Please answer each question with 500 words or more total word count. Please cite sources and use apa format.Benefits as a Strategic Advantage???1.Why are benefits strategically important to employers, and what are some key strategic considerations?Health Care Costs Out of Control???2.Discuss the following statement: “Health care costs are out of control in the United States, and increasing conflicts between employers and employees are likely as employers tyr to reduce their health benefits costs.”3.This section discusses important issues that will shape compensation professionals’ work for years to come. Which one of these issues stands to create the greatest uncertainty for compensation professionals? Explain your answer
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12
Compensating the Flexible Workforce
Contingent Employees and Flexible
Work Schedules
Learning Objectives
G
When you finish studying this chapter,
A you should be able to:
12-1. Describe the four groups ofTcontingent workers.
12-2. Discuss pay and benefits issues for contingent workers.
E
12-3. Summarize the three categories of flexible work schedules.
S
12-4. Discuss the pay and employee benefits issues for flexible work schedules,
, telecommuting arrangements.
compressed workweeks, and
12-5. Describe unions’ reactions to contingent work and flexible work schedule
arrangements.
D
12-6. Identify strategic issues andE
choices companies have regarding the use of
contingent workers.
A
N
D
R
CHAPTER WARM-UP!
If your professor has assigned this,Ago to the Assignments section of mymanagementlab.com
to complete the Chapter Warm-Up! and see what you already know. After reading the
chapter, you’ll have a chance to take the Chapter Quiz! and see what you’ve learned.
1
1
Changing business conditions and personal preferences for work–life balance have led to an increase
in contingent workers and the use of 2
flexible work schedules in the United States. This chapter
looks at compensation issues for contingent
3 workers and demonstrates that compensating contingent
workers is a complex proposition. Human resource (HR) and compensation professionals encounter
T
tremendous challenges in managing pay and benefits for these individuals. Many companies employ
both types of individuals, often in theS
same jobs. To the casual onlooker, including others in the
workplace, there are no visible differences; however, HR and compensation professionals must take
many factors into consideration. As we will learn in this chapter, compensation professionals should
be aware of the differences between core employees and contingent workers and the complexities of
compensating contingent workers, particularly, pertaining to the domain of legally required benefits.
12-1 Describe the four
groups of contingent
workers.
280
The previous chapters addressed compensation issues for core employees. Core employees have
full-time jobs or part-time jobs, and they generally plan long-term or indefinite relationships
with their employers. In addition, all core employees were assumed to work standard schedules
Strategic Compensation: A Human Resource Management Approach, Ninth Edition, by Joseph J. Martocchio. Published by Pearson.
Copyright © 2017 by Pearson Education, Inc.
ISBN 1-323-59381-0
THE CONTINGENT WORKFORCE
 ;
   ><K> ?x
(i.e., fixed 8-hour work shifts, 5 days per week). Compensation practices differ somewhat for the
flexible workforce. According to the U.S. Bureau of Labor Statistics, contingent workers1 are
those who do not have an implicit or explicit contract for ongoing employment. Persons who do
not expect to continue in their jobs for such personal reasons as retirement or returning to school
are not considered contingent workers, provided that they would have the option of continuing
in the job were it not for these reasons. Alternatively, some refer to contingent employment as
‘on-demand’ employment.2 This idea relies on job security as the basis for distinguishing between contingent and noncontingent employment. Figure 12-1 details questions that determine
whether workers expect their employment to continue, that is, whether their work arrangement
is considered to be contingent.
Groups of Contingent Workers
There are four distinct groups of contingent workers:
G
A
T
E
PART-TIME EMPLOYEES The Bureau of Labor Statistics defines
S a part-time worker as an individual
who works fewer than 35 hours per week.3 The Bureau also distinguishes between two kinds of
,
part-time employees: voluntary and involuntary. A voluntary part-time employee chooses
ISBN 1-323-59381-0
š
š
š
š
Part-time employees
Temporary and on-call employees
Leased employee arrangements
Independent contractors, freelancers, and consultants
to work fewer than 35 hours per regularly scheduled workweek. In some cases, individuals
supplement full-time employment with part-time employment
D to meet financial obligations.
Some workers, including a small but growing number of professionals, elect to work parttime as a lifestyle choice. These part-timers sacrifice pay, E
and possibly career advancement, in
exchange for more free time to devote to family, hobbies, and
A personal interests. They often have
working partners or spouses whose benefits, generally including
medical and dental insurance,
N
extend coverage to family members.
Involuntary part-time employees work fewer than D
35 hours per week because they are
unable to find full-time employment. Involuntary part-time
Rwork represents a substantial share
of all part-time employment. There is a commonly held but inaccurate stereotype of involuntary
A
part-time workers as being low skilled and uninterested in career advancement. To the contrary,
many involuntary part-time workers hold entry-level career-track jobs.4 Although we have discussed voluntary and involuntary part-time work as part of 1
the contingent workforce, it is important to emphasize that many core workers negotiate part-time schedules with employers.
1 and the number of individuals who
Table 12-1 lists the specific reasons for part-time work
2 each reason. The table also shows
work part-time, defined as fewer than 35 hours weekly, for
those who usually work on a full-time or part-time basis, for
3 economic reasons, the majority of
the workers who were employed on a part-time basis because of slack work or business condiT
tions, or they could only find part-time work. We can reasonably
say that those individuals are
probably working part-time on an involuntary basis. Noneconomic
reasons explain approxiS
mately 80 percent of those who usually work part-time. Most of those workers indicate that they
usually work part-time because they are in school or training, are retirees whose Social Security
retirement benefit requirements place a limit on additional earnings. The average weekly hours
worked for individuals who usually work part-time based on economic reasons was 22.6 hours
and 19.8 hours for noneconomic reasons.
Companies may experience advantages and disadvantages from employing part-time workers. Flexibility is the key advantage. Most companies realize a substantial cost savings because
they offer few or no discretionary benefits. In addition, companies realize cost savings for
benefits that are linked to hours worked (e.g., retirement plan contributions). Table 12-2 shows
employers’ costs for providing various discretionary benefits and legally required benefits to
Strategic Compensation: A Human Resource Management Approach, Ninth Edition, by Joseph J. Martocchio. Published by Pearson.
Copyright © 2017 by Pearson Education, Inc.
281
282
 
N     >> 
24
     
) 0     
    0    
 )4 )   ‹
74 0
  
0   )    
+ˆ    
      
  0‹
‰
Š
‰
Š
Š
<4(      "  )  ‹ ‰ Š 34, 0       0 ‹ G A T E S , ‰ Š 94, 0  "&   ‹ ‰ ;4 )    )    („(*( *%     0‹ Š      84$  0    &      ) ‹ D E A N D (     R Œ Œ <ˆ3ˆ9ˆ A  Œ  Œ ; Employment expected to continue  0  @4,00     &    )   0 ‹ %  Š    1  1 2 Employment NOT 3 expected to continue T S Questions that Determine Whether Workers Expect :4   0 ˆ    0   0)   0 ‹ ‰ (     ŒŒ <ˆ3ˆ 9  Œ  Œ ; FIGURE 12-1 Their Employment to Continue Source: Polivka, A. E. (1996). Contingent and alternative work arrangements, defined. Monthly Labor Review, 119(10), p. 5. Strategic Compensation: A Human Resource Management Approach, Ninth Edition, by Joseph J. Martocchio. Published by Pearson. Copyright © 2017 by Pearson Education, Inc. ISBN 1-323-59381-0 full-time and part-time employees. Employers save a considerable amount of money in the areas of paid leave, insurance, and legally required benefits. In Chapter 9 we discussed that a greater percentage of full-time workers receive employee benefits than part-time workers. Companies also save on overtime pay expenses. Hiring part-time workers during peak business periods minimizes overtime pay costs. As we discussed in Chapter 2, the Fair Labor  ;    ><K> ?x
TABLE 12-1 Reasons for Working Less than 35 Hours per Week, February 2015
(Numbers in Thousands)
%”&” 2 ?@&) >”” %& J[ ’”
Total
Usually Work
’ƒ
Usually Work
Part-Time
Total, 1 to 34 hours
Economic reasons
Slack or casual work or business conditions
Could only find part-time work
Seasonal work
Job started or ended in the middle of week
Noneconomic reasons
Child-care obstacles
Other family or personal obligations
Health or medical limitations
In school or training
Retired or Social Security limit on earnings
Vacation time or personal day
Holiday, legal, or religious obligation
Weather-related curtailment
All other reasons
Average weekly hours, economic reasons
Average weekly hours, noneconomic reasons
35,719
6,772
4,011
2,355
297
109
28,947
1,016G
5,020
A
844
6,385T
2,316E
2,836S
604
,
1,463
8,464
22.9D
21.5E
10,170
1,660
1,399

152
109
8,510
101
697

55

2,836
604
1,463
2,755
24
25.6
25,549
5,112
2,612
2,355
145

20,437
915
4,323
844
6,331
2,316



5,709
22.6
19.8
A
N
D
R
Employers’ Hourly Costs for Full- and Part-Time
A 2014
Employee Benefits, December
Note: Dash indicates no data or data that does not meet publication criteria.
Source: U.S. Bureau of Labor Statistics. (March 6, 2015). Labor Force Statistics from the Current Population
Survey. Available: http://www.bls.gov/web/empsit/cpseea25.htm, accessed March 17, 2015.
TABLE 12-2
K&2
Total hourly benefits costs
Paid leave
Supplemental pay
Insurance
Retirement and savings
Legally required benefits
’ƒ SVX
1
11.80
1
2.77
1.41 2
3.18 3
1.65 T
2.78
S
%ƒ SVX
3.37
0.45
0.22
0.70
0.32
1.68
ISBN 1-323-59381-0
Source: U.S. Bureau of Labor Statistics. (2015). Employer Costs for Employee
Compensation, December 2014. USDL: 15-0386. Available: http://www.bls.gov,
accessed March 9, 2015.
Standards Act of 1938 (FLSA) requires that companies pay nonexempt employees at a rate
equaling one and one-half times their regular hourly pay rates. Retail businesses save by employing part-time sales associates during the peak holiday shopping season.
Job sharing is a special kind of part-time employment agreement. Two or more part-time
employees perform a single full-time job. These employees may perform all job duties or share
the responsibility for particular tasks. Some job sharers meet regularly to coordinate their efforts.
Strategic Compensation: A Human Resource Management Approach, Ninth Edition, by Joseph J. Martocchio. Published by Pearson.
Copyright © 2017 by Pearson Education, Inc.
283
284
 
N     >> 
TABLE 12-3 Benefits of Job Sharing
K&2”  /”
š
š
š
š
š
Maintenance of productivity because of higher morale and maintenance of employee skills
Retention of skilled workers
Reduction or elimination of the training costs that result from retraining laid-off employees
Greater flexibility in deploying workers to keep operations going
Minimization of postrecession costs of hiring and training new workers to replace those who found
other jobs during layoff
š Strengthening employees’ loyalty to the company
K&2”  /”
š
š
š
š
Continued employee benefits protection
G of unemployment is high
Continued employment when the likelihood
Maintenance of family income
A
Continued participation in qualified retirement
programs
T
E
Job sharing represents a compromise S
between employees’ needs or desires not to work full-time
and employers’ needs to staff jobs on, a full-time basis. Both employers and employees benefit
from the use of job sharing. Table 12-3 lists some of the benefits of job sharing to employers and
employees.
D
two reasons. First, temporary workersEfill in for core employees who are on approved leaves of
absence, including sick leave, vacation,
Abereavement leave, jury duty, and military leave. Second,
temporary workers offer extra sets ofNhands when companies’ business activities peak, during
such times as the holiday season for retail businesses or summer for amusement parks. Temporary
D basis usually measured in days, weeks, or months.
employees perform jobs on a short-term
Companies have been hiring temporary
workers for three additional reasons. First, tempoR
rary employment arrangements provide employers the opportunity to evaluate whether legitiA
mate needs exist for creating new positions. Second, temporary employment arrangements give
TEMPORARY AND ON-CALL EMPLOYEES Companies traditionally hire temporary employees for
Strategic Compensation: A Human Resource Management Approach, Ninth Edition, by Joseph J. Martocchio. Published by Pearson.
Copyright © 2017 by Pearson Education, Inc.
ISBN 1-323-59381-0
employers the opportunity to decide whether to retain particular workers on an indefinite basis.
“The temp job is often what one university
placement director calls the ‘3-month interview’—
1
and a gateway to a full-time job and perhaps a new career.”5 In effect, the temporary arrange1 when employers observe whether workers are meeting
ment represents a probationary period,
2
job performance standards. As a corollary,
such temporary arrangements provide workers the
chance to decide whether to accept employment
on a full-time basis after they have had time to
3
“check things out.” Third, employing temporary workers is often less costly than employing core
T less likely to receive costly discretionary benefits (e.g.,
workers because temporary workers are
medical insurance coverage).
S
Companies hire temporary employees from a variety of sources. The most common source
is a temporary employment agency. Companies employed approximately 2.9 million temporary workers.6 Most temporary employment agencies traditionally placed clerical and administrative workers. Since then, many temporary agencies also place workers with specialized skills
(e.g., auditors, computer systems analysts, and lawyers). Temporary agencies are becoming
more common. Nowadays, there has been an expansion into blue collar work. For example, jobs
in transportation and material moving and production account for approximately 42 percent of
the temporary employment industry.7
Companies generally establish relationships with temporary employment agencies based on
several factors. First, companies consider agencies’ reputations as an important factor, judging
 ;
   ><K> ?x
reputations by how well agencies’ placements work out. Some agencies place a wide range of
employees, yet others specialize in one type of placement (e.g., financial services professionals).
When companies plan to hire a variety of temporary workers, it is often more convenient to work
with agencies that do not specialize. Companies should ultimately judge these agencies’ placement records for each type of employee.
Second, companies also should consider agencies’ fees. Cost is a paramount consideration
for companies that are pursuing lowest-cost competitive strategies. Temporary agencies base
fees as a percentage of their placements’ pay rates. The percentage varies from agency to agency.
The competition among temporary agencies fortunately keeps these rates in check.
Although temporary employees work in a variety of companies, their legal employers are
the temporary employment agencies. Temporary employment agencies take full responsibility for
selecting temporary employee candidates and determine candidates’ qualifications through interviews and testing. Many temporary agencies train candidates to use such office equipment as fax
G programs, particularly for clerimachines, e-mail, and spreadsheet and word processing software
cal and administrative jobs. Temporary employees receive compensation
directly from the agency.
A
Companies may hire temporary employees through other means. For example, some comT direct hire arrangements, tempanies hire individuals directly as temporary workers. Under
porary employees typically do not work for more than 1 year.
E In addition, the hiring companies
are the temporary workers’ legal employers. Thus, companies
S take full responsibility for all HR
functions that affect temporary employees, including performance evaluation, compensation,
,
and training.
On-call arrangements are another method for employing temporary workers. On-call
employees work sporadically throughout the year when companies require their services.
D
Companies can schedule workers for several days or weeks in a row. Some unionized skilled
E are unable to secure permanent,
trade workers are available as on-call employees when they
full-time employment. These employees’ unions maintain A
rosters of unemployed members who
are available for work. When employed, on-call workers are employees of the hiring companies.
N implementing HR policies, includThus, the hiring companies are responsible for managing and
D
ing compensation.
R qualified individuals and place
LEASED EMPLOYEE ARRANGEMENTS Lease companies employ
ISBN 1-323-59381-0
them in client companies on a long-term basis. Most leasing
A companies bill the client for the
direct costs of employing the workers (e.g., payroll, benefits, and payroll taxes) and then charge
a fixed fee. Lease companies base these fees on either a fixed percentage of the client’s payroll
1
or a fixed fee per employee.
Leasing arrangements are common in the food service
1 industry. ARAMARK is just one
example of a leasing company that provides cafeteria services to client companies. ARAMARK
2 preparers, and checkout clerks.
staffs these companies’ in-house cafeterias with cooks, food
3 not the client company. Leasing
These cafeteria workers are employees of the leasing company,
companies also operate in other industries, including security
T services, building maintenance,
and administrative services. Lease companies and temporary employment agencies are similar
S provide both wages and benefits
because both manage all HR activities. Thus, lease companies
to their employees. Lease companies and temporary employment agencies differ in an important
respect, however. Lease company placements generally remain in effect for the duration of the
lease company’s contract with the host company.
INDEPENDENT CONTRACTORS, FREELANCERS, AND CONSULTANTS Independent contractors,
freelancers, and consultants (the term independent contractor will be used in this discussion)
establish working relationships with companies on their own rather than through temporary
employment agencies or lease companies. Traditionally, independent contractors typically
possess specialized skills that are in short supply in the labor market. It is estimated that 34
percent of the U.S. workforce qualify as freelancers.8 Companies select independent contractors
Strategic Compensation: A Human Resource Management Approach, Ninth Edition, by Joseph J. Martocchio. Published by Pearson.
Copyright © 2017 by Pearson Education, Inc.
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