BENEFITS AND OTHER COMPENSATION ISSUES

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BENEFITS AND OTHER COMPENSATION ISSUES
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Benefits (Indirect Financial Compensation)

• All financial rewards that are not paid
  directly to the employee

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Benefits in a Total Compensation Program
External EnvironmentInternal Environment
Compensation
Financial
Non-Financial
The Job Job Environment
Indirect (Benefits) Legally Required Benefits
Social Security
Unemployment Compensation Workers Compensation
Family Medical Leave Voluntary
Benefits Payment for Time Not
Worked Health Care
Life Insurance
Retirement Plans
Employee Stock Option Plans Supplemental
Unemployment Benefits Employee Services
Premium Pay
Unique Benefits
Direct
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Mandated Benefits(Legally Required)

• Social security
• Unemployment compensation
• Workers compensation
• Family and Medical Leave Act of 1993 (FMLA)

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Social Security

• Created system of retirement benefits
• Federal payroll tax to fund unemployment and
  retirement benefits
• Amendments included disability insurance,
  survivors benefits, and Medicare

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Unemployment Compensation

• Laid off individual receives compensation for up
  to 26 weeks
• Administered by states
• Payroll tax paid solely by employers

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Workers Compensation

• Expenses resulting from job-related accidents or
  illnesses
• Administered by states
• Program paid for by employers
• Premium expense directly tied to past experience

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Family and Medical Leave Act of 1993 (FMLA)

• Private employers with 50 or more employees and
  governmental employers regardless of number of
  employees
• Up to 12 workweeks of unpaid leave per year for
  absences due to employees own serious health
  condition, need to care for newborn or
  newly-adopted child, seriously ill child, parent,
  or spouse

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Discretionary Benefits (Voluntary)

• Payment for time not worked
• Health care
• Life Insurance
• Retirement plans
• Employee Stock Option Plans (ESOP)
• Supplemental Unemployment Benefits (SUB)
• Employee services
• Distinctive benefits
• Premium pay
• Part-time employee benefits

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Health Care Legislation

• Consolidated Omnibus Budget Reconciliation Act of
  1985 (COBRA) Temporarily continue coverage if
  employees would lose it because of termination,
  layoff, or other change in employment

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Health Care Legislation (Continued)

• Older Workers Benefit Protection Act (OWBPA) -
  Employers must offer benefits to older workers
  that are equal to, or more than, the benefits
  given to younger workers with one exception. Is
  not required when costs to do so are greater than
  for younger workers

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Health Care Legislation (Continued)

• Employee Retirement Income Security Act of 1974
  (ERISA) Strengthen existing and future
  retirement programs
• Older Workers Benefit Protection Act (OWBPA)
  extends coverage to all employee benefits

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Nonfinancial Compensation

• Very powerful factor in compensation equation

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The Job as a Total Compensation Factor

• Central issue in many motivation theories
• Vital component of total compensation program

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Job Characteristics Theory

• Skill variety extent work requires number of
  different activities for successful completion
• Task identity extent job includes an
  identifiable unit of work carried out from start
  to finish
• Task significance impact job has on other people

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Job Characteristics Theory (Continued)

• Autonomy individual freedom and discretion
  employees have in performing their jobs
• Feedback amount of information employees
  receive about how well they have performed the job

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Flexible Compensation Plans

• Permit employees to choose from among many
  alternatives in deciding how their financial
  compensation will be allocated
• Determine the compensation package that best
  satisfies his or her particular needs

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Other Compensation Issues

• Severance pay
• Comparable worth
• Pay secrecy
• Pay compression