STRATEGIC COMPENSATION A Human Resource Management Approach Chapter

STRATEGIC COMPENSATION A Human Resource Management Approach Chapter 9: Discretionary Benefits Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -1

Discretionary Benefit Types • Protection programs—provide family benefits, promote health, and guard against income loss caused by such catastrophic factors as unemployment, disability, or serious illnesses • Paid time-off—provides employees time off with pay for such events as vacation • Services—provide enhancements such as tuition reimbursement and day care assistance to employees and their families Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -2

Income Protection Programs • Disability insurance—includes both short and long-term disability care • Life insurance—protects employees’ families by paying a specified amount to an employee’s beneficiaries upon the employee’s death • Pension programs—income to employees and their beneficiaries during some or all of their retirement Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -3

Short-Term Disability • Less than six months duration • Unable to perform job • Benefit: 50 -100% of pretax income • Conditions: – Recovery from injuries – Recovery from surgery – Treatment of an illness requiring any hospitalization – Pregnancy Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -4

Long-Term Disability • Six months to life • Unable to perform any job qualified for • Benefit: 50%– 70% of pretax pay • 6 -12 month waiting period • Other benefits used first Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -5

Life Insurance • Pays employees’ beneficiaries upon employees’ death • May also include – Accidental death – Dismemberment benefits Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -6

Life Insurance Types • Term life insurance—provides protection to employees’ beneficiaries only during a limited period based on a specified number of years • Whole life insurance—does not terminate until payment is made to beneficiaries • Universal life insurance—provides protection to employees’ beneficiaries based on the insurance feature of term life insurance Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -7

Retirement Programs • Provide income to employees and their beneficiaries during some or all of their retirement Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -8

Learning Objective 3 The different types of paid time off Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -9

Paid Time Off Policies • • Holidays Vacation Sick leave Personal leave Jury duty Funeral leave Military leave • Clean-up, preparation, or travel time • Rest period “break” • Lunch period • Integrated time off policies • Sabbatical leave • Volunteerism Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -10

Integrated Paid Time Off Policies • Combine holiday, vacation, sick leave, and personal leave policies into a single paid time off policy • Provide individuals the freedom to schedule time off without justifying the reasons Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -11

Sabbatical Leaves • Paid time off for professional activities • Common in college and university settings – Faculty members who meet minimum service requirements • Outside academia Usually limited to professional and managerial employees Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -12

Volunteerism Causes • Improving literacy • Providing comfort to terminally ill patients • Serving food at shelters for individuals who cannot afford to feed themselves • Serving as a mentor to children who do not have one or more parents • Spending time with elderly or disabled residents of nursing homes who may no longer have living friends or family Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -13

Summary Learning Objective 3 • Paid time off policies • Integrated paid time off policies • Sabbatical leaves • Volunteerism causes Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -14

Learning Objective 4 A variety of employee services Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -15

Services • • • Employee assistance programs Family assistance programs Flexible scheduling and leave Day care Tuition reimbursement Transportation services Outplacement assistance Wellness programs Smoking cessation Stress management Weight control and nutrition programs Financial education Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -16

Employee Assistance Programs • Provided for: - Alcohol or drug abuse - Domestic violence - Emotional impact of AIDS and other diseases - Clinical depression - Eating disorders Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -17

Advantages of EAPs for Employer Reduced costs: - Turnover - Absenteeism - Medical costs - Unemployment insurance rates - Workers’ compensation rates - Accidents - Disability insurance Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -18

Family Assistance Programs • Help employees provide elder care and child care • Making referrals to on-site child or elder care centers • Company-sponsored day care programs Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -19

Flexible Scheduling • Compressed work weeks (e. g. , 10 -hour days or 12 -hour days) • Flextime • Job sharing Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -20

Day Care • Companies subsidize child or elder day care in community-based centers • Elder care—self-help, meals, and entertainment activities for the participants • Child care—supervision, preschool preparation, and meals Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -21

Tuition Reimbursement • Promotes employee education • Full or partial • Not the same as pay-for-knowledge Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -22

Outplacement Assistance Programs Required due to: • Layoffs due to economic hardship • Mergers and acquisitions • Company reorganizations • Changes in management • Plant closings or relocation • Elimination of specific positions, often the result of changes in technology Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -23

Outplacement Assistance Services • • • Personal counseling Career assessments and evaluations Training in job search techniques Resume and cover letter preparation Interviewing techniques • Training in the use of basic workplace technology Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -24

Wellness Programs Emphasize, in order to keep health costs low: • • Weight loss and nutrition Stress management Smoking cessation Cardiovascular fitness Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -25

Discretionary Benefits and Strategic Compensation • Promotes competitive advantage • Can undermine imperatives of strategic compensation • Promotes employee behaviors with strategic value • Attracts quality employees • Meets the needs of a diverse workforce Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 9 -26