中国经济管理大学 MBA课堂笔记：加里·德斯勒《人力资源管理》：Benefits and Services
Benefits and Services
中国经济管理大学/中國經濟管理大學
Benefits and Services
Lecture Outline:
The Benefits Picture Today
Policy Issues
Pay for Time Not Worked
Unemployment Insurance
Vacations and Holidays
Sick Leave
Cost-Reduction Tactics
Leaves and FMLA
Severance Pay
Supplemental Unemployment Benefits
Insurance Benefits
Workers’ Compensation
Hospitalization, Health, and Disability Insurance
Improving Performance: Trends in Employer Health Care Cost Control
Long-Term Care
Life Insurance
Benefits for Part-Time and Contingent Workers
Retirement Benefits
Social Security
Pension Plans
Pensions and Early Retirement
Improved Performance through HRIS
Personal Services and Family-Friendly Benefits
Personal Services
Family-Friendly (Work-Life) Benefits
Other Personal Services Benefits
Executive Perquisites
Flexible Benefits Programs
The Cafeteria Approach
Flexible Work Schedules
In Brief:
This chapter discusses the benefits and services that companies might offer to employees. These benefits and services are offered to attract employees, retain employees, and to help make employees more productive during their service. Often benefits address employee needs, such as security in old age.
Interesting Issues:
Though direct compensation (salary) is important, a company’s indirect compensation (benefits) is often the “tipping point” in a decision to accept or reject an employer’s job offer. It is interesting to reflect about the relative merits of increased pay as opposed to increased quality of life.
Learning Objectives:
1. Name and define each of the main pay for time not worked 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 benefit programs.
Annotated Outline:
I. The Benefits Picture Today - Benefits are indirect financial and nonfinancial payments.
A. Policy Issues – The list of policy issues includes what benefits to offer, who receives coverage, whether to include retirees in the plan, whether to deny benefits to employees during initial “probationary” periods, how to finance benefits, cost-containment procedures, and how to communicate benefits options to employees. Benefits can be classified by 1) pay for time not worked; 2) insurance benefits; 3) retirement benefits; and 4) services. Some benefits are required by law, while others are discretionary.
II. Pay for Time Not Worked
A. Unemployment Insurance – All states have unemployment insurance or compensation acts (that follow federal guidelines), which provide for weekly benefits if a person is unable to work through some fault other than his/her own. The benefits derive from an unemployment tax on employers that can range from 0.1% to 5% of taxable payroll in most states. An employer’s unemployment tax rate reflects its rate of personnel terminations.
B. Vacations and Holidays – The number of paid employee vacation days and holidays varies considerably from employer to employer. Firms have to address several holiday- and vacation-related policy issues. There are a myriad of laws that affect benefits. Vacation and holiday pay legal issues are discussed.
C. Sick Leave – Provides pay to employees when they’re out of work due to illness. Most sick leave policies grant full pay for a specified number of permissible sick days. To minimize employees using their sick leave as extensions to their vacations, some employers are repurchasing unused sick leave at the end of the year by paying their employees a daily equivalent sum for each sick leave day not used or creating a leave bank or paid time off (PTO).
D. Cost-Reduction Tactics – Employers use several tactics to reduce excessive sick leave absence. Some repurchase unused sick leave at the end of the year by paying their employees a sum for each unused sick day. The problem is that legitimately sick employees may come to work. Many employers use pooled paid leave plans (or “banks”). These plans lump together sick leave, vacation, and personal days into a single leave pool.
E. Leaves and FMLA – The law stipulates that: 1) private employers of 50 or more employees must provide eligible employees up to 12 weeks of unpaid leave for their own serious illness, the birth or adoption of a child, or the care of a seriously ill child, spouse, or parent; 2) employers may require employees to take any unused paid sick leave as part of the 12-week leave provided in the law; 3) employees taking leave are entitled to receive health benefits while they are on unpaid leave; and 4) employers must guarantee employees the right to return to their previous or equivalent position with no loss of benefits at the end of the leave; however, the law provides a limited exception from this provision. Vague interpretations of the law have resulted in leaves sometimes being approved even when they were not legitimate. Employers have been enriching their parental leave plans to make it more attractive for mothers to return from maternity leave.
F. Severance Pay – As a one-time payment when terminating an employee, severance is considered a humanitarian gesture and good public relations. Most managers expect employees to give them at least one or two weeks’ notice if they plan to quit; it therefore seems appropriate to provide at least one or two weeks’ severance if an employee is being dismissed. A severance plan may be subject to ERISA if the employer has a legal obligation to make severance payments, as is the case under some union contracts. Even voluntary plans could become subject to ERISA if the employer identifies it as a plan established or maintained by the employer in employee handbooks.
G. Supplemental Unemployment Benefits – These benefits supplement the employee’s unemployment compensation and help the person maintain his/her standard of living for a time while he/she is out of work due to layoffs, reduced workweeks, and relocations. They are becoming more prevalent in union agreements.
III. Insurance Benefits
A. Workers’ Compensation – refers to the sure, prompt income and medical benefits provided in work-related accidents to the victims or their dependents, regardless of fault. Every state has its own workers’ compensation law and administrative commission, and some run their own insurance programs. Most states require employers to carry workers’ compensation insurance. Neither the state nor the federal government contributes any funds for workers’ compensation.
1. How Benefits Are Determined – Workers’ Compensation can be monetary or medical. Monetary awards are based on a formula regarding the disability involved and the worker’s average weekly wages. Some disabilities or losses also receive monetary awards based on a schedule of those losses.
2. Controlling Workers’ Compensation Costs – The costs of insurance premiums depend on the number and dollar amount of claims, thus minimizing such claims is important. Some ways to reduce such claims is to screen out accident-prone workers, reduce accident-causing conditions in facilities, institute effective safety and health programs, and comply with government standards on these matters. Many firms institute rehabilitation programs to get injured employees back on the job as fast as possible, since workers’ compensation costs accumulate as long as the person is out of work.
B. Hospitalization, Health, and Disability Insurance – These benefits are aimed at providing protection against hospitalization costs and loss of income arising from accidents or illness occurring from off-the-job causes. They are offered by most employers because medical care and insurance are so expensive. Employer health and hospitalization plans must comply with the Americans with Disabilities Act. Accidental death and dismemberment coverage provides a lump-sum benefit in addition to life insurance benefits when death is accidental. Disability insurance provides income protection for loss of salary due to illness or accident. A health maintenance organization (HMO) is a medical organization consisting of several specialists operating out of a community-based health care center. Preferred provider organizations (PPOs), a cross between HMOs and the traditional doctor/patient arrangement, are groups of health care providers that contract to provide medical care services at a reduced fee. The costs of mental health treatment are rising because of widespread drug and alcohol problems. There is an increase in the number of states requiring employers to offer a minimum package of mental health benefits. The Mental Health Parity Act of 1996 sets minimum mental health care benefits at the national level.
C. Improving Performance: Trends in Employer Health Care Cost Control – Many employers are changing their medical plans and using cost-containment specialists to reduce health care costs. Also, consumer education is among the most important initiatives in health administration. Employees must know the costs of health choices in order to make better decisions. More employers are requiring employees to pay higher premiums and co-payments. Clinical prevention programs include mammograms, immunizations, and routine checkups. Wellness programs, claim audits, as well as other options are discussed.
D. Long-Term Care – Is a new benefit aimed at supporting people in their old age. The Health Insurance Portability and Accountability Act (HIPAA), enacted in 1996, lets employers and employees deduct the cost of long-term care insurance premiums from their annual income taxes.
E. Life Insurance – Most employers provide group life insurance plans, which usually accept all employees, regardless of health or physical condition.
F. Benefits for Part-Time and Contingent Workers – Some firms provide holiday, sick leave, vacation benefits, and some form of health care benefits for employees who work less than 35 hours a week.
IV. Retirement Benefits
A. Social Security provides three types of benefits: retirement benefits, survivor’s (death) benefits, and disability payments. Retirement benefits provide an income if you retire at age 62 or thereafter and are insured under the Social Security Act. Survivor’s (death) benefits provide monthly payments to your dependents regardless of your age at death if you were insured under the Social Security Act. Disability payments provide monthly payments to employees who become totally disabled (and their dependents) if they work and meet certain requirements. The Social Security system also administers the Medicare program, which provides a wide range of health services to people 65 or older.
B. Pension Plans – There are a variety of pension plans. Defined contribution plans specify what contributions the employer will make to the employee’s retirement or savings fund. In a 401(k) plan, an employee authorizes the employer to deduct a certain amount of money from his/her paycheck before taxes and to invest in the 401(k) plan. Many federal laws govern pensions.
1. 401(k) Plans – This is a popular defined contribution plan in which the employee can have money deducted from his or her paycheck and deposited in the account before payroll taxes.
2. Other Plans – In a savings thrift plan, employees contribute a portion of their earnings to a fund. The employer usually matches this contribution in whole or in part. In deferred profit sharing plans, employers contribute a portion of their profits to the pension fund. An employee stock ownership plan (ESOP) is a tax-deductible stock bonus plan.
3. Cash Balance Pension Plans – These are defined benefit plans for federal tax purposes, but have the portability advantages of defined contribution plans. Defined benefit plans are most advantageous to older employees with long service terms. Younger employees, or those who want to change jobs, usually prefer defined contribution plans. The cash balance plan has both portability and predictable benefits.
C. Pensions and Early Retirement – The company opens up (for a limited time only) the opportunity for employees to retire earlier than usual, with a financial incentive, which is generally a combination of improved or liberalized pension benefits plus a cash payment.
D. Improving Performance through HRIS: Online Benefits Management Systems – Benefits administration can be an enormously labor-intensive and time-consuming activity for an HR department. One of the main ways HR managers are increasing the productivity of their benefits dollars is by increasing the utilization of technology.
V. Personal Services and Family-Friendly Benefits
A. Personal Services are being provided by many companies. Options may include credit unions, legal services, and counseling.
1. Employee Assistance Programs – EAPs provide employees with counseling and/or treatment for problems such as alcoholism, gambling, or stress.
B. Family-Friendly (Work-Life) Benefits – There are more families in which both adults work, more one-parent households, more women working, and more people over 55 working. On-site child care, fitness and medical facilities, flexible work scheduling, telecommuting, occasional sabbaticals, loan programs for home computers, stock options, concierge services, and even insurance for the family pet are all part of the compensation package in the new workplace. Employers are increasingly granting fathers time off, or flexible schedules, to take care of the kids.
1. Subsidized child care is an increasingly desirable benefit, which tends to improve recruiting results, lower absenteeism, improve morale, garner favorable publicity, and lower turnover.
2. Sick Child Benefits – Unexpected absences due to last-minute child care emergencies can be problematic for employers, who then need to hire temporary help or cope with reduced productivity. Emergency child care benefits are being offered by more employers.
3. Elder Care – Programs are being offered to employers to help employees who must care for elderly who can’t fully care for themselves.
4. Family-Friendly Benefits and the Bottom Line – Evaluating the effectiveness and profitability of these programs is difficult. However, employers are carefully reviewing these services to see if they are contributing monetarily to the organization.
C. Other Personal Services Benefits – Employers often provide subsidized employee educational subsidies. Such programs are expensive. The employer may also be paying employees to leave. Payments may range from all tuition and expenses to a fixed amount per year.
D. Executive Perquisites – Perks include management loans, salary guarantees, protection for executives if their firms become targets of acquisitions or mergers, financial counseling, relocation benefits, time off with pay, outplacement assistance, company cars, chauffeured limousines, security systems, company planes and yachts, executive dining rooms, physical fitness programs, legal services, tax assistance, liberal expense accounts, club memberships, season tickets, credit cards, and children’s education.
VI. Flexible Benefits Programs – When given the opportunity to choose, employees do prefer flexibility in their benefits plan.
A. The Cafeteria Approach – A cafeteria benefits plan, which is generally synonymous with a flexible benefits plan, is where each employee is given a benefits fund budget to spend on whichever benefits he/she wants once the employer limits the total cost for each benefits package and includes certain non-optional items. Flexible spending accounts let employees pay for certain benefits expenses with pretax dollars. Core plus option plans establish a core set of benefits, which are usually mandatory for all employees; then the employees can choose from various benefits options.
B. Flexible Work Schedules
1. Flextime - Is an arrangement by which employees have flexibility in scheduling their workday around core hours.
2. Telecommuting – Telecommuters work at home and use phones and the Internet to conduct business.
3. Compressed Workweeks – May consist of four 10-hour days, three 12-hour days, or other such combinations.
4. Effectiveness of Flexible Work Schedule Arrangements – Reviews indicate that they increase employee satisfaction and productivity. Some critics are concerned that fatigue and accidents may increase.
5. Other Flexible Work Arrangements – There are many other arrangements that employers may offer. Job sharing is when two people share one full-time job. Job sharing can be useful for retirement-aged employees, allowing the company to retain the employee, who experiences reduced hours. Work sharing is when a whole group reduces its hours to prevent layoffs.
Improving Performance Questions:
13-1: A note on this agency in Wikipedia refers to “amazingly high” levels of sick leave among staff at the DVLA [around 2007], with employees having an average of three weeks a year sick leave.” What sorts of inaction on the part of previous managers could help explain such poor attendance?
13-2: Would you recommend this program to your employer? Why?
13-3: Google search multinational insurance licensing laws, check a few sites, and make a list of four specific ways insurance licensing laws differ among countries.
13-4: Explain how you believe you’d react to having your employer switch you to a leasing firm, and why.
13-5: Why do you think some firms, such as NES, like telecommuting, while others, such as Yahoo, shun it?
Discussion Questions:
13-6: What is unemployment insurance? Is an organization required to pay unemployment benefits to all dismissed employees? Explain how you would go about minimizing your organization’s unemployment insurance tax.
Unemployment insurance provides benefits to an individual who is unable to work through some fault other than his/her own. An organization is not required to pay unemployment benefits to all dismissed employees. You could minimize your organization’s unemployment insurance tax by making sure that all your managers understand the unemployment insurance code, training managers and supervisors on discipline and discharge, conducting exit interviews, verifying employment claims, filing protests against a former employee's claim on a timely basis, knowing your local unemployment insurance official, and auditing the annual benefit charges statement.
13-7: Explain how ERISA protects employees’ pension rights.
Under ERISA, pension rights must be vested under one of three formulas. Also, ERISA established the Pension Benefits Guarantee Corporation to help ensure that pensions meet vesting obligations. The PBGC also insures pensions should a plan terminate without sufficient funds to meet its vested obligations.
13-8: Describe the main retirement benefits.
Social Security – Federal program that provides three types of benefits: retirement income at the age of 62 and thereafter, survivor’s or death benefits payable to the employee’s dependents regardless of age at time of death, and disability benefits payable to disabled employees and their dependents. These benefits are payable only if the employee is insured under the Social Security Act.
Pension Plans – Plans that provide a fixed sum when employees reach a predetermined retirement age or when they can no longer work due to disability.
401K – A defined contribution plan based on section 401(k) of the Internal Revenue Code.
13-9: What are the main provisions of the FMLA?
The FMLA provides the following: 1) private employers of 50 or more employees must provide eligible employees up to 12 weeks of unpaid leave for their own serious illness, the birth or adoption of a child, or the care of a seriously ill child, spouse, or parent; 2) employers may require employees to take any unused paid sick leave or annual leaves as part of the 12-week leave provided in the law; 3) employees taking leaves are entitled to receive health benefits while they are on unpaid leave, under the same terms and conditions as when they were on the job and; 4) employers must guarantee employees the right to return to their previous or equivalent position with no loss of benefits at the end of the leave; however, the law provides a limited exception from this provision to certain highly paid employees.
Individual and Group Activities:
13-10: Working individually or in groups, research the unemployment insurance rate and laws of your state. Write a summary detailing your state’s unemployment laws. Assuming Company X has a 30% rate of annual personnel terminations, calculate Company X’s approximate unemployment tax rate in your state.
Suggest that the students use the Internet to research the unemployment rate and laws for your state.
13-11: Assume you run a small business. Working individually or in groups, visit the website www.dol.gov/elaws. See the Small Business Retirement Savings Advisor. Write a 2-page summary explaining: (1) the various retirement savings programs available to small business employers, and (2) which retirement savings program you would choose for your small business and why.
Based on what they learned from the chapter and the results of their Internet search, the students should include at a minimum a 401(k) plan that can be assessed online.
13-12: You are the HR consultant to a small business with about 40 employees. Now the firm offers only 5 days of vacation, 5 paid holidays, and legally mandated benefits such as unemployment insurance payments. Develop a list of other benefits you believe it should offer, along with your reasons for suggesting them.
The specific ones to recommend would depend partly on the profile of the employees of the firm. In the absence of that information, the least costly addition of benefits would be to add some sick leave (or personal days) and consider additional vacation and/or holidays. The next benefit that they might look to would be to add the availability of some kind of health plan that could include a contributory cost to the employee. This would be less expensive to the company and add real value to the employees because of group discounts.
13-13: Appendix A, PHR and SPHR Knowledge Base at the end of this book lists the knowledge someone studying for the HRCI certification exam needs to have in each area of human resource management (such as in Strategic Management, Workforce Planning, and Human Resource Development). In groups of four to five students, do four things: (1) review Appendix A; (2) identify the material in this chapter that relates to the required knowledge Appendix A lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.
The material in this chapter that relates to the HRCI certification exam includes: unemployment insurance, vacations and holidays, sick leave, parental leave and FMLA, severance pay, supplemental unemployment benefits, workers’ compensation, hospitalization, health and disability insurance, life insurance, benefits for part-time workers, social security, pension plans, pension planning, pensions and the law, pension trends, executive perquisites, and flexible benefits programs. Multiple-choice questions should reflect material in this chapter and should have answer choices which could appear plausible.
Experiential Exercises and Cases:
Experiential Exercise: Revising the Benefits Package
Purpose: The purpose of this exercise is to provide practice in developing a benefits package for a small business.
Required Understanding: Be very familiar with the material presented in this chapter. In addition, review Chapter 11 to reacquaint yourself with sources of compensation survey information, and come to class prepared to share with your group the benefits package for the small business in which you work or in which someone with whom you’re familiar works.
How to Set up the Exercise/Instructions: Divide the class into groups of four or five students. Your assignment is as follows: Maria Cortes runs a small personnel recruiting office in Miami and has decided to start offering an expanded benefits package to her 25 employees. At the current time, the only benefits are 7 paid holidays per year and 5 sick days per year. In her company, there are 2 other managers, as well as 17 full-time recruiters and 5 secretarial staff members. Your assignment is as follows: In the time allotted, your group should create a benefits package in keeping with the size and requirements of this firm.
Video Case Appendix:
Video Title: Pay for Performance and Financial Incentives (Joie de Vivre Hospitality)
Synopsis:
Chip Conley is the founder of Joie de Vivre Hospitality (JDV), a collection of boutique hotels, restaurants, and spas in California. Conley aims to foster employee motivation using Maslow’s Hierarchy of Needs and has written books and lectured on the subject. Joie de Vivre pays average wages, but experiences low turnover due to the nature of the relationships it has formed with each employee.
Discussion Questions:
13-14: Chip Conley, founder of Joie de Vivre Hospitality, believes that most companies frame their financial incentives in the wrong way. Explain what he means. What does JDV do differently?
13-15: Why does Joie de Vivre offer free hotel stays to all employees as part of its incentive plan?
13-16: According to the video, what separates a world-class organization is its ability to care for its employees in good times and in bad. How did JDV accomplish this during the dot-com crash and post-9/11 industry recession?
13-17: Of the compensation, benefits, and incentives practices we discussed in Chapters 11, 12, and 13, which would you recommend JDV implement, and why?
Application Case: Striking for Benefits
13-18: Assume you are mediating this dispute. Discuss five creative solutions you would suggest for how the grocers could reduce the health insurance benefits and the cost of their total benefits package without making any employees pay more.
It is suggested that you consider giving this exercise as a group assignment. Finding five creative solutions will be challenging, but things that should be considered include: altering deductibles but providing grandfathered employees extra pay to compensate; altering the pay schedule by increasing the pay for existing employees to compensate for additional health care costs passed on to them, but new employees not getting that pay increase; etc.
13-19: From the grocery chains’ point of view, what is the downside of having two classes of employees, one of which has superior health insurance benefits? How would you suggest they handle the problem?
Morale is a critical problem. Anytime there are two classes, jealousy and resentment increase and morale decreases. Also, administration costs increase. Some of the suggestions in question #1 might avoid the two classes.
13-20: Similarly, from the point of view of the union, what are the downsides of having to represent two classes of employees, and how would you suggest handling the situation?
The “lower class” employees will feel that they were “sold out” by the union and may lose faith in the value of the union. Initially the union will be safe because of the larger number of employees in the “better” group, but eventually that will change.
Continuing Case: Carter Cleaning Company – The New Benefit Plan
13:21: Draw up a policy statement regarding vacations, sick leave, and paid days off for Carter Cleaning Centers.
The students are likely to create different policy statements, which will reflect their different preferences for benefits. You should get the students to discuss how LearnInMotion.com might allow for flexibility in their pay for time not worked.
13-22: What would you tell Jennifer are the advantages and disadvantages to Carter Cleaning Centers of providing its employees with health, hospitalization, and life insurance programs?
The student should refer to the hospitalization, medical, and disability insurance section of the chapter to develop their lists of advantages and disadvantages.
13-23: Would you advise establishing some type of day care center for the Carter Cleaning employees? Why or why not?
A better approach for a small company such as Carter would be to locate a licensed day care provider that would be willing to give a discount to Carter employees. From that starting point, she could then consider whether to subsidize childcare.
Hotel Paris: Improving Performance at the Hotel Paris - The New Benefits Plan
13-24: What is your opinion of the new Hotel Paris benefits plan?
Student’s answers will vary.
13-25: Because employers typically make benefits available to all employees, they may not have the motivational effects of incentive plans. Given this, list five employee behaviors you believe Hotel Paris could try to improve through an enhanced benefits plan, and explain why you chose them.
Answers will vary. Some possible answers include calling in sick, leaving early or coming in late, being short with customers or staff, passing illness to other staff members by coming in sick, and showing a lack of motivation.
13-26: Given your answer to question 1, explain specifically what other benefits you would recommend the Hotel Paris implement to achieve these behavioral improvements.
Flexible benefit plans would allow employees in different age groups, with different needs, to adjust their benefits to their situation. An on-site child-care facility or voucher system may be a possibility depending on need.
Key Terms:
Benefits - Indirect financial and nonfinancial payments employees receive for continuing their employment with the company.
Supplemental Pay Benefits - Benefits for time not worked such as unemployment insurance, vacation and holiday pay, and sick pay.
Unemployment Insurance - Provides benefits if a person is unable to work through some fault other than his or her own.
Sick Leave - Provides pay to an employee when he or she is out of work because of illness.
Severance Pay - A one-time payment some employers provide when terminating an employee.
Supplemental Unemployment Benefits - Provide for a guaranteed annual income in certain industries where employers must shut down to change machinery or due to reduced work. These benefits are paid by the company and supplement unemployment benefits.
Workers’ Compensation - Provides income and medical benefits to work-related accident victims or their dependents regardless of fault.
Health Maintenance Organization (HMO) - A prepaid health care system that generally provides routine round-the-clock medical services as well as preventative medicine in a clinic-type arrangement for employees, who pay a nominal fee in addition to the fixed annual fee the employer pays.
Preferred Provider Organization (PPO) - Groups of health care providers that contract with employers’ insurance companies or third-party payers to provide medical care services at a reduced fee.
Group Life Insurance - Provides lower rates for the employer or employee and includes all employees, including new employees, regardless of health or physical condition.
Social Security - Federal program that provides three types of benefits: retirement income at age 62 and thereafter; survivor's or death benefits payable to the employee's dependents regardless of age at time of death; and disability benefits payable to disabled employees and their dependents. These benefits are payable only if the employee is insured under the Social Security Act.
Pension Plans - Plans that provide a fixed sum when employees reach a predetermined retirement age or when they can no longer work due to disability.
Defined Benefit Pension Plan - A plan that contains a formula for determining retirement benefits.
Defined Contribution Pension Plan - A plan in which the employer's contribution to employee's retirement or savings funds is specified.
Portability - Making it easier for employees who leave the firm prior to retirement to take their accumulated pension funds with them.
401(k) Plan - A defined contribution plan based on section 401(k) of the Internal Revenue Code.
Savings and Thrift Plan - Plan where employees contribute a portion of their earnings to a fund; the employer usually matches this contribution in whole or in part.
Deferred Profit-Sharing Plan - A plan in which a certain amount of profits is credited to each employee’s account, payable at retirement, termination, or death.
Employee Stock Ownership Plan (ESOP) - A qualified, tax-deductible stock bonus plan in which employers contribute stock to a trust for eventual use by employees.
Cash Balance Plans - Plans under which the employer contributes a percentage of employees’ current pay to employees’ pension plans every year, and employees earn interest on this amount.
Employee Retirement Income Security Act (ERSIA) - Signed into law by President Ford in 1974 to require that pension rights be vested, and protected by a government agency, the PBGC.
Pension Benefits Guarantee Corporation (PBGC) - Established under ERISA to ensure that pensions meet vesting obligations; also insures pensions should a plan terminate without sufficient funds to meet its vested obligations.
Early Retirement Window - A type of offering by which employees are encouraged to retire early, the incentive being liberal pension benefits plus perhaps a cash payment.
Employee Assistance Program (EAP) Benefits - Indirect financial and nonfinancial payment employees receive for continuing their employment with the company.
Family-Friendly Benefits - These generally include benefits like child care, elder care, fitness facilities, and flexible work schedules, benefits that help employees balance their family and work lives.
Flexible Benefits Plan/Cafeteria Benefits Plan - Individualized plans allowed by employers to accommodate employee preferences for benefits.
Flextime - A plan whereby employees’ workdays are built around a core of mid-day hours, such as 11:00 a.m. to 2:00 p.m. Workers determine their own starting and stopping hours.
Compressed Workweek - A plan in which employees work fewer days each week, but each day they work longer hours.
Workplace Flexibility - Arming employees with the information technology tools they need to get their jobs done wherever they are.
Job Sharing - Allows two or more people to share a full-time job.
Work Sharing - A temporary reduction in work hours by a group of employees during economic downturns as a way to prevent layoffs.
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