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Please circle the one benefit below that is most important to you and your family:
a. Medical insurance
b. The 401(k) plan
c. The bonus plan
9. Include demographic items. When designing a benefit plan, you need to know how different categories of employees feel about the current benefits and what changes they would like to see. Therefore, ask employees to indicate sex, age, full or part time, family income, dependents, salaried versus hourly, and whether they are covered under a spouse’s plan.
10. Include items that require employees to make choices. Such items can provide valuable information that will help you make intelligent decisions when designing a benefit plan. For example:
What Is Important to Employees?
If necessary, I would be willing to pay more out of my paycheck to receive, or to receive an increase in:
a. Medical insurance
b. Dental insurance
c. Life insurance
d. Prescription drug coverage
e. Vision care
Please circle the one most important change that you would like to see made to our medical plan:
a. Reduce the medical insurance required copayment when I receive services
b. Increase the types of coverage provided in the plan
c. Allow me to visit any doctor
d. Reduce the amount of money I contribute toward the cost of the plan
• Employee input must be taken into account when designing or improving employee benefit and compensation plans.
• Trying to make everyone in the organization happy with the benefit and compensation plan is an unrealistic goal.
• The most important issues to employees today are pay, pay-performance linkage, adequate staffing, enjoyment of their work, and work/family balance.
• An employee benefit survey can help you identify what is most important to your employees.
WHAT IS THE CURRENT EMPLOYEE PICTURE?
Almost invariably, business owners are surprised by the actual information about their employees. They are surprised that one employee’s salary is so high and another’s salary is so low. Sometimes they learn that a key person (one who really helps the company make those critical deadlines) has been overlooked and has not received a bonus in years.
GETTING AN INTEGRATED PICTURE OF THE WORKFORCE
Worksheet 4.1 on page 36 provides a framework for pulling together information about employees, their compensation, benefits, performance assessment, and developmental needs. It is a framework for analyzing the components of the compensation plan in an integrated way.
What Is the Current Employee Picture?
Worksheet 4.1 Employee Data Table— Compensation and Performance Information
Employee Name Date of Birth Date of Hire Position Hours Base Pay Benefits Performance Assessment? Developmental Needs?
INFORMED DECISION MAKING
With integrated information about your employees, you can get a better picture of your overall workforce. You can make informed decisions about whom you want to reward and whether your compensation is fair and equitable relative to work performance. This is also a tool for identifying high-performing employees—their strengths and developmental needs. You can make evaluations about which employees need training or a new assignment.
Within this framework, you can adjust compensation to reward the strong performers. You can adjust compensation to ensure pay equity among workers who are doing similar work. It is a sound business practice to review whether women or minorities are being paid fairly relative to compensation paid
to white men for similar work. This reduces the risk of litigation for discriminatory employment practices.
Aggregating employee information in an integrated framework will help you evaluate alternatives for establishing a retirement plan for your company and enable you to make informed decisions about your compensation plan.
Family relationships add complexity to running a business. Successful family businesses that stand the test of time find ways to resolve disputes and rivalries among family members and ensure that the leadership of the company is in capable hands. Sometimes this means finding nonfamily hands.
Compensation planning is especially important in family businesses. Frequently, the extended family depends heavily, sometimes exclusively, on profits from the business to maintain their way of life. To develop an effective compensation plan for a family business requires addressing all the issues discussed in Chapters 1 through 4 as well as dealing with the family dynamics.
RECURRING PATTERNS OF FAMILY DYNAMICS
Although each family business has unique characteristics, there are recurring patterns that affect compensation planning. These include sibling rivalry, unwillingness of younger family members to take over, nonproductive family members, and the classic parent’s reluctance to “let go.”
The successful transition of ownership and management of a family business is fraught with problems, and the statistics are not encouraging. An article by John Bedosky in Trusts & Estates (April 2002), titled “Family Conflict, Not the Taxman, Is the Biggest Obstacle to Passing the Business to Successors,” states: “Often because of inadequate succession planning, less than 13 percent of today’s family businesses stay within a family for more than 60 years.”