Case Lightning Industries manufactures lamps for residential homes

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Case v. Laura Jacobs, is ely with increasing ensation package Lightning Industries resident of the company, Laura Jacob Lightning Industries manufactures lamps for residential homes. The convinced that she must get concessi ced that she must get concessions from the workers if Liahtning is to compete effectively with in loyee benefits. She doesn't mind foreign competition. In particular. Jacobs is displeased with the cost conceding a competitive wage increase (maximum 3 percent), but she wants the total compensation par to cost 3 percent less. The current costs are shown in Exhibit 9.9. EXHIBIT 9.9 BIT 9.9 Current Compensation Costs $36,769 Average yearly wage $ 17.68 Average hourly wage $12,923 Dollar value of yearly benefits, per employee $49,769 Total compensation (wages plus benefits) Daily average number of hours paid Benefits Average Employer Cost/ Employee/Year 1. Legally required benefits $ 3,549 Canada Pension Plan Employment Insurance Workers' Compensation $1647 Pension group insurance, $ 34 Pension plan contributions Group insurance fe, health, den $ 2.450 $ 523 c Short-term disability d. Long-term disability Discounts on goods and services purchased from company by employees Miscellaneous payments (termination pay allowances. moving expenses, etc.) 3. Payments for time not worked a Paid vacations (16 days average) $ 3.324 b. Paid statutory holidays (9 days) Paid rest periods, lunch periods. wash-up clothes-change time, get ready time, etc. (60 minutes) $ 1.558 $ 973 $ 727 time, d. Payments for jury/witness duty, voting time, leave for bereavement, or other personal reasons $ 66 4. Other items $ 2,681 a. Contributions to employee savings plan b. Tuition reimbursement plan (50%) $ 1.064 $ 804 c. EAP $ 687 d. Special wage payments ordered by courts, payments to union stewards, etc. $ 126 Total $13,000 Your assistant has surveyed other companies that are obtaining concessions from employees. 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 can propose, labelled "Option 1" and "Option 2" (Exhibit 9.11). MPORTANCE TO WORKERS ETMENLER EXHIBIT 910 / Benefit Preference OR METHOD OF ADMINISTERIO ENEFIT Pensions Mathcare plan Holidays Paid vacation Life insurance Long-term disability Short-term disability Paid rent periods. lunch breaks, etc Dental plan Proft sharing Contributions to savings plan Discount on goods Fair treatment in administration g9%88% Note important to extremely important Two Possible Packages for Cutting Benefit Costs EXHIBIT 9.11 Option 1 Implement deductible ($50 annually for Healthcare plan Dental plan Reduction of benefit: Eliminate 10-minute paid break Coordination with legally required benefit: Integrate CPP with Lightning Industries pension plan (subtract CPP payout from pension benefit) Option 2 Improved claims processing for Short-term disability Long-term disability Require probationary period (one year) before eligible for Discounts on goods Contributions to employee savings plan Coinsurance (80% Healthcare plan CHAPTER 9 EMPLOYEE BENEFITS Questions cost out these package cost bese packages given the data in Exhibits 99 and 910 and urance carriers and other information sources (Exhibit 9.12) ckage should you recommend to Jacobs? Why? the strategies do you think will require less input from employees in various insuran which package 3. Which of the and 910 and the information obtained from input from employees in terms of their reactions 9.12 EXHIBIT 9.12A Analysis of Cost Implications for Different Cost-Cutting Lightning Industries nt Cost-Cutting Strategies: COST-SAVING STRATEGY SAVINGS AS % OF BENEFIT COST Deductible ($50 annually): Healthcare plan Dental plan Require probationary period before eligible (one year): Discount on goods and services . Contributions to employee savings plan Improved claims processing: Short-term disability . Long-term disability Coordination with legally required benefits: . Integrate CPP with Lightning Industries pension plan Case v. Laura Jacobs, is ely with increasing ensation package Lightning Industries resident of the company, Laura Jacob Lightning Industries manufactures lamps for residential homes. The convinced that she must get concessi ced that she must get concessions from the workers if Liahtning is to compete effectively with in loyee benefits. She doesn't mind foreign competition. In particular. Jacobs is displeased with the cost conceding a competitive wage increase (maximum 3 percent), but she wants the total compensation par to cost 3 percent less. The current costs are shown in Exhibit 9.9. EXHIBIT 9.9 BIT 9.9 Current Compensation Costs $36,769 Average yearly wage $ 17.68 Average hourly wage $12,923 Dollar value of yearly benefits, per employee $49,769 Total compensation (wages plus benefits) Daily average number of hours paid Benefits Average Employer Cost/ Employee/Year 1. Legally required benefits $ 3,549 Canada Pension Plan Employment Insurance Workers' Compensation $1647 Pension group insurance, $ 34 Pension plan contributions Group insurance fe, health, den $ 2.450 $ 523 c Short-term disability d. Long-term disability Discounts on goods and services purchased from company by employees Miscellaneous payments (termination pay allowances. moving expenses, etc.) 3. Payments for time not worked a Paid vacations (16 days average) $ 3.324 b. Paid statutory holidays (9 days) Paid rest periods, lunch periods. wash-up clothes-change time, get ready time, etc. (60 minutes) $ 1.558 $ 973 $ 727 time, d. Payments for jury/witness duty, voting time, leave for bereavement, or other personal reasons $ 66 4. Other items $ 2,681 a. Contributions to employee savings plan b. Tuition reimbursement plan (50%) $ 1.064 $ 804 c. EAP $ 687 d. Special wage payments ordered by courts, payments to union stewards, etc. $ 126 Total $13,000 Your assistant has surveyed other companies that are obtaining concessions from employees. 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 can propose, labelled "Option 1" and "Option 2" (Exhibit 9.11). MPORTANCE TO WORKERS ETMENLER EXHIBIT 910 / Benefit Preference OR METHOD OF ADMINISTERIO ENEFIT Pensions Mathcare plan Holidays Paid vacation Life insurance Long-term disability Short-term disability Paid rent periods. lunch breaks, etc Dental plan Proft sharing Contributions to savings plan Discount on goods Fair treatment in administration g9%88% Note important to extremely important Two Possible Packages for Cutting Benefit Costs EXHIBIT 9.11 Option 1 Implement deductible ($50 annually for Healthcare plan Dental plan Reduction of benefit: Eliminate 10-minute paid break Coordination with legally required benefit: Integrate CPP with Lightning Industries pension plan (subtract CPP payout from pension benefit) Option 2 Improved claims processing for Short-term disability Long-term disability Require probationary period (one year) before eligible for Discounts on goods Contributions to employee savings plan Coinsurance (80% Healthcare plan CHAPTER 9 EMPLOYEE BENEFITS Questions cost out these package cost bese packages given the data in Exhibits 99 and 910 and urance carriers and other information sources (Exhibit 9.12) ckage should you recommend to Jacobs? Why? the strategies do you think will require less input from employees in various insuran which package 3. Which of the and 910 and the information obtained from input from employees in terms of their reactions 9.12 EXHIBIT 9.12A Analysis of Cost Implications for Different Cost-Cutting Lightning Industries nt Cost-Cutting Strategies: COST-SAVING STRATEGY SAVINGS AS % OF BENEFIT COST Deductible ($50 annually): Healthcare plan Dental plan Require probationary period before eligible (one year): Discount on goods and services . Contributions to employee savings plan Improved claims processing: Short-term disability . Long-term disability Coordination with legally required benefits: . Integrate CPP with Lightning Industries pension plan