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									                                          Research Proposal   1




             Research Proposal


Compensation Plans and Employees Acceptance


     By Kathleen Cline and Gina Rager




                  ILR 619

     Indiana University of Pennsylvania

               May 7 th, 2007
                                                          Research Proposal   2


                    Compensation Plans and Employees Acceptance


Table of Contents


      Abstract………………………………………………………………………3
      Introduction/Background……………………………………………………4
      Literature Review……………………………………………………………6
      Problem Statement…………………………………………………………..10
      Significance of Problem…………………………………………………….11
      Null Hypothesis……………………………………………………………..12
      Study Design………………………………………….………………….12-14
      Health Care Coverage……………………………………………..…….14-20
      Dental Insurance…………………………………………………………20-21
      Vision Insurance …………………………………………………………21-23
      Employee Assistance Programs………………………………………..……24
      Employee Wellness Programs………………………………………..….23-24
      Deferred Compensation Plans……………………………………….…..24-26
      Deferred Benefit Plans……………………………………………………….27
      Retirement Plans…………………………………………………….…...27-28
      Life Insurance………………………………………………………..…...28-30
      Short Term Disability………………………………………………….....30-31
      Long Term Disability……………………………………………………..31-32
      Salary Compensation Plans ……………………………………………..….32
      Paid Time Off……………………………………………………………..32-37
      Career Development ………………………………………………………...37
      Other Benefits…………………………………………………………….37-38
      Summary/Findings ……………………………………………………….38-39
      Recommendations …………………………………………………….…..39-40
      References…………………………………………………………….......41-42
                                                                     Research Proposal        3



                                            Abstract

       The purpose of this study is to determine if there is a relationship between certain

compensation plans and employee acceptance. The study hopes to determine whether such

factors as health insurance plans, dental plans, vision plans, prescription drug plans,

retirement plans, employee wellness programs, and life/disability insurance have an effec t

on an employee‟s satisfaction of said plans. This study looks at every aspect of

compensation benefits to establish which compensation plans satisfy the employees to the

fullest. The study also looks at the characteristics such as paid time off (i.e.,

personal/emergency days, vacation days, bereavement time), career development (i.e.,

tuition assistance and employee development programs), bonus/incentive plans, company

discounted services, and flexible benefits to determine the employees contentment of th e

aforementioned plans/programs.
                                                                   Research Proposal           4


Introduction/Background

       It used to be that if an employer wanted to entice a candidate to take a job all they

would have to do is offer them a little more money to their base salary. Then it got to the

point where employers, who were looking to lure someone away from a company and get

that shining star candidate, would give them a signing bonus. In today‟s work force

employees and potential employees do not just look at how much monetary compensation

they are getting from an employer, they are concerned with their benefit packages.

Employers focus on which incentives should be used in order to get and retain employees

(Denisi, & Griffin, 2005, p.382).

       For many Human Resources professionals, establishing a compensation package that

meets the needs of all employees can be a difficult task. In the early years of benefit

packages, employers created them voluntarily; there were no laws or regulations in place to

make the employers assist their employees in their health care. The employer did this as a

positive incentive to retain the employees they already had and attract new candidates.

Subsequently, benefit plans were thought to be “either contractual or gratuitous in nature,”

in the eyes of the employer the beneficiary had no right to complain or make suggests to

change the plans since they were only giving them out of the goodness of their hearts

(Krouner, 1976, p. 426-427). Today employers design their benefit plans to give the

employees a perceived notion “that management was genuinely concerned for their

welfare” (Milkovich and Newman, 2008, p.406). In order to attract high level job

candidates, it is important to incorporate a benefit package that entices workers from all

spectrums of the workforce.
                                                                   Research Proposal            5


       The researchers found this topic especially intriguing due to personal experience,

working observations, and educational purposes. It is our thought that everyone involved

in the work force will have a strong opinion regarding their compensation package. The

researchers thought that this topic is important to them on a personal level, since they will

be graduating from a masters program in May. Issues involving benefit plans will very

soon be affecting them as well. This project will help the participants in a few months to

determine what benefit plans will best suit their personal needs as well as the personal

needs of others. They will someday be Human Resources professionals and will need to be

able to determine what compensation packages will be best for their organizations and

employees. The research that they participated in will give them a cutting edge outlook

exceeding their peers due to their knowledge pertaining to the main concerns of employees

in relation to their benefit packages now and in the future.

       Another main reason that the researchers chose this topic in particular was to

conduct a study of benefits that will reflect the employees of Indiana County‟s Society of

Human Resource Management (herein after SHRM), views on their company‟s bene fits.

This not only was an excellent way for the county to get an incite to their employees

feelings about their benefits, but this was also an interesting way to engage the graduate

chapter. Through the research, the researchers are now able to think ab out the different

aspects of the human resource profession. This was a fine time for the researchers to

explore a topic that closely relates to their major and future career choices. Being able to

use the researchers and not have to pay or take the time out of their busy schedules, SHRM

members were made to rely on the skills and educational knowledge that the graduate

SHRM members can offer.
                                                                   Research Proposal             6


Literary Review

       In order to understand what employee benefit satisfaction is, the researchers have

found that the definition varies depending on the source. One that they found that will

suffice for the researches purposes is that there are two dimensions of employee benefit

satisfaction: “1) satisfaction with the cost structure of the benefit program and 2)

satisfaction with benefit package quality” (Danehower, 1995, pg. 68). Research proposes

that the “basic” benefits that most employers feel are necessary to provide are health

insurance, dental, vision, disability, sick leave, vacation time, and maternity/famil y leave.

These are the main attributes employees look at when considering taking a job. Even when

these small portions of benefits are provided, employee‟s satisfaction is higher then

employees that do not get the minimum benefits (Tatum, 2002, p. 27). Any other benefits

that are tacked on to those seven categories listed above are often times thought of as perks

of working for that organization and do substantially increase employees satisfaction.

       The researchers found that more and more employers are finding that a big problem

with designing their compensation plans is deciding what benefits they want to offer. A

way that employers have been able to get around this issue is using flexible benefit plans to

let their employees have a more predominant role in the decision of their benefit plans,

which over all leads to increased employee satisfaction (Barber et al, 1992, p. 56).

       Traditionally benefit plan decisions were made by companies benefit administrator

/managers, teamed with other members of top management (Barber et al, 1992, p. 55). In the

1960s it became apparent through changing workforce demographics that “traditional

benefit plans geared to the needs of the formerly preponderant nuclear family (i.e., an
                                                                   Research Proposal              7


employed male head of household, non working spouse, and children) failed to

accommodate the interests of the new workforce” (Barber et al, 1992, p. 55).

       Most people thirty years ago had indemnity plans. Indemnity plans are a bit like

auto insurance: you pay a certain amount of your medical expenses up front in the form of

a deductible and afterward the insurance company pays the majority of the bill.

(QuickQuote Financial Group, 2005) For years indemnity plans were the norm. Most of our

parents were raised under this system. Under this type of coverage one can go to any

doctor, any hospital, or chose any health care provider. You didn‟t need a referral to go to a

specialist and the insurance company didn‟t tell you whether a visit was necessary or not.

On the down side, fee-for-service plans usually involve more out-of-pocket expenses.

Often there is a deductible, usually of about $200-$2,500 before the insurance company

starts paying. Once you've paid the deductible, the insurer will kick in about 80 percent of

any doctor bills. You may have to pay up front and then submit the bill for reimbursement,

or your provider may bill your insurer directly (QuickQuote Financial Group, 2005).

       In the 1980s, health insurance costs and other benefits were on the rise due to

inflation. As a way to keep costs contained, flexible plans were becoming appealing.

              Barber et al says, cost savings can be realized by (a) limiting the total cost of

              benefits by allowing employees to choose personally valued benefits within a

              cost constraint and, (b) improving efficiency of benefit use through increased

              awareness of benefit cost…To some extent, however, the cost containment

              effect of flexible benefits could be offset by increased administrative costs

              (associated with processing individual benefit choices) and by adverse
                                                                     Research Proposal          8


                selection (where only heavy users of a particular benefit opt for that benefit) ,

                (1992, p. 56).

          As an employer being able to provide employees with options of a choice in benefits

increases the probability that “employees will become more aware of benefits costs,

potentially leading to an increased employee appreciation of benefits” (Rabin, 1994, p. 68).

The researchers found that in most instances employees underestimate the cost associated

with their benefits, because they are not aware of the full capacity of their packages.

                Rabin states, it has been suggested that employees‟ attitudes toward their

                benefits are related to their understanding of benefits. Hence, the extent to

                which an organization‟s benefits communication program increases an

                employee‟s benefits knowledge and awareness, benefits satisfaction levels

                may be increased (1994, p. 68).

          One interesting study that the researchers found was done about how organizations

make their decisions to determine their benefit plans. The study said that if employers let

their employees have some say over the plans being considered, then their satisfaction with

the ultimately chosen plan will be higher then if management chose the plan without any

employee input (Davis et al, 1995, pg.256). If there are any perceived thoughts that

management was not giving the employees wellbeing consideration, then the plans are

more often then not looked upon as being unfair and subsequently disliked. The

researchers found that as long as the employees were under the impression that

management made the benefit plans in a fair manner, meaning their thoughts and concerns

were taken into consideration, then they were more acceptant of them (Davis et al, 1995,

p.256).
                                                                   Research Proposal         9


       Due to the ever changing and increasing cost of benefits, employees are “feeling

less loyal and committed to their employers, experiencing reduced job satisfaction and

motivation, and exhibiting counterproductive behaviors” (Davis et al, 1995, p.257). If

employees feel that their employer does not care enough about them and their families‟

health, they may develop an immense feeling of betrayal and tend to show it in their work.

       The United States is the only industrialized nation without universal healthcare.

This has in the past, and is already proving to be a huge topic in the upcoming elections.

Klein (2006) suggests, “In 2002, we spent $5,267 per capita on healthcare — $1,821

more than Switzerland, the nearest runner-up. And yet we had higher infant mortality,

lower life expectancy and more price inflation” (Klein, 2006). Massachusetts has passed

the nation's first near-universal healthcare plan, creating a structure that should cover

95%-plus of its citizens by making healthcare as mandatory as car insurance. Most

states, including Pennsylvania have some sort of universal healthcare initiation in place,

but who knows when or if they will ever get passed. Unfortunately in the richest country

of the world, only those under the right plan get to enjoy our medical technology.

Further, “because the United States provides little in the way of nationalized benefit

plans, pressure on U.S. employers to provide and manage this broad spectrum of benefits

is particularly intense” (Barber et al, 1992, pg. 55).




Problem Statement

       Through research and personal communication with human resource professionals,

it is concluded that benefit satisfaction can produces a negative effect on the employee.

Two major problems that we have found are: 1) due to the overwhelming fact that
                                                                   Research Proposal          10


employees do not either understand or fully acknowledge their benefits, the employees and

the employer both lose out and 2) employees are not using their benefits correctly at times,

causing the employer to have to spend more money than needed on that employee

(Huseman, and Hatfield, 1978, p.4).

       After speaking to many human resources professionals, the researchers found that

there are instances where employees do not take full advantage of all the benefits that are

offered to them. This is in most part due to a lack of communication from t he human

resources department to the employees. Employees think that the information provided at

their orientations about their benefits is all the information that they need. Some

employees do not take the time to ask enough thorough questions about the ir benefit plans

to get fully acquainted with them. The human resource professionals think that if they give

the employees a book with the plans in it, the employees have all the resources they need to

figure them out on their own. Because of this communication problem, employees are

missing out on benefits that they are entitled to, and therefore are not aware of the extra

incentives they have at their organizations, thus creating a negative view of their benefit

package (Rabin, 1994, pg. 68).

       The second problem is very closely tied in with the first. The researchers say,

“employee‟s are not using their benefits correctly at times, causing the employer to have to

spend more money than is needed on that employee.” What they are referring to is that

there are times when an employee will use a doctor outside of their plan, which causes the

organization to pay out of their pocket to cover the extra expense. Therefore, the

researchers examined the question: is there a relationship between compensation plans and

employee acceptance of their compensation plans?
                                                                   Research Proposal        11


Significance of Problems

       For years it has been a significant problem for human resource professionals to hire

people who are willing to work hard for their compensation. Any time a person is hired a

company is putting forth thousands of dollars in recruiting, hiring, and training costs, on a

gamble whether or not the new employee will be satisfied with the organization let alone

their compensation package.

       A study done by Richard C. Huseman and John D. Hatfield at the University of

Georgia says that because employees “are unaware of the benefit package, it is

understandable that attaining benefit program goals is severely impeded.” This is a big

issue for human resources, if they can not obtain the information they need to assess the

goals of their benefits, then the employees will never be satisfied with them (Huseman &

Hatfield, 1978, p.4).

       In regard to our second problem, it is essential for the organization to fully

communicate their benefit packages so they do not have to spend money arbitrarily on

employees because they are confused as to what doctor they are allowed to see. An issue

that may cause an employee frustration with their coverage is if for example an employee

has seen a specific doctor for numerous years, but based on the company compensation

package, the employee now has to switch doctors.



Null Hypothesis

       There is not a direct relationship between compensation plans and employee

acceptance of said compensation plans.
                                                                    Research Proposal            12


Study Design


       The researchers created a survey based on a past survey done by SHRM. The

survey contains 63 core questions that are broken down into 6 parts. Each part deals with a

specific type of benefit (i.e. medical insurance, retirement plans, life/disability insurance,

paid time off, and other benefits). Every part was broken down into sub -categories so we

could gather more detailed responses. A sample question would be:

   1. What insurance company and plan(s) do you use for your health care coverage?

       a) As an employer, we are _____ with health care coverage for our FT employees.

       __1) Dissatisfied
       __2) Slightly Dissatisfied
       __3) Slightly Satisfied
       __4) Satisfied
       __5) Very Satisfied

       b) FT employees are _____with the health care coverage.

       __1) Dissatisfied
       __2) Slightly Dissatisfied
       __3) Slightly Satisfied
       __4) Satisfied
       __5) Very Satisfied

       c) FT employees are interested in making changes to their health care coverage.

       __1) Strongly Disagree
       __2) Disagree
       __3) Slightly Agree
       __4) Agree
       __5) Strongly Agree

The survey was sent out to all active members of Indiana County SHRM, via email.

       These questions provided the researchers with the information needed to see how

managers feel about their compensation plans, and their perceived knowledge of how th eir

employees feel about the plans as well. This survey will benefit all of those employed. In
                                                                 Research Proposal           13


particular, the investigation will help those individuals who develop compensation plans

for their employers understand their employee‟s needs. This study will show what plans

are most appealing to employees and areas that are not as attractive. The researchers feel

that the importance of the study is shown through the increasing concerns of employees

and employers in respect to compensations packages.
                                                                 Research Proposal      14


                                  Health Care Coverage

       Our survey was conducted by 13 companies. In our survey, we had 4 categories of

types of industries, which were industrial, service, banking/finance, and other. Four

companies were industrial, one company was service, one was banking/finance and seven

were considered „other.‟ The number of employees varied between each company. Six

companies had fewer than 150 employees, 4 companies had 151-245 employees and 2

companies had 246-390 employees and 1 company had 1,239 employees. Of the

companies, we asked how many full time employees they each employed. Four companies

had 13-60 fulltime employees, four companies had 61-120 fulltime employees, three

companies had 121-153 fulltime employees and two companies had 320-708 fulltime

employees. We also surveyed the number of part-time employees. Three companies had

no part-time employees, four companies had 1-5 part-time employees, four companies had

14-100 part-time employees, and two companies had 157-376 part-time employees. The

gender breakdown by % is as follows: 90M/10F: one company, 80M/20F: one company,

70M/30F: three companies, 60M/40F: two companies, 30M/70F: one company, 0M/100F

and two companies did not answer the question.

Health Care Satisfaction

       The companies had to list their medical insurance providers and they were as

follows: four companies had Highmark Blue PPO, one company listed Highmark Direct

Blue, two companies use Select Blue, one company uses Mountain State BCBS Health

America, one company has Highmark PPO Blue Split 90/70, one company uses Highmark

POS and three companies use Highmark BCBS. We asked if employer was satisfied with

their health care coverage for full-time employees and found that there were two companies
                                                                   Research Proposal           15


with 85% or higher satisfaction, seven companies with 84%-76% satisfaction, and there

were four companies with 75% or less satisfaction. We also questioned if they thought

their full-time employees were satisfied with their health care coverage. One employer

thought their full-time employees were dissatisfied, one employer thought they were

slightly satisfied, eight employers thought they were satisfied, two employers thought they

were very satisfied and one company did not respond to the question. Our next question

asked if the employer thought that their full-time employees were interested in changes to

their health care. Nine companies disagreed and four companies agreed.

Premiums

       Our survey asked what % of premium was paid by the company for full -time

employees‟ medical insurance. Out of thirteen companies only one company paid 100%.

This shocked the researchers, since health care is very expensive and not many companies

can afford to pay 100%. The researchers were not surprised to find that one company paid

60%, one company paid 70%, two companies paid 75%, six companies paid 80%, one

company paid 84%, and one company paid 85%. The researchers then asked what percent

of premium was paid by the company for families‟ medical coverage, one company paid

100%, one company paid 86%, six companies paid 80%, two companies paid 75%, one

company paid 70%, one company paid 50% and one company paid 40%. Next, the

employers were questioned if they were satisfied with the premium paid by the company.

The results were that nine employers are satisfied, one was very satisfied, which seemed

like typical responses, but there were also three companies that were either only slightly

satisfied or not satisfied at all. Following this question, we asked if the employer thought

that their full-time employees were satisfied with the premium paid by the company.
                                                                  Research Proposal         16


Again the researchers found that the data as expected; eight of the thirteen employers

thought that their full-time employees were either satisfied or very satisfied with the

premiums paid, and three of the thirteen thought that their employees were not happy with

what the company is paying.

Health Care Eligibility

       Another question asked when employees are eligible for health care. The

researchers found that one company‟s procedure required 30 days after full-time status, if

employee is going from part-time to full-time and 90 days after full-time if newly hired.

Another company was after three months (90 days). Four companies were after 90 days of

employment. A different company was first day of month following employment date.

Two other companies started the first of month after 60 days from the date of hire.

Another company was the first of the month after 30 days of continuous employment and

two companies were immediately upon full-time employment. Additionally, other

companies started the first of the month following 30 days of employment (for non -exempt

employees) and the first of the month following the date of hiring (exempt employees).



Health Care for Part-Time Employees

       The survey asked if employers provided health care for part-time employees. Two

companies answered yes, eight answered no and three did not respond. If they responded

yes to this question, they were to outline the percent of premium paid. Nine of the thirteen

companies did not answer, the one company that did said that they pay 50% of premium of

employee that is covered and employee pays 100% of dependent covered. One company

gives their part-time employees full-time coverage; the company pays 80% individual and
                                                                  Research Proposal       17


80% family. The next question asked if the employer was satisfied with health care for

their part-time employees. Since not all companies have part-time employees there were

only two that said they were satisfied with part-time coverage. The employers were then

asked if they thought their part-time employees were satisfied with their health care. One

company stated that they were slightly dissatisfied and one was very satisfied. Eleven did

not respond to the question. The survey then asked if the employer thought their part-time

employees were interested in making changes to their health care. Once again since there

were only two companies that offer part-time employee benefits, the only responses were

that both companies thought their part time employees did not want to make any changes to

their coverage.



Cash Compensation Offered

       The next set of questions asked the employers if they offered cash compensation to

full-time or part-time employees who waive the company‟s medical coverage. Seven

companies answered yes and six companies answered no. If they answered yes, they were

asked the annual compensation. The researchers discovered that every company does this

differently. Here are just a few of the different ways that companies offer cash

compensation: one company was $24.04/week and $1250/year. Another company had

$50/month opt out, and an other had a dollar per hour opt out bonus, and if an employee

chooses to opt out of their medical and vision plan, proof of other insurance must be

provided in order to receive bonus. A different company gives their full-time employees

$1800 for health and $174.96 for dental. Another company gives all employees $65/month

per individual and full-time employees receive $150 for family.
                                                                   Research Proposal         18


       The employers were then asked if they were satisfied with the cash compensation

offered to employees who waived company‟s medical coverage. Only six companies were

satisfied, one was very satisfied and six did not respond. The employers were asked if they

thought the employees were satisfied with the cash compensation offered to them if the

medical coverage was waived. There was only one very satisfied response, five were

satisfied, and 6 did not respond. The next question was if the employer thought that the

employees were interested in changing to the cash compensation offered to them if the

medical coverage was waived. Five disagreed, one slightly agreed, one agreed and six did

not respond.



Prescription Drug Plans

       The companies were asked if they offered a prescription drug plan as part of their

health care. All 13 companies responded yes. The survey then asked them if they were

satisfied with the prescription drug plan in use. Ten employers were satisfied and three

were very satisfied. The employers were then asked to evaluate what their employee‟s

satisfaction level was with the prescription drug plan. The researchers found that one was

slightly dissatisfied, two were slightly satisfied, five were satisfied and five were very

satisfied. The following question asked if the employer thought their employees were

interested in making changes to the prescription drug plan. Two strongly disagreed, six

disagreed, four slightly agreed and one agreed.

       The companies were asked to name their prescription provider. The providers being

used in Indiana are: GoldPermier Pharmacy Network, Highmark, Highmark Direct Blue,

Medco, Highmark Select Blue, and Highmark BCBS Premier Gold III. The researchers
                                                               Research Proposal           19


wanted to know if all of the companies had co-pays on these plans, and they all answered

yes. The employer was then to outline their co-pay schedule. The outlines are as follows:

      -$10 co-pay on all prescriptions

      -$10 generic, $20 name brand, $40 non-formulary co-pay

      - $10 generic, $20 name brand co-pay.

      -$15 co-pay on all prescriptions

      -$15 generic and $30 brand co-pay.

      -$5 co-pay on all prescriptions

      -$15 generic, $30 brand name for 30 day supply, $30 for generic mail order, -and

             $60 brand name for a 90 day supply.

      -$8 generic, $15 brand; non-host $5 generic, $20 brand formula and $35 brand non

             formula.

      -$10 generic, $20 brand and a mail order of $20 generic and $40 90/day supply.

      -$10 generic, $20 name brand and maintenance of $20 generic and $40 brand name

      -$10 generic, $15 30/day supply of brand name and mail order of $30 generic

             90/day supply and $40 brand 90/day supply.

      -$15 generic, $25 brand, $40 nonformula and mail order $30 generic 90/day supply,

             $50 brand and $80 non-formulary.



                                         Dental Insurance

Full-Time Employees

      All of the companies offer dental insurance to their full-time employees. A large

portion of the companies (nine to be exact) use United Concordia. One other company uses
                                                                 Research Proposal         20


Gardian, one uses Delta and another company uses Metlife. The researchers asked what

percent of the premium is paid by the company for their employees. Five companies paid

85% and above, five companies paid 76%-84% and three companies paid less than 75%.

       The survey questioned what percent of the premium is paid by the company for

employees‟ families. Of the companies, four pay 0%-33%, seven companies pay 70%-80%

and two companies pay 86%-100%. After questioning these details, the survey inquired if

the employers were satisfied with the percent of premium that was paid by the company.

The trend was that employers were happy with their premiums. Seven employers were

satisfied and six employers were very satisfied. The researchers questioned if employees

were satisfied with the percent of premium that was paid by the company. Although the

employers were satisfied with the premiums, the employees opinions were more spread out.

Two of the companies‟ employees were slightly dissatisfied, one was slightly satisfied,

eight were satisfied and two were very satisfied. The majority of the employees were

satisfied with three companies being the exception.

       The survey questioned when the employees were eligible for dental insurance. Four

companies offered dental insurance immediately upon full-time employment, two

companies offered the insurance after 30 days, two companies offered dental coverage after

60 days and three companies offered the coverage after 90 days. One of the companies did

not respond to the question and one company offered coverage after six months of

employment. The employers were asked if they were satisfied with the eligibility for their

dental insurance and the responses ranged from slightly satisfied to very satisfied. The

employees were also asked how satisfied they were with the eligibility of their dental
                                                                  Research Proposal          21


insurance and the again the answers ranged from slightly satisfied to very satisfied with

one company being slightly dissatisfied.

       The researchers questioned if the company offered dental insurance to their part -

time employees. Twelve companies answered no and only one company responded with

yes. The company that offers dental insurance to their part-time employees pay a 100% for

the individual and 80% for the family.

       When questioned if the part-time employees were interested in making changes to

their eligibility for their dental insurance, two companies disagreed and 11 companies did

not answer. The researchers found this to be an interesting finding being that only one

company offered dental insurance to their employees, yet employees did not with to make

changes to this eligibility.



                                           Vision

       The next category questioned in the survey was vision insurance. The researchers

questioned if the company offered vision insurance to their full-time employees. Ten of

the companies answered yes and three of the companies responded no. The employers

ranged from being satisfied to very satisfied with their vision insurance. Survey results

showed that the full-time employees ranged from being slightly satisfied to very satisfied

with their vision insurance. Only two companies slightly agreed to makin g changes to their

vision insurance.

       The companies were questioned as to who they used for their vision insurance. Of

the 13 companies, ten responded. Two companies used Fashion thru Highmark, four

companies used Davis Vision, one company used Highmark, one company used Vision
                                                                  Research Proposal       22


Benefits of America and another company used Optichoice. The employer ranged from

being satisfied to very satisfied with their companies vision insurance. The employees

agreed with the employers in that they were satisfied and very satisfied with their

companies‟ vision insurance.

       The company then outlined the percent premium that was paid by their company to

their full-time employees. Four companies paid 0%, three companies paid 70%-80%, three

companies paid 84%-90% and three companies paid 100%. It was question as to what

percent of the premium was paid by the company for the employees‟ families. Four

companies paid 0%, six companies paid 70%-80% and three companies paid 86%-100%.

Both the employers and the employees were slightly satisfied to very satisfied with the

percent of premium paid by the company.

       The survey questioned when the employees were eligible for vision insurance. Two

companies offered dental insurance immediately upon full-time employment, two

companies offered the insurance after 30 days, one company offered dental coverage after

60 days and three companies offered the coverage after 90 days. Three of the companies

did not respond to the question, one company offered coverage after six months of

employment and one company offered insurance the first day of the month following their

employment date. Both the employer and the employees were slightly satisfied to very

satisfied with the eligibility of their vision insurance.

       Only one company of the 13 offered vision insurance to their part-time employees.

The researchers asked the companies to please outline the percent of premium paid and two

companies responded. One company paid 100% for the individual and 80% for the
                                                                   Research Proposal      23


families and the other company pay has employees pay their own cost but they do

participate because it is a low cost to them.



                               Employee Assistance Programs

       The researchers asked if the company offered any type of Employee Assistance

Programs (hereinafter EAP) to their employees. Three companies did over EAP‟s and nine

companies did not (one company did not respond). The three employees then provided a

brief overview of the EAP‟s. One employer offered their EAP through their long term

disability program, another company‟s EAP was free and confidential for employees and

families using a 800# to explain the area of need, and the other company offered an EAP

through Gateway for up to six free consultations a year per family member. Of the three

companies that have EAP‟s the employers and employees were all slightly satisfied to very

satisfied and strongly disagreed to making changes to the EAP‟s.



                                  Employee Wellness Plans

       The researchers asked the companies to please provide an overview of any benefits

that are provided by the company for Employee Wellness Plans (hereinafter EWP) and five

companies responded. Two of the companies provided health club discounts, one company

provided: health club discounts, weight management, smoking cessation, “be -well”

incentives (money off insurance), and FSA or other ongoing health education. Another

company afforded smoking cessation, weight management and in-house program

incentives. The last company listed smoking cessation, weight management through

Highmark, onsite fitness center and a “Get Physical” camp. Of the five companies that
                                                                  Research Proposal          24


provided detailed information on their EAP‟s, together the employer and employee were

slightly satisfied to very satisfied.



                                  Defined Compensation Plan

       The survey asked the companies if they offered a Defined Compensation Plan

(hereinafter DCP) and all of the 13 companies did offer DCP. It was questioned as to what

their plan was and seven companies used a traditional 401k plan, one company used a

DCRP/403b plan, another company used a 403b plan and the last company offered a 401k

plan to non-union employees and a pension to the union employees. The employer was

slightly satisfied to very satisfied with there DCP plan offered. Employees were all

slightly satisfied to very satisfied with their DCP plan with one exception being slightly

dissatisfied. Of the 13 companies, two of them agreed with the fact that they were

interested in making changes to their DCP.

       The survey asked what the maximum percentage was that their employees could

contribute to their DCP. Four of the companies failed to respond to the question, one

company offered 0%, four companies offered 10%-15%, and one company stated that their

401k employees could contribute 0-100% of their income up to $13,000/year. Two

companies stated that employees could contribute any amount allowable by law/IRS

limitations and the last company stated that employees do not contribute to the DCP.

       It was questioned as to what (if any) employer match is contributed to the DCP.

The outlines are as follows:

       - .25 on every $1 up to 6% of salary

       - 100% first 2.5%; 50% next 2%
                                                                 Research Proposal       25


       - 15%

       - 25% a month for first 10%

       - 25% limited to 5% of the employee‟s gross annual pay

       - 25% of employee contribution not to exceed 4%

       - After two years of service: 2-5 years 1%, 5-15 years 2%, 15-25 years 3%,

         25+ years 4%

       - Company contributes .25/$1 deterred up to 4% of gross

       - First year 20%, second year 20%, third year 25%

       - No match to 403(b)

       It was asked whether the employees are eligible to participate. Seven companies

stated after one year, one company stated after 30 days, another company answered TSA

upon employment and match after two years of service. Another company responded with

immediately, another said the first day of following quarter following 90 days of

consecutive service and the last company answered with 401k after 90 days of consecutive

employment and pension the first of the month.

       To receive more detailed information, the researchers asked the vesting schedule of

each company. The results are as follows:

       - 1 year-0%; 2 years-20%, 3 years-40%, 4 years-60%, 5 years-80%, 6 years-

         100%

       - 100% vesting upon entry

       - Three years of employment in order to be vested

       - Three years for DCRP immediately for 403(b)

       - 401k
                                                                 Research Proposal           26


       - Five years of employment

       - Five years of meeting the 100 hours

       - Annually

       - Less than 1 year-0%, 1 year-10%, 2 years-20%, 3 years-40%, 4 years-

60%, 5 years-80%, 6+ years- 100%

       - No vesting for defined contribution

       - No vesting since the company does not make contributions

       - Progressive %- seven years to 100%

       To further get a better detailed understanding of each company‟s DCP, the survey

questioned who administers the company‟s DCP. The results varied. One company uses

Hartford, two companies listed Principal, one company stated Controller/HR, another

mentioned Conrad Segel, one listed S&T Bank, one listed MetLife, another company stated

LPL Financial, another used Ameritas, another used PNC Bank, another listed Merrill

Lynch, another company used John Hancock, and the last company stated CFO.



                                     Defined Benefit Plan

       The companies were then asked if the offered a Deferred Benefit Plan (hereinafter

DBP). Of the thirteen companies only three stated yes with ten stating no. Of the three

that offer DBP, one company was satisfied with their DBP, one was slightly satisfied and

one was dissatisfied. When asked if the employees were satisfied with their DBP, one

company listed the employees as being very satisfied, one stated slightly dissatisfied and

the last listed their employees as being dissatisfied.
                                                                  Research Proposal            27


                                     Retirement Benefits

       The survey requested information regarding the company‟s retirement benefits. The

researchers asked what formula was used to calculate retirement benefits. Eleven of the 13

companies did not respond to this particular section. One company stated that actuaries

were based on five highest years of pay and years of service and the other company stated

that theirs was based on an actuary‟s calculation.

       Two of the companies stated that they were slightly satisfied with the way their

company calculated their retirement benefit and one company was satisfied. One company

went on to state that their employees were dissatisfied with the way their company

calculated their retirement benefits. Another company‟s employees were slightly

dissatisfied while the last company‟s employees were satisfied.

       The survey then questioned if the employees were interested in changing the way

their company calculated their retirement benefits. One company disagreed, one company

agreed and another company strongly agreed.

       The researchers questioned what age and years of service can the company‟s

employees receive full retirement benefits. Eight companies did not respond to this

section. One company listed a 401k plan and 62 years of age, another listed 55 years of

age and three companies listed 65 or older. The next question asked what the vesting

schedule was. Of the four companies that responded to this section, one explained that

their participants are always fully vested and three companies listed five years of service.

       As asked in the DCP section, the survey asks who administers each companies DBP.

Only four companies responded, each having a different administer. One listed S&T
                                                                  Research Proposal          28


Wealth Management, one listed Unum, another listed PNC Bank and the last of the four

listed CFO.

       In closing of this section, it was asked if the company provided any other types of

retirement plans. Two companies listed profit sharing and one listed tax deferred annu ity

that employees contribute to but the employer does not.



                                       Life Insurance

       The next section of the survey deals with life insurance. All thirteen of the

company‟s surveyed said that they do offer life insurance and they all use a third party

provider. The providers used in Indiana County are Fortis, Jefferson Pilot, Fort Dearborn,

Eastern Life and Health, ING, MetLife, Genworth, Purdential, Hartford, Boston Mutual and

three companies use Unum. All of the employers were satisfied to very satisfied wit h their

third party provider except one. Interesting enough even though one employer was not

completely satisfied with their provider, all of the employers said that they thought that

their employees were satisfied. When asked if they thought their employees wanted to

change their third party provider all of them said that they disagreed, with the exception of

one that said they slightly agree.

       The employers were asked to outline any company paid life insurance benefit. Here

are the findings:

       -$20,000 term, add $20,000 if accidental

       -$25,000 group term life accidental death and dismemberment-automatically

       reduces to 65% at age 65 and 5-% at age 70, and terminates at retirement

       -1 ½ annual salary maximum is $100,000 for employees and $200,000 for man agers
                                                                  Research Proposal        29


       -1 time the annual salary to the maximum of $50,000

       -1 time the annual salary

       -2 ½ times the hourly rate multiplied by 2080 rounded up-$25,000 minimum

       -Twice the annual salary

       -Twice the annual salary with a maximum of $100,000

       -Hourly/salaried employees $15,000; managers get $40,000-$75,000 depending on

       years of service; 100% company paid

       Life $20,000 and accidental death and dismemberment $20,000

       Non exempt employees get 1 time their salary; exempt employees get twice their

       salary; non union employees get twice their annual salary with a maximum of

       $100,000; and union employees get $35,000 term UFE per collective bargaining

       agreement

       -Up to $50,000

As you can see there are many different ways and formulas that are used to calculate how

much life insurance a company should pay for. Also, ten of these companies offer life

insurance for the employee‟s dependants.



                                   Short Term Disability

       Another subject questioned in the researcher‟s survey was short term disability.

There were ten companies that offer short term disability; out of those ten, eight were

satisfied with the coverage and two were dissatisfied. The results were the same when

asked if the employer thought that the employees were happy with the coverage as well and

only two thought that the employees wanted to change their short term disability. The
                                                                  Research Proposal          30


majority of the companies with short term disability coverage use a third party provider,

only three are self insured.

       Many of the companies used the same number of absences to set the standard of

when short term disability becomes effective. For six of the companies an employee only

needed to be absent from work for seven days, one company had short term disability

coverage start after the fifth absence. Another company did not start it until your 30 th day

of missed work, and still another waited for a period of 14 days. The maximum number of

days that an employee could be on short term disability did vary considerably; the time

ranged from 26 days, to 26 weeks. This was not surprising because there are no set

standards that employers have to follow and every company depending on how big it is will

vary on how long they can afford to let an employee be on disability. Through the survey

the researchers were able to see how the short term disability benefits were provided, and

the majority of the companies had different ways to compensate the employees. Excluding

the five employers who did not answer this question the breakdown of payment is as

follows:

       -$100 per week

       -$200 per week

       -60% of their pay per week

       -70% of their pay per week

       -Benefit amount is equal to the lesser of 60% of the employees basic weekly

       earnings or $750 maximum weekly benefit.
                                                                   Research Proposal           31


                                    Long Term Disability

       The majority of the participants of this survey do offer long term disability, ten to

be exact. Of those ten employers, all but one administers the plan though a third party

provider, and the employee is very satisfied with this coverage offered. Also of the ten

company‟s that offer long term disability only two have their employees pay for it; and

three companies pay 100% of the premium.

       The trend discovered with this information is that most of the employers offer long

term disability no sooner then 30 days after the start of employment, and no later then 180

days. The employers that did offer this benefit were asked by the researchers to outline

their payment plans. They are as follows:

       -40% of basic monthly earnings

       -60% of basic monthly earnings; maximum monthly benefit of $5,000

       -60% of salary, no years of service required

       -66.66% of earnings

       -The monthly benefit is equal to the lesser of 60% of the employers monthly

       earnings, or $2,000 maximum monthly benefit; A minimum monthly benefit is

       lesser of 10% of the employees monthly benefit amount.



                                Salary Contribution Benefits

       There was only one company that answered yes to offering other types of salary

contribution benefits. They are slightly dissatisfied with what they offer, and think that

their employees are satisfied. The third party used for this benefit is AFLAC.
                                                                  Research Proposal       32


                                       Paid Time Off

Paid Holidays

       The researchers found that every company did give their employees paid holiday

time. The amount of time ranged from 1 day to a maximum of 13 days. For one company

that has union and non union employees, the researchers discovered that the different

groups got a different amount of time off. For one company their union employees

received 8.5 holidays off and their non union only received 7.5. This is most likely due to

the fact that unions have a chance to bargain over how many days off they can get and non

union employees do not get this opportunity.



Sick Time

       When it came to sick time off the researchers found that not all companies offer

this. Only seven employers provide their employees sick time off. Each company differed

on how many days off they could get and how those days were calculated. The results are

as follows:

       -12 days per year for full-time employees

       - 3 days per calendar year accruable to a total of nine calendar days

       -5 days per year

       -6 days for full-time employees; 0 for part-time employees

       -Full-time employees accrue 1 sick day per month; part-time employees receive a

       half day per month or prorated depending upon hours worked each week

       -Full-time department managers receive 1 week every 6 months and 2 weeks after a

       year
                                                                   Research Proposal         33


       -Full-time non union employees receive 5 days after 5 years of service; 6 days after

       10 years of service; 10 for working 10 years or more with an additional day for

       every year worked past 10

       The employers are mostly satisfied with this except one, who is dissatisfied. Two

employers believe that their employees are dissatisfied with the amount of sick days and

the other five feel that their employers are satisfied. There are also two employers that

think their employees would like to change how many sick days they receive.



Personal/Emergency Days

       When asked about personal/emergency days there were seven employers that said

that they offered them to their employees, and only one was not completely satisfied wit h

days offered. The majority of employers do believe that their employees are dissatisfied,

and only three sense that their employees want to change the amount offered. The

responses that were given to the researchers are as follows:

       -Allow 3 last minute call offs per year

       -Full-time employees get 2 days per year; Part-time union employees receive 1 day

       after 4-5 years of service, 2 days after 6 or more years of service

       -Full-time employees receive 2 days per year and part-time employees receive none

       - Full-time employees receive 3 days per year and part-time employees receive none

       -Full-time employees receive 3 days, 4 days after 10 years of service, 5 days after

15 years of service.

       -No official personal days, however employees use sick days for this purpose
                                                                  Research Proposal          34


Vacation Days

       The last section of paid time off that the researchers surveyed was vacation days.

All but four employers offer vacation days to their employees the findings are as follows:

       -10 days off for 1 YOS (hereinafter Year of Service); 15 days off for 2-5 YOS; 20

       days off after 5-20 YOS; YOS over 20 years get 25 days off

       -1 YOS = 5days; 3 YOS = 7 days; 5 YOS = 10 days; 10 YOS = 13 days

       -14 days

       -Exempt employees receive: 1-5 YOS = 3 weeks, 5-10 YOS = 4 weeks, 20 YOS = 5

       weeks; Non-Exempt employees receive: 1-5 YOS = 2 weeks, 5-10 YOS = 3 weeks,

       20 YOS = 5 weeks

       -Full-time employees get 2 weeks for 1-10 YOS, 3 weeks for 11-20 YOS, any YOS

       over 20 get 4 weeks; Part-time employee‟s vacation is based on last years hours

       worked

       -Union employees: 5 days off for 3 months-2 YOS, 10 days off for 3-5 YOS, 15

       days off for 6-10 YOS, 20 days for 10-15 YOS, any service over 15 years gets 25

       days off; Non Union employees: 5 days off for 3 months-2 YOS, 10 days off for 3-5

       YOS, 15 days off for 6-10 YOS, 20 days for 10-15 YOS, any service over 10 years

       gets 20 days off

       -Up to 4 YOS get 10 days, after 4 years they receive 15 days

       -0-1YOS = 10 days, 3 YOS = 15 days, 5 YOS = 17 days, 7 YOS = 15 days,

       10 YOS = 21 days, 15 YOS = 25 days, 20 YOS = 27 days, 25 YOS = 29 days

       All of the employers are happy with the vacation days that are offered. Amazingly

there were six employers that were either dissatisfied or slightly dissatisfied. Only four
                                                                   Research Proposal        35


employers were satisfied. Eight employers think that their employees are satisfied with

vacation days offered, and it came as no surprise to the researchers that eight employers

believe that their employees would like to change the amount of vacation days offered.



Part-Time Employee’s

       Due to the fact that not all companies employ part-time employees it was no

surprise to the researchers that only three companies offered paid time off to their part -time

employees. The employers are satisfied with the amount of time off they give and they feel

that the employees are also satisfied with it. Part-time employees at these companies get

one of these choices:

       1)one personal day, one vacation day based on the prior year, one bereavement day

       and one day for jury duty;

       2) Personal days after 3 years of service;

       3) Vacation is prorated based of hours worked in the previous calendar year.



Bereavement Policies

       All but two companies surveyed did have a bereavement policy. Each policy

differed slightly from each other. The policies are as follows:

       -3 days for full-time employees; paid for immediate family members, unpaid for

       other relatives

       -3 days immediate family members and 1 day for extended family members

       -3 days immediate family members and 1 day for aunts an uncles etc

       -3 days off with pay for immediate family members
                                                                   Research Proposal       36


       -3 days off up to and including the funeral

       -3 paid days off for full-time employees after introductory period of 13 weeks

       -4 days for a spouse, children, stepchildren; 3 days for siblings, parents,

       grandchildren; and 1 day for in laws

       -5 days

       -Full-time employees get 4 days including the day of the funeral

       -Full-time employees get up to 3 days for a parent, spouse, sibling etc.; 1 day

       grandparents; and part-time employees only get 1 day.

       -Up to 3 days paid leave

All eleven companies with policies are satisfied to very satisfied with their policies. They

feel that their employees are also satisfied with them and do not want to change what is

already in place.

                                    Career Development

       Through the survey the researchers found that only eight of the companies surveyed

have career development programs. All of these companies are very satisfied with the

development plans they offer and they feel that their employees are as well, and do not

think that they want to make any changes to the programs offered. Some of the different

programs being offered are:

       -Cross training and internal classes

       -Plan 1-Full-time employees get $1,500; Plan 2-Part-time employees get $750; Plan

       3-All employees get $3,000 junior/senior year nursing school; Other- $350 per year

       for certification

       -Tuitions reimbursement/assistance
                                                                   Research Proposal          37


       -Tuition reimbursement. Enhanced tuition assistance for employee‟s pursuing a

       career as a registered nurse.



                                            Other Benefits

Bonus and Incentive Plans

       Of the thirteen companies surveyed only eleven of them answered this question.

Nine companies do offer bonus and incentive plans, all of which are very satisfied with the

plans they offered and believe that their employees are too. Only one company thinks that

their employees might want to change the plan.

Services at a Discount

       There are only five companies that get their employees services at a discount. Out

of those five they all fell very satisfied with these services and feel that their employees do

not want to make any changes to them.

Flexible Benefits

       Out of the thirteen companies that participated in this survey the researchers were

amazed to find that only company has flexible benefits. This was astonishing to the

researchers because flexible benefits seem to be the norm for companies these days (Barber

et al, 1992, p. 56). The company that does offer flexible benefits is very happy with their

plan and so are their employees.



                                         Summary/Findings

       After viewing all of the information found through the survey, the researchers came

to the conclusion that the 13 companies in Indiana County SHRM that participated in this
                                                                  Research Proposal         38


survey proved for the null hypothesis to be false. There is a relationship between

compensation plans and employee acceptance of said compensation plans, and what the

relationship deals with. The relationship lies between different compensation plans and the

amount of money the employers and employees have to pay for those said plans. The

survey also shows that employee satisfaction is highly correlated to the amount of m oney

that is paid by the company.

        The researchers based their conclusion from the following information and trends.

The higher percent paid for medical coverage, the lower the percent paid for dental

coverage. The higher the percent paid for health care coverage, the less satisfied the

employees are with their dental coverage. The researchers concluded from this data that

the percent of dental insurance is negatively correlated to the percent premium of health

care.

        Significant findings include a negative correlation between vision insurance and

health care premium paid by the company. Along with dental insurance, the more health

care that was paid by the employer, the less offering for vision insurance. The last

significant correlation the researchers found was that employers that offer satisfactory

health care coverage also offer DCP‟s.



                                         Recommendations

        The researchers felt that some improvements the employers should investigate

include a more even distribution of premiums paid more between (for example) dental and

health insurance. The employees would be more satisfied if their premiums were more

evenly distributed between the employees and the employer. Employees work hard for
                                                                   Research Proposal       39


their employers, trying to make their company profitable and more efficient. These

employees work with dedication and deserve to be compensated for their actions. It is

imperative that employers recognize the needs of their employees and provide

compensation packages that reward employees. It is also important for the employers to

educate their employees on all benefits offered. Some employees may be dissatisfied for

the wrong reason because they are not aware of all the details of their benefit package.

Even though the researchers lack human resource experience, while inputting the data they

notice and the lack of the companies benefits offered. Employers need to remember that

they are not only trying to please the employees they have, they are trying to entice

potential employees with their benefit packages. It pay profit the company in the long run

if they offer, competitive benefits, that will retain good quality employees.
                                                                    Research Proposal         40




                                              References

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Blau, G., & Tatum, D. (2002). Further distinguishing basic versus career enrichment benefit

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Danehower, C., & Lust, J. (1995). Understanding and measuring employee benefit satisfaction.

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                                                                      Research Proposal            41


Davis, E., & Ward, E. (1995). Health benefit satisfaction in the public and private sectors: the

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Krouner, L. (1972). Employee benefit plans: Due process for beneficiaries. Labor Law Journal,

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Milkovich T. George, and Newman M. Jerry, (2008). Compensation. (9th edition).



Personal Communication with Dr. David Piper, February 27, 2007.



Personal Communication with Dr. Scott Decker, February 27, 2007.
                                                                   Research Proposal           42




QuickQuote Financial Group. “Types of Health Insurance.” 1997-2005.Retrieved

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