$$ CASE Lamps Plus Lamps Plus manufactures lamps for residential homes. The president of the compariy, Laura Cole, is convinced that she must get concessions from the workers if Lamps Plus is to compete effectively with increasing foreign competition. In particular, Cole is displeased with the cost of employee benefits. She doesn't mind conceding a competitive wage increase $($maximum $3\%),$ but she wants the total compensation package to cost $3\%$ less. The current costs are shown in Exhibit $9\mathrm{.}9.$ EXHIBIT $9\mathrm{.}9$ Current Compensation Costs Average yearly wage $$33,750$ Averace hourly wape $$3401402$ $$18\mathrm{.}00$ Dollar value of yearly benefits, per employee $$47\mathrm{.}764\mathrm{.}02$ Total compensation $($wages plus benefits Daily average number of hours paid Benefits Average Employer Cost Employee$/$Year $6\backslash$deg C ADDd ING $12-18$ AM n CBenefits $751.$ Legally required benefits Average Employer Cost Employee$/$Year a Canada Pension Plan $ $3\mathrm{.}238\mathrm{.}93$ $ $1,648,63$ b$.$ Employment Insurance $ $746,55$ c$.$ Workers' Compensation $ $843\mathrm{.}75$ $ $5,197502.$ Pension, group insurance, disability a$.$ Pension plan contributions $(7\%$ of base$)$ b$.$ Group insurance $($life$,$ health, dentah $ $2\mathrm{.}362,50$ $ $2,700$ c$.$ Short$-$term disability $ $85$ d$.$ Long$-$term disability $ $50$ $ $4,3503.$ Payments for time not worked $ $2\mathrm{.}430$ a$.$ Paid vacation and statutory holidays $(20$ days average$)$ $ $675$ b$.$ Paid sick days $(5$ days average$)$ E $121$b$.$ Paid sick days $(5$ days average$)$ AB c$.$ Paid rest periods, lunch periods, etc. $ $675.$ $ $1\mathrm{.}125$ d$.$ Payments for jury duty, leave for bereavement, or other personal reasons $ $1204.$ Other items $ $1227\mathrm{.}50$ a$.$ Contributions to employee savings plan $ $1012\mathrm{.}50$ b$.$ Tuition reimbursement plan $(50\%)$ $ $80$ C$.$ EAP $ $100$ $ $35$ a$.$ Discounts on goods and services purchased from company by employees Total $$14,014\mathrm{.}02$ You also have data from a consulting firm that indicates employee preferences for different forms of benefits Pupe $182$ Exhibit $9\mathrm{.}10).$ Based on all this information, you have two possible concession packages that you propose, labelled "Option $1"$ and "Option $2"$ Exhibit $9\mathrm{.}11).$ EXHIBIT $9\mathrm{.}10$ Benefit Preferences $4$ ENG $12$:$19$ AM $021-11-16$EXHIBIT $9\mathrm{.}10$ Benefit Preferences Benefit Type Healthcare plan Importance to Workers Holidays Paid vacation $70$ Life insurance $82$ Long$-$term disability $72$ Short$-$term disability $60$ Paid rest periods. lunch breaks, etc $55$ Dental plan $51$ Profit Sharing $21$ Contributions to Savings plan $13$ Discount on goods $5$ or and $12$:$19$ AMFair treatment in administration Note: $0=$ unimportant: $100=$ extremely important $100$ EXHIBIT $9\mathrm{.}11$ Two Possible Packages for Cutting Benefit Costs Option $1$ Implement deductible $(525$ annually$)$ for Healthcare plan Dental plan $.$ Require employee's contribution to: Pension plan $(3\mathrm{.}5\%$ of base pay$)$ Require probationary period $($one year before eligible for Discounts on goods Contributions to employee savings plan Option $2$ Imnrmnd claims nine sing forMIR 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 $.$ EXHIBIT $9\mathrm{.}12$ Analysis of Cost Implications for Different Cost$-$Cutting Strategies: Lightning Industries Cost$-$Saving Strategy Savings as $\%$ of Benefit$-$Type Cost Require probationary period before eligible $($one year Discount on goods and services Type here to search ORE $06\backslash$deg C A $10$ GRequire probationary period before eligible $($one yeary Discount on goods and services Contributions to employee savings plan $10$ Improved claims processing: $10.$ Group insurance $10$ Short$-$term disability $5$ Long$-$term disability $3$ Questions $1.$ Cost out each of the two options, using the information provided in Exhibits $9\mathrm{.}9$ and $9\mathrm{.}12.2.$ 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 $6$C $04$ NO o $12202$ ITQuestions $1.$ Cost out each of the two options, using the information provided in Exhibits $9\mathrm{.}9$ and $9\mathrm{.}12.2.$ 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? $6\backslash$deg C A $44$ EN