CSU Unit 6 Government Regulations on Compensation Practices There are a number of cost-saving strategies when it comes to putting together benefit packages

CSU Unit 6 Government Regulations on Compensation Practices There are a number of cost-saving strategies when it comes to putting together benefit packages. Identify and explain how outsourcing and flexible benefit plans help in being more cost effective. Discuss how flexible benefit plans with your current or past employer are introduced and applied.Just a paragraph UNIT VI STUDY GUIDE
Employee Benefits
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
7. Explain the influences of government regulations on compensation practices.
7.1 Explain government-mandated indirect benefits.
7.2 Explain how to select and communicate benefits.
Course/Unit
Learning Outcomes
7.1
7.2
Learning Activity
Unit Lesson
Chapter 13, pp. 474–480
Video: Mandatory Benefits
Unit VI Article Critique
Unit Lesson
Chapter 12, pp. 443–460
Chapter 13, pp. 474–480
Unit VI Article Critique
Reading Assignment
Chapter 12: The Benefit Determination Process, pp. 443–460
Chapter 13: Benefit Options, pp. 474–480
In order to access the following resource, click the link below.
Learning, G. (2015, September 4). Mandatory benefits [Video file]. Retrieved from

Click here to access the transcript for the video above.
Unit Lesson
Benefits: What Are Benefits?
According to the textbook, Newman, Gerhart, and Milkovich, (2017) explain that indirect benefits are the part
of the total compensation package provided to employees in whole or in part by employer payments, not
including pay for time worked (direct benefit). Examples of indirect benefits include the following but are not
limited to (Newman et al., 2017):
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





life insurance,
pension,
workers’ compensation,
unemployment,
Social Security,
tuition reimbursement,
paid time off (PTO),
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


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employee assistance,
wellness programs, and
health care (medical, dental, and/or vision).
Title
There are two types of indirect benefits: mandated and non-mandated. Mandated (required by statutory law)
benefits consist of workers’ compensation, Social Security, and unemployment compensation.
Click the link below to access a video that further explains mandatory benefits.
Learning, G. (2015, September 4). Mandatory benefits [Video file]. Retrieved from

Click here to access the transcript for the video above.
A breakdown of the mandated benefits are shown in the graphic below.
Workers’ Compensation
• Covers medical care for
work-related injuries
• Qualifying criteria
associated
Social Security
• Created to protect against
financial devastation due to
unemployment
• Contributed to by employee
and employer
Unemployment
Compensation
• Unemployment insurance,
which provides weekly
income to those unemployed
at no fault of their own
• Qualifying criteria
associated
Non-mandated benefits include life insurance, pension, and tuition reimbursement, among others. Indirect
benefits make up about 25%–30% (if not more for some) of the total compensation package with direct
benefit making up 70%–75% (Newman et al., 2017). The nurses’ compensation illustration being used over
the units identifies the indirect benefit percentages to be 26% ($27,631) of the $103,077 direct salary
compensation. Newman et al. (2017) identify that the percentage has increased to 40% by some calculations
today.
Indirect Compensation
Bonuses
Pensions
BHR 3301, Compensation and Benefits
Health Care
Disability
401k
Social Security
PTO
2
Even though there are some benefits that are not required, it is identified as a UNIT
strategic
move for
the
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organization to offer benefits that attract, retain, and motivate potential candidates
Titleand employees. It is also
known that employees consistently rate benefits as key factors in job satisfaction, with medical benefits being
the top-ranked benefit (Newman et al., 2017). In the chart above, health care makes up 6% of the indirect
compensation offered in the total compensation package. However, health care makes up 21% of indirect
benefits alone. So, health care is one of the top-leading benefits to offer. Exhibit 12.2 on page 446 of the
textbook shows the rank of benefits according to employees, and these have also been ranked in order below
(Newman et al., 2017).
1.
2.
3.
4.
5.
6.
7.
Medical
Pension
Paid vacation and holidays
Sick days
Dental
Long-term disability
Life insurance
Offering benefits is going to be costly, which depends on the organization’s budget, benefits selected, and the
number of employees participating in the benefits offered. The cost of benefits have steadily grown over the
years at a rapid pace. So, what do you think caused the rapid increase in such a limited amount of time
compared to previous years? The percentages for 2017 and 2018 are shown in the graphic below (U.S.
Bureau of Labor Statistics, 2018).
Benefit Cost Increase
2018
2017
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3
Benefit Cost Increase
Below is an illustration of mandated and non-mandated benefits.
Indirect Benefits
Mandated
Non-mandated
Unemployment
Tuition
Reimbursement
Worker
Compensation
Life Insurance
Social Security
Pension
Health
Insurance
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Benefits: How to Plan?
UNIT x STUDY GUIDE
Title
An organization’s budget plays a crucial role in planning for benefits. Some questions to consider in the
strategic planning process are shown below (“With Benefits,” 2017).
What are the major challenges and the rationale behind offering benefits and existing benefits?
•
•
•
•
Assess previous relevance
Assess current relevance
Adjust changes to align with forward progression
Benchmark efforts
Define the company’s reason(s) for offering benefits.
•
•
•
•
Attract, retain, and motivate
Health care and robust benefit offerings
Compliance with regulatory requirements
Competitive labor market
What is the strategic plan for benefits in 3 to 5 years? How does the strategic plan align with the
overall corporate strategy?
•
•
•
•
•
Budget consideration
Poll for feedback by key decision makers
Impact to the organization’s financial and strategic goals
Action plan/calendar
Employee communication
What are the guiding principles in creating the benefit plan?
•
•
•
•
•
Industry leader
Set metric for percentage of benefits
Offering of a variety of plans
Clear guidelines
Future plans
What are the success metrics?
•
•
•
•
•
Evaluation criteria
Reviewing progress
Predetermined times (throughout the year)
Celebrate the successes
Use to attract, retain, and motivate
Per the textbook, the organization must plan and design effective benefit programs, and the value must be
communicated to the employees (Newman et al., 2017). Benefit information can be communicated in a
number of ways, for example, through the employee handbook, trainings/meetings, newsletters,
websites/social media, intranet, e-mails, and/or brochures. The key to properly planned benefits is identifying
with your audience and meeting the demands presented from the audience. Refer to pages 446–459 of the
textbook for additional information on benefit planning, designing, and administering the plan.
Benefits: What Is the Value?
The value of benefits can vary for the employee and employer. In most cases, the employee values the
benefits according to what is being offered for payment and how it can benefit his or her family (e.g., freedom
of selection, options/flexibility). Of course, the value will vary according to personal needs/demands (e.g., one
employee may value the direct compensation more than the indirect compensation, such as pay vs medical
benefits). You can see how employees’ decision-making is based upon the medical benefits more so than the
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direct pay/compensation benefits. According to Newman et al. (2017), medicalUNIT
benefits
continue
to be ranked
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as the most important benefit of selection. The value for an employee can continue
Title to be based on overall
satisfaction. When employees are satisfied with their benefit selections, they are more satisfied with
employment, which leads to better attainment, retention, and motivation.
For the employer, benefits are valued in a different manner. The employer views benefits as a way to attract,
retain, and motivate potential employees and existing employees. Organizations will conduct benchmark
efforts to identify with the market value for total compensation with a chosen industry. This is where the
organization solidifies whether the organization will lead, lag, and/or match market value for positions within
the organization. When an organization puts value into the benefits, it can bring about greater motivation,
productivity, and profits. In order to continue increasing value for employees, the employer must effectively
communicate the benefits. The more an organization buys into the benefits, the more the employees will
appreciate and value the organization.
Benefits: How to Select?
Selecting benefits from the employer standpoint is going to start with aligned goals and objectives, feedback
from the employees, budget, and final cost of benefit selections. It is always important to select benefits that
represent the culture of the organization (e.g., family oriented, health and wellness, flexibility). From there, the
employee is able to identify the benefits that fit his or her needs. According to Newman et al. (2017),
employees are willing to pay more out-of-pocket costs if given the opportunity for greater choice in designing
their own benefit package. Employees are looking to meet the personal and family needs when selecting
benefits. Exhibit 12.5 in the textbook identifies factors that the employer and employee considers when
selecting benefits; see the graphic below for more information (Newman et al., 2017).
Employee
Factors
•Relationship to total compensation costs
•Costs relative to benefits
•Competitor offerings
•Role of benefits
•Legal requirements
Employer
Factors
•Equity and fairness
•Personal needs
Once various factors are considered in selecting the benefits, it is important that the organization offers a
user-friendly avenue in selecting the chosen benefits. Technology has taken the human resources (HR)
processes to another level. From the employee handbook to website access (e.g., Internet, intranet, social
media platforms). When there is ease in identifying with the benefits and the selection process, it makes the
overall process more effective and beneficial to the organization in the end. With the benefits being
specifically identified and explained, it provides a clearer opportunity for the employees to better understand
and select the options of choice, thus leading to making even better decisions to meet personal and family
demands, as they relate to the benefits being offered.
Summary
As benefits continue to change over time, it will always be an employer and employee effort to get the
process right. From the employer standpoint, this means identifying the demands of the serviced audience
and representing the culture of the organization in the benefits that are selected and offered. Of course, not all
demands may be met; however, it is a start in moving forward to attract, retain, and motivate the best.
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References
UNIT x STUDY GUIDE
Title
Newman, J. M., Gerhart, B., & Milkovich, G. T. (2017). Compensation (12th ed.). New York, NY: McGrawHill/Irwin.
U.S. Bureau of Labor Statistics. (2018). Employment cost index summary [Press release]. Retrieved from
https://data.bls.gov/cgi-bin/print.pl/news.release/eci.nr0.htm
With benefits, it’s good to get back to the basics. (2017, July). Workforce. Retrieved from
https://www.workforce.com/2017/07/06/benefits-good-get-back-basics/
Suggested Reading
This article provides insight on what employees view as concerns when attempting to select benefits as the
organization goes through changes in health insurance/benefits options. There are 10 questions that the
organization should address for better benefit selection on behalf of the employees.
Kalish, B. M. (2016, September 8). 10 common questions employees have about benefit options. Employee
Benefit News. Retrieved from https://www.benefitnews.com/list/10-common-questions-employeeshave-about-benefit-options
Learning Activities (Nongraded)
Nongraded Learning Activities are provided to aid students in their course of study. You do not have to submit
them. If you have questions, contact your instructor for further guidance and information.
Refer to page 465 of the textbook, and complete the following, which is one of the “Review Questions” in
Chapter 12.
4. As HR Director at Crangle Fixtures, your bonus this year is based on your ability to cut employee
benefit costs. Your boss has said that it’s okay to shift some of the costs over to employees (right now
they pay nothing for their benefits) but that he doesn’t want you to overdo it. In other words, at least
one-half of your suggestions should not hurt the employee’s pocket book. What alternatives do you
want to explore, and why?
Refer to page 494 of the textbook, and complete the following “Review Questions” for Chapter 13.
4. Why are defined contribution pension plans gaining in popularity in the United States and defined
benefit plans losing popularity?
5. Some experts argue that consumer-directed health care is, amongst other things, a great
communications tool for employee benefits. Defend this position.
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