c. Workers' Compensation $843.75 2. Pension, group insurance, disability a. Pension plan contributions ( 7% of base) b. Group insurance (life, health, dental) c. Short-term disability d. Long-term disability 3. Payments for time not worked a. Paid vacation and statutory holidays ( 20 days average) b. Paid sick days ( 5 days average) c. Paid rest periods, lunch periods, etc. d. Payments for jury duty, leave for bereavement, or other personal reasons $5,197.50 $2,362.50 $2,700 \$ 85 $50 $4,350 $2,430 \$ 675 $1,125 $120 EXHIBIT 9.11 Two Possible Packages for Cutting Benefit Costs Option 1 Implement deductible (\$25 annually) for - Healthcare plan - Dental plan Require employee's contribution to: - Pension plan ( 3.5% of base pay) Require probationary period (one year) before eligible for - Discounts on goods - Contributions to employee savings plan Option 2 Improved claims processing for - Group Insurance - Short-term disability - Long-term disability Reduction of benefits: - Eliminate two paid sick days per year - Eliminate paid rest periods Lamps Plus Lamps Plus manufactures lamps for residential homes. The president of the company, Laura Cole, is convinced that she must get concessions from the workers if Lamps Plus is to compete effectively with increasing foreign competition. In particular, Cole is displeased with the cost of employee benefits. She doesn't mind conceding a competitive wage increase (maximum 3\%), but she wants the total compensation package to cost 3% less. The current costs are shown in Exhibit 9.9. Questions 1. Cost out each of the two options, using the information provided in [[ Exhibits 9.9 [ $ and 9.12. 2. Which package would you recommend to Cole? Why? Which of the options do you think will employees more likely to accept? 3. Could you propose a better option than the two suggested that will achieve Cole's goal and at the same time be more likely to be accepted by the employees with less resistance? You also have data from a consulting firm that indicates employee preferences for different forms of benefits ( Exhibit 9.10). Based on all this information, you have two possible concession packages that you propose, labelled "Option 1" and "Option 2" ( Exhibit 9.11)