Managing
Human Resources
Bohlander  Snell  Sherman
Chapter 11
Employee
Benefits
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-1
Learning Objectives
Describe the characteristics of a sound benefits
program.
Recognize management concerns about the costs
of employee benefits and discuss ways to control
those costs.
Explain the employee benefits required by law.
Discuss suggested ways to control the costs of
health care programs.
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Learning Objectives, cont.
Describe those benefits that involve payment for
time not worked.
Discuss the recent trends in retirement policies
and programs.
Describe the major factors involved in the
management of pension plans.
List the types of service benefits that employers
may provide.
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Presentation Slide 11-1
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-4
Requirements for a Sound Benefits Program
Modifying
Employee Benefits
Allowing for
Employee Input
Establishing
Specific Objectives
Providing
Flexibility
Communicating
Benefits
Information
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-5
Presentation Slide 11-2
Flexible Employee Benefits Plans
ADVANTAGES
 Contribute to affirmative
action
DISADVANTAGES
 Difficult to design and
administer
 Accommodate differences  Higher administrative
in employee needs
costs
 Prevent waste of benefits  Possible blame on
employer for poor
employee choices
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-6
Flexible Benefits Plans
(Cafeteria Plans)
Benefit plans that enable individual
employees to choose the benefits that are
best suited to their particular needs
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-7
Presentation Slide 11-3
How Benefit Dollars Were Spent
in 1997 (Percent of Total)
Legally Required
21.3%
Retirement & Sav'gs
Plans 15.3%
Life Insurance &
Death Payments 1%
Medical & Related
Benefits 23.2%
Paid Rest Periods
8.9%
Pay for Time Not
Worked 24.7%
Misc. 5.6%
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-8
Presentation Slide 11-4
Categories of Employee Benefits #1
• Benefits Required by Law
– Old age and survivors insurance
(OASI)
– Unemployment insurance
– Workers’ compensation
– Leaves without pay
• Payment for Time Not
Worked
–
–
–
–
Holidays
Vacations
Sick leave
Jury duty, military service, and
bereavement leaves
• Supplemental Unemployment
Benefits (SUB)
• Insurance
–
–
–
–
–
Group life insurance
Long-term Care
Health care insurance
Dental insurance
Legal insurance
• Retirement Benefits
– Pre-retirement counseling
– Pension plans
– Deferred compensation plans
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-9
Presentation Slide 11-5
Categories of Employee Benefits #2
Services
• Employee assistance program
• Counseling services
• Educational assistance plans
• Child care
• Elder care
• Food services
• Health services
• Legal services
•
•
•
•
•
•
•
Financial planning
Housing and moving
expenses
Transportation:
pooling/parking
Purchasing assistance
Credit unions
Social and recreational
services
Awards
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-10
Employee Benefits Required by Law
Social Security
Unemployment
Insurance
Workers’
Compensation
Leaves Without
Pay
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-11
Workers’ Compensation
Insurance
Federal- or state-mandated insurance
provided to workers to defray the loss
of income and cost of treatment due
to work-related injuries or illness
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-12
Presentation Slide 11-6
Controlling Workers’ Compensation Costs
 Assess
high-risk areas within the workplace.
 Prevent injuries through job design, employee selection,
and training.
 Utilize physicians with experience in occupational
health.
 Maintain effective communication with an injured
worker.
 Manage the care of injured worker until he/she returns
to work.
 Provide worker training in health and safety areas.
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-13
Discretionary Benefits
Health Care
Payment for Time
Not Worked
Supplementary
Unemployment
Benefits
Life and LongTerm Care
Insurance
Pension Plans
Retirement
Programs
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Health Maintenance
Organizations (HMOs)
Organizations of physicians and healthcare
professionals that provide a wide
range of services to subscribers and
dependents on a prepaid basis
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Preferred Provider
Organization (PPO)
A group of physicians who establish
an organization that guarantees lower
health care costs to the employer
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Supplemental Unemployment
Benefits (SUBs)
A plan that enables an employee who
is laid off to draw, in addition to state
unemployment compensation, weekly
benefits from the employer that are paid
from a fund created for this purpose
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-17
Silver Handshake
An early-retirement incentive
in the form of increased pension benefits
for several years, or a cash bonus
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-18
Types of Pension Plans
Noncontributory
Contributory
Defined-Benefit
DefinedContribution
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Contributory Plan
A pension plan where contributions are
made jointly by employees and employers
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Noncontributory Plan
A pension plan where contributions
are made solely by the employer
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-21
Defined-Benefit Plan
A pension plan in which the amount
an employee is to receive upon
retirement is specifically set forth
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-22
Defined-Contribution Plan
A pension plan that establishes the
basis on which an employer will
contribute to the pension fund
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-23
Contemporary Pension Plan Options
401(k) Savings
Cash-Balance
Plans
Savings Plans
• Tax-deferred savings
• Employer contributes a
plans
percentage of employee’s
pay each year
• Employees save
through payroll
• Account balance also
deductions
earns interest each year
• Employers may match • Experts predict it will
a portion of employee
replace traditional
savings
pension plans
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Vesting
A guarantee of accrued benefits
to participants at retirement age, regardless
of their employment status at that time
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Employee Services
Employee
Assistance
Programs
Counseling
Services
Educational
Assistance
Child Care
Elder Care
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-26
Employee Assistance Programs
(EAPs)
Services provided by employers
to help workers cope with a wide
variety of problems that interfere
with the way they perform their jobs
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Elder Care
Care provided to an elderly
relative by an employee who
remains actively at work
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
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Other Services
Recreational
and Social
Services
Awards
Food
Services
On-Site
Health
Services
Legal
Services
Credit Unions
Purchasing
Assistance
Financial
Planning
Transportation
Pooling
Housing and
Moving
Managing Human Resources, 12e, by Bohlander/Snell/Sherman © 2001 South-Western/Thomson Learning
11-29