Employee Benefits 3770 Beardshear Hall

Human Resource Services

Employee Compensation and Benefits

Mike Otis SPHR, CEBS Associate Director Human Resource Services

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Agenda
Typical HR Organization Compensation Goals Compensation Approaches Employer Challenges General Benefit Concepts Health Benefits Welfare Benefits Retirement Benefits Closing Thoughts

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Typical HR Structure
Employee Relations Workers Comp HR Payroll
Leave Programs Equal Opportunity Diversity

Compensation Benefits Employee Assistance Recruiting

HRIS

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Goals of Compensation Plans

Why do companies care about how much they pay?

Employee Benefits 3770 Beardshear Hall

Human Resource Services

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

Is Pay the Only Important Factor?

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Total Compensation
Employee Satisfaction Supportive Corporate Culture Executive Sponsorship

Rewards
Bonus Salary Increases Promotions

Benefits
Health Plans Retirement Plans Vacation/ time off

Equity Offerings
Awards Recognition New job assignments Pay

Salary
Overtime (if in non-exempt
classification)

Paid Training Working Hours

Employee Benefits 3770 Beardshear Hall

Human Resource Services

What Factors Determine 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 3770 Beardshear Hall

Human Resource Services

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 Must meet both salary test and duties test

Employee Benefits 3770 Beardshear Hall

Human Resource Services

How to Build a Total Compensation House

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Compensation Philosophy

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Compensation Structure

Compensation Philosophy

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Job Classifications

Compensation Structure

Compensation Philosophy

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Rewards/Recognition
Benefits

Job Classifications

Compensation Structure

Compensation Philosophy

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Rewards/Recognition
Benefits Benefits

Job Classifications

Compensation Structure

Compensation Philosophy

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Rewards/Recognition
Benefits Benefits

Job Classifications

Compensation Structure

Compensation Philosophy

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Compensation Structure Example

Grade 12 11 10 9 8 7 6 5 4 3 2 1 Minimum $93,500 $81,800 $71,800 $65,300 $57,200 $52,000 $45,600 $40,000 $37,800 $34,300 $31,200 $28,800 Midpoint $131,000 $114,500 $100,500 $88,200 $77,400 $67,600 $59,300 $52,000 $47,200 $42,900 $39,000 $36,000 Maximum N/A $147,200 $129,200 $111,000 $97,200 $88,400 $73,000 $64,000 $60,500 $51,500 $46,800 $43,200 Midpoint Progression 14% 14% 14% 14% 14% 14% 14% 10% 10% 10% 8% N/A Range Width N/A 80% 80% 70% 70% 70% 60% 60% 60% 50% 50% 50%

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Benefits are often as important as pay to employees

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Utopia Enterprises Your Employer of Choice!

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

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Human Resource Services

Benefits Offered
Source: 2005 Iowa Employer Benefits Study, David P. Lind and Associates

Offered by Employers with 250 or more Employees 97.7% 95.4% 94.4% 94.1% 86.5% 84.1% 83.7% 75.1% 73.8% 73.1% 36.7% 32.8% 32.5% 32.2% 25.6% 18.9% 7.4% Not on list Not on list Not on list

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Health Insurance Life Insurance Retirement Plans Paid Holidays Pre-Tax deductions for Employee benefit contributions Long Term Disability Insurance Paid Vacation Educational Assistance/Tuition Reimbursement Sick Leave Employee Assistance Program (EAP) Fitness Center or Gym subsidy Long Term Care Insurance Flextime Casual Dress (every day, not just Fridays) Retiree Health Insurance (post age 65) Telecommuting Child Care Assistance (on or off site) Subsidized employee meals Free Coffee/Soda Pet Insurance

Employee Benefits 3770 Beardshear Hall

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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 3770 Beardshear Hall

Human Resource Services

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

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Human Resource Services

Categories of Benefits
Category
Government Mandated Core benefits

Examples
Social Security and disability, workers compensation Medical, life insurance, disability, retirement programs, vacation, holiday pay, sick pay Employee assistance programs, work/life programs, wellness, on-site daycare Flexible spending accounts, computer discount purchases, pet insurance, tuition reimbursement

Lifestyle benefits

Custom benefits

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Laws Affecting Employee Benefits and Compensation

Patient Protection and Affordable Care Act (PPACA) (new) 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 Stabilization Act of 1942 birth of employer group benefits Health Insurance Portability and Accountability Act of 1996 (HIPAA) (and amendments) Pension Protection Act of 2006 many, many others

Employee Benefits 3770 Beardshear Hall

Human Resource Services

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 3770 Beardshear Hall

Human Resource Services

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

Employee Benefits 3770 Beardshear Hall

Human Resource Services

Questions??