Compensation and BenefitsCompensation and Benefits

Aaron HumphreysAaron Humphreys

Melissa JonesMelissa Jones

Nick EvansNick Evans

What is CompensationWhat is Compensation

Something (such as money) given or Something (such as money) given or received as payment or reparation (as for received as payment or reparation (as for a service or loss or injury) a service or loss or injury)

What are Benefits?What are Benefits?

A non-cash payment or compensation A non-cash payment or compensation which is paid in full or partly by a Employer which is paid in full or partly by a Employer as part of a employees pay.as part of a employees pay.

Types of CompensationTypes of Compensation

Standard Salary StructureStandard Salary Structure– Where pay is predefined for curtain jobs which have a minimum Where pay is predefined for curtain jobs which have a minimum

and a maximum pay amountand a maximum pay amount– Pay varies based on skill and experience with in the specified Pay varies based on skill and experience with in the specified

pay amountpay amount– Pay amounts are set up competitivelyPay amounts are set up competitively– Benefits usually are the decision maker for employeesBenefits usually are the decision maker for employees– Uses Merit pay programs which increase pay of employees Uses Merit pay programs which increase pay of employees

based on the results of the annual employee performance based on the results of the annual employee performance reviews reviews

– DownsideDownsideEmployees may notice a pay increase after every evaluation and Employees may notice a pay increase after every evaluation and cause them to loose motivation for improvementcause them to loose motivation for improvement

Types of CompensationTypes of Compensation

Incentive CompensationIncentive Compensation– Reward based incentive program Reward based incentive program – More commonly used by companiesMore commonly used by companies– Increases emphasis on performance and competition for talentIncreases emphasis on performance and competition for talent– Incentive Forms:Incentive Forms:

Base pay set lower then non-incentive structuresBase pay set lower then non-incentive structuresThen add in interval pays:Then add in interval pays:

– BonusesBonuses– CommissionsCommissions– Non-Cash Compensations & BenefitsNon-Cash Compensations & Benefits

Flexible schedulesFlexible schedulesRelaxed atmospheresRelaxed atmospheresChildcare Childcare Other lifestyle benefits Other lifestyle benefits

Cash Forms of Incentive Cash Forms of Incentive CompensationCompensation

BonusBonus– Based on achievementBased on achievement– Program should be applied throughout the company to avoid the loss of Program should be applied throughout the company to avoid the loss of

teamworkteamwork– Do not put limits on the level of bonuses one could earn because once the meet Do not put limits on the level of bonuses one could earn because once the meet

the goal they may kick back and relax.the goal they may kick back and relax.– Long term bonuses can be offered also such as stock opinionsLong term bonuses can be offered also such as stock opinions

CommissionsCommissions– Your base salary has to be sufficient to attract good candidates, but not so good Your base salary has to be sufficient to attract good candidates, but not so good

that you'll get reps satisfied with the base amount even if they don't make any that you'll get reps satisfied with the base amount even if they don't make any sales! sales!

– AdvantagesAdvantagesSales Reps are more motivated to workSales Reps are more motivated to workEmployees are able build a since of trust with the clients for repeat purchasesEmployees are able build a since of trust with the clients for repeat purchases

– DisadvantagesDisadvantagesEmployees focus entirely on the sale of items that give them the highest return for their Employees focus entirely on the sale of items that give them the highest return for their time and don't really take into consideration the actual needs of the customers time and don't really take into consideration the actual needs of the customers Customer service may suffer because the sales rep may move on to the next high-Customer service may suffer because the sales rep may move on to the next high-dollar sale dollar sale Pay structures can change over timePay structures can change over time

Non-Cash Compensation and Non-Cash Compensation and BenefitsBenefits

Non-Cash CompensationsNon-Cash Compensations– Flexible schedulesFlexible schedules

Makes it easier for employees to schedule work around their Makes it easier for employees to schedule work around their children’s eventschildren’s eventsAble to work at home part of the weekAble to work at home part of the week

– Relaxed atmospheresRelaxed atmospheresHarassment free work areasHarassment free work areasFriendly workforceFriendly workforceWork at home part-timeWork at home part-time

– Childcare Childcare Companies offer onsite daycare for convenience and safety of Companies offer onsite daycare for convenience and safety of employees childrenemployees children

– Other lifestyle benefitsOther lifestyle benefitsOn-premises Exercise FacilitiesOn-premises Exercise Facilities

Worker’s CompensationWorker’s Compensation

Makes sure people injured at work receive Makes sure people injured at work receive appropriate appropriate – medical caremedical care– lost wages relating to the on-the-job injurylost wages relating to the on-the-job injury– if necessary, retraining and rehabilitationif necessary, retraining and rehabilitation

When workers are killed on the job, When workers are killed on the job, members of the workers' families are members of the workers' families are ordinarily eligible for benefits.ordinarily eligible for benefits.Workers Compensation Laws By StateWorkers Compensation Laws By State

BenefitsBenefits

Cost BenefitsCost Benefits– Health insuranceHealth insurance– Short-term & Long-term DisabilityShort-term & Long-term Disability– Life InsuranceLife Insurance– Paid Time OffPaid Time Off– Retirement PlansRetirement Plans– Money Purchase Plans Money Purchase Plans – Employee Assistance ProgramsEmployee Assistance Programs– Dependent Care AssistanceDependent Care Assistance– Adoption Assistance ProgramsAdoption Assistance Programs– Outplacement ServicesOutplacement Services

BenefitsBenefits

Cost Benefits Cont.Cost Benefits Cont.– Education Assistance ProgramsEducation Assistance Programs– Employee Achievement/Merit AwardsEmployee Achievement/Merit Awards– Golden ParachutesGolden Parachutes– Cafeteria Plans and other Flexible Benefit PlansCafeteria Plans and other Flexible Benefit Plans– Stock Options Stock Options – Jury Duty, Military Leave, and BereavementJury Duty, Military Leave, and Bereavement– Domestic Partner BenefitsDomestic Partner Benefits– Unpaid LeaveUnpaid Leave

Covered by the Family Medical Leave ActCovered by the Family Medical Leave Act

Non-Cost BenefitsNon-Cost Benefits– Flexible work hours Flexible work hours – Telecommuting – Work at homeTelecommuting – Work at home– Discounts for Your EmployeesDiscounts for Your Employees– Working Condition BenefitWorking Condition Benefit– On-premises Exercise FacilitiesOn-premises Exercise Facilities

Employee Assistance ProgramsEmployee Assistance Programs

Used by many employersUsed by many employersGreat for people with disabilitiesGreat for people with disabilitiesPrograms provide employees with somewhere to turn in the event of a Programs provide employees with somewhere to turn in the event of a personal problem that affects all aspects of their lives, including their jobspersonal problem that affects all aspects of their lives, including their jobsIf employers ignore these types of problems:If employers ignore these types of problems:– less loyalty and more employee burnout. less loyalty and more employee burnout.

These programs help:These programs help:– Employees determine the problem and find the right kind of helpEmployees determine the problem and find the right kind of help– Management better understand the types of problems employees may be facing, Management better understand the types of problems employees may be facing,

both personal and work-relatedboth personal and work-related– Stress that is related to job securityStress that is related to job security– Conflicts with others in the workplaceConflicts with others in the workplace– Divorce or other family problemsDivorce or other family problems– Substance abuseSubstance abuse– Financial problems. Financial problems.

RecommendationsRecommendations– Have an on-site certified employee assistance professional, or contract with Have an on-site certified employee assistance professional, or contract with

someone outside the businesssomeone outside the business

Dependent Care AssistanceDependent Care Assistance20% of non-working mothers of young children don’t work because 20% of non-working mothers of young children don’t work because quality childcare is unaffordablequality childcare is unaffordableDependent Care Assistance is not limited to childcare. Dependent Care Assistance is not limited to childcare. It can be elder care or care for any family member. It can be elder care or care for any family member. Employers can offerEmployers can offer– flexible working arrangementsflexible working arrangements– care resources and referralscare resources and referrals– financial-planning assistancefinancial-planning assistance– long-term care insurancelong-term care insurance– dependent-care assistance accounts. dependent-care assistance accounts.

You can also provide educational services for your employees to You can also provide educational services for your employees to help them learn more about their options. help them learn more about their options. You may also consider opening a company-sponsored childcare You may also consider opening a company-sponsored childcare center. center. Most who have existing centers believe they have definitely saved Most who have existing centers believe they have definitely saved money over the long run.money over the long run.

Dependent Care AssistanceDependent Care Assistance

AdvantagesAdvantages– A boost in your company's ability to recruit and retain employeesA boost in your company's ability to recruit and retain employees– Company productivity will be increased because your Company productivity will be increased because your

employees have reliable childcare and fewer absencesemployees have reliable childcare and fewer absences– It also helps give your company more of a family-oriented It also helps give your company more of a family-oriented

reputationreputation

DisadvantagesDisadvantages– company-owned childcare centers have to keep the center going company-owned childcare centers have to keep the center going

even if your employees have few childreneven if your employees have few children– Company pays up to one-third of the expenses of the center to Company pays up to one-third of the expenses of the center to

make it affordable for your employeesmake it affordable for your employees

Cafeteria PlansCafeteria PlansWhat are Cafeteria Plans?What are Cafeteria Plans?Cafeteria plans are a type of flexible benefit plan that let your employees Cafeteria plans are a type of flexible benefit plan that let your employees choose from a list of benefits they wish to participate in.choose from a list of benefits they wish to participate in.Choosing to participate will often allow the employee to reduce their taxable Choosing to participate will often allow the employee to reduce their taxable income because they are paying or contributing with pre-tax dollars. income because they are paying or contributing with pre-tax dollars. The five main types of plans are: The five main types of plans are: – Premium-Only PlansPremium-Only Plans - employees can pay their portions of the insurance - employees can pay their portions of the insurance

premiums with pre-tax dollars. premiums with pre-tax dollars. – Spending AccountsSpending Accounts - allows your employees to put aside pretax money into - allows your employees to put aside pretax money into

accounts to be used for dependent care or medical bills. accounts to be used for dependent care or medical bills. – Full Flexible Benefit PlansFull Flexible Benefit Plans - give employees both a choice in selecting from the - give employees both a choice in selecting from the

menu of benefits, as well as an allowance to spend on those benefits. Any menu of benefits, as well as an allowance to spend on those benefits. Any benefits they want to add that will be more than their allowance would be paid for benefits they want to add that will be more than their allowance would be paid for with pre-tax dollars in some cases and post-tax in others. with pre-tax dollars in some cases and post-tax in others.

– Variable CreditsVariable Credits - allows employers to base the employee's allowance on their - allows employers to base the employee's allowance on their performance or certain health aspects such as smoker vs. nonsmoker, seat belt performance or certain health aspects such as smoker vs. nonsmoker, seat belt use, and other criteria. Credits are given based on these factors. use, and other criteria. Credits are given based on these factors.

– Modular PlansModular Plans - employee's choices are put into packages. Usually the - employee's choices are put into packages. Usually the packages are set up with specific groups in mind so they can target their needs. packages are set up with specific groups in mind so they can target their needs. They are divided into groups based on demographics such as young single They are divided into groups based on demographics such as young single workers, families, and older couples. workers, families, and older couples.

Jury Duty, Military Leave, and Jury Duty, Military Leave, and BereavementBereavement

Usually, companies allow up to two weeks Usually, companies allow up to two weeks per year for:per year for:– jury duty jury duty – military leave military leave

Three days per year for bereavement. Three days per year for bereavement.

Military LeaveMilitary Leave– ReemploymentReemployment

Golden ParachutesGolden Parachutes

What are Golden Parachutes?What are Golden Parachutes?Contracts that set up top executives with special benefits Contracts that set up top executives with special benefits in the event they lose their jobs due to takeovers or in the event they lose their jobs due to takeovers or acquisitions by another companyacquisitions by another companyThese benefits are typically quite generousThese benefits are typically quite generousFormsForms– large severance packagelarge severance package– Large one-time bonus that only comes when employment is Large one-time bonus that only comes when employment is

terminatedterminated– Stock options. Stock options.

They will have to pay a 20% tax on the total amount of They will have to pay a 20% tax on the total amount of their payment. their payment.

Court CasesCourt CasesWorkers Compensation FraudWorkers Compensation Fraud– Hal Tyree from Sutton, MA hurt his back on the job and was working else where Hal Tyree from Sutton, MA hurt his back on the job and was working else where

while collecting WC payments from ABF Freight Systems insurance company.while collecting WC payments from ABF Freight Systems insurance company.– Company hired private investigator and caught him delivering home heating oil Company hired private investigator and caught him delivering home heating oil

for another company.for another company.– Court ordered him to Court ordered him to

three years of probation on each countthree years of probation on each countto run concurrentlyto run concurrentlyordered him to repay $29,387 to Lumberman Mutual Insurance Co. ordered him to repay $29,387 to Lumberman Mutual Insurance Co.

Workers compensation – State CoverageWorkers compensation – State Coverage– Robert Mahoney was hired by United Airlines on Jan. 6, 1969 in IllinoisRobert Mahoney was hired by United Airlines on Jan. 6, 1969 in Illinois– He voluntarily applied for a transfer to the Orlando, Fl airport in 1993He voluntarily applied for a transfer to the Orlando, Fl airport in 1993– He was injured on the job March 19, 1999 in FLHe was injured on the job March 19, 1999 in FL– He filed for worker’s compensation in FL and then later filed in Illinois.He filed for worker’s compensation in FL and then later filed in Illinois.– The verdict was he was covered under Illinois’ Worker’s Compensation Act The verdict was he was covered under Illinois’ Worker’s Compensation Act

because it "clearly states that site of the contract for hire is the exclusive test for because it "clearly states that site of the contract for hire is the exclusive test for determining the applicability of the act to persons whose employment is outside determining the applicability of the act to persons whose employment is outside Illinois where the contract of hire is made in Illinois." Illinois where the contract of hire is made in Illinois."

Health InsuranceHealth Insurance

VacationVacation

Retirement PlansRetirement Plans

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Flexible SchedulesFlexible Schedules

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Relaxed AtmospheresRelaxed Atmospheres

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ChildcareChildcare

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DisabilityDisability

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Temporary Permanent

Dental PlanDental Plan

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Selected WebsitesSelected Websites

Allbusiness.comAllbusiness.com– Provides samples of forms and policiesProvides samples of forms and policies

howstuffworks.comhowstuffworks.com– Provides lots of useful information about how Benefits Provides lots of useful information about how Benefits

and Compensation are usedand Compensation are used– Gives types of benefits and compensationGives types of benefits and compensation– Information about laws that could conflict with your Information about laws that could conflict with your

policiespolicies

Department of LaborDepartment of Laborentrepreneur.comentrepreneur.commanagementhelp.orgmanagementhelp.org

Links UsedLinks Usedhttp://library.acaweb.org/search/.b1769016/.b1769016/1,1,1,B/i8562172482http://library.acaweb.org/search/.b1769016/.b1769016/1,1,1,B/i8562172482~b1769016&FF=&1,0,%2C1%2C0~b1769016&FF=&1,0,%2C1%2C0http://library.acaweb.org/search/.b1769016/.b1769016/1,1,1,B/i8562172482http://library.acaweb.org/search/.b1769016/.b1769016/1,1,1,B/i8562172482~b1769016&FF=&1,0,%2C1%2C0~b1769016&FF=&1,0,%2C1%2C0http://www.allbusiness.com/human-resources/compensation/2976262-1.htmhttp://www.allbusiness.com/human-resources/compensation/2976262-1.html?google=compensation%20and%20benefitsl?google=compensation%20and%20benefits http://http://www.dhrm.state.va.us/compensation.htmlwww.dhrm.state.va.us/compensation.html http://http://www.managementhelp.org/pay_ben/pay_ben.htmwww.managementhelp.org/pay_ben/pay_ben.htm http://http://money.howstuffworks.com/benefits.htmmoney.howstuffworks.com/benefits.htm http://http://www.sbinformer.comwww.sbinformer.com/tools//tools/ http://http://www.thebenefitsguide.com/s/compensation_and_benefitswww.thebenefitsguide.com/s/compensation_and_benefits http://http://www.wacaba.orgwww.wacaba.org// http://www.entrepreneur.com/humanresources/compensationandbenefits/http://www.entrepreneur.com/humanresources/compensationandbenefits/index115914.html index115914.html http://www.dol.gov/dol/topic/index.htmhttp://www.dol.gov/dol/topic/index.htmhttp://www.expertlaw.com/library/comp_by_state/index.html http://www.expertlaw.com/library/comp_by_state/index.html http://labor-employment-law.lawyers.com/human-resources/Military-http://labor-employment-law.lawyers.com/human-resources/Military-Leave.html Leave.html

Questions?Questions?