1PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookThe University of West AlabamaThe University of West AlabamaManaging Human ResourcesManaging Human ResourcesBohlander Bohlander •• SnellSnell1414ththeditionedition© 2007 Thomson/South© 2007 Thomson/South--Western.Western.All rights reserved.All rights reserved.Employee BenefitsEmployee Benefits© 2007 Thomson/South-Western. All rights reserved. 11–2ObjectivesAfter studying this chapter, you should be able to:1. Describe the characteristics of a sound benefits program.2. Indicate management concerns about the costs of employee benefits and discuss ways to control those costs.3. Identify and explain the employee benefits required by law.4. Discuss suggested ways to control the costs of healthcare programs.5. Describe benefits that involve payment for time not worked.© 2007 Thomson/South-Western. All rights reserved. 11–3Objectives (cont’d)After studying this chapter, you should be able to:6. Discuss the recent trends in retirement policies and programs.7. Indicate the major factors involved in the management of pension plans.8. Describe the types of work/life benefits that employers may provide.© 2007 Thomson/South-Western. All rights reserved. 11–4The Chief Objectives of Benefits Programs• Improve employee work satisfaction• Meet employee health and security requirements• Attract and motivate employees• Reduce turnover• Maintain a favorable competitive position© 2007 Thomson/South-Western. All rights reserved. 11–5Requirements for a Sound Benefits ProgramStrategic Strategic Benefits Benefits PlanningPlanningAllowing for Allowing for Employee Employee InvolvementInvolvementBenefits for a Benefits for a Diverse Diverse WorkforceWorkforceProviding Providing for for FlexibilityFlexibilityCommunicating Communicating Employee Benefits Employee Benefits InformationInformation© 2007 Thomson/South-Western. All rights reserved. 11–6Providing 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.2© 2007 Thomson/South-Western. All rights reserved. 11–7Figure 11Figure 11––1 1 Flexible Benefits Plans: Advantages and DisadvantagesFlexible Benefits Plans: Advantages and DisadvantagesADVANTAGES• 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.© 2007 Thomson/South-Western. All rights reserved. 11–8Figure 11Figure 11––1 1 Flexible Benefits Plans: Advantages and Disadvantages (cont’d)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.© 2007 Thomson/South-Western. All rights reserved. 11–9Communicating 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)© 2007 Thomson/South-Western. All rights reserved. 11–10Highlights in HRM 1 Crafting an Effective Benefits Communication ProgramIn 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 as PowerPoint or Lotus Freelance to present information to groups of employees.• Maintain a benefits hotline to answer employee questions.© 2007 Thomson/South-Western. All rights reserved. 11–11Highlights in HRM 2 A Personalized Statement of Benefits Costs© 2007 Thomson/South-Western. All rights reserved. 11–12Benefits IssuesRising costs of providing benefits Rising costs of providing benefits Benefits offered by other employeesBenefits offered by other employeesConcerns of ManagementConcerns of ManagementUnion demands for additional benefitsUnion demands for additional benefitsTax consequences of benefitsTax consequences of benefitsBenefits coverage for domestic partnersBenefits coverage for domestic partners3© 2007 Thomson/South-Western. All rights reserved. 11–13The High Cost of Providing Benefits• According to a 2003 U.S. Chamber of Commerce study, the cost of employee benefits in that year averaged 42.3 percent of payroll.• The average distribution of these benefits was $18,000 per employee per year.• The current trend is for employers to require employees to pay part of the costs of certain benefits (for example, through copayments or higher deductibles), especially medical coverage.© 2007 Thomson/South-Western. All rights reserved. 11–14Domestic Partner Benefits• Domestic Partner (Apple Computer) A person over age 18 who shares living quarters with another adult in an exclusive, committed relationship in which the partners are responsible for each other’s