3.4- Employee Benefits

3.4- Employee Benefits - EMPLOYEE BENEFI TS Prof. John K...

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Unformatted text preview: EMPLOYEE BENEFI TS Prof. John K ammeyer-Mueller MGT 4301 4.3 Employee Benefits What Are Benefits? They are non-wage/salar y goods and ser vices provided t o employees. What are some examples of benefits? Benefits are getting more expensive all of the time 24.7% of payroll costs in 1959 were made up of benefits Today 41.3% of costs are made up of benefits. 4.3 Employee Benefits Why on Ear th Would Employees Get Benefits? Cash compensation is fungible You can use cash to buy other things Technically, you could use cash compensation to buy all the benefits Reasons why benefits are still provided Economies of scale Gift exchange Golden handcuffs Super ior workforce per for mance Tax shelter ing pur poses 4.3 Employee Benefits Economies of Scale The pr ice per additional unit of production decreases as the scale of production increases Some insurance plans are administ ered across multiple companies who pool t ogether 4.3 Employee Benefits total cost units produced Gift Exchange What are some reasons you give presents inst ead of cash as bir thday gifts? Symbolic consequences for employees Perception of employers who provide benefits programs How can the menu of benefits inf luence your perception of a companys culture? 4.3 Employee Benefits Golden Handcuffs Transaction costs of changing benefits Pre-existing conditions Long-ter m payouts Sometimes there are tax penalties Consequences: employees reluctant to tur nover because they really cant afford to bear the costs 4.3 Employee Benefits Super ior Workforce Per for mance Employee health and wellness Decreased number of sick days Lower employee stress I ncreased concentration at work Examples of policies t o achieve these outcomes Health insurance Exercise clubs/gym membership discounts Employee wellness programs (e.g., smoking cessation, chemical dependency counseling, exercise trainers, meditation centers) 4.3 Employee Benefits Tax Shelt er ing Employee salar ies are tax deductable to employers Fr inges can be tax exempt to employees as well I n general, the total tax savings are therefore greater than if the employee just had the money t o buy his/her own benefits 4.3 Employee Benefits Getting Creative I magine that you dont know anything about employee benefits that most employers offer Come up with three activities that would uniquely capitalize on at least three of the following Economies of scale, gift exchange, golden handcuffs, super ior workforce per for mance, tax shelter ing pur poses Consider some activities that employers might consider that wouldnt be especially good based on these cr it er ia 4.3 Employee Benefits A Cynical View of Employee Wellness Programs 4.3 Employee Benefits A Basic Over view of What is Provided by Employers and Used by Employees 4.3 Employee Benefits A Basic Over view of What is Provided by Employers and Used by Employees 4.3 Employee Benefits A Basic Over view of What is Provided by Employers and Used by Employees 4.3 Employee Benefits Health I nsurance: The Most...
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3.4- Employee Benefits - EMPLOYEE BENEFI TS Prof. John K...

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