week 7 assignment

Text: Milkovich, G. T., Newman, J. M., Gerhart, B., & Martocchio, J. J. (2011). Compensation and benefits(custom text). New York, NY: McGraw-Hill Irwin.

Application: Course Project Part 3—Exploring Retirement Options

According to the CIA World Factbook, the average life expectancy in the United States is 78.37 years. If the standard age of retirement is 65 years old, then the average American worker can expect to live 13 years beyond retirement. Even with minimal and prudent spending, 13 years of retirement for an individual can cost hundreds of thousands of dollars. Because retirement represents such a substantial expense, many responsible employers offer some kind of assistance with planning and saving for retirement.

There are two commonly used retirement options that organizations use to provide employee support: defined benefit plans and defined contribution plans. Organizations that offer defined benefit plans provide a specified monthly benefit to retired employees. Most commonly, the monthly benefit is determined by a formula that incorporates an employee’s past compensation and length of tenure. On the other hand, organizations that offer defined contribution plans will set up individual retirement accounts for employees. Retired employees’ benefits will consist of the money credited to their accounts through employer contributions, personal contributions, and investment earnings. One of the most common examples of defined contribution is the 401(k) plan.

For Part 3 of the Course Project, conclude your research and efforts on the company introduced in Week 4’s scenario. To complete this part of the project, examine Chapter 14, “Employer-Sponsored Retirement Plans,” in your text, to explore retirement options that may be applicable to the company’s total rewards package. Conduct additional research on retirement packages to determine how modifications and additions can be made to an organization’s existing retirement package. Finally, outline all of your total rewards recommendations by combining your suggestions from each part of this Course Project.

Scenario

The final component of compensation and benefits that the GM would like your HR firm to address involves modifying the company’s current retirement package. The company recently conducted a brief survey of its employees and found that employees are generally satisfied with the company’s core package of benefits. Currently, their benefits include all those that are legally required, with the company covering 70% of the cost of premiums, a 60% LTD plan, unlimited sick leave, and three weeks paid vacation annually. On the other hand, employees were fairly neutral in regards to the current retirement plan, which is a simple 401(k) offered through a major brokerage house. This retirement plan allows for a limited set of investment options with no employer match on employee pre-tax contributions.

As the company marks another successful year within the technology industry, and the stability of the company is no longer in question, the GM would like to revise the current retirement plan to be more externally competitive. Though there are limits to what the company can offer, he believes that improvements in retirement options could better meet the needs of current employees while also helping to attract prospective talent.

To complete Part 3 of your Course Project, respond to the following in a 4- to 5-page paper:

· Justify modifications and additions to the organization’s retirement package.

. Identify at least two organizations within the technology industry that offer exemplary retirement packages.

. Briefly describe each organization and reference its website.

. Create a bulleted list for each organization that details the components of its retirement package.

· Describe at least three modifications or additions you could make to the company’s current retirement package.

. How could these changes increase external competitiveness and employee satisfaction?

· Prioritize the modifications or additions you described.

. Under budget constraints, which elements would be essential, and in which elements could compromises be made? Justify your response by citing real-world examples.

· Explain how the retirement package should rank among other aspects of compensation and benefits.

. What compromises, if any, could be made in elements of the company’s total rewards package to accommodate improvements to the current retirement package? Justify your response.

· Summarize your total rewards recommendations for the Course Project into a cohesive, well-aligned rewards package.

· Describe the compensation and benefits strategies you believe are appropriate for the company. Include an explanation of your suggestions for:

. Pay levels, forms, and mix

. Equity-based compensation

. Retirement options

· What key points have you learned about total rewards, strategic alignment, and external competitiveness?