Human Resource Management: Fifteenth Edition

Human Resource Management
Fifteenth Edition
Chapter 10
Indirect Financial
Compensation (Employee
Benefits)
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Learning Objectives
10.1 Define indirect financial compensation (employee
benefits).
10.2 Describe legally required benefits and the various
kinds.
10.3 Define discretionary benefits and explain the various
types.
10.4 Explain workplace flexibility (work/life balance).
10.5 Describe customized benefit plans.
10.6 Summarize the issues of communicating information
about benefit plans.
Total Compensation Components
Indirect Financial Compensation (Employee
Benefits)
• All financial rewards not included in direct financial
compensation
• Employee benefits account for about 30 percent of total
compensation costs
Legally Required Benefits
• Social Security
• Unemployment insurance
• Workers’ compensation
• Health care
– Fee-for-service plans
– Managed care plans
– Consumer-driven health care plans
Legislation Pertaining to Health Care
• The Consolidated Omnibus Budget Reconciliation Act (C
OBRA) of 1985
• The Older Workers Benefit Protection Act (OWBPA)
• The Health Insurance Portability and Accountability Act
(HIPAA)
• The Patient Protection and Affordable Care Act (PPACA)
Discretionary Benefits
• Protection programs
• Paid time-off
• Employee services
Retirement Plans
• Retirement plans provide a source of income to individuals
following the end of their work lives
• Tax incentives promote the use of most retirement plans.
• Qualified plans provide favorable treatment
• Nonqualified plans do not provide tax incentives
• Vesting
Retirement Plan Design
• Defined benefit plans
– Pension plans (Life-long fixed benefit)
• Defined contribution plans
– 401(k) plans
• Hybrid plans
– Cash balance plans
Life Insurance and Disability Insurance
• Life insurance: Provides cash benefit upon the death of an
insured person
– Two common types of life insurance:
 Term life insurance
 Whole life insurance
• Disability insurance
– Workers’ compensation protects employees from job-
related accidents and illnesses
– Some firms provide additional protection that is more
comprehensive
Paid Time-Off (1 of 2)
• Vacation: Provides workers with opportunity to rest,
become rejuvenated, and thus more productive
• Sick pay and paid time-off banks
– Allocate each employee a certain number of sick leave
days per year
– PTO banks: Certain number of days off provided each
year that employees can use for any purpose
• Parental leave: the Family and Medical Leave Act (FMLA)
• Sabbaticals: Temporary leaves of absence from
organization, usually at reduced pay
Paid Time-Off (2 of 2)
• Volunteerism
• Other types:
– Perform civic duties
– Handle personal affairs
– Jury duty
– National Guard or military reserve
– Voting time
– Bereavement time
– Rest periods, coffee breaks, lunch periods, cleanup
time, and travel time
Employee Services (1 of 2)
• Child care
• Educational assistance
• Food service/subsidized cafeterias
Employee Services (2 of 2)
• Scholarships for dependents
• Relocation benefits
• Domestic partner benefits and same-sex marriage
• Other benefits
Workplace Flexibility (Work/Life Balance)
• Focus on solving personal issues that detract from
employee’s work
• Can be a key factor in attracting and retaining employees
• Moved from being a great benefit to a business necessity
• Workforce today not homogeneous
Work-Life Balance Factors: Flextime
• Practice of permitting employees to choose, with certain
limitations, their own working hours
• Work same number of hours per day as they would on
standard schedule
• Many firms are using flextime
Illustration of Flextime
Work-Life Balance Factors: Compressed
Workweek
• Permits employees to fulfill their work obligation in fewer
days than typical five-day workweek
• Four 10-hour days
• Often greater job satisfaction
Work-Life Balance Factors: Job Sharing
• Two part-time people split duties of one job
• Partners must be compatible, have good communication
skills
• Trust must exist between job sharers and their manager
Work-Life Balance Factors: Two-In-A-Box
• Give two executives the same responsibilities and same
title and let them decide how the work is to be divided
• Full-time job for both executives
• Requires work and constant communication
Work-Life Balance Factors: Telecommuting
• Employees are able to remain at home, or away from the
office, and perform work using computers and other
electronic devices
• More popular in recent years
Work-Life Balance Factors: Part-Time Work
• Some do not want or need full-time employment
• Highly educated professionals are often choosing part-time
opportunities
• Recent recession caused many workers to take part-time
jobs
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