1. Introduction to Employee benefits We used to call them "fringe benefits," but we quit using the word "fringe" when we saw the magnitude of that figure." - James Morris A benefit is a form of indirect compensation. Unlike in many other countries where benefits are uncommon, U. S. has been a major provider of these benefits to the citizens. In many other states, citizens as well as employers are taxed to pay for the government supplies such as health care and retirement.

Benefits in perception Who do employers provide benefit? Benefits are viewed as a part of total compensation, which is a key decision area in human resources. Total compensation includes money paid directly (wages and salaries), money paid indirectly (benefits & incentives) and non-monetary rewards (such as praise, recognition and job satisfaction). Many times, employers focus on real wages and salaries and fail to consider the additional perks to be contributed which are important. Reasons for offering benefits Benefits seems as a protecting tool for employees from financial risk such as illness, disability, unemployment, and old age. While from management point of view, it contributes several other goals: Help attract employees- an employer with a more attractive benefits package may have a differential advantage over other employers, in hiring qualified employees if the prospective employees know about the advantage.

Help retain employees - an employee who receives a benefit package such as profit sharing, stock ownership, and elder care may have difficulty finding a job elsewhere with same compensation and for this reason employee would stay in the company. Elevate the image of the organization with employees and other organizations. For some employers creating an image of care and generosity by demonstrating concern for employees stand out from other company's objective. Image drives benefits more than rational economic concerns in other organization. Increase job satisfaction- benefits can contribute to employees overall good feelings toward the employer.

This can entitle employee to work harder and motivate them to be loyal to the company. Why were these benefits introduced? Benefits were introduced for two reasons- Wage controls- during both World War II and the Korean war, wage and price controls constrained employers' ability to give pay raises. A pension plan, more vacation time, or sick leave might be used to keep or attract good employees who otherwise would leave because their wages could not be raised. Unions- unions in this time had gained power, so to negotiate and to stop bargaining, employers added benefits.

These were highly desired by employees. Taxation as a reason to offer benefits For employees mostly tax is not levied on benefits. And for this reason employees value benefits more than equivalent cash payment. For example a person getting $500 as pay on which he is required to pay tax of $100, but if employer provides prescription drugs, he is not taxed.

So this way, benefits are more desirable. 2. Legally mandated benefits Mandated benefits are those benefits which employer is required to pay employee by law. These benefits might differ from one country to another. But universally worker's compensation exists in all states. Additionally employers must offer unpaid leave to employees during medical or family difficulty.

Mandated benefits include universal health care benefits for all workers, childcare assistance, transferable pension plan coverage and core benefits for part time employees working 500 hrs per year. Social security The social security act of 1935, established a system providing old age, survivors, disability, and retirement benefits. Administrated by the federal government through the social security administration, this program provides benefits to previously employed individuals. Employees and employers share in the cost of social security through a tax on employees' wages or salaries. Worker's compensation A legally required benefit that provides medical care, income continuation and rehabilitation expenses for people who sustain job related injuries or sickness. Employees are entitled to quick and certain payment from the worker's compensation system without proving that the employer is at fault.

In exchange, employees give up the right of legal actions and awards, so employer limited liability for occupational illness and injury. Unemployment compensation Another benefit required by law is unemployment compensation, established as a part of the social security act of 1935. An employee seeking employment and is out of work normally receives up to 26 weeks of pay, at the rate of 50% to 80% normal pay. This fund is not provided to employees fired due to misconduct. Family leave The law requires that employers provide employees with health benefits if they have worked a total of 12 weeks leave during 12 months period under these conditions.

Birth, adoption, or foster care replacement of a child. Caring for a spouse, child, parent with a serious health condition. Serious health condition of the employee where one requires inpatient, hospital, hospice, or requiring dental care or continuing physician care. Security benefits Severance pay- it is a security benefit voluntarily obtainable be employers to employees who lose their jobs. They may receive lump-sum payment if the employer terminates their employment. For example, if a faculty closes due to no gains or profits incurred from it, then employees are subjected to severance benefits.

Family security issues- for many workers balancing work and family responsibilities becomes a challenge. These employees often come across the difficulty of attaining high- quality and affordable childcare. Hence employees provide these facilities in either on site day care services or developing after school program for older school-age children. Caring for elderly relatives is another family related issue. This includes transportation and assistance with shopping meals, laundry, housecleaning, feeding, bathing, medication and financial affairs. Health care benefits Through insurance coverage, employers provide range of health care and medical benefits.

The common ones include medical, dental, prescription drug, and vision care expenses for employees and their dependents. To an extent this may also include dental insurance, which is highly desirable to employees. Some employer medical insurance plans also cover psychiatric counseling. 3.

Financial and other benefits Wide ranges of other special benefits are offered by companies-financial, insurance benefits, educational benefits, social and recreational benefits. These benefits are useful in attracting and retaining employees, as these are often not taxed as income. Financial benefits- these benefits include a variety of items. A credit union provides saving and lending services for employees. Purchase discount allow employees to but goods or services from their employers at reduced rates. For example Gap in U.

S. provides 30% discount to its employees on clothing. Employee thrift, saving, or stock- investment plans may be made available. Some employers match a portion of the employee's contribution.

These plans are especially attractive to executive and managerial personnel. Executives may value financial planning and counseling providing information on investment, tax shelters, and financial counseling due to high levels of compensation. In near future, these financial benefits are likely to grow as the workers reach the retirement age. Other financial benefits include use of company car and company expense accounts and assistance in buying and selling a house when an employee is transferred. Insurance benefits- addition to health benefits, employer do provide different types of insurance benefits. Employees see this benefits as advantage as usually employer pays some or all the premiums.

life insurance- this is common insurance paid by the employer as he pays all or some of the premiums according to employee's base pay. Disability insurance-others benefits are tied as short term and long term disability insurance. It provides protection to employees who get injured while at work. Legal insurance-these are similar to health benefits i. e. paying a standing pay and in turn have right to use the services of a network of lawyers to handle their legal problems.

Educational benefits- this benefit is providing assistance through formal education courses and degree programs, including the costs of books and laboratory materials. These are to meet certain criteria such as education should be job related and should above minimum standards. Social and recreational benefits- these include group partying, bowling, picnics and other sponsored activities and interest group. The reason behind is to encourage employee happiness and team spirit.

Time off benefits Employers give employees paid time off in a number of cases such as paid lunch breaks and rest period, holidays, vacations and many others. It comprises of 5%to 13% of total compensation. Holiday pay- it comprises of all national holidays provided by the state such as Christmas or Thanksgiving. Vacation pay- paid vacations are a common benefit given on time scale, based on employee's length of service. Leave of absence- these are taken as time off with or without pay and could be due to many reasons. Leaves under this add to employer costs even when they are unpaid, because they missing person work is to be done by other employee or by temporary employee working under contract.

Family leave- it is one similar to covered in medical act where they are access to have paternity leave for male workers, but mostly is not used. Medical and sick leave- many employers allow their employees to miss a limited number of days because of illness without losing pay. Some employers allow employees to accumulate unused sick leave, which may be used in case of catastrophic illness. Other leave- these leave include leave such as military leave, election leave and jury leave, which are required by various state and laws. Employers cover the cost of this by paying employees for such leaves. Funeral or bereavement leave is another common leave offered.

Here up to 3 days of leave is granted for expiry of immediate family members. 4. Flexible benefits A flexible benefit plan, sometimes called a flex or cafeteria plan, allows employees the benefits they prefer from groups of benefits established by the employer. Due to changes in composition of the workforce, demand for flexible benefits has risen. These system recognize that individuals may have different situations and require different benefits because of age, family status and lifestyles. For instance, individuals in dual career may not require same benefits and because of flexible benefits, they can pick up according to the needs.

Flexible spending accounts- these flexible spending accounts allow employees to contribute pretax dollar to buy additional benefits. An example illustrates the advantage of these accounts to employees. Assuming that an employee earning $3000 per month and has $100 per month deducted to put in to a flexible spending account. That $100 does not count as gross income for tax purposes, so her taxable income is reduced. The employee to buy the additional benefits, which can include additional health care, life insurance, and disability insurance and dependent care benefits, uses this money. If employees do not spend all of the money in their accounts by the end of the year, money is forfeited.

The reason behind to use this plan is it provides tax advantage. 5. Analyzing company benefits Apple computers Apple offers great benefits to its employees that include insurance coverage, bonuses, and stock purchases and saving/ investment plan. Briefly explaining these Flexible benefits- according to situation and personal requirement of the individuals / family suiting the lifestyle, employee can chose from these benefits. Apple provides with enough flex dollars to purchase basic benefits.

But if the needs are higher such as childcare, elder care or additional life insurance, then electing flexible spending account would help. These services help by paying with pre- tax dollars. Flexible benefits include. Medical Coverage. Dental Coverage.

Prescription Drug Coverage. Vision Care Coverage. Mental Health Coverage. Life Insurance. Eligible Dependent & Domestic Partner Benefits Bonus program -at all organizational levels bonus is given for outstanding performance Stock purchases- employees are encouraged to invest in company stocks by providing 10% discount on stocks and bonds. Financial education- wide varieties of educational classes are given to attain financial goals of the employee.

A computer at home- as large number of companies provide purchase discounts, apple provides great incentives to its employees on buying apple computers. Times to relax- for the recharge of mind frame and body, holiday schedules are given. Health &fitness- to encourage positive lifestyle and to enhance the quality of life these practices (fitness plans, health education, preventive care) are done in the company. Pre- tax deferral: elect to contribute from 1% to 25% of the eligible pay before taxes. No waiting for vesting: apple contribution and the employees contribution is grouped and vested into 401 (K) plan account. Vesting is the right of employees to receive their pension plans.

And 401 (k) plan is an agreement in which a percentage of an employee's pay is withheld and invested in a tax-deferred account. Investment options broad range of investment option is provided as an opportunity to build a diversified investment portfolio. Microsoft Microsoft covers most of the needs of the employees and henceforth divides it's benefits into four broad categories. Health care. Personalized benefits. Financial plans.

Microsoft extras Medical and hospitalization- the core plan of Microsoft provides 80% coverage after a deductible and 100 percent coverage of usual, customary, and reasonable charges after the annual ounce of pocket amount has been reached, with an ultimate lifetime maximum. Other health benefits comprises of vision care i. e. paying annual fee for one pair of glasses, and dental care i. e. choosing a basic plan or higher benefits Personalized benefits (these can be augmented on the basis of health care plan) Life insurance coverage ranges from a minimum of $10000 to a maximum of six times your annual base pay or $ 1, 000, 000 whichever is less.

Disability- includes short-term disability i. e. unable to work for a short period of time and could extend to 168 days. Coverage is provided upto 60% of the monthly pay.

Dependent care flexible account- by reimbursing eligible day care and elder care expenses on a pretax basis- unto $5000 p. a. per household. Group legal plan- provides assistance with routine legal services such as real estate, adoption, divorce, bankruptcy, and wills. Financial plans- Microsoft provides these options to help employees develop a financially secure future. Saving plan 401 (k) plan- it defers up to 25% of pretax salary dollars.

Microsoft matches 50% on every dollar upto 6% of employee contribution, which can be extended to 7% on an after tax basis. Employee stock purchase plan i. e. let employees buy up to 15% of their tax salary to buy company's stock at a 15%discount.

Microsoft extras- company's perks are more than the Seattle has coffeehouses. Paid maternity leaves up to 8 weeks, paid vacation based on the years of service to the company, prime discounts on the main outlets & brand name products and many other. In housing training, health club membership, adoption assistance, family counseling services, many financial services provided at a discount and loads of other benefits are provided. General mills General mills is manufacturer and marketer of consumer foods products whose brands include Betty Crocker, Pillsbury, Green Giant, Hagen-Days, and Old El Paso. It offers comprehensive reward programs that are contemporary and fully competitive. Benefits they offer to their employees comprises of -.

Total rewards. Lifestyle. Convenient services (twin cities- based employees) Total rewards Competitive salary and annual bonus- salaries are reviewed annually based on the performance and the external value of the position. Employees are eligible for cash bonuses based on their performances.

Medical and dental benefits- provides employees and their partners with these benefits including same sex domestic partners in all locations. Retirement and saving benefits- employees are eligible to have 401 (k) plan up to 15% of their income. They can also choose to invest in individual stocks, bonds and mutual funds outside the funds offered by the company. Stock options and ownership- from time to time, general mills grants stock options to employees who do not otherwise receive annual stock option grants through a management plan. Flexible spending account- they allow to set aside a part of the income for the unseen expectations such as health and childcare.

Insurance- They too provide short term and long term disability insurance. Relocation benefits-to help make the move less stressful, general mills provides benefits that include paid house- hunting trip to new location, move household goods and temporary living allowance in new location. Educational assistance- they encourage employees by reimbursing for job related opportunities. Educational loans and scholarship opportunities are available to employees and family members. Lifestyle - under this general mills sees to it that employees lead healthy, fulfilling lives and make a strong contribution in the workplace. Vacation holiday and summer hours- the amount of vacation received by each employees depend on the years of service and this expands as the number of years increase of the employee starting from 3 week holiday in first year.

From Memorial Day to Labor Day, Minneapolis employees can take advantage of summer hours, which allow employees to work longer days Monday though Thursday and take a half day on Friday. Flexible work- where business allow flexible work schedule are practiced. Parenting benefits- in addition to provision of maternity leaves to birth mothers they offer benefits to adopting fathers and parents, also paying adoption expenses up to $5000. Referral services- they provide information on wide variety of important subjects such as child care, adoption information and elder care and many more. Convenient services (twin cities based employees only) - health services- the health service department at the world headquarters is staffed by registered nurses and physicians during normal business hours. Employees can use these services for emergency as well as for small injuries and illness.

Health services also include dental and eye examinations as well as dermatology services, free immunizations and referrals to physicians and specialists. Fitness center- to remain in shape and healthy general mills feature a variety of aerobic machines, strength equipment, exercise classes and seminars on health and fitness. These all are available at the world headquarters main office. Other than these many special benefits are provided to employees based in twin cities such as infant care center where infant ages from 6 weeks to 16 months are taken care of.

This also includes back up sick childcare where they assist employees by paying 85% of the cost of sick childcare. Employee's club- general mills provide social and cultural activities for employees and they " re families, as well as many discounted tickets to the local and national events. Other miscellaneous services- such as dry cleaning and laundry services, photo processing and hair salon services. Employees can buy gas or have their car services at automotive care center. 6. Critically evaluating and comparing the three companies Looking at apple computers it provide flexible benefits.

The flexible approach to benefits has some drawbacks- the major problem is the complexity of keeping track of what each employee chooses, especially as the company has large number of employees. Also, an increase in benefit communications cost is a concern. As the numbers of benefits offered is extensive it becomes difficult for the employee to decide and understand the complexity. Next problem is that inappropriate benefit package can be chosen by employee. For example a young construction worker might not choose disability benefits, and if he or she is injured, the family might suffer financial hardships. Another problem that can arise is adverse selection, whereby higher- risk employees select and use certain benefits.

Because many insurance plans are based on a group rate, the employer may face higher rates if insufficient number of employees select an insurance option. Comparing the companies mentioned above each of them offer great variety of benefits to their employees. For instance- General Mills provides wide array of benefits to employees residing in two cities whereas Apple and Microsoft doesn't. General Mills also provide relocation facilities to its employees, which are not included in the other two companies. Except this it also extensive health benefits to the employees families including childcare facilities and not like Microsoft where it caters benefits mostly according to the individual needs. Apple where forth is the company providing least number of benefits among the rest two others.

General mills also review and raise their salaries annually whereas Microsoft doesn't mention this at all while Apple computers provides reward on the organizational level. Assessing general mills, it can also be seen that many benefits are provided under the sections of two broad categories of employees- employees and two cities residing employees. This might clashes between the two groups. Paid vacation- Microsoft gives is after one year of service whereas General Mills provide it in the first year itself, while Apple Computers just give there employees time to relax.

Apple Computers also don't lay stress on facilities such as childcare or elder care, which could result into reduced work performance, increased absenteeism, and more personal stress for the affected employees. Rather this could be stated that Apple focuses on more of financial and insurance benefits than the personalized or lifestyle benefits. This could result that the company is not able to retain the employees of the firm and the employees might shift to other companies, which provide large range of benefits. Another major difference among the three companies is the dress code. Microsoft follows no dress code, which creates a friendly environment among the employees, though not mentioned but imaginarily Apple and General Mills do follow a dress code. One criticism of providing benefits is that mainly employers provide it to show an image that they care and by proving it to customers and gaining positive feedback and make a status.

One more reason behind providing these benefits is the self-interest that is being competitive in the market and providing more benefits that any other company gives. This helps them to attract and retain their employees. This is a possibility that introducing and giving so many perks and benefits to employees might in turn reduce the actual wages and salaries. An added criticism to benefit to employees is many people are skeptical as to whether "unlimited vacation" offers would be useful to senior executives, who probably don't have the time to take much vacation. Another flaw that is there in all three companies is that none of them provides unemployment compensation to give temporary security to employees who are out of work. 7.

Recommendations and Conclusion In conclusion Apple Computers should include more benefits to attract and retain employees in their company. Just by providing basic package of benefits makes them incompetent in the market. Secondly emphasis is laid on providing financial benefits. They need to put equal consideration to other miscellaneous benefits that are offered in other companies such as personalized benefits. They also should try to enhance their workplace by introducing other social and recreational benefits. While Microsoft does provide a wide array of benefits to employees, it mostly caters on individual basis such as dental & childcare whereas General Mills go way beyond and provide these benefits on family basis too.

Microsoft also lacks in providing benefits like backup childcare. These benefits should be introduced to attract more employees and creating a new image, more positive. Lastly General mills a higher number of benefits only to the employees working in headquarters main office, which could result in disarray between employees. To avoid any such circumstances to occur it should provides benefits equally. As mentioned earlier all companies providing flexible benefits could results into number of problems. Part of these problems can be overcome, by requiring employees to select a core set of benefits (life, health, and disability insurance) and then offering options on other benefits.

In this way companies could achieve in attracting and retaining higher number of employees, improved company's image, at the same time enhancing job satisfaction. Executive summary Benefits provide additional compensation to employees as reward for organizational membership. Because benefits generally are not taxed, they are highly desired by employees. Emphasizing and explaining on these benefits section 1-outline reasons for providing these benefits, why they were introduced and in short gives basic ground for providing benefits. Next section lists all the benefits that are made mandatory or to be provided by law. This includes social security, worker's compensation and family leave.

Section 3 explains other several types of financial and related benefits. Section 4 discusses communication and flexible benefits as considerations in benefits administration. Section 5 analyses the companies chosen i. e. Apple Computers, Microsoft and General Mills and states benefits provided by these companies. Next segment that is section 6 compares and critically evaluate the three companies and last section gives recommendation and conclusion while bring an end to the research paper.

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