MGTO 231
Human Resources
Management
Benefits 福利
Dr. Kin Fai Ellick WONG
Prologue
Job 1
 Job 2
 Job 3


Some jobs list a brief summary of benefits,
some do not.
So, what are included in a benefit package?
 Why don’t we simply pay more base salary
and eliminate the benefit package?
 How benefits can be designed in a way
that is consistent with the business
strategy?

Outline
Some basic concepts of benefits
Types of benefits
The strategic aspect of benefits
Managing benefits
Basic concepts

The three components of compensation
systems
 Base
compensation
 Pay incentives
 Indirect compensation / benefits

They are complementary to each other

Benefits = indirect compensation
 Group
membership rewards that provide
security for employees and their family
members
 It is an indirect compensation because it
provides a plan rather than cash
 Attractive benefit packages help recruit and
retain talented employees
Who gave the contributions?

Contributions
 Payments
made for benefits coverage
 May come from the employer, employee, or
both
 Vacations: employer
 Some types of insurance: paid partly by
employer and partly by employees
Outline
Some basic concepts of benefits
Types of benefits
The strategic aspect of benefits
Managing benefits
Major types of benefits
Legally required benefits
 Health insurance
 Retirement
 Housing allowance
 Insurance
 Education allowance
 Paid time off

Legally required benefits

Hong Kong government requires employers to
give the following benefits
 maternity
leave, rest days, sickness allowance,
statutory holidays and annual leave provided under
the Employment Ordinance and the keeping and
maintenance of records as required by the Ordinance
 MPF
 Part IV of the Employees' Compensation Ordinance
which provides for compulsory insurance in relation to
compensation for work injuries
Health insurance
Hospital costs, physician charges, and the
cost of other medical services
 Most UST staff

 Are
allowed to claim $250 for each medical
consultation, with a total less than about
$19,000 per year

It is usually separated from other types of
insurance
Retirement
Retirement benefit provides income to
employees after they retire
 The implementation of Mandatory
Provident Fund (MPF) follows this idea

Housing allowance



This allowance provides extra funding for
employees to buy or rent a flat
This type of benefits usually applicable to
employees at senior positions
Example: In government, the lowest position that
is granted with this allowance is about $50,000
per month; the allowance is about $13,000 per
month (2001)  $11,000 per month (2002)
Insurance

Protect employees and their family from
financial difficulties as a result of
 Disability
 Death
Education allowance

For children
 This
type of benefits provides employees’ children
with reasonable funding for education
 This type of benefits is usually applicable to
employees at senior positions

For employee themselves
 Employers
may contribute all or part of the tuition fee
(may only be applicable to some specified courses or
programs)

Workplace English Campaign (職業英語資助計劃)
Paid time off
Sick leave
 Vacations

I
have 42 days per year
Outline
Some basic concepts of benefits
Types of benefits
The strategic aspect of benefits
Managing benefits
Designing a benefit package

Three issues should be considered
 Organizational
objectives
 Total compensation strategy
 Characteristics of the workforce

Organization’s objectives
 Some
organizations’ objectives are to minimize
the compensation differences between low-level
and high-level employees, then benefit mix should
be the same for all employees
 Some are to increase the differences to encourage
low-level employees to move upward, then benefit
mix for the top-management should be more
attractive than that for the low-level employees

Total compensation strategy
 Corresponding
to the “below-market vs. abovemarket compensation”, that is to consider the
packages offered by others
 In hi-tech firm, retirement benefits are generally not
so emphasized, thus, an effective total
compensation strategy for a hi-tech firm could be
the one that increases base compensation, but
does not offer retirement benefits
 Deciding the percentage of the total compensation
package that will be allocated to benefits compared
to other components of the package

Workforce’s characteristics
 Workforce
consists largely of parents with
young children  child-care, family-friendly
benefits
 Old employees  retirement plan
 Young employees  leave, social gathering
Outline
Some basic concepts of benefits
Types of benefits
The strategic aspect of benefits
Managing benefits
Flexibility of benefits
The degree of freedom employees have to
decide the benefit package to their
personal needs, as different employees
may have different needs
 Similar to

 Centralized
vs. decentralized pay
Two critical issues in
administering benefits
How to manage a flexible benefit system?
 How to let employees know about the
benefits (problems of communications),
the packages are becoming more and
more complicated?

 See
my benefit package
Conclusion

Why don’t we simply pay more base salary
and eliminate the benefit package?
 Not
all benefits are monetary e.g., leave
 Creating a sense of protection: benefits occur
at the right moment when the employees
need them (e.g., medical insurance)
 Showing the care from the organizations