Employee Benefits

Human Resource Services

3770 Beardshear Hall

Employee Compensation
and Benefits
Mike Otis, Associate Director
Human Resource Services

Employee Benefits
3770 Beardshear Hall

Human Resource Services

Agenda

Typical HR Organization

Compensation Goals
Compensation Approaches
Benefits Exercise
Employer Challenges
General Benefit Concepts
Health Benefits
Welfare Benefits
Retirement Benefits
Closing Thoughts

Employee Benefits

Human Resource Services

Typical HR Structure

3770 Beardshear Hall

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Goals of Compensation Plans

Employers are able to attract and retain
employees who will contribute to the
organizations success
Employees feel they are
compensated/rewarded fairly/equitably
for their efforts and contributions to an
organizations success

Employee Benefits
3770 Beardshear Hall

Human Resource Services

Total Compensation
Employee Satisfaction

Employee
Satisfaction
Supportive
Corporate
Culture
Executive Sponsorship

Rewards

Benefits

Bonus

Health Plans

Salary Increases

Retirement Plans

Promotions

Vacation/ time off

Salary

Equity Offerings
Awards

Pay

Recognition

Overtime (if in non-exempt

New job assignments

classification)

Paid Training
Working Hours

Employee Benefits

Human Resource Services

3770 Beardshear Hall

What Factors Determines Pay

Employer considerations
Where employers compete for talent local or
national
What talents an employer competes for the
skill/knowledge level
How strongly the employer wants to compete
Lead the market
Meet the market
Lag the market

Employee Benefits

Human Resource Services

3770 Beardshear Hall

What Factors Determine Pay?

What job duties will be performed determines classification as
either Exempt or Non-exempt (Governed by Fair Labor Standards
Act (FLSA))

Non-exempt employees.
Eligible for overtime pay for hours worked in excess of
40
Employer must have record of time worked

Exempt employees
Typically executive, professional, or administrative
positions
Must meet minimum weekly pay guideline
Not entitled to overtime

Employee Benefits
3770 Beardshear Hall

Human Resource Services

Rewards/Recognition
Benefits
Benefits

Job
Classifications
Compensation Structure

Compensation Philosophy

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Compensation Structure Example

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Utopia Enterprises Your

Employer of Choice!
We provide a buffet
of benefit choices to
meet your individual
needs!!

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3770 Beardshear Hall

Human Resource Services

Benefits Offered

Offered by Employers with 250

or more Employees

Rank

Health Insurance

97.7%

Life Insurance

95.4%

Retirement Plans

94.4%

Paid Holidays

94.1%

Pre-Tax deductions for Employee benefit contributions

86.5%

Long Term Disability Insurance

84.1%

Paid Vacation

83.7%

Educational Assistance/Tuition Reimbursement

75.1%

Sick Leave

73.8%

Employee Assistance Program (EAP)

73.1%

10

Fitness Center or Gym subsidy

36.7%

11

Long Term Care Insurance

32.8%

12

Flextime

32.5%

13

Casual Dress (every day, not just Fridays)

32.2%

14

Retiree Health Insurance (post age 65)

25.6%

15

Telecommuting

18.9%

16

Child Care Assistance (on or off site)

7.4%

17

Subsidized employee meals

Not on list

18

Free Coffee/Soda

Not on list

19

Pet Insurance

Not on list

20

Source: 2005 Iowa Employer Benefits Study, David P.

Lind and Associates

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Employer Challenges
Structuring employee benefit packages that meet
the needs of a diverse workforce one size does
not fit all
Helping existing employees understanding the
value of their benefits
Administering benefit programs costly and timeconsuming. Not a profit-making venture!
Continued rising health care costs
Limited budgets Benefits average 25% - 40% of
Payroll in most organizations
Government restrictions/legislation/public policy

Employee Benefits

Human Resource Services

3770 Beardshear Hall

General Concepts
Publicly traded companies will tend to
structure pay/benefits that incorporate more
equity (stock options, savings match in
company stock, bonus tied to company
performance, etc)
Non-publicly traded companies/organizations
will spend more on non-cash incentives
Governmental organizations will on average
spend more on benefits in lieu of salary

Employee Benefits
3770 Beardshear Hall

Human Resource Services

Core vs. Non-Core Benefits

Core Benefits
(Traditional)

Non-core Benefits
(Voluntary Elective)

Health Insurance

Dental

Prescription Drugs

Vision

Basic Life Insurance

Supplement Life, Dependent Life

Vacation

Long-term care insurance

Holidays

Auto-homeowners insurance

Sick Pay

Mortgage services/discounts

Disability

On-site daycare
Tuition reimbursement
Yes, even Pet Insurance

Employee Benefits
3770 Beardshear Hall

Human Resource Services

Health Benefits
General types of health coverage
Medical
Prescription Drugs
Dental
Vision

Most health benefit employee

contributions will be deducted from pay
pre-tax

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Wellness Programs
Many employers are starting to see the value from
incorporating wellness initiatives into their work places
disease management
health risk assessments
fitness programs
on-site clinics and pharmacies

Prevention vs. Payment

Improve productivity/reduce
absenteeism/presenteeism
Difficult to measure the Return on Investment (ROI) of
wellness programs

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Welfare Benefits
Provide safety and monetary security beyond
health
Typical benefits
Basic life
Supplemental (optional) life
Accidental Death and Dismemberment (AD&D)
Dependent life insurance
Short-term disability (STD)
Long-term disability (LTD)

Employee Benefits
3770 Beardshear Hall

Human Resource Services

Vacation

May be provided under separate

program or combined under a PTO (paid
time off) plan with sick days

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Retirement Benefits
Defined Benefit Plans (traditional Pension)
Based on a formula that determines a future benefit

Defined Contribution Plans (think 401(k))

future value depends on contributions from employee and/or
employer
403(b)/

457 Not-for-profit employers

401(k) For-profit employers

Other Types - Deferred Compensation Plans

IRS restrictions

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Human Resource Services

3770 Beardshear Hall

Comments on Retirement
Defined Benefit (Pension) plans are the

exception rather than the rule

Many employers now will automatically
enroll employees in 401(k)/403(b) plans
Understand the time-value of money
compounding
DIVERSIFY investments Many
employees are too conservative or too
risky

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Employee Benefits

Human Resource Services

Conflicting Priorities for

Savings/Retirement
Car payments/car insurance
Mortgage/rent/student loans
Utilities
Food/beverages
Clothing
Entertainment
Life expenses in general

3770 Beardshear Hall

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Other Voluntary Benefits

Offered as optional benefits typically
employee pays full cost
Voluntary benefit programs typically offered at
a discount price resulting from group
purchasing power
Employer may offer the option of payroll
deduction
Examples are auto/homeowners insurance,
pet insurance, computer purchase discounts

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Laws Affecting Employee

Benefits and Compensation
Fair Labor Standards Act (FLSA)
Employee Income Retirement Security Act of 1974 (ERISA)
Age Discrimination and Employment Act (ADEA)
Family Medical Leave Act (FMLA) of 1996
Economic Growth and Tax Relief Reconciliation Act
(EGTRRA) of 2001
Health Insurance Portability and Accountability Act of 1996
(HIPAA) (and amendments)
Pension Protection Act of 2006
many, many others

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Closing Thoughts
How employees are compensated takes many forms salary,

benefits, working conditions, challenging/stimulating work, coworkers, etc. The right mix for each person is different
Pay policies will differ for every employer some will focus on
cash compensation and some will focus on Total Compensation
The employers main goal is structuring compensation and
benefit programs is to be able to attract and retain the right
employees needed to help the employer be competitive

Employee Benefits

Human Resource Services

3770 Beardshear Hall

Closing Thoughts
Employee benefits have huge budget impacts to employers
Benefits are the hidden paycheck for employees
Employees need to understand the total compensation an
employer provides not just the salary. Employers need to sell
Total Compensation not just salary
Employees need to be educated consumers of benefit
programs especially health care and retirement programs
Employees should take advantage of retirement plan offerings
and save early (time value of $$) and always save enough to at
least take advantage of employers matching contribution