirement age, regardless of their employment status at that time • Pension Portablity  Employees who leave an organization can leave their funds in their current plan or transfer those funds to a locked-in RRSP or into their new employer’s pension plan Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11–22 Employee Services: Creating a Work/Life Setting • 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 remains Copyright© 2008who by Nelson, a actively at work division of Thomson Canada Ltd 11–23 Family-Friendly Benefits: Balancing Work and Home Needs • Child care/elder care referral services • Time off for children’s school activities • Employer-paid onsite or near-site child care facilities • Flexible work hours scheduling • Employer-accumulated leave days for dependent care • Subsidized temporary or emergency dependent care • Extended leave policies for child/elder care • Sick-child programs (caregiver on call) • Work-at-home arrangements/telecommuting • Partial funding of child care costs • Customized career paths Copyright© 2008 by Nelson, a division of Thomson Canada Ltd Figure 11.5 11–24 Other Benefits and Services Awards Awards Recreational Recreationaland and Social Social Food FoodServices Services On-Site On-SiteHealth Health Services Services Credit CreditUnions Unions Legal LegalServices Services Purchasing Purchasing Assistance Assistance Transportation Transportation 2008Pooling by Nelson, Pooling Copyright© a division of Thomson Canada Ltd Financial Financial Planning Planning Housing Housingand and Moving Moving 11–25 Key Terms • • • • • contributory plan defined-benefit plan defined-contribution plan elder care employee assistance programs (EAPs) • flexible benefits plans (cafeteria plans) Copyright© 2008 by Nelson, a division of Thomson Canada Ltd • • • • • noncontributory plan severance pay silver handshake vesting workers’ compensation insurance 11–26 [...].. .Benefits Issues Concerns Concernsof ofManagement Management Union Uniondemands demandsfor foradditional additionalbenefits benefits Benefits Benefitsoffered offeredby byother otheremployees employees Tax Taxconsequences consequencesof ofbenefits benefits Rising Risingcosts costsof ofproviding providingbenefits benefits Benefits coverage Benefits coverage fordomestic domesticpartners... andpensions pensions 11 12 Canada and Quebec Pension Plans • Covers all employees between ages of 18 and 70 • Used to pay retirement pensions, disability benefits and survivor benefits • All contributions come from employers and employees Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11 13 Employment Insurance • Benefits paid to claimants who are unemployed and actively seeking employee • Amount... Copyright© 2008 by Nelson, a division of Thomson Canada Ltd Figure 11. 3 11 16 Provincial Hospital and Medical Services • Many employers offer third party benefit coverage for additional benefits, beyond provincial health care Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11 17 Discretionary Major Employee Benefits • Health care benefits • Payment for time not worked • Severance pay • Life... Risingcosts costsof ofproviding providingbenefits benefits Benefits coverage Benefits coverage fordomestic domesticpartners partners Copyright© 2008 by Nelson, a for division of Thomson Canada Ltd 11 11 Types of Employee Benefits Required Required By By Law Law Discretionary Discretionary Canada Canada/Quebec /QuebecPension PensionPlans Plans Health Healthcare care Employment EmploymentInsurance Insurance Payment... Housingand and Moving Moving 11 25 Key Terms • • • • • contributory plan defined-benefit plan defined-contribution plan elder care employee assistance programs (EAPs) • flexible benefits plans (cafeteria plans) Copyright© 2008 by Nelson, a division of Thomson Canada Ltd • • • • • noncontributory plan severance pay silver handshake vesting workers’ compensation insurance 11 26 ... Nelson, a division of Thomson Canada Ltd 11 18 Payment for Time Not Worked Vacations Vacationswith withpay pay Severance Severancepay pay Time Not Worked Paid Paidholidays holidays Sick Sickleave leave Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11 19 Retirement Programs • Silver Handshake  An early-retirement incentive in the form of increased pension benefits for several years or a cash... Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11 20 Types of Pension Plans • Contributory plan  Contributions to a plan are made jointly by employees and employers • Noncontributory plan  Contributions to a plan are made solely by the employer Copyright© 2008 by Nelson, a division of Thomson Canada Ltd • Defined-benefit plan  The amount an employee is to receive upon retirement is specifically... Defined-contribution plan  The basis (amount) an employer contributes to the pension fund is specified 11 21 Federal Regulation of Pension Plans • Vesting  A guarantee of accrued benefits to participants at retirement age, regardless of their employment status at that time • Pension Portablity  Employees who leave an organization can leave their funds in their current plan or transfer those funds... funds in their current plan or transfer those funds to a locked-in RRSP or into their new employer’s pension plan Copyright© 2008 by Nelson, a division of Thomson Canada Ltd 11 22 Employee Services: Creating a Work/Life Setting • 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... abuse, emotional difficulties, and financial or family difficulties • Child and Elder Care  Care provided to a child or an elderly relative by an employee remains Copyright© 2008who by Nelson, a actively at work division of Thomson Canada Ltd 11 23 Family-Friendly Benefits: Balancing Work and Home Needs • Child care/elder care referral services • Time off for children’s school activities • Employer-paid