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Module 4: (8 Hours)
Determining External Competitiveness and Benefits Management:
Competitiveness: Definition of Competitiveness, Pay Policy Alternatives, Wage Surveys, Interpreting
Survey Results, Pay Policy Line, Pay Grades
Benefits: Benefits Determination Process, Value of Benefits, Legally Required Benefits, Retirement,
Medical, & Other Benefits

Determining External Competitiveness and Benefits Management

Definition of Competitiveness:
Competitiveness pertains to the ability and performance of a firm, sub-sector or country to sell and
supply goods and services in a given market, in relation to the ability and performance of other firms, sub-
sectors or countries in the same market. It’s the Ability of a firm or a nation to offer products and
services that meet the quality standards of the local and world markets at prices that are
competitive and provide adequate returns on the resources employed or consumed in producing
them.
Competitiveness is the comparison of the compensation both inside & outside the organization.
External Competitiveness: refers to the pay relationships

In external competitiveness, (the second pay policy) comparisons are made outside the
organization – comparisons with other employers that hire the same kinds of employees.
External competitiveness is expressed in practice by (1) setting a pay level that is above, below,
or equal to that of competitors, and (2) determining the mix of pay forms relative to those of
competitors.

External competitiveness refers to the pay relationships among organizations – the organization’s
pay relative to its competitors. Pay level refers to the average of the array of rates paid by an
employer: (base + bonuses + benefits + options) number of employees. Pay forms are the various
types of payments, or pay mix, that make up total compensation.
Both pay level and pay mix focus on two objectives: (1) control costs, and (2) attract and retain
employees.

Control Costs
The higher the pay level, the higher the labor costs: Labor costs = pay level x number of
employees The higher the pay level relative to what competitors pay, the greater the relative
costs to provide similar products or services. So you might think that all organizations would pay
the same job the same rate. However, they do not.

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Attract and Retain Employees

Different employers set different pay levels. They deliberately choose to pay above or below
what others are paying for the same work. Not only do the rates paid for similar jobs vary among
employers, but a single company may set a different pay level for different job families. Exhibit
7.1 illustrates this point. However, when total compensation (bonuses, stock options, and
benefits) is looked at, the pay rate for the position might be further below or actually above the
market rate. For example, an engineer is 2% below the market rate when only his base wage is
observed. But when total compensation is taken into consideration, he might be 30% below the
market rate.
WHAT SHAPES EXTERNAL COMPETITIVENESS?
Factors that affect a company’s decision on pay level and mix: (1) (LABOR MARKET
FACTORS) competition in the labor market for people with various skills; (2) (PRODUCT
MARKET FACTORS) competition in the product and service markets, which affects the
financial condition of the organization; and (3) (ORGANIZATION FACTORS) characteristics
unique to each organization and its employees, such as its business strategy, technology, and the
productivity and experience of its work force.
These factors act in concert to influence pay-level and pay-mix decisions.

LABOR MARKET FACTORS

Economists describe two basic types of markets: the quoted price and the bourse. Stores that
label each item’s price or ads that list a job opening’s starting wage are examples of quoted-price
markets (Amazon). Bourse markets allow for haggling to occur over the terms and conditions
until an agreement is reached (e-Bay). In both the bourse and the quoted market, employers are
the buyers and the potential employees are the sellers. People and jobs match up at specified pay
rates.

How Labor Markets Work

Theories of labor markets usually begin with four basic assumptions:
Employers always seek to maximize profits People are homogeneous and therefore
interchangeable; a business school graduate is a business school graduate is a business school
graduate.The pay rates reflect all costs associated with employment (e.g., base wage, bonuses,
holidays, benefits, even training). The markets faced by employers are competitive, so there is no
advantage for a single employer to pay above or below the market rate.
Understanding how markets work requires analysis of the demand and supply of labor. The
demand side focuses on the actions of the employers: how many employees they seek and what
they are able and willing to pay those employees. The supply side looks at potential employees:
their qualifications and the pay they are willing to accept in exchange for their services.
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Labor Demand
How many people will a specific employer hire? The answer requires an analysis of labor
demand. In the short term, an employer cannot change any other factor of production (i.e.,
technology, capital, or natural resources. Under such conditions, a single employer’s demand for
labor coincides with the marginal product of labor.
The marginal product of labor is the additional output associated with the employment of one
additional human resource unit, with other production factors held constant. The marginal
revenue of labor is the additional revenue generated when the firm employs one additional unit
of human resources, with other production factors held constant.
Marginal Product

Diminishing marginal productivity results from the fact that each additional employee has a
progressively smaller share of the other factors of production with which to work. In the short
term, other factors of production (e.g., office space, number of computers, telephone lines) are
fixed. As more business graduates are brought into the firm without changing other production
factors, the marginal productivity must eventually decline.

Marginal Revenue
Marginal revenue is the money generated by the sale of the marginal product, the additional
output from the employment of one additional person. Therefore, the employer will continue to
hire graduates until the marginal revenue generated by the last hire is equal to the costs
associated with employing that graduate. Because other potential costs will not change in the
short run, the level of demand that maximized profits is that level at which the marginal revenue
of the last hire is equal to the wage rate for that hire. A manager using the marginal revenue
product model must do only two things: (1) determine the pay level set by market forces, and (2)
determine the marginal revenue generated by each new hire. This will tell the manager how
many people to hire.
The model provides a valuable analytical framework, but it oversimplifies the real world. In most
organizations, it is almost impossible to quantify the goods or services produced by an individual
employee, since most production is through joint efforts of employees with a variety of skills.
So neither the marginal product nor the marginal revenue is directly measurable. However, if
compensable factors define what organizations value, then job evaluation reflects the job’s
contribution and may be viewed as a proxy for marginal revenue product.
Labour Supply

This model assumes that many people are seeking jobs, that they possess accurate information
about all job openings, and that no barriers to mobility (discrimination, licensing provisions, or
union membership requirements) among jobs exist. If unemployment rates are low, offers of
higher pay may not increase supply – everyone who wants to work is already working. If

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competitors quickly match a higher offer, the employer may face a higher pay level but no
increase in supply.

Pay Policy Alternatives:

Pay level is the average of the array of rates inside the organization. There are 3 conventional
pay-level alternatives:
1. To-lead: if you Lead the market your pay structure (salary range midpoints) are targeted to be
better / higher than the competition.
2. To-meet: to Lag the market is to provide less in midpoints than the proverbial going rate.
3. To-follow: a conscious strategy, many choose to pin their market competitiveness to a certain
calendar date, either the first of the year, midway or the end. Their goal is to position themselves
to either lead or lag the market as of that target date, which means that their competitive situation
would fluctuate before and after

 Lead-Lead: If you want your pay structure to remain ahead of the market for the entire
year (i.e., certain industries, skilled workforce, limited labor pool, etc.), you peg your
midpoints to be competitive throughout. By targeting the end date, December 31st you
will stay ahead of the game even as the market slowly catches up. You will lead the
market for both the first and the second six months of the year.

 Lag-Lag: On the opposite scale,if you're satisfied to remain behind the market for the
complete fiscal year (i.e., certain industries, less skilled workforce, abundant labor pool,
affordability issues, etc.), you peg your pay structure to be competitive (matched) only
for one day, the first of the year. From January 2nd onward your structure then slips
behind the market, falling ever further all the way through to December 31st. You will
lag the first six months and even more so for the second six months.

 Lead-Lag: A common practice is to split the difference, because you're not too worried
over six months of slippage. So you peg your structure to July 31st. You will then lead
the market for the first six months, then lag the market by an acceptable amount for the
second six months.

Wage Surveys: A wage survey is a systematic process of collecting & making judgements about the
compensation paid by other employers. They provide the data for setting the pay policy relative to
competition & translating that policy into pay levels & structures.
1. Designing the survey:
2. Who should be involved in the survey design?
3. How many employers should be involved? Which jobs should be included?
4. What information to collect?

Nature of the organization: Fin performance, Size & Structure

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Nature of the Total Compensation System: Cash forms used, Non-Cash forms used
Incumbent & Job: Date job, individual, pay
Interpreting survey results:
1. The policy on competitive position is translated into practice by pay policy lines.
2. The use of grades & ranges recognizes both internal & external pressures on pay
decisions.
3. Pay ranges permit the employers to value & recognize these differences with pay.

Pay policy Line: A mathematical expression that describes the relationship between a
job’s pay & its evaluation points.

Pay Grades: Grouping jobs of similar worth or content together for pay administration
purposes. Range speed is the distance between min & max amounts in a pay grade.

Benefits:
Employee benefits are that part of the total compensation package, other than pay for
time worked, provided to employees in whole or in part by employer payments (e.g.,
life insurance, pension, workers’ compensation, vacation).
Benefits are the programs an employer uses to supplement employees’ compensation,
such as paid time off, medical insurance, company car, and more. Employee benefits
are optional, non-wage compensation provided to employees in addition to their normal
wages or salaries. These types of benefits may include group insurance (health, dental,
vision, life etc.), disability income protection, retirement benefits, daycare, tuition
reimbursement, sick leave, vacation (paid and non-paid), funding of education, as well
as flexible and alternative work arrangements.

Benefits are forms of value, other than payment, that are provided to the employee in
return for their contribution to the organization, that is, for doing their job. Some benefits,
such as unemployment and worker's compensation, are federally required. (Worker's
compensation is really a worker's right, rather than a benefit.)

Prominent examples of benefits are insurance (medical, life, dental, disability,

unemployment and worker's compensation), vacation pay, holiday pay, and maternity
leave, contribution to retirement (pension pay), profit sharing, stock options, and bonuses.
(Some people would consider profit sharing, stock options and bonuses as forms of
compensation.)

Benefits determination process:

The process involves the following steps:

1. What is expected from benefits?

2. Appropiriate mix of benefits

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3. How much to provide?

4. Which employees should be given benefits?
5. What is received in return for benefits?

Strategic reasons for offering benefits:

 Help attract employees
 Help retain employees
 Elevate the image of the organization with employees & other organisations.
 Increase job satisfaction

ADVANTAGES OF COMPENSATION AND BENEFITS.

A well designed compensation and benefits plan helps to attract, motivate and retain talent in the
firm (which is myWear). A well designed compensation & benefits plan will benefit the
boutique in the following ways.

1. Job satisfaction: the employees would be happy with their jobs and would love to work for
you if they get fair rewards in exchange of their services.

2. Motivation: We all have different kinds of needs. Some of us want money so they work for the
company which gives them higher pay. Some value achievement more than money, they would
associate themselves with firms which offer greater chances of promotion, learning and
development. A compensation plan that hits workers’ needs is more likely to motivate them to
act in the desired way.

3. Low Absenteeism: Why would anyone want to skip the day and watch not-so-favorite TV
program at home, if they enjoy the office environment and are happy with their salaries and get
what they need and want?

4. Low Turnover: Would your employees want to work for any other boutique if you offer them
fair rewards. Rewards which they thought they deserved?

ADVANTAGES TO EMPLOYEES
1. Peace of Mind: the offering of several types of insurances to your workers
relieves them from certain fears. the workers as a result now work with relaxed
mind.
2. Increases self-confidence.

Value of benefits:

A total rewards approach to compensating employees is more than just salaries and bonuses.

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The human resources professional community has expanded how it defined the discipline
generally known as compensation and benefits to rename it "total rewards." The definition of
compensation and benefits was rather limited--mainly the perception of it--to mean what you pay
employees, and the types of benefits such as medical coverage, income protection options,
vacation and sick time.

Components of Total Rewards

Total rewards is a relatively new term coined by members of the human resources professional
community and adopted by human resources associations, such as the Society for Human
Resources Management and WorldatWork, an association primarily for compensation
professionals.

Formerly referred to as simply compensation and benefits, total rewards takes on a more creative
and broad definition of the ways employees receive compensation, benefits, perks and other
valuable options. WorldatWork defines this new term: "Total rewards include everything the
employee perceives to be of value resulting from the employment relationship."

Small businesses and large corporations alike are affected by the economy, and thus are quick to
devise more creative and less-costly options to reward employees. Small businesses with smaller
budgets are prone to consider leveling actual compensation and providing benefits to minimize
the expense of maintaining a satisfied workforce.

For example, under the old reference to compensation and benefits, employers considered the
cost of an employee's salary, the employer versus employee cost for medical coverage, and the
value of vacation and sick pay for each worker. Renaming these activities gives employers the
motivation to engage in more creative ways to reward employees. Rewards do not always have
to be cost of living increases, salary increases for excellent performance and the cost of having
employees out of the office for sick days or vacations.

Assessing the Value

The value of total rewards is high, simply because of the wider variety of factors that comprise
total rewards. In addition to salaries and wages, total rewards may be broad structures of
compensation and benefits package. On the other hand, total rewards may include many noncash
incentives and recognition. A total rewards program might include on-site childcare and athletic
gym membership. Some companies allow their employees use of the company's retreat or
vacation dwelling, very beneficial for travelers who don't want to wipe out their vacation money
on lodging. Other substantial perks can include tuition reimbursement, payment for attendance
and completion of professional development activities, or opportunities for employees to design
their own schedules with arrangements such as telecommuting. All of these rewards are valuable,
although there isn't an enormous cash outlay with which you must be concerned. When you
consider total compensation in the form of total rewards, the added value is remarkable.

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Legally Required Benefits:

o Social Security: For death, retirement, disability, benefits for dependents of
retired/disabled worker, survivor benefits
o Workers’ Compensation: For work related injuries: permanent and temporary
total disabilities, permanent partial disability, survivor benefits, medical expenses,
rehabilitation
Insurance paid for by employers
o Unemployment Compensation: For subsistence between jobs, employer
provides stability, Varies by state, Financed by employers, Experience rating,
Eligibility, coverage, duration, amount
o Family Medical Leave Act: 12 “work weeks” of unpaid leave during 12 month
period,
Reasons: --Birth or adoption of a child, foster child, Care for close family
member with serious health condition, Your own serious health condition makes
you unable to perform your job
o Firms with 50 or more employees (5% of employers, 60% of workers are
covered)
o Key exemptions for highly compensated employees
o Return to an “equivalent position”
Employment Insurance

Employment Insurance provides temporary financial assistance for unemployed Canadians while
they look for work or upgrade their skills. People who are sick, pregnant or caring for a newborn
or adopted child, as well as those who must care for a family member who is seriously ill with a
significant risk of death, may also be assisted by Employment Insurance.

Employment Insurance (EI) premiums are calculated on, and deducted from, an employee's
maximum insurable earnings (MIE), which are insurable salary, wages, cash allowances and
other remuneration paid to an employee. The Canada Revenue Agency is responsible for
determining what is considered insurable employment and which earnings are insurable.

Most employees in Canada are considered to be in “insurable employment” and covered by EI.
As of January 1, 1997, every hour of work is insurable up to a yearly maximum earnings limit,
replacing the previously required weekly minimum earnings or hours worked.

All employees in insurable employment must have EI premiums deducted from their earnings.
Premiums are set annually as a rate per $100 of Insurable Earnings up to the level of Maximum
Insurable Earnings. Their employers are also required to make payments at 1.4 times the
employee rate, unless Human Resources and Skills Development Canada has granted the
employer a reduced rate.

Procedures for premium deductions and remittances are outlined in “Canada Revenue Agency
Instructions to Employers”

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Types of Employment Insurance benefits

There are several types of benefits available to Canadians, depending on their situation.

Regular Benefits

These benefits are available to individuals who lose their jobs through no fault of their own (for
example, due to shortage of work, seasonal layoffs, or mass layoffs) and who are available for
and able to work, but can’t find a job.

Maternity and Parental Benefits

These benefits provide support to individuals who are pregnant, have recently given birth, are
adopting a child, or are caring for a newborn.

Sickness Benefits

These benefits are for individuals who are unable to work because of sickness, injury, or
quarantine.

Compassionate Care Benefits

These benefits are available to people who have to be away from work temporarily to provide
care or support to a family member who is gravely ill with a significant risk of death.

Statutory Obligations

A statutory obligation is a requirement that employers are required to provide their employees as
determined by the law of the province or territory where the employer operates.

Employment Standards Legislation sets out the minimum terms and conditions of employment
for those who operate federally and for each province or territory. Both employers and
employees must follow these minimum obligations unless they offer terms or conditions more
generous that the ones mandated by legislation.

Therefore, employment standards legislation sets out minimum standards relating to employment
terms and conditions. The legislation also includes exceptions for certain types of employees,
such as managers and professionals. Some key areas covered by legislation are:

 Minimum Wage
 Hours of Work
 Vacations and Holiday Leave
 Maternity and Paternity Leaves
 Adoption and Parental Leaves
 Emergency/Sick Leave/Compassionate Leave
 Bereavement Leave

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 Leave entitlement
 Grievance procedures
 Termination of employment

Human Rights Legislation goes beyond just the employment relationship but does address
certain issues relating to potential workplace discrimination

Occupational Health and Safety Legislation creates health and safety obligations for both
employers and employees to minimize the risk of workplace accidents.

Worker’s Compensation Legislation provides workers who become sick or injured at work with
compensation for both economic and non-economic losses, in certain circumstances for
participating organizations.

Retirement

Retirement and pension benefits are provided to retired government officials to ensure a regular
income and a secure future. The provision of such financial benefits results in a feeling of
independence and a decent standard of life. As far as retirement benefits are concerned, they
usually consist of leave encashment, retirement gratuity and contributed provident fund.

Along with these retirement benefits, senior citizens are also entitled to pension benefits that
allow them to live a hassle free life after completion of their job tenure. Different types of
pension available to senior citizens are superannuation, retiring pension, voluntary retirement
pension, compensation pension, compassionate allowance, extraordinary pension and family
pension.

Superannuation pension is meant for those government officials who retire at the age of 60 years.
Voluntary pension is awarded to those who wish to retire three months in advance after
completing 20 years of service. Extraordinary pension is another pension scheme that is awarded
to those government employees who are disabled or the families of those employees who lose
their lives during the tenure of their job.

Dearness Allowance Rates

Dearness Allowance or DA is another benefit provided to senior citizens. The Government

announces DA rates twice a year. This allowance is added to the salary or pension of government
employees. DA rates are also applicable to senior citizens who have taken complete retirement.
Those who go in for reemployment are not eligible to avail dearness allowance.

Employment-based pensions

A retirement plan is an arrangement to provide people with an income during retirement when
they are no longer earning a steady income from employment. Often retirement plans require
both the employer and employee to contribute money to a fund during their employment in order
to receive defined benefits upon retirement. It is a tax deferred savings vehicle that allows for the

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tax-free accumulation of a fund for later use as a retirement income. Funding can be provided in
other ways, such as from labor unions, government agencies, or self-funded schemes. Pension
plans are therefore a form of "deferred compensation". A SSAS is a type of employment-based
Pension in the UK.

Some countries also grant pensions to military veterans. Military pensions are overseen by the
government; an example of a standing agency is the United States Department of Veterans
Affairs. Ad hoc committees may also be formed to investigate specific tasks, such as the U.S.
Commission on Veterans' Pensions (commonly known as the "Bradley Commission") in 1955–
56. Pensions may extend past the death of the veteran himself, continuing to be paid to the
widow

Social and state pensions

Many countries have created funds for their citizens and residents to provide income when they
retire (or in some cases become disabled). Typically this requires payments throughout the
citizen's working life in order to qualify for benefits later on. A basic state pension is a
"contribution based" benefit, and depends on an individual's contribution history. For examples,
see National Insurance in the UK, or Social Security in the United States of America.

Many countries have also put in place a "social pension". These are regular, tax-funded non-
contributory cash transfers paid to older people. Over 80 countries have social pensions.[4] Some
are universal benefits, given to all older people regardless of income, assets or employment
record. Examples of universal pensions include New Zealand Superannuation [5] and the Basic
Retirement Pension of Mauritius.[6] Most social pensions, though, are means-tested, such as
Supplemental Security Income in the United States of America or the "older person's grant" in
South Africa.[7]

Disability pensions

Some pension plans will provide for members in the event they suffer a disability. This may take
the form of early entry into a retirement plan for a disabled member below the normal retirement
age.

Phased Retirement

Today’s work place is challenged with having up to four different generations working side by
side. For most employers, designing a compensation and benefit structure that address the unique
needs of each demographic group, is a complex task. Added to that is the shift in pension
structures over the past few years. Some non-profit organizations provide their employees with a
pension fund; however most tend to offer only contributions to an RRSP. This leads to an
increasing number of employees not feeling able to retire.

It is important that organizations understand the details of their pension plan, whether it is a
defined benefit or contribution or simply an RRSP program before considering design changes.

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For those not hindered by a design change, one option that is gaining in popularity, especially in
this sector, is providing a phased retirement program for older skilled employees.

For employees:

Components of the phased program are allowing employees who might be considering retiring to
delay their departure date, continue to earn a partial income that reduces the burden on their
pension income, they continue to receive benefit coverage and are able to acclimate gradually by
continuing to reduce their hours until they are prepared to leave.

For employers:

Employers are able to develop a timely and effective succession plan without losing critical skills
or intellectual capital. Organizations benefit by being able to tap into the most experienced staff
at a reduced salary, while transitioning to a new team or organizational design.

Hurdles:

Employees need to understand the impact continuing to work may have on pension or benefit
programs; also to be considered is the timing of starting your phased approach. If an employee
starts too soon, they might not have accumulated enough to compensate for the reduced salary.

Employers need to be sure that the phased retirement program is structured in a way that will not
diminish the work of the organization or the financial position of the employee.

Medical Benefits

The injured or ill worker who is eligible for workers' compensation will receive necessary
medical care directly related to the original injury or illness and the recovery from his/her
disability. The treating health care provider must be authorized by the Workers' Compensation
Board, except in an emergency situation. Some injured or ill workers may require diagnostic
tests, x-ray examinations, magnetic resonance imaging (MRI) or other radiological examinations
or tests. As of March 13, 2007, insurance carriers, which includes self-insured employers and the
State Insurance Fund, are authorized to contract with a legally and properly organized diagnostic
networks to perform diagnostic tests, x-ray examinations, magnetic resonance imaging or other
radiological tests or examinations or tests. In addition, insurance carriers may require claimants
to obtain or undergo such diagnostic tests with a provider or at a facility that is affiliated with the
network the carrier has contracted with, except when a medical emergency exists requiring an
immediate diagnostic test or if the network does not have a provider or facility able to perform
the diagnostic test within a reasonable distance from the claimant's residence or place of
employment.

Organizational health expense plans are generally permitted in the following areas across
Canada:

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 Hospital room charges in excess of the standard rate to cover semi-private or private
accommodation
 Hospital charges for emergency treatment outside Canada
 Drugs, medication and vaccines and other supplies available only by prescription
 Professional services of a physician for out-of-country medical expenses
 Professional services for private duty nursing
 Charges for special medical appliances such as crutches, artificial limbs or wheelchairs
 Non-emergency ambulance services
 Dental treatments not requiring hospitalization.
 Professional services provided by licensed paramedicals, such as psychologists, massage
therapists, speech therapists, podiatrists, physiotherapists, chiropractors, osteopaths, or
naturopaths.
 Vision care expenses including frames and lenses, contact lenses, fitting and remedial
treatment, laser eye correction surgery
o This option is one that many employers struggle to provide their employees with
as the number requiring vision care is so great, the cost of including this option
could raise the employer’s costs by anywhere from 20 to 40%

It is common practice to include many of the above items under a single extended healthcare
plan. Most benefit carriers will tailor a plan to include only those features and coverage’s
desired. Certain items, however, are often restricted or sold in combination with other coverage’s
to contain overall plan costs or to subsidize heavily utilized services.

Extended healthcare plan options should be selected based on the organization’s overall
compensation objectives and employee needs. For small organizations, the range of coverage
options may be limited if the plans are financed on a fully insured basis. These plans offer
restricted flexibility to limit the occurrence of high-risk claims. These pre-packaged plans are
available to small organizations through affiliation with umbrella organizations such as chambers
of commerce, boards of trade, trade associations and professional organizations. For larger
organizations, the range of options is mostly limited by cost considerations.

Other Benefits
Dental

Dental plan design is the art of finding a delicate balance between understanding what the
foundational priorities are, and allocating sufficient funds, to ensure that the coverage is
perceived as being sufficient and appropriate.

Although the type of dental work can differ from person to person, some common elements have
been found:

 Most employees, their spouses and children, require basic preventative dental care and
repair. Therefore, most employers elect to design the plan in such a way as to minimize
the cost to employees of basic coverage.
 Since major restorative care and orthodontics tend to be more elective in nature and less
common in need across the employee group than basic services, most plans do not

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provide equal coverage in all areas. For example, the plan might pay 100% of basic and
50% of the other two categories. It is also common to find deductibles, co-insurance and
benefit maximums for the non-basic services to free up more funds for the necessary
preventive ones.
 High employee deductibles and co-insurance percentages can help to limit plan
disbursements because employees will be paying more of the total costs. The potential
problem is that these high employee costs may, in effect, force postponement of needed
dental work until the repair bill is even higher. Paying 100% of basic preventative care
from day one is the overwhelming choice of employers.
 Having the dental plan require a “pre-treatment” evaluation for certain expenses helps
control cost levels by ensuring that the plan only pays for reasonable treatments. It also
avoids any misunderstanding by the employee as to what services are covered and how
much he or she is required to pay. It is always preferable to ensure the employee knows
what the plan will pay for and what exact dollar amount is their responsibility.
 A commonly asked question of benefit administrators is why the dental plan is not
optional but compulsory? If the plan is optional, only those employees who are likely to
need dental care will sign up. They will almost always use services that exceed their
contributions, deductibles and co-insurance. Those who feel that the benefits will not
cover their costs will decline. Because of this “adverse selection”, cost per employee will
be so high that employers would not be perceived as competitive.

Life and AD&D

Most employers design their plans with a provision to protect the employee and/or their family in
the event of Accidental Death or Dismemberment (AD&D). Employers often provide basic
coverage as a factor of the employee’s salary, (example: 2x the employee’s salary in the event of
death or total paralysis) with additional coverage available should the employee chose to
purchase it. Each employee benefit plan should include a chart that identifies what coverage is
available and the associated cost.

Long-term disability

Long-term disability is an income-replacement provision. This is one provision that cannot be

purchased through a spousal plan. Employees are asked to pay the total cost of the premiums in
order to receive a tax-free payment should they be unable to work. Long-term disability coverage
is applied for when an employee is unable to complete a certain percentage of the essential duties
of their role due to illness on an ongoing basis. The structure of each plan can differ slightly, so
understanding what you are trying to achieve with this program including elimination periods
and termination options, is critical at the outset.

Employee Assistance Plans (EAPs)

An EAP, or employee assistance program, is a confidential, short term, counseling service for
employees with personal problems that affect their work performance. Studies have shown that

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providing confidential qualified counseling and support can reduce the stress and conflict felt by
the employee, which in-turn can reduce absenteeism and ultimately turnover.

One-on-one sessions are offered and online information, coaching and support services are also
available. Employees turn to the EAP for help with a variety of issues, including the following:

 Dependent care issues, such as searching for child care information, identifying services
for special needs children, obtaining advice on the college application process, or
arranging for residential care for an elder.
 Dealing with the stress of a major life change (even a positive one), such as having or
adopting a child, getting married, moving or buying a home, or getting a promotion.
 Serious personal or professional concerns, such as general anxiety, depression, substance
abuse, burnout, coping with illness, the loss of a loved one, relationship challenges, or
resolving interpersonal conflicts.

Different types of programs are available to employers to provide employee assistance.

Employers can establish their own in-house programs, join a consortium of organizations to
provide external services or refer employees to public and private providers of this service. The
range of costs across these options can vary widely. Organizations must then decide the most
advantageous approach to achieve the level of improved wellness among their employees.

Death benefits replace a portion of lost family income for eligible family members of employees
killed on the job.
Maximum Medical Improvement (MMI)

 the point in time when your work-related injury or illness has improved as much
as it is going to improve, or
 104 weeks from the date you became eligible to receive temporary income
benefits.

Education benefits

 Alcon provides and/or assists with relevant on-site and external courses, conferences and
seminars, tuition reimbursement, professional memberships, etc.

Family benefits

 Employee Assistance Program – provides assistance and support with issues such as
mental health and legal problems
 Adoption Reimbursement Program
 Group Legal Plan

Other Benefits, Based on Location

 Associate credit union

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 Cafeteria
 Service awards
 Company store
 Auto purchase discounts
 Other corporate discounts

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