Employee Compensation and Benefits

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 Benefits Exercise 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 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 organization’s success Employees feel they are compensated/rewarded fairly/equitably for their efforts and contributions to an organization’s 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 Supportive Corporate Culture Executive Sponsorship Employee Satisfaction • Rewards • Bonus • Salary Increases • Promotions • Equity Offerings • Awards • Recognition • New job assignments • Benefits • Health Plans • Retirement Plans • Vacation/ time off • Paid Training • Working Hours • Salary • Pay • Overtime (if in non-exempt classification)

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 Compensation Structure Example

Employee Benefits • 3770 Beardshear Hall Human Resource Services New Employee Exercise“It’s good for the heart!”

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!!

Employee Benefits • 3770 Beardshear Hall Human Resource Services

Employee Benefits • 3770 Beardshear Hall Human Resource Services 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 time-consuming. 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

Employee Benefits • 3770 Beardshear Hall Human Resource Services Core vs. Non-Core 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 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 • 3770 Beardshear Hall Human Resource Services Closing Thoughts • How employees are “compensated” takes many forms – salary, benefits, working conditions, challenging/stimulating work, co-workers, 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 employer’s 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??

Employee Compensation and Benefits