978-0134235455 Chapter 13 Solution Manual

Chapter 13: Benefits and Services 13-8

13-6: Costco’s HR strategy is to deflect Walmart’s low wages by paying employees more, thereby

producing more employee engagement.

Discussion Questions:

13-1: What is unemployment insurance? Is an organization required to pay unemployment

benefits to all dismissed employees? Explain how you would go about minimizing

your organization’s unemployment insurance tax.

Unemployment insurance provides benefits to an individual who is unable to work through

some fault other than his/her own. An organization is not required to pay unemployment

benefits to all dismissed employees. You could minimize your organization’s

13-2: Explain how ERISA protects employees’ pension rights.

Under ERISA, pension rights must be vested under one of three formulas. Also, ERISA

established the Pension Benefits Guarantee Corporation to help ensure that pensions meet

13-3: Describe the main retirement benefits.

This item can be assigned as a Discussion Question in MyManagementLab. Student

13-4: What are the main provisions of the FMLA?

This item can be assigned as a Discussion Question in MyManagementLab. Student

Individual and Group Activities:

13-5: Working individually or in groups, research the unemployment insurance rate and

laws of your state. Write a summary detailing your state’s unemployment laws.

Assuming Company X has a 30% rate of annual personnel terminations, calculate

Company X’s approximate unemployment tax rate in your state.

Suggest that the students use the Internet to research the unemployment rate and laws for

your state.

Chapter 13: Benefits and Services 13-9

13-6: Assume you run a small business. Working individually or in groups, visit the Web site

www.dol.gov/elaws. See the Small Business Retirement Savings Advisor. Write a 2-

page summary explaining: (1) the various retirement savings programs available to

small business employers, and (2) which retirement savings program you would

choose for your small business and why.

Based on what they learned from the chapter and the results of their Internet search, the

13-7: You are the HR consultant to a small business with about 40 employees. Now the firm

offers only 5 days of vacation, 5 paid holidays, and legally mandated benefits such as

unemployment insurance payments. Develop a list of other benefits you believe it

should offer, along with your reasons for suggesting them.

The specific ones to recommend would depend partly on the profile of the employees of the

firm. In the absence of that information, the least costly addition of benefits would be to

add some sick leave (or personal days) and consider additional vacation and/or holidays.

13-8: Appendices A and B at the end of this book list the knowledge someone studying for

the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in

each area of human resource management (such as in Strategic Management and

Workforce Planning). In groups of several students, do four things: (1) review

Appendix A and/or B; (2) identify the material in this chapter that relates to the

Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam

questions on this material that you believe would be suitable for inclusion in the

HRCI exam; and (4) if time permits, have someone from your team post your team’s

questions in front of the class, so that students in all teams can answer the exam

questions created by the other teams.

The material in this chapter that relates to the HRCI certification exam includes:

unemployment insurance, vacations and holidays, sick leave, parental leave and FMLA,

severance pay, supplemental unemployment benefits, workers’ compensation,

Experiential Exercise: Revising the Benefits Package

Chapter 13: Benefits and Services 13-10

Purpose: The purpose of this exercise is to provide practice in developing a benefits

package for a small business.

Required Understanding: Be very familiar with the material presented in this chapter. In

addition, review Chapter 11 to reacquaint yourself with sources of compensation survey

information, and come to class prepared to share with your group the benefits package for

the small business in which you work or in which someone with whom you’re familiar

works.

How to Set up the Exercise/Instructions: Divide the class into groups of four or five

students. Your assignment is as follows: Maria Cortes runs a small personnel recruiting

office in Miami and has decided to start offering an expanded benefits package to her 25

employees. At the current time, the only benefits are 7 paid holidays per year and 5 sick

days per year. In her company, there are 2 other managers, as well as 17 full-time recruiters

and 5 secretarial staff members. Your assignment is as follows: In the time allotted, your

group should create a benefits package in keeping with the size and requirements of this

firm.

Application Case: Striking for Benefits

13-9: Assume you are mediating this dispute. Discuss five creative solutions you would

suggest for how the grocers could reduce the health insurance benefits and the cost of

their total benefits package without making any employees pay more.

It is suggested that you consider giving this exercise as a group assignment. Finding five

creative solutions will be challenging, but things that should be considered include: altering

deductibles but providing grandfathered employees extra pay to compensate; altering the pay

13-10: From the grocery chains’ point of view, what is the downside of having two classes of

employees, one of which has superior health insurance benefits? How would you

suggest they handle the problem?

Morale is a critical problem. Anytime there are two classes, jealousy and resentment

increase and morale decreases. Also, administration costs increase. Some of the

13-11: Similarly, from the point of view of the union, what are the downsides of having to

represent two classes of employees, and how would you suggest handling the

situation?

The “lower class” employees will feel that they were “sold out” by the union and may lose

faith in the value of the union. Initially the union will be safe because of the larger number

Chapter 13: Benefits and Services 13-11

Continuing Case: Carter Cleaning Company – The New Benefit Plan

13:12: Draw up a policy statement regarding vacations, sick leave, and paid days off for

Carter Cleaning Centers.

The students are likely to create different policy statements, which will reflect their

different preferences for benefits. You should get the students to discuss how

13-13: What would you tell Jennifer are the advantages and disadvantages to Carter

Cleaning Centers of providing its employees with health, hospitalization, and life

insurance programs?

The student should refer to the hospitalization, medical, and disability insurance section of

13-14: Would you advise establishing some type of day care center for the Carter Cleaning

employees? Why or why not?

A better approach for a small company such as Carter would be to locate a licensed day

care provider that would be willing to give a discount to Carter employees. From that

Hotel Paris: Improving Performance at the Hotel Paris – The New Benefits Plan

13-15: What is your opinion of the new Hotel Paris benefits plan?

Students’ answers will vary.

13-16: Because employers typically make benefits available to all employees, they may not

have the motivational effects of incentive plans. Given this, list five employee

behaviors you believe Hotel Paris could try to improve through an enhanced benefits

plan, and explain why you chose them.

Answers will vary. Some possible answers include calling in sick, leaving early or coming

in late, being short with customers or staff, passing illness to other staff members by

13-17: Given your answer to question 13-16 and what you read in this chapter of Dessler

Human Resource Management, explain specifically what other benefits you would

recommend the Hotel Paris implement to achieve these behavioral improvements.

Students’ answers will vary.

Chapter 13: Benefits and Services 13-12

13-18: Explain specifically what other benefits you would recommend the Hotel Paris

implement to achieve these behavioral improvements.

Flexible benefit plans would allow employees in different age groups, with different needs,

to adjust their benefits to their situation. An on-site child care facility or voucher system

My Management Lab

Students can find the following assisted-graded writing questions at mymanagementlab.com:

13-19: You are applying for a job as a manager and are at the point of negotiating salary and

benefits. What questions would you ask your prospective employer concerning benefits?

Describe the benefits package you would try to negotiate for yourself.

13-20: Your clients want to know how they can use their employee benefits package to improve

employee engagement. What would you tell them?

Key Terms:

Benefits – Indirect financial and nonfinancial payments employees receive for continuing their

employment with the company.

Supplemental Pay Benefits – Benefits for time not worked such as unemployment insurance,

vacation and holiday pay, and sick pay.

Unemployment Insurance (or compensation) – Provides benefits if a person is unable to work

through some fault other than his or her own.

Sick Leave – Provides pay to an employee when he or she is out of work because of illness.

Severance Pay – A one-time payment some employers provide when terminating an employee.

Supplemental Unemployment Benefits – Provide for a guaranteed annual income in certain

industries where employers must shut down to change machinery or due to reduced work. These

benefits are paid by the company and supplement unemployment benefits.

Workers’ Compensation – Provides income and medical benefits to work-related accident

victims or their dependents regardless of fault.

Health Maintenance Organization (HMO) – A prepaid health care system that generally

provides routine round-the-clock medical services as well as preventative medicine in a clinic-type

arrangement for employees, who pay a nominal fee in addition to the fixed annual fee the

employer pays.

Chapter 13: Benefits and Services 13-13

Preferred Provider Organization (PPO) – Groups of health care providers that contract with

employers’ insurance companies or third-party payers to provide medical care services at a

reduced fee.

Group Life Insurance – Provides lower rates for the employer or employee and includes all

employees, including new employees, regardless of health or physical condition.

Social Security – Federal program that provides three types of benefits: retirement income at age

62 and thereafter; survivor’s or death benefits payable to the employee’s dependents regardless of

age at time of death; and disability benefits payable to disabled employees and their dependents.

These benefits are payable only if the employee is insured under the Social Security Act.

Pension Plans – Plans that provide a fixed sum when employees reach a predetermined retirement

age or when they can no longer work due to disability.

Defined Benefit Pension Plan – A plan that contains a formula for determining retirement

benefits.

Defined Contribution Pension Plan – A plan in which the employer’s contribution to employee’s

retirement or savings funds is specified.

Portability – Instituting policies that enable employees to easily take their accumulated pension

funds when they leave an employer.

401(k) Plan – A defined contribution plan based on section 401(k) of the Internal Revenue Code.

Savings and Thrift Plan – Plan where employees contribute a portion of their earnings to a fund;

the employer usually matches this contribution in whole or in part.

Deferred Profit-Sharing Plan – A plan in which a certain amount of profits is credited to each

employee’s account, payable at retirement, termination, or death.

Employee Stock Ownership Plan (ESOP) – A qualified, tax-deductible stock bonus plan in

which employers contribute stock to a trust for eventual use by employees.

Cash Balance Plans – Plans under which the employer contributes a percentage of employees’

current pay to employees’ pension plans every year, and employees earn interest on this amount.

Employee Retirement Income Security Act of 1975 (ERSIA) – Signed into law by President

Ford to require that pension rights be vested, and protected by a government agency, the PBGC.

Pension Benefits Guarantee Corporation (PBGC) – Established under ERISA to ensure that

pensions meet vesting obligations; also insures pensions should a plan terminate without sufficient

funds to meet its vested obligations.

Chapter 13: Benefits and Services 13-14

Early Retirement Window – A type of offering by which employees are encouraged to retire

early, the incentive being liberal pension benefits plus perhaps a cash payment.

Employee Assistance Program (EAP) Benefits – A formal employer program for providing

employees with counseling and/or treatment programs for problems such as alcoholism, gambling,

or stress.

Family-Friendly (or work-life) Benefits – Benefits such as child care and fitness facilities, that

make it easier for employees to balance their work and family responsibilities.

Flexible Benefits Plan/Cafeteria Benefits Plan – Individualized plans allowed by employers to

accommodate employee preferences for benefits.

Flextime – A work schedule in which employees’ workdays are built around a core of midday

hours and employees determine, within limits, what other hours they will work.

Compressed Workweek – A schedule in which employees work fewer but longer days each

week.

Job Sharing – Allows two or more people to share a full-time job.

Work Sharing – Refers to a temporary reduction in work hours by a group of employees during

economic downturns as a way to prevent layoffs.