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					                                                   Employee Benefits
                                                 3770 Beardshear Hall
Human Resource Services




          Employee Compensation
               and Benefits
                 Mike Otis, Associate Director
                  Human Resource Services
                                     Employee Benefits
                                   3770 Beardshear Hall
Human Resource Services




                          Agenda
      • Typical HR Organization
      • Compensation Goals
      • Compensation Approaches
      • Benefits Exercise
      • Employer Challenges
      • General Benefit Concepts
      • Health Benefits
      • Welfare Benefits
      • Retirement Benefits
      • Closing Thoughts
                                           Employee Benefits
                                         3770 Beardshear Hall
Human Resource Services




                  Typical HR Structure
                                              Employee Benefits
                                            3770 Beardshear Hall
Human Resource Services




      Goals of Compensation Plans
      • Employers are able to attract and retain
      employees who will contribute to the
      organization’s success
      • Employees feel they are
      compensated/rewarded fairly/equitably
      for their efforts and contributions to an
      organization’s success
                                                                                   Employee Benefits
                                                                              3770 Beardshear Hall
Human Resource Services




                          Total Compensation
                              Employee Satisfaction
                             Supportive Corporate Culture
                               Executive Sponsorship




           Rewards                                                       Benefits
     • Bonus                                                     • Health Plans
     • Salary Increases                                          • Retirement Plans
     • Promotions                                                • Vacation/ time off
     • Equity Offerings                       Salary             • Paid Training
     • Awards                     • Pay                          • Working Hours
     • Recognition                • Overtime (if in non-exempt
                                  classification)
     • New job assignments
                                                           Employee Benefits
                                                      3770 Beardshear Hall
Human Resource Services




      What Factors Determines Pay
      • Employer considerations
         – Where employers compete for talent – local or
         national
         – What talents an employer competes for – the
         skill/knowledge level
         – How strongly the employer wants to compete
             • Lead the market
             • Meet the market
             • Lag the market
                                                                          Employee Benefits
                                                                        3770 Beardshear Hall
Human Resource Services




      What Factors Determine Pay?
      • What job duties will be performed determines classification as
      either Exempt or Non-exempt (Governed by Fair Labor Standards
      Act (FLSA))
           – Non-exempt employees.
               • Eligible for overtime pay for hours worked in excess of 40
               • Employer must have record of time worked
           – Exempt employees
               • Typically executive, professional, or administrative
               positions
               • Must meet minimum weekly pay guideline
               • Not entitled to overtime
               • Must meet both salary test and duties test
                                                     Employee Benefits
                                                   3770 Beardshear Hall
Human Resource Services




                           Rewards/Recognition


    Benefits
                                                   Benefits
                                 Job
                            Classifications

                          Compensation Structure



                 Compensation Philosophy
                                          Employee Benefits
                                        3770 Beardshear Hall
Human Resource Services




               Compensation Structure
                    Example
                                            Employee Benefits
                                          3770 Beardshear Hall
Human Resource Services




         Utopia Enterprises – Your
           Employer of Choice!
                          We provide a “buffet”
                          of benefit choices to
                          meet your individual
                                needs!!
                                                                                                     Employee Benefits
                                                                                                   3770 Beardshear Hall
Human Resource Services



                         Benefits Offered                   Offered by Employers with 250   Rank
      Source: 2005 Iowa Employer Benefits Study, David P.        or more Employees
                     Lind and Associates
    Health Insurance                                                   97.7%                 1
    Life Insurance                                                     95.4%                 2
    Retirement Plans                                                   94.4%                 3
    Paid Holidays                                                      94.1%                 4
    Pre-Tax deductions for Employee benefit contributions              86.5%                 5
    Long Term Disability Insurance                                     84.1%                 6
    Paid Vacation                                                      83.7%                 7
    Educational Assistance/Tuition Reimbursement                       75.1%                 8
    Sick Leave                                                         73.8%                 9
    Employee Assistance Program (EAP)                                  73.1%                 10
    Fitness Center or Gym subsidy                                      36.7%                 11
    Long Term Care Insurance                                           32.8%                 12
    Flextime                                                           32.5%                 13
    Casual Dress (every day, not just Fridays)                         32.2%                 14
    Retiree Health Insurance (post age 65)                             25.6%                 15
    Telecommuting                                                      18.9%                 16
    Child Care Assistance (on or off site)                              7.4%                 17
    Subsidized employee meals                                        Not on list             18
    Free Coffee/Soda                                                 Not on list             19
    Pet Insurance                                                    Not on list             20
                                                      Employee Benefits
                                                    3770 Beardshear Hall
Human Resource Services




                 Employer Challenges
      • Structuring employee benefit packages that meet
      the needs of a diverse workforce – one size does
      not fit all
      • Helping existing employees understanding the
      “value” of their benefits
      • Administering benefit programs – costly and time-
      consuming. Not a profit-making venture!
      • Continued rising health care costs
      • Limited budgets – Benefits average 25% - 40% of
      Payroll in most organizations
      • Government restrictions/legislation/public policy
                                                 Employee Benefits
                                               3770 Beardshear Hall
Human Resource Services




                     General Concepts
      • Publicly traded companies will tend to
      structure pay/benefits that incorporate more
      equity (stock options, savings match in
      company stock, bonus tied to company
      performance, etc)
      • Non-publicly traded companies/organizations
      will spend more on non-cash incentives
      • Governmental organizations will on average
      spend more on benefits in lieu of salary
                                                                         Employee Benefits
                                                                       3770 Beardshear Hall
Human Resource Services




         Core vs. Non-Core Benefits
                    Core Benefits        Non-core Benefits
                     (Traditional)     (Voluntary – Elective)
            Health Insurance         Dental

            Prescription Drugs       Vision

            Basic Life Insurance     Supplement Life, Dependent Life

            Vacation                 Long-term care insurance

            Holidays                 Auto-homeowners insurance

            Sick Pay                 Mortgage services/discounts

            Disability               On-site daycare

                                     Tuition reimbursement

                                     Yes, even Pet Insurance
                                              Employee Benefits
                                            3770 Beardshear Hall
Human Resource Services




                          Health Benefits
      • General types of health coverage
           – Medical
           – Prescription Drugs
           – Dental
           – Vision
      •Most health benefit employee
      contributions will be deducted from pay
      pre-tax
                                                            Employee Benefits
                                                          3770 Beardshear Hall
Human Resource Services




                   Wellness Programs
      • Many employers are starting to see the value from
      incorporating wellness initiatives into their work places
           – disease management
           – health risk assessments
           – fitness programs
           – on-site clinics and pharmacies
      • Prevention vs. Payment
      • Improve productivity/reduce
      absenteeism/presenteeism
      • Difficult to measure the Return on Investment (ROI) of
      wellness programs
                                                     Employee Benefits
                                                   3770 Beardshear Hall
Human Resource Services




                          Welfare Benefits
      • Provide safety and monetary security beyond
      health
      • Typical benefits
           – Basic life
           – Supplemental (optional) life
           – Accidental Death and Dismemberment (AD&D)
           – Dependent life insurance
           – Short-term disability (STD)
           – Long-term disability (LTD)
                                          Employee Benefits
                                        3770 Beardshear Hall
Human Resource Services




                          Vacation
      • May be provided under separate
      program or combined under a PTO (paid
      time off) plan with sick days
                                                                     Employee Benefits
                                                                   3770 Beardshear Hall
Human Resource Services




                   Retirement Benefits
      •Defined Benefit Plans (traditional Pension)
           – Based on a formula that determines a future benefit
      •Defined Contribution Plans (think 401(k))
           – future value depends on contributions from employee and/or
           employer
               • 403(b)/457 Not-for-profit employers
               • 401(k) For-profit employers

      • Other Types - Deferred Compensation Plans
      • IRS restrictions
                                               Employee Benefits
                                             3770 Beardshear Hall
Human Resource Services




            Comments on Retirement
      • Defined Benefit (Pension) plans are the
      exception rather than the rule
      • Many employers now will automatically
      enroll employees in 401(k)/403(b) plans
      • Understand the time-value of money –
      compounding
      • “DIVERSIFY” investments – Many
      employees are too conservative or too
      risky
                            Employee Benefits
                          3770 Beardshear Hall
Human Resource Services
                                              Employee Benefits
                                            3770 Beardshear Hall
Human Resource Services




               Conflicting Priorities for
                Savings/Retirement
      • Car payments/car insurance
      • Mortgage/rent/student loans
      • Utilities
      • Food/beverages
      • Clothing
      • Entertainment
      • Life expenses in general
                                                    Employee Benefits
                                                  3770 Beardshear Hall
Human Resource Services




             Other Voluntary Benefits
      • Offered as optional benefits – typically
      employee pays full cost
      • Voluntary benefit programs typically offered at
      a discount price resulting from group
      purchasing power
      • Employer may offer the option of payroll
      deduction
      • Examples are auto/homeowners insurance,
      pet insurance, computer purchase discounts
                                                             Employee Benefits
                                                           3770 Beardshear Hall
Human Resource Services




          Laws Affecting Employee
         Benefits and Compensation
    • Fair Labor Standards Act (FLSA)
    • Employee Income Retirement Security Act of 1974 (ERISA)
    • Age Discrimination and Employment Act (ADEA)
    • Family Medical Leave Act (FMLA) of 1996
    • Economic Growth and Tax Relief Reconciliation Act
    (EGTRRA) of 2001
    • Health Insurance Portability and Accountability Act of 1996
    (HIPAA) (and amendments)
    • Pension Protection Act of 2006
    • many, many others
                                                                   Employee Benefits
                                                                 3770 Beardshear Hall
Human Resource Services




                      Closing Thoughts
     • How employees are “compensated” takes many forms – salary,
     benefits, working conditions, challenging/stimulating work, co-
     workers, etc. The right “mix” for each person is different
     • Pay policies will differ for every employer – some will focus on
     cash compensation and some will focus on Total Compensation
     • The employer’s main goal is structuring compensation and
     benefit programs is to be able to attract and retain the right
     employees needed to help the employer be competitive
                                                             Employee Benefits
                                                           3770 Beardshear Hall
Human Resource Services




                      Closing Thoughts
    • Employee benefits have huge budget impacts to employers
    • Benefits are the “hidden paycheck” for employees
    • Employees need to understand the “total compensation” an
    employer provides – not just the “salary.” Employers need to sell
    Total Compensation – not just salary
    • Employees need to be “educated consumers” of benefit
    programs – especially health care and retirement programs
    • Employees should take advantage of retirement plan offerings
    and save early (time value of $$) – and always save enough to at
    least take advantage of employer’s matching contribution

				
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posted:11/10/2011
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