Comp and Benefits presentation 3

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Employee Benefits
3770 Beardshear Hall
Human Resource Services
Employee Compensation
and Benefits
Mike Otis SPHR, CEBS
Associate Director
Human Resource Services
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Agenda
• Typical HR Organization
• Compensation Goals
• Compensation Approaches
• 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
Relations
Equal
Opportunity
Diversity
Workers
Comp
HR
Leave Programs
Payroll
Compensation
Benefits
Employee
Assistance
Recruiting
HRIS
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Goals of Compensation Plans
Why do companies care about how much
they pay?
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
Is Pay the Only Important
Factor?
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
• Awards
• Pay
• Recognition
• Overtime (if in non-exempt
• New job assignments
classification)
• Paid Training
• Working Hours
Employee Benefits
3770 Beardshear Hall
Human Resource Services
What Factors Determine 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
How to Build a Total
Compensation “House”
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Compensation Philosophy
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Compensation Structure
Compensation Philosophy
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Job
Classifications
Compensation Structure
Compensation Philosophy
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Rewards/Recognition
Benefits
Job
Classifications
Compensation Structure
Compensation Philosophy
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
Rewards/Recognition
Benefits
Benefits
Job
Classifications
Compensation Structure
Compensation Philosophy
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Compensation Structure
Example
Grade
Minimum
Midpoint
Maximum
Midpoint
Progression
Range
Width
12
$93,500
$131,000
N/A
14%
N/A
11
$81,800
$114,500
$147,200
14%
80%
10
$71,800
$100,500
$129,200
14%
80%
9
$65,300
$88,200
$111,000
14%
70%
8
$57,200
$77,400
$97,200
14%
70%
7
$52,000
$67,600
$88,400
14%
70%
6
$45,600
$59,300
$73,000
14%
60%
5
$40,000
$52,000
$64,000
10%
60%
4
$37,800
$47,200
$60,500
10%
60%
3
$34,300
$42,900
$51,500
10%
50%
2
$31,200
$39,000
$46,800
8%
50%
1
$28,800
$36,000
$43,200
N/A
50%
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Benefits are often as important
as pay to employees
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
or more Employees
Rank
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
Source: 2005 Iowa Employer Benefits Study, David P.
Lind and Associates
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 timeconsuming. 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
Categories of Benefits
Category
Examples
Government Mandated
Social Security and disability, workers
compensation
“Core” benefits
Medical, life insurance, disability,
retirement programs, vacation, holiday
pay, sick pay
“Lifestyle” benefits
Employee assistance programs,
work/life programs, wellness, on-site
daycare
“Custom” benefits
Flexible spending accounts, computer
discount purchases, pet insurance,
tuition reimbursement
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Laws Affecting Employee
Benefits and Compensation
• Patient Protection and Affordable Care Act (PPACA) (new)
• 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
• Stabilization Act of 1942 – birth of employer group benefits
• 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, coworkers, 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
Employee Benefits
3770 Beardshear Hall
Human Resource Services
Questions??
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