Compensation issues
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1. The Employee Benefit Research Institute (www.ebri.org) has conducted a "Retirement Survey" for several years. Visit EBRI's website and find the 2010 Retirement Confidence Survey. Scan the "Findings" and take a look at the "Fact Sheets" and comment on how HR might help solve the problem of inadequate employee participation in company supported retirement plans (e.g., 401K-like programs). Also, make observations on why most companies are shifting from defined benefit to contributory plans and any other aspects of retirement planning from the HR perspective.
2. One of basic premises of economics is that people respond to incentives. Give examples of individual incentives used by an organization in which you were either employed or know about. Describe why those plans were successful or unsuccessful. How could you have structured the unsuccessful ones to work better?
3. The attached series of articles from SHRM regarding pension funding issues helps us understand why employers are shifting away from defined benefit plans to contribution plans (e.g., 401K). To pay a $30,000 per year pension takes about $500,000 in the bank. If you are General Motors with thousands of pensioners, you have to tie up a lot of cash to cover the pension obligations. That much cash is a tempting source for urgently needed funds, and leads to borrowing and those sincere promises to pay it back. Do you have any observations?
4. SHRM reports, "In what could prove to be a bellwether for corporate compensation generally, financial organizations have changed their pay mix, moving away from short-term incentives in favor of increased salary, deferred compensation and modified incentive program design. According to a global survey by HR consultancy Mercer, key changes in the sector's short-term incentive (STI) programs include more focus on balanced, risk-adjusted performance measurement and deferral of bonus payouts over several years." The full SHRM article is attached and the Mercer Survey summary is http://www.mercer.com/press-releases/1368340. Do you have any observations regarding SHRM's claim that the Mercer survey represents a "bellwether for corporate compensation"?
5. It seems that competition has tended to drive up the "worth" of a good CEO to unsustainable levels. Basic economics says that someone should be paid what they are worth. Read the attached WSJ article about how one company tried to pull back. Did Sharper Image make some good decisions? Has their profitability shown results?
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HUMAN RESOURCE
1. The Employee Benefit Research Institute (www.ebri.org) has conducted a "Retirement Survey" for several years. Visit EBRI's website and find the 2010 Retirement Confidence Survey. Scan the "Findings" and take a look at the "Fact Sheets" and comment on how HR might help solve the problem of inadequate employee participation in company supported retirement plans (e.g., 401K-like programs). Also, make observations on why most companies are shifting from defined benefit to contributory plans and any other aspects of retirement planning from the HR perspective.
There are several ways in which HR might help the problem of inadequate employee participation in company supported retirement plans. First, HR must communicate the main effects of the Patient Protection and Affordable Care Act of 2010. Second, HR must increase employee involvement in company supported retirement plans. The 2010 Retirement Confidence Survey shows that those plans that are developed by the employees themselves are rated highly by the employees. Third, the HR must show employees their legal rights and the fact that employees can avail themselves of the health benefits. In other words the HR must create confidence that they will actually get health benefits. Fourth, HR should commence auto-enrollment helping those that stand the risk of running short of money in retirement. Fifth, the HR should explain why Health Savings Accounts cannot cover all retiree medical costs. Sixth, in case of defined plans similar to 410 (k) retirement plan, the effect on the employees income adequacy is positive but the employees continue to have doubts about the efficacy and adequacy of such plans.
Most companies are shifting from defined benefit to contributory plans so that companies are able to reduce their share of contribution. However, there are other reasons also. When employees join in contributory plans and other plans where employees actively participate, their satisfaction and confidence is higher than receiving a defined benefit. The survey shows that own health plans are rated highly. Further, if the employees select the contributory plans and elect to contribute a certain portion of the salary, these employees have lesser doubts about health benefits.
2. One of basic premises of economics is that people respond to incentives. Give examples of individual incentives used by an organization in which you were either employed or know about. Describe why those plans were successful or unsuccessful. How could you have structured the unsuccessful ones to work better?
The basic premise in the factory where I worked was that any salesperson that exceeded his target was paid an incentive at the rate of 2% of the value of sales above her target. This plan was ...
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