11

BENEFITS AND OTHER

COMPENSATION ISSUES

22

Benefits (Indirect Financial Compensation)

All financial rewards that are not paid directly to the employee

33

Benefits in a Total Compensation Program External EnvironmentInternal Environment

Compensation

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

Financial Non-FinancialThe Job Job EnvironmentDirect

44

Mandated Benefits(Legally Required)

Social security Unemployment

compensation Worker’s compensation Family and Medical

Leave Act of 1993 (FMLA)

55

Social Security

Created system of retirement benefits

Federal payroll tax to fund unemployment and retirement benefits

Amendments included disability Amendments included disability insurance, survivors’ benefits, and insurance, survivors’ benefits, and MedicareMedicare

66

Unemployment Compensation

Laid off individual receives compensation for up to 26 weeks

Administered by states Payroll tax paid solely by

employers

77

Worker’s Compensation Expenses resulting from

job-related accidents or illnesses

Administered by states Program paid for by

employers Premium expense

directly tied to past experience

88

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 employee’s own serious health condition, need to care for newborn or newly-adopted child, seriously ill child, parent, or spouse

99

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

1010

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

1111

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

1212

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

1313

Nonfinancial Compensation

Very powerful factor in compensation equation

1414

The Job as a Total Compensation Factor

Central issue in many motivation theories

Vital component of total compensation program

1515

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

1616

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

1717

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

1818

Other Compensation Issues

Severance pay Comparable worth Pay secrecy Pay compression