Question

The Cost of Benefits

The cost of benefits accounts for more than 31 percent of the total employee compensation package. Employee benefits are unique in that they have legal compliance aspects, they are institutionalized in most organizations, and they are complex. Employee benefits are important because they influence attraction, retention, retirement, and performance of employees. Organizations need to regularly examine their benefits package to ensure they are meeting employee needs in the best way possible.

In this exercise, please read the mini-case and answer the questions that follow.

Hospital executive Richard Weber was facing a difficult decision regarding the employee benefits for the doctors, nurses, and administrative staff working in his building. The costs of employee benefits had continued to grow throughout the years and were now accounting for a large percentage of the total compensation package at the hospital. Weber did not know what to do.

He could not cut benefits entirely because several of them were required by law. Moreover, benefits were often used as a part of recruitment to attract doctors and nurses to the hospital. In addition, Weber believed that the tax treatment of benefits was more valuable to employees than if he were to offer higher salaries. Furthermore, he knew the hospital insurance rates were much lower than those the employees would be able to find on their own.

He also worried that if he touched the benefits, he would have organized labor groups coming after him. Weber knew that he could potentially reduce specialized programs such as the 16 paid hours a month employees were given for volunteer work, but he felt that those programs were valuable and enriched outreach to the surrounding community. The cost of benefits just kept growing, and Weber did not believe there was anything he could do about it.

21.

value:
2.00 points

Which of the following is an optional benefit Weber can offer employees in his hospital?

Life insurance

Social security

Workers' compensation

References

Multiple ChoiceLearning Objective: 13-01 Discuss the growth in benefits costs and the underlying reasons for that growth.

Difficulty: 2 MediumLearning Objective: 13-02 Explain the major provisions of employee benefits programs.

22.

value:
2.00 points

Weber uses benefits as a means to recruit and attract employees. This type of strategy led to the tremendous growth of benefits in this country and was first implemented due to

Wage controls

Stereotype protection

Legal regulations

References

Multiple ChoiceLearning Objective: 13-01 Discuss the growth in benefits costs and the underlying reasons for that growth.

Difficulty: 2 MediumLearning Objective: 13-02 Explain the major provisions of employee benefits programs.

23.

value:
2.00 points

Tax treatments of benefits is often more favorable to the employee than tax treatment of wages because of which of the following?

Benefit caps

Social Security Act

Marginal tax rate

References

Multiple ChoiceLearning Objective: 13-01 Discuss the growth in benefits costs and the underlying reasons for that growth.

Difficulty: 2 MediumLearning Objective: 13-02 Explain the major provisions of employee benefits programs.

24.

value:
2.00 points

The hospital insurance rates were much lower than those employees could find on their own because of __________________.

Economies of scale

New Deal legislation

Marginal tax rates

References

Multiple ChoiceLearning Objective: 13-01 Discuss the growth in benefits costs and the underlying reasons for that growth.

Difficulty: 2 MediumLearning Objective: 13-02 Explain the major provisions of employee benefits programs.

25.

value:
2.00 points

Which of the following factors has influenced the increase in the scope of employee benefits?

Global expansion of business

Increased government oversight

Organized labor

References

Multiple ChoiceLearning Objective: 13-01 Discuss the growth in benefits costs and the underlying reasons for that growth.

Difficulty: 2 MediumLearning Objective: 13-02 Explain the major provisions of employee benefits programs.

Answer 1

21. The correct option is life insurance because it cheaper with respect to social security and workmen compensation is more applicable on jobs with higher risk.

22. Benefits in labor recruitment was first implemented due to wage control.

23. Due to marginal tax rate tax treatment of benefits is beneficial for employees.

24. Economies of scale is the reason for cheaper rate of group than individual.

25. Organized labor has increased the scope of employee benefits.