7 Benefits and Services Lecture

8/2/2019 7 Benefits and Services Lecture

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1. Define each of the main pay for time notworked benefits

2. Describe each of the main insurance benefits

3. Discuss the main retirement benefits

4. Outline the main employees services benefits

5. Explain the main flexible benefitprograms

6. Discuss benefits provided bycompanies inAsia

2009 Pearson Education South Asia PteLtd. All rights reserved. 132


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Four main types of plans:1.Supplemental pay benefits

2.Insurance benefits

3.Employee services

4.Retirement benefits


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Benefits Indirect financial and non-financial payments

employees receive for continuing theiremployment with the company.

Types of employee benefit plans Pay for time not worked

Insurance benefits

Retirement benefits Services and family-friendly benefits


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Also known as supplemental paybenefits

Examples include:

Holidays

Sick leave

Parental leave

Proper leave records should be keptby employers


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Unemployment Insurance : Provides benefits if a person is unable to work through

some fault other than his or her own.

Vacation and holiday Number of paid vacation days varies by country.

Sick leave Provides pay to an employee when he or she is out of

work because of illness.

Parental leave Important benefit especially where many workers are

females with children


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Severance pay

A one-time payment when terminating anemployee.

Reasons for granting severance pay: Acts as a humanitarian gesture and good public

relations.

Mirrors employees two week quit notice.

Avoids litigation from disgruntled former employees.


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Workers compensation (monetary ormedical) Provides income and medical benefits to work-

related accident victims or their dependents,regardless of fault.

Death or disability: a cash benefit based on priorearnings.

Controlling worker compensation costs

Screen out accident-prone workers. Make the workplace safer. Thoroughly investigate accident claims. Use case management to return injured employees

to work as soon as possible.


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Hospitalization, health, and disabilityinsurance

Protects employees against hospitalization costs

and loss of income arising from off-the-jobaccidents or illness.

Accidental death .

Disability insurance

Insurance for health-related expenses


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Health maintenance organization(HMO)

A medical organization consisting of specialists

operating out of a community-based health carecenter.

Provides routine medical services to employees whopay a nominal fee.

Receives a fixed annual contract fee per employeefrom the employer (or employer and employee),regardless of whether it provides that person withservice.


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Life insurance

Most employers provide group lifeinsurance plans.

Employees can obtain lower rates in agroup plan.

Employer usually pays 100 percent of

the base premium; the employee paysfor any additional coverage.


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Pension plans Financial programs that provide a fixed amount

when employees reach a predeterminedretirement age or when they can no longer workdue to disability.

Defined Benefit pension plan:A plan that contains a formula for determiningretirement benefits

Defined Contribution Plans:A plan in which the employers contribution toemployees retirement savings funds is specified.

Portability: Instituting policies that enableemployees to easily take their accumulatespension funds when they leave employer.


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Social security plans Vary from country to countryBroadly 3 types of benefits

Retirement income

Survivors or death benefits payable to the

employees dependents regardless of age at thetime of death

Disability benefits payable to disabled employeesand their dependants.

Only if insured under Social security Act.


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Personal services: Social and recreational facilities

Transport and food:

Subsidies, in-house canteens, company vehicles Education subsidy:

Tuition refunds

Family-friendly benefits:

Child care, elder care, fitness facilities, flexiblework schedules


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The cafeteria (flexible benefits)approach

Each employee is given a benefits fund budget to

spend on the benefits he or she prefers.

The fund limits the total cost for each benefitspackage.

Core plus option plans establish a core set ofbenefits which are mandatory for all employees.


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The cafeteria (flexible benefits)approach (contd)

Pros

Employees can choose the package that suits thembest

Easier to introduce new benefits since company doesnot need to lock them in for all new employees

Cons

Additional admin cost as company has toperiodically update each employees package


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Objective: To meet the diverse needs ofemployees

Advantages:

Encourage responsible usage by employees Reduce wastage of benefits not fully utilized

Employees appreciate perks better because theyare more aware of the dollar value of benefits

Disadvantages: Extra cost

More administrative work as plan may becomplicated


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Flextime

Compressed workweek

Job sharing Teleworking


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A plan whereby employees workdays arebuilt around a core of mid-day hours whenall workers are required to be present.

Workers can arrange their own starting andstopping hours before and after the coreperiod.

Positive effects on employee productivity, jobsatisfaction, satisfaction with work schedule, andemployee absenteeism.

Positive effect on absenteeism was much greaterthan on productivity.


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Non-conventional 5-day, 40-hourworkweek

Example pilots, doctors, nurses etc.

Increase productivity Less disruption from shift changes

Longer time-off-work periods

Reduced absenteeism


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Job sharing Allowing two or more people to share a single

full-time job.

Teleworking Employees work from home using telephones and

the Internet to transmit letters, data, andcompleted work to the home office.

Allows employees to manage work and familyresponsibilities

7 Benefits and Services Lecture

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