Managing HRM, 2e

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• Designing and Administering Benefits

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How the Benefit Dollar Is Spent
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Contributions
Payments made for benefits coverage.
Contributions for a specific benefit may come
from the employer, employee, or both.
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Cost of Employee Benefits in the United States,
1929-1993
1993
41.0
33.8
1984
1975
30.0
21.5
1965
Year
17.0
1955
3.0
1929
0
5
10
15
20
25
30
35
40
45
Percent of Employer Payroll
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Percentage of Employers Providing Selected
Benefit Plans
Medium and Large Private Firms 1993
Small Private Firms 1994
State and Local Governments 1990
76 50 57 87 43 95 89 56 13
64 15 38 62 22 86 80 50 4
87 91 9 87 30 66 73 94 5
Health Insurance Retirement Plans Defined
Benefit Plans Defined Contribution
Plans Insurance Plans Life Insurance Long-term
Disability Insurance Time-off Plans Paid
Vacations Paid Holidays Paid Sick
Leave Flexible Benefits Plans
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Companies with the Best Benefits
1. Xerox 2. Quaker Oats 3. John Hancock 4.
Chrysler 5. Merck 6. Bell Atlantic 7. ATT 8.
Citibank 9. Johnson Johnson 10.
Hewlett-Packard
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Legally Required Benefits

• Social Security
• Retirement Income
• Disability Income
• Medicare
• Survivor Benefits
• Workers Compensation
• Unemployment Insurance
• Unpaid Leave

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Social Security Benefits
Eligibility
Provisions
Benefit
Retirement income Disability income Medicare
Survivor benefits

• Age 65 (full benefits)
• or
• Age 62-64 (benefits reduced
• up to 20)
• Totally and continuously
• disabled for 5 months.
• Disability should be expected
• to last at least 12 months or
• result in death.
• Age 65
• or
• Receiving Social Security
• disability payments for
• 24 months.
• Family members of the
• deceased person, including
• widow or widower age 60
• or over, child or grandchild
• under age 18, or dependent

Monthly payments for life beginning at
retirement. Average benefit provides about 30
of earnings prior to retirement. Monthly
payments comparable to retirement benefits as
long as totally disabled. Provisions for
payments to dependents. Covers hospital
expenses, nursing home and home health agency
ex- penses, subject to a deductible payment.
Medical expenses are covered, subject to monthly
premium. Monthly payments related to the
deceased workers primary Social Security
retirement benefit.
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Voluntary Benefits

• Health Insurance
• Traditional Health Insurance
• Health Maintenance Organizations (HMOs)
• Preferred Provider Organizations (PPOs)
• Health Insurance Coverage of Employees Partners
• Retirement Benefits
• Defined Benefit Plans
• Defined Contribution Plans
• 401(k) Plan
• IRA
• SEP

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Domestic Partnerships

• State of NM
• legal spouse
• UNM (over 10 years)
• two (2) individuals who live together in a
  long-term relationship of indefinite duration.
  There must be an exclusive mutual commitment
  similar to that of marriage, in which the
  partners agree to be financially responsible for
  each other's welfare and share financial
  obligations.
• NMSU (within the past year)
• 2.1.1. Both domestic partners must be unmarried.
• 2.1.2. Domestic partners must have been in a
  mutually exclusive relationship for the last
  twelve (12) months, intending to do so
  indefinitely, and must share the same primary
  residence.
• 2.1.3. Domestic partners must meet the age
  requirements for marriage in New Mexico and be
  mentally competent to consent to contract.
• 2.1.4. Domestic partners must not be related by
  blood to the degree prohibited in a legal
  marriage in the State of New Mexico.
• 2.1.5. Domestic partners must be jointly
  responsible for the common welfare of each other
  and share financial obligations.

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Voluntary Benefits (cont.)

• Insurance Plans
• Life Insurance
• Long-Term Disability Insurance
• Paid Time Off
• Sick Leave
• Vacations
• Severance Pay
• Holidays and Other Paid Time Off
• Employee Services

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A Comparison of Defined Contribution Retirement
Plans
Tax Break on Contributions/ Earnings
Maximum Contribution
Plan
Available to
Appropriate for
401(k) IRA (Roth IRA) SEP
Employees of for-profit businesses Anyone
with earned income The self-employed and
employees of small businesses
Everyone who qualifies Those without company
pension plans or who have put max. into co.
plan Self-employed person who is a sole
proprietor
15 of salary up to 10,500 in 2000 100 of
salary up to 3,500 (depending on
age/income) 7,000 if joint with spouse 15 of
gross self- employment in- come or 30,000,
whichever is less
Yes/Yes Sometimes/ Yes Yes/Yes
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Personal Account versus Deferred Compensation Plan
Deferred Compensation Plan
Personal Account
Salary Set Aside Annually (100/mo.) Less Taxes
(28) Net Amount Invested Annually
1,200 336 864
1,200 0 1,200
141,761
67,514
57,266
31,933
18,128
11,609
1,251
891
Account Value at the end of
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Annual Number of Vacation Days in Various
Countries for Employees with One Year of Service
Austria
Canada
France
Japan
Netherlands
Spain
United Kingdom
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Selected Tax-Free or Tax-Preferred Employee
Benefits or Services
1. Charitable contributions 2. Counseling
Financial Legal Psychiatric/psychological 3.
Tax preparation 4. Education subsidies 5. Child
adoption 6. Child care 7. Elder
care 8. Subsidized food service 9. Discounts on
merchandise 10. Physical awareness and fitness
programs 11. Social and recreational
opportunities 12. Parking
13. Transportation to and from work 14. Travel
expenses Car reimbursement Tolls and
parking Food and entertainment
reimbursement 15. Clothing reimbursement/ allowan
ce 16. Tool reimbursement/allowance 17. Relocation
expenses 18. Emergency loans 19. Credit
union 20. Housing 21. Employee assistance
programs 22. On-site health services 23. Credit
unions
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• Developing Employee Relations and Communications

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The Communication Process within an Organization
Noise
Communication Channel
Sender (Encodes Message)
Receiver (Decodes Message)
Feedback
Noise
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How to Communicate Useful Feedback to Employees

• Focus on specific behaviors
• Keep the feedback impersonal
• Give the feedback at the appropriate time and
  place
• Focus negative feedback on behaviors that can be
  controlled by the employee

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Downward Communication
Communication that allows managers to implement
their decision and to influence employees lower
in the organizational hierarchy.
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Upward Communication
Communication that allow employees at lower
levels to communicate their ideas and feelings to
higher-level decision makers.
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Information Dissemination Programs

• Employee Handbook
• This is probably the most important source of
  information that the HR department can provide.
• Although sometimes considered a tool for only
  large corporations, small businesses can also
  benefit from the use of employee handbooks.
• Written Communications
• Memos
• Financial Statements
• Newsletters
• Bulletin Boards

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Information Dissemination Programs (cont.)

• Audiovisual Communications
• Video Presentations
• Teleconferencing
• Electronic Communications
• Voice Mail
• Electronic Mail
• Meetings
• Retreats
• Informal Communications

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International Comparisons of Employee Satisfaction
Where Workers Are Happy
100
82
72
66
65
58
53
43
Percent Satisfied with Company as an Employer
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0
Mexico
U.S.
Singapore
Japan
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• Respecting Employee Rights and Managing Discipline

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Categories of Employee Rights
Contractual Rights
Other Rights
Statutory Rights

• Protection from
• discrimination
• Safe working
• conditions
• Right to form
• unions

• Employment contract
• Union contract
• Implied contracts/
• employment policies

• Ethical treatment
• Privacy (limited)
• Free speech
• (limited)

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Management Rights

• The rights of the employer, usually called
  management rights, can be summed up as the rights
  to run the business and to retain any profits
  that result.
• Management rights include the right to manage the
  workforce and the rights to hire, promote,
  assign, discipline, and discharge employees.
• Management rights are influenced by the rights of
  groups who have an interest in decisions made in
  the workplace.
• One of the most important employer rights is
  employment at will.

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Employment at Will

• Employers have long used employment at will, a
  common-law rule, to assert their right to end
  their employment relationship with an employee at
  any time for any cause.
• Although the courts originally assumed the
  employment at will would give both parties equal
  footing in the employment relationship, it is
  apparent that employment at will has stacked the
  deck in favor of employers.
• One labor relations expert has estimated that
  approximately 150,00 employees are wrongfully
  discharged each year.
• Virtually all of these wrongful discharges occur
  in the 70 of the U.S. labor force that is not
  protected by either a union contract or civil
  service rules.

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Legal Limitations to Employment at Will

• Public Policy Exceptions The courts have ruled
  that an employee may not be discharged for
  engaging in activities that are protected by law.
  Examples are
• Filing a legitimate workers compensation claim
• Exercising a legal duty, such as jury duty
• Refusing to violate a professional code of ethics
• Refusing to lobby for a political candidate
  favored by the employer

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Random Drug Testing

• Many employees consider random drug testing an
  unreasonable and illegal invasion of their
  privacy.
• Although random drug testing is required by law
  for specific occupations where safety is
  critical, it has been challenged in cases where
  the employer has other methods available to
  ensure a drug-free work environment.
• Employees anger and humiliation about random
  drug testing is compounded by the evidence that
  it does not help deter accidents.
• In 1991 a Federal Railroad Administration report
  found that only 3.2 of workers involved in
  railroad accidents tested positive for drugs.

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Electronic Monitoring

• Companies are attempting to fight various forms
  of theft by using electronic surveillance devices
  to monitor employees.
• The increased sophistication of computer and
  telephone technology now makes it possible for
  employers to track employees job performance
  electronically.
• Employees are most likely to see electronic
  monitoring as legitimate when management used it
  to control theft.

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Whistleblowing

• Whistleblowing is risky because managers and
  other employees sometimes deal harshly with the
  whistleblower.
• Despite the risks, many employees have used
  whistleblowing to call their employers to account.

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Four Steps in a Progressive Discipline Procedure
1. Verbal Warning
2. Written Warning
3. Suspension
4. Discharge
The employee has an unexcused ab- sence from
work. He received a ver- bal warning from the
supervisor and is told that if he takes another
un- excused absence within the next month,
harsher punishment will follow.
Two weeks after the verbal warning from his
super- visor, the employee takes another
un- excused absence. He now receives a written
warning that if he fails to correct his
ab- senteeism problem within the next two months
more severe treatment will follow. This
warning goes into his personnel file.
Two weeks after his return from suspension,
the employee does not show up for work. Upon
his return to work the following day, he is
discharged.
Six weeks later the employee fails to show up for
work for two consecutive days. This time he is
suspended from work without pay for one week.
He also received a final warning from his
supervisor that if he has another un- excused
absence within three months after his return
from suspension, he will be terminated.
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• Managing Workplace Safety and Health

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Workplace Safety and the Law

• Workers Compensation
• The workers compensation concept is based on the
  theory that work-related accidents and illnesses
  are costs of doing business that the employer
  should pay for and pass on the the consumer
• Workers compensation benefits compensate
  employees for injuries or illnesses occurring on
  the job. These benefits are
• Total disability benefits
• Impairment benefits
• Survivor benefits
• Medical expense benefits
• Rehabilitation benefits

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Workplace Safety and the Law (cont.)

• The Occupational Safety and Health Act (OSHA)
• OSHA is fairly straightforward. It imposes three
  major obligations on employers
• To provide a safe and healthy work environment
• To comply with specific occupational safety and
  health standards
• To keep records of occupational injuries and
  illnesses
• The Occupational Safety and Health Administration
• The Occupational Safety and Health Administration
  has the primary responsibility for enforcing
  OSHA. It develops occupational standards, grants
  variances to employers, conducts workplace
  inspections, and issues citations and penalties

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Death Rates for the Deadliest Industries
Trucking 12.1 Logging 9.0 Fuel
Dealers 5.6 Petroleum Products 5.2 Crop
Production 4.2
Rates are annual deaths per 100,000 workers.
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AIDS

• Dealing effectively with workplace concerns that
  arise when an employee contract acquired
  immunodeficiency syndrome will be one of the most
  important workplace health challenges of the next
  decade.
• The overwhelming majority of U.S. organizations
  have not actively addressed the topic of HIV
  infection in the workplace.
• A survey of 2,000 adults found that 67 would
  have some misgivings about working near someone
  with AIDS, and 26 would feel uncomfortable.
• In 1992 OSHA issued the Bloodborne Pathogens
  Standards, which must be followed in all
  workplaces where employees can reasonably be
  expected to come in contact with blood or other
  body fluids.

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