5b Assume an average wage of 1150 per hour and a workweek of

(5b) Assume an average wage of $11.50 per hour and a workweek of 40 hours.

Your benefits budget is 38% of salary.

Assume 70% of the customer services associates will require family coverage.  

Structure a fixed (not cafeteria) benefits program for the customer service associates to be hired. You want to develop a program that will enable you to attract and retain the best employees.  

List below the benefits you will offer.     (Recall, this is not a cafeteria program)

Benefit Offered

Include sub-description if appropriate

Cost per Employee

Brief Rationale

(Why are you offering this benefit?)

2. What is your benefits budget per employee?   How did you determine this? (Show your math as well as explain what assumptions are you made).

3. Why do you believe this is the best plan? (Why does your plan make sense to help attract and retain the best employees?)

4. What are some potential weaknesses to the plan you have developed?

5.   Where were there areas of confusion or lack of clarity? / What else would you like to know to help make your plan stronger?

Developing an Employee Benefits Program^[1]

submit one file addressing the following (which are also shown in this file

USA Credit is a major financial services organization which offers private label credit cards. Since its founding, USA Credit has targeted medium-sized retailers that like the customer closeness associated with having their own credit card but lack the technical expertise to effectively manage an accounts receivable business. USA Credit\'s business-plan projects that it will double in size in the next two to three years. To support retailers’ credit card customers, USA Credit installs at each retail site a bank of telephones tied directly to the regional processing center. In addition, there is a payment drop box for customer payments and an attractive kiosk containing applications and assorted credit-related information. Retailers report their major concerns focus on (1) increasing the number of credit card customers for their stores; (2) maintaining accurate billing information that is summarized in attractively designed monthly statements to customers; and (3) maximizing collection efforts.

Since its founding, USA Credit\'s offices have been staffed with part-time employees working 20-25 hours per week. Most employees are full-time students, mothers of school-age children, and senior citizens. Employees have been paid wages similar to those offered by other entry-level employers in the area, such as fast-food restaurants and retailers. No employee benefits have been offered, except those required by law.

Several months ago, USA Credit\'s top management team decided its future goals would best be met by establishing a national service center to replace the regional credit offices. They wish to attract a full-time workforce in order to provide stability and a level of professionalism as new accounts are added and as strategic services are expanded. Estimates are that the center would initially employ 75 customer service associates and 4 to 7 other individuals, such as managers and technical specialists. If business grows according to plan, the number of customer service associates is expected to double over the next few years.

A lengthy search has been conducted using a cross-functional managerial team, which included Andy Wolfson, USA Credit\'s HR manager. After months of research, the team recommended locating the center on a two-acre lot just northeast of Taos, New Mexico. Real estate values are excellent in the region, the profile of the local worker is very appealing, the tax situation is favorable, and state and local political and community organizations welcome the opportunity to sponsor the opening of a solid, reputable, growing business such as USA Credit. Last week, the recommendation was unanimously approved for implementation. Groundbreaking is scheduled for next month.

Andy Wolfson\'s main challenge is to assemble an HR plan. A key element of this involves designing a compensation and benefits program for the customer service associates. In addition to its state-of-the-art information systems technology, the competence and courtesy of its associates are expected to be major sources of competitive advantage. If USA Credit is going to continue to be successful in this upcoming growth period, it will be because it didn\'t lose focus on current customers. The customer service associates at the national service center would be critical contributors to this effort.

Andy has requested a variety of information from knowledgeable sources concerning the employee marketplace and the practices of other area businesses. This information compiled in the attached memo from Andrea Birch. Based on this information, he has sent a preliminary proposal to the corporate vice president for administration. Xavier Ortenzio, whose response is also included. Working with a number of consultants and with local insurance companies, Andy has developed a list of possible benefit choices and their costs, which are itemized in the exhibit.

Solution

Ans-

2)The potential problems of job loss and skill shifting arise with any form of
negotiated or mandated pay rise, whether imposed by an outside agency or by bargaining
with a union. But a union is in the best position to weigh the consequences for its own
members of pay increases. In times of recession or economic hardship for the University,
it may choose to accept less of a pay raise. In better economic times, it will likely push
for much more.

3)It should be emphasized that a parity wage concept only makes sense in cases
where a well-functioning collective bargaining process is available. With the resurgence
of SEIU Local 254 and an initial significant increase in pay to compensate for past
failures in bargaining and the incentives.A minority of the members of the committee called for the combination of both an external living wage \"backstop\" and parity wage.

4)Collective bargaining is the appropriate process to determine appropriate wage
adjustments to respond to the problems highlighted in this report. Collective bargaining
allows the participating parties to take into account trade-offs of wages against other
forms of compensation and to consider the possible consequences for employment of
wage adjustments. It is not for the committee to tell the parties how they should negotiate
in collective bargaining. Nevertheless, the committee does have some observations and
suggestions to make about issues that should be considered in the re-opening of the wage
provisions of current collective bargaining agreements.

5)The committee believes thatthis concern is one of great importance, given the critical need that all workers have to be able to obtain medical care. We do not know all of the reasons underlying decisions by
workers not to elect health coverage; cost is very likely a key explanation in many cases.