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WORKPLACE BENEFITS.
Term Paper ID:23614
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Essay Subject:
Examines baby boomers' compensation options. Retirement, pay, profit-sharing, 401(K) plans, health care, bonuses, demographics, compared to parents, future.... More...
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10 Pages / 2250 Words
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Paper Abstract:
Examines baby boomers' compensation options. Retirement, pay, profit-sharing, 401(K) plans, health care, bonuses, demographics, compared to parents, future.
Paper Introduction:
Compensation and benefits in the workplace are very different for the “baby boomer” generation in comparison to the benefits received by their parents. Parents of baby boomers worked for one company, put in their hours, and received a pay check. The amount of the take-home pay was fairly stable. Job security meant getting a job with a large corporation or government agency. One of the parents, usually the father, was a part of the company team until retirement. The company was an integral part of family life. The place of employment provided a social outlet, promised a secure retirement, and paid for complete medical coverage for the family.
Times have changed. The most significant change in employer/employee relationships is the shift of responsibility from the employer to employee. Across the country, companies are
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Benefits also reflect a company's self-image and defineit to its employees. Long-term care coverage is one of the new benefitoptions. Many small companies cannot support thecosts of funding a defined benefit plan. Job security meant getting a job with a large corporationor government agency. Baby boomers are responsible for the creation of a new growthindustry in compensation and benefits plans--the outside vendor. In contrast, baby boomers tend to distrust authority and askquestions. As aresult, most company programs focus on investment fundamentals in anattempt to assist employees in understanding the basics of assetallocations and rates of return. Since the end of the babyboom in 1964, the percentage of children under age 18 in the population hasbeen dropping. This group wasreared to accept authority and save for a rainy day (Farush, 1996, pp. They want to manage their own financial affairs. Bothlarge and small firms are following a growing trend to offer employees theoption of choosing their benefit package components. Thisis no longer true. However, companies musttake every precaution not to advise employees on specific investments, orthey can open themselves to liabilities and possible legal actions. Changing benefit packages was never easy,and, when contractual agreements are in place, making changes can be evenmore difficult for the employer. The cradle-to-graverelationship between employer and employee that baby boomers' parentsenjoyed is a thing of the past. Journal of Lendingand Credit Risk Management, pp. A regular paycheck in a set amount will no longerbe the norm. Benefit choices are available in areas other than retirement. Being able to select options and controltheir own investments appeals to most baby boomers. N. By 1987, the bureau wasreporting that bonus payments were some part of the agreement for 4 percent of all workers with union contracts (Boyett & Conn, 1991, pp. With increased workforce mobility,especially among skilled workers, today's employee could be working for acompetitor tomorrow. A general trend to pay based onskills and performance, not on position, has been emerging over the past 1 years, according to a number of studies conducted by the Hay Group (Boyett& Conn, 1991, pp. Employees arevalued for their skills, levels of performance, and contributions to thegrowth and well-being of the company. Flexible benefit programs suit this group best. Slowly but surely, they areredefining the family unit and are pressuring their employers to selectbenefit program providers that will accommodate all the newly definedfamily members. In addition, employers are faced with theintroduction of new laws which have changed the functions of benefits andcompensation management. Plans may include any one or more ofthe many available options--the popular 4 1(k), profit-sharing, and stockoption programs, to name a few. Benefitprograms for their parents often included payroll deductions for pensionprograms, U.S. They wantmore options and the opportunity to select among the available options tosatisfy their needs. 116-121). As the population ages and lives longer, elder care needsincreases accordingly, also. Breaking all thestatistical records in 1987, female baby boomers of childbearing age (15 to44 years old) were 74 per cent of the female labor force. They do not believe thatthe Social Security system will be intact when they reach retirement age.The many changes in health care make them uneasy, as well. Parents of baby boomers worked for one company, put in theirhours, and received a pay check. 7-1 ). As the baby boomers move through their careers, meeting their needshas changed the face of benefits and compensation programs forever. They have lived to see more inflation,the spread of technology, the computerization of banking and shopping, theReagan Boom, more inflation, and now a tight job market in which downsizingand reengineering are part of the new business jargon. Workplace 2 : The revolutionreshaping American business. Baby boomers' concern over long-term health care has created a newtype of benefit. 117). Historically, little if any, profit sharing with employees wasavailable during the time the parents of the baby boomers were working,except for a few top executives. The workplace has changed because companies must change to remaincompetitive and stay in business. The most significant change in employer/employeerelationships is the shift of responsibility from the employer to employee. Benefits help a company compete with other businesses forquality workers. Retirement and pay are the two areas in benefits and compensationprograms which have been the most affected. Many baby boomers are notpart of the traditional family arrangement. Labor force projections: Thebaby boom moves on. These days, even the corporate giants are using outside help.For many employers, out-sourcing saves resources. Times have changed. (1991, November). Monthly Labor Review, pp. They signed up. 117-118) and the Department of Labor, Bureau of LaborStatistics (1993). Some employers offera cafeteria-style menu of benefits. Bycomparison, the parents of baby boomers tended to be savers. ERISA, with its disclosure requirements, was thefirst law to outline the role of benefits managers. Thisever-increasing percentage of women in the labor force is projected tocontinued, according to the Bureau of Labor Statistics (Fullerton, 1991, p.38). As a result of the baby boom, the increased demand forhomes, schools, automobiles, and other consumer goods and city servicesrippled through the economy. Daycare and elder care, on-site banking and dry cleaning services, maternityand paternity leaves, flexible work hours, telecommuting and otherworkplace innovations in time and scheduling are considered just asimportant as traditional retirement and medical benefit programs to thebaby boomers. Most of the baby boom generation will be among the 45- to 64-year-olds in 2 5. Across the country, companies are becoming less paternalistic in theirmanagement of employees. ReferencesBoyett, J. Employers no longer feel either the obligation or thenecessity to provide the same high level of benefits for their employees. Record-keeping isshifted to a third-party vendor, and much of the investment management ishandled by the employee. The company was an integral part offamily life. Further, homes weretraditionally bought and maintained by the husbands' single income. Savings bonds, and insurance policies. In another area, companies are becoming lesspaternalistic in their treatment of employees as workers. This age group will comprise 25 percent to 3 percent of thepopulation by that time. (1996, March) Demographics dominate. Companies are attempting to cope with the frustrations of their babyboomer employees and to survive in their marketplace through a number ofchanges and innovations in compensation and benefit offerings. Baby boomers are accustomed to buying name brandproducts, and they have become very demanding. (1996, June). A totally different world faces today'sbenefits manger. As the largest segment, their impact on thedemographics of the labor force has been significant. This responsibility shiftrequires more work for the employee. 33-36). When the swell of baby boomers entered the workforce for the firsttime, because of their large number, the median age of the workforcedecreased. Another factor which has contributed to the gradual reduction inbenefits is the prevalent attitude among employees that benefits, oncegiven, cannot be taken away. Participation in4 1(K) plans is increasing. Many employees knew managersin their place of employment who did not have the skills others had andcertainly did not work as hard or produce as much but who were in higherpositions than they were. Ifcarefully planned and implemented, changes can benefit both employee andemployer. Surveys indicate a trend among companies to give lower salaryincreases, implement pay for performance programs, extend review periods,give lump sum merit increases, and use two-tier compensation systems(Boyett & Conn, 1991, p. Companies feel less inclined toprovide long-term benefits. Most averageAmerican workers own more and more of the companies in which they work(Boyett & Conn, 1991, p. They are faced with the reality that job securityis nonexistent, new jobs are scare, and employer loyalty to workers nolonger exists in a world of downsizing and reengineering (Farush, 1996, p.1 ). As a result of thatperformance review, employees would receive a percentage increase on theirbase salary. H., & Conn, H. At home, Americans were fascinated with the baby boom phenomena.From 1946 to 1964, the birthrate exploded throughout the nation--15 million births by 195 and 179 million by 196 . Companies are giving employees the opportunity toparticipate in the selection and planning of their retirement, compensationand other benefits programs. 123). The large percentage of female baby boomers in the work place hasaffected the benefit programs in many companies in a number of ways.Historically, the majority of married women, primarily the mothers of thebaby boomers, did not work outside the home. Baby boomers comprise the largest single segmentof the population. P. As more women go to work, the need for child careincreases. Baby boomers experienced the Cold War, the Vietnam War and inflationduring the Carter administration. 38-4 . Against the backdrop of the Cold War and the threat ofatomic war, Americans moved toward greater national unity. Even with two incomes, the baby boomers are havingdifficulty affording new homes and maintaining the overall lifestyle thatthey have come to enjoy. As this group ages, retires, dies and otherwise leaves theworkforce, the median age will begin to increase, again. This is one of the reasons thatthe 4 1(K) programs, in which employee contributions to their retirementsavings are matched by the employer, are so popular. Baby boomers can select how they wantto allocate the benefit money that is available to them to spend on healthcare, disability insurance, and other benefit options. Traditionally, people were paid based on the position they held inthe hierarchy of the organization. Pay increases for most workers were tiedto job performance reviews. That situation is rapidly changing. The age of entitlement to automatic salary increases and better,more expensive benefit packages has ended. People sat down with their supervisor once ayear to review their performance on the job. E. Benefits and compensation are changing because the workplace ischanging. For example, AT&T alreadyoffers this benefit on a payroll deduction basis. How people are paid will continue to change dramatically for thebaby boomer generation. Monthly Labor Review, pp. Employers can no longer afford tocarry long-term employees until retirement if they do not perform.Downsizing and reengineering are taking their toll on the workforce. New York: Penguin.Fullerton, H. They are making thedecisions. However, managing and administering themore complex benefits programs can be a daunting task, even for largercompanies. While many companies stilloffer some type of defined benefit plan, more than 65 per cent now alsooffer one or more contribution plans. However, because of the managers' position inthe hierarchy of the company, they were being paid much more money. A. However, workers have always known that performance and skill hadlittle to do with how much people were paid. Still, benefits remain animportant part of the overall compensation package for the majority ofemployers. Pay bonuses were so rare before 1983 that the Bureau of LaborStatistics did not keep statistics on the number. Upward mobilityand middle-class incomes swept the country as millions of Americans beganto enjoy a post-war affluence such as they had never dreamed in the past. Policy implementationof 4 1(k) plans and managed care benefits have contributed to the ever-increasing complexity of benefits administration, also. Another reason for their popularity is that a good 4 1(K) offers awide range of investment options. If companies are going to survive in theglobal marketplace, changes are necessary at all levels and in all areas.The new management approach encourages people to do their best, develop anduse new skills, focus on customer/client relationships, increaseproduct/service quality, and be involved in the business of which they area part. 31-44.Fullerton, H. The costs of nursing home confinement or an assisted livingsituation could devastate most people's retirement fund in a few years. Socialcriticism was tolerated less, and areas of conflict such as labor unionstrikes, government policies, and racism were repressed. On their side, employers have at least a fiduciary obligation toprovide some financial information to employees explaining retirement andinvestment plan structures and available options. Asbaby boomers near retirement age, they are opting for buy-in options toprovide voluntary long-term care coverage. As a resultof these attitudes, baby boomers tend to be more interested in investingthan saving. N. This is a result of the drop in birth rates after 1964 (Fullerton,1993, p. 7-14.Huth, S. Companies are looking for ways to cut costs while at the sametime increasing the value they receive for their benefit dollars.Employees want more selection and flexibility in their benefit programs. Baby boomers are benefiting from, as well as affecting, thischange. The place of employment provided a social outlet, promised asecure retirement, and paid for complete medical coverage for the family. The amount of the take-home pay wasfairly stable. Money to educate their children, as well as forretirement, is a major concern for this group. 31-41.Furash, E. Baby boomers are concerned about whether their pensions, socialsecurity, and Medicare will provide them with adequate support for acomfortable retirement. Baby boomers are the major recipients and users of credit. Faced with the many retirement andmedical options, workers must be much better informed. With the continuing increase in health care costs, benefits managersare forced to focus on flexible benefits and alternative health careprograms to contain costs for their companies. Currently, thisnumber of working women is almost one-third of the total workforce. Today, more and more workers each yearshare in the profits of the company which employs them. The overall laborpool is aging as the baby boomers approach retirement age. Employee Benefit Plan Review, pp. Another look at the labor force:The American work force 1992-2 5. The agecomposition of the current labor force reflects the fact that the generalpopulation is moving through a period in which fewer people are going towork. One of the parents, usually the father, was a partof the company team until retirement. The amount of responsibility assignedand how many people reported to them reflected people's level in thecompany and their compensation. They did not participate in the selection of their benefits andcompensation program or discuss options. Flexible benefitplans have a number of different configurations available, depending on thecompany's resources, type of workforce, and other factors. Mostemployers used outside insurance and medical and investment companies forthe traditional benefits plans. Benefits are expensive and account for asubstantial share of total worker expenses. Nationwide, employersare contributing less to retirement programs. Compensation and benefits in the workplace are very different for the"baby boomer" generation in comparison to the benefits received by theirparents. (1991). Performance-based pay plans are already in place in anumber of American companies such as DuPont, Lincoln Electric in Cleveland,Ohio, and Nucor Steel Plants in Charlotte, North Carolina and Darlington,South Carolina. Parents of the baby boomer generation experienced the Depression eraand may have grown to adulthood in time to experience World War II and theKorean conflict. Now, in most families, two incomes are required tomaintain the home. (1993, November).
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