Human resrouce management 12th mathis jacson chapter 0014

CHAPTER 14 Managing Employee Benefits S E C T I O N Compensating Human Resources © 2008 Thomson/South-Western All rights reserved PowerPoint Presentation by Charlie Cook The University of West Alabama Chapter Chapter Objectives Objectives After you have read this chapter, you should be able to: ■ Define a benefit and identify four strategic benefits considerations ■ Summarize why benefits management and communications efforts are important ■ Distinguish between mandated and voluntary benefits and list three examples of each ■ Explain the importance of managing the costs of health benefits and identify some methods of doing so ■ Discuss the shift of retirement plans from defined-benefit to defined-contribution and cash balance programs ■ Describe the growth of financial, family-oriented, and time-off benefits and their importance to many employees © 2008 Thomson/SouthWestern All rights reserved 14–2 Benefits and HR Strategy • Benefit  An indirect reward given to an employee or group of employees for organizational membership EmployerProvided Benefits Absorb social costs for health care and retirement Influence employee decisions about employers © 2008 Thomson/SouthWestern All rights reserved Are increasingly seen as entitlements Average over 40% of total payroll costs 14–3 FIGURE 14-1 Employer Compensation and Benefits Costs per Hour, Private Industry © 2008 Thomson/SouthWestern All rights reserved Source: U.S Bureau of Labor Statistics, “Employer Costs for Compensation,” News Release, June 21, 2006, www.bls.gov 14–4 FIGURE 14-2 Strategic Benefits Considerations © 2008 Thomson/SouthWestern All rights reserved 14–5 FIGURE 14-3 Benefits Management Components © 2008 Thomson/SouthWestern All rights reserved 14–6 Benefits Design • Decisions Affecting Benefit Design:  How much total compensation?  What part of total compensation should benefits comprise?  What expense levels are acceptable for each benefit?  Which employees should get which benefits?  What are we getting in return for the benefit?  How will offering benefits affect turnover, recruiting, and retention of employees?  How flexible should the benefits package be? © 2008 Thomson/SouthWestern All rights reserved 14–7 FIGURE 14-4 Typical Division of HR Responsibilities: Benefits Administration © 2008 Thomson/SouthWestern All rights reserved 14–8 HR and Benefits Administration Benefits Administration Issues and Trends Outsourcing of Benefits Administration Internet-Based Administration Systems © 2008 Thomson/SouthWestern All rights reserved Benefits Measurement (Return vs Costs) 14–9 FIGURE 14-5 Common Benefits Metrics • Benefits as a percentage of payroll (pattern over a multi-year period) • Benefits expenditures per full-time equivalent (FTE) employee • Benefits costs by employee group (full-time vs parttime, union vs nonunion, office, management, professional, technical, etc.) • Benefits administration costs (including staff time multiplied by the staff pay and benefits costs per hour) • Health-care benefits costs per participating employee © 2008 Thomson/SouthWestern All rights reserved 14–10 Retirement Benefits • Social Security Act of 1935  Provides old age, survivor’s, disability, and retirement benefits  Federal payroll tax (7.65%) on both the employer and the employee  Medicare taxes are 2.9%  Benefit payments are based on an employee’s lifetime earnings  Administered by the Social Security Administration © 2008 Thomson/SouthWestern All rights reserved 14–20 FIGURE 14-11 Median Age at Retirement by Gender © 2008 Thomson/SouthWestern All rights reserved Source: U.S Bureau of Labor Statistics, www.bls.gov 14–21 Pension Plans Types of Pension Plans DefinedBenefit Plan DefinedContribution Plan © 2008 Thomson/SouthWestern All rights reserved Cash Balance Plan 14–22 FIGURE 14-12 Worker Participation in Pension Plans © 2008 Thomson/SouthWestern All rights reserved 14–23 Pension Plan Concepts Contributory Plan Non-Contributory Plan Pension Plan Formats Vesting of Pension Rights © 2008 Thomson/SouthWestern All rights reserved Portability of Pension Benefits 14–24 Individual Retirement Options Individual Retirement Account (IRA) 401(k) and Roth IRA Individual Retirement Options 403(b) Keogh © 2008 Thomson/SouthWestern All rights reserved 14–25 Protection of Retirement Benefits Employee Retirement Security Employee Retirement Income Security Act (ERISA) 1974 Retirement Equity Act (amended ERISA in 1984) © 2008 Thomson/SouthWestern All rights reserved Qualified Domestic Relations Order (QDRO) 14–26 Retirement Benefits and Legal Requirements Older Worker Security Pension Protection Act of 2006 Age Discrimination in Employment Act (ADEA) © 2008 Thomson/SouthWestern All rights reserved Older Workers Benefit Protection Act (OWBPA) 14–27 FIGURE 14-13 Common Types of Financial Benefits © 2008 Thomson/SouthWestern All rights reserved 14–28 Family Medical Leave Act (FMLA) • Coverage  Employers with 50 or more employees  Employees who have worked at least 12 months and 1,250 hours in the previous year • Requirements  Eligible employees can take up to a total of 12 weeks of unpaid leave in a 12-month period to attend to a family or serious medical condition  Employees must exhaust all other forms of leave  Employees have rights to continued health benefits and to return to their job © 2008 Thomson/SouthWestern All rights reserved 14–29 FIGURE 14-14 Percentages of Employees Taking Family or Medical Leave © 2008 Thomson/SouthWestern All rights reserved Source: Jane Wald Fogel, “Family and Medical Leave,” Monthly Labor Review, September 2001, 17– 23; and U.S Bureau of Labor Statistics, www.bls.gov 14–30 Family-Care Benefits Family-Based Benefits Adoption Benefits Child-Care Assistance © 2008 Thomson/SouthWestern All rights reserved Elder-Care Benefits 14–31 Benefits for Domestic Partners • Domestic Partners or Spousal Equivalents  Unmarried employees who are living with individuals of the opposite sex  Gay and lesbian employees who have partners • Affidavit of Spousal Equivalence • Each is the other’s only spousal equivalent • They are not blood relatives • They are living together and jointly share responsibility for their common welfare and financial obligations © 2008 Thomson/SouthWestern All rights reserved 14–32 Time-Off and Other Benefits Holiday Pay Vacation Pay Time-Off and Other Benefits Miscellaneous Benefits Leaves of Absence Paid-TimeOff (PTO) Plans © 2008 Thomson/SouthWestern All rights reserved 14–33 FIGURE 14-15 Percentage of Companies with Various Paid-Time-Off Plans © 2008 Thomson/SouthWestern All rights reserved Source: U.S Bureau of Labor Statistics, 2005, www.bls.gov 14–34