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3.4- Employee Benefits - 4.3 Employee Benefits E M PL OYEE...

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EMPLOYEE BENEFITS Prof. John Kammeyer-Mueller MGT 4301 4.3 Employee Benefits
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What Are Benefits? They are non-wage/salary goods and services provided to 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
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Why on Earth 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 Superior workforce performance Tax sheltering purposes 4.3 Employee Benefits
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Economies of Scale The price per additional unit of production decreases as the scale of production increases Some insurance plans are administered across multiple companies who pool together 4.3 Employee Benefits total cost units produced
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Gift Exchange What are some reasons you give presents instead of cash as birthday gifts? Symbolic consequences for employees Perception of employers who provide benefits programs How can the menu of benefits influence your perception of a company’s culture? 4.3 Employee Benefits
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Golden Handcuffs Transaction costs of changing benefits Pre-existing conditions Long-term payouts Sometimes there are tax penalties Consequences: employees reluctant to turnover because they really can’t afford to bear the costs 4.3 Employee Benefits
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Superior Workforce Performance Employee health and wellness Decreased number of sick days Lower employee stress Increased concentration at work Examples of policies to 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
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Tax Sheltering Employee salaries are tax deductable to employers Fringes can be tax exempt to employees as well In general, the total tax savings are therefore greater than if the employee just had the money to buy his/her own benefits 4.3 Employee Benefits
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Getting Creative Imagine that you don’t 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, superior workforce performance, tax sheltering purposes Consider some activities that employers might consider that wouldn’t be especially good based on these criteria 4.3 Employee Benefits
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A Cynical View of Employee Wellness Programs 4.3 Employee Benefits
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A Basic Overview of What is Provided by Employers and Used by Employees 4.3 Employee Benefits
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A Basic Overview of What is Provided by Employers and Used by Employees 4.3 Employee Benefits
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A Basic Overview of What is Provided by Employers and Used by Employees 4.3 Employee Benefits
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