Compensation issues
1. The
Employee Benefit Research Institute (www.ebri.org) has conducted a
“Retirement Survey” for several years. Visit EBRI’s website and find
the 2010 Retirement Confidence Survey. Scan the “Findings” and take a
look at the “Fact Sheets” and comment on how HR might help solve the
problem of inadequate employee participation in company supported retirement
plans (e.g., 401K-like programs). Also, make observations on why most companies
are shifting from defined benefit to contributory plans and any other aspects
of retirement planning from the HR perspective.
2. One of
basic premises of economics is that people respond to incentives. Give examples
of individual incentives used by an organization in which you were either
employed or know about. Describe why those plans were successful or
unsuccessful. How could you have structured the unsuccessful ones to work
better?
3. The
attached series of articles from SHRM regarding pension funding issues helps us
understand why employers are shifting away from defined benefit plans to
contribution plans (e.g., 401K). To pay a $30,000 per year pension takes about
$500,000 in the bank. If you are General Motors with thousands of pensioners,
you have to tie up a lot of cash to cover the pension obligations. That much
cash is a tempting source for urgently needed funds, and leads to borrowing and
those sincere promises to pay it back. Do you have any observations?
4. SHRM reports, “In what could prove to be a
bellwether for corporate compensation generally, financial organizations have
changed their pay mix, moving away from short-term incentives in favor of
increased salary, deferred compensation and modified incentive program design.
According to a global survey by HR consultancy Mercer, key changes in the
sector’s short-term incentive (STI) programs include more focus on balanced,
risk-adjusted performance measurement and deferral of bonus payouts over
several years.” The full SHRM article is attached and the Mercer Survey
summary is http://www.mercer.com/press-releases/1368340. Do you have any
observations regarding SHRM’s claim that the Mercer survey represents a
“bellwether for corporate compensation”?
5. It seems that competition has tended to drive up the
“worth” of a good CEO to unsustainable levels. Basic economics says
that someone should be paid what they are worth. Read the attached WSJ article
about how one company tried to pull back. Did Sharper Image make some good
decisions? Has their profitability shown results?
about 500 words total
