Financial and Other Aspects of Employment
"We would like you to work for us:' When offered an employment position. you should examine a range of factors. Carefully assess the organization. the specific job. and the salary and other benefits.
Accepting an Employment Position
Before accepting a position. do additional research about the job and the company. Request information about your specific duties and job expectations. If someone currently has a similar position, ask to talk to that person. If you are replacing a person who is no longer with the company, obtain information about the circumstances of that person's departure.
The Work Environment
Investigate the work environment. The term corporate culture refers to management styles. work intensity. dress codes. and social interactions witrun an organization. For example. some companies have rigid lines of communication. while others have an open-door atmosphere. Are the values. goals, and lifestyles of cun'ent employees similar to yours? If not. you may find yourself in an uncomf0l1able situation that doesn't allow you to perform according to your capabilities.
Consider company policies and procedures for salary increases. evaluations of employees. and promotions. Talk with current workers to obtain this information.
Factors Affecting Salary
Your initial salary will be influenced by your education and training. company size. and salaries for comparable positions. To ensure a fair starting salary. talk to people in similar positions and check business journals for information about salary levels. In addition, make sure you clearly understand company procedures and policies for raises. In recent years. increased emphasis has been placed on team results for salary increases and on rewards for expanded learning.
Performance quality and work responsibilities are the main influences on salary advances. Meet regularly with your supervisor to obtain performance evaluations and suggestions for professional growth. Communicate your desire for increased work responsibilities and greater financial rewards. Meeting and exceeding organizational expectations should enhance your monetary position. If not, you may wish to consider other employment opportunities.
Evaluating Employee Benefits
Escalating health care costs. changing family situations. and concerns about retirement have increased the attention given to supplementary compensation benefits.
Meeting Employee Needs
In recent years. nonsalary employee benefits have expanded to meet the needs of different life situations. The increasi.ng numbeI of two-income and single-parent households has resulted in a greater need for child care benefits and leaves of absence to care for newborn children. newly adopted children, and other dependents. The need for elder care benefits for employees with dependent parents or grandparents also increases. Child care benefits are offered in a variety of forms. ranging from direct payments for child care to facilities on company premises.
Other employee benefits designed to meet employees' needs include flexible work schedules: work-at-home arrangements: legal assistance: counseling for health, emotional. and financial needs: and exercise and fitness programs. Such benefits not only enhance the quality of employees' lives but are profitable for organizations because happier. healthier employees miss fewer workdays and have a higher level of productivity.
Cafeteria-style employee benefits are programs that allow workers to base their job benefits on a credit system and personal needs. Flexible selection of employee benefits has become common. A man'ied employee with children may opt for increased life and health insurance. while a single parent may use benefit credits for child care services. The Financial Planning for Life's Situations box on page 52 suggests benefits for different life situations. Like any financial decision. employee benefits involve a trade-off. or opportunity cost. that you must assess.
Many organizations offer flexible spending plans. also called expense reimbursement accounts. This anangement allows you to set aside part of your salary for paying medical or dependent care expenses. These funds are not subject to income or Social Security taxes. However. money not used for the specified purpose is forfeited. Therefore, you must carefully plan the amount to be designated for a flexible spending plan.
In a similar manner. a medical-spending account (MSA) allows people who are selfemployed or work for a company with 50 or fewer employees the oppOlwnity to pay health care costs with pretax dollars. The MSA has two components: (1) health insurance coverage with a high deductible and (2) a tax-defened savings account for paying medical expenses. Money in this account may be taken out for other uses: however. the funds are then taxed, along with an additionall5 percent tax penalty. While MSAs haye tax-saving implications. the high deductible may not be affordable for many households.
When matching dependent health care needs and medical insurance plans. consider
the following:
- Types of services ayailable and location of health care providers.
- Direct costs (insurance premiums) to you.
- Anticipated out-of-pocket costs (deductibles and coinsurance amounts).
As people live longer, profit-sharing plans and retirement programs are increasing in importance. In addition to Social Security benefits. some employers contribute to a pen-ion plan. Vesting is the point at which retirement payments made by the organization on your behalf belong to you even if you no longer work for the organization. Vesting schedules vary, but all qualified plans (those for which an employer may deduct contributions to the plan for tax purposes) must (1) be 100 percent vested on completion of five years of service or (2) have 20 percent Vesting after three years and full vesting, in stages, after seven years. Vesting refers only to the employer's pension contributions; employee conttibutions belong to the employees regardless of the length of their service with the organization.
Workers are commonly allowed to make personal contributions to company-sponsored retirement programs. These plans usually involve a variety of investments, making it easy for employees to create a diversified portfolio for their retirement funds.
Comparing Benefits
Two methods used to assess the monetary value of employee benefits are market value calculations and future value calculations.
Market value calculations determine the specific monetary value of employee benefits-the cost of the benefits if you had to pay for them. For example, you may view the value of one week's vacation as 1/52 of your annual salary, or you may view the value of a life insurance benefit as what it would cost you to obtain the same coverage. You can use this method to determine the difference between two job offers with different salaries and employee benefits.
Future value calculations enable you to assess the longterm worth of employee benefits such as pension programs and retirement plans. For example, you can compare the future value of payments contributed to a company retirement fund to that of other saving and inyestment options.
You should also take tax considerations into account when you assess employment benefits. A tax-exempt benefit is one on which you won't have to pay income tax, but a tax-deferred benefit requires the payment of income tax at some future time, such as at retirement. In recent years. the federal government has required that taxes be paid on certain types of nonfinancial benefits. For example. the value of a company car used for personal travel is considered taxable income.
To be exempt from federal income tax. a benefit plan must be "nondiscriminatory": that is. lower-paid coworkers must receive benefits comparable to those given to highly paid executies, If executives are given life insurance coverage in which the premium constitutes a higher proportion of their salaries. the excess value of the insurance premium is taxable. When assessing employment compensation and benefits. consider their taxability, since an untaxed benefit of lower value may be worth more than a benefit of higher value that is subject to taxation.
Your Employment rights
Employees have legal rights both during the hiring process and on the job. For example. an employer cannot refuse to hire a woman or terminate her employment because of pregnancy. nor can it force her to go on leave at an arbitrary point during her pregnancy. In addition, a woman who stops working due to pregnancy must get full credit for previous service. accrued retirement benefits, and accumulated seniority. Other employment rights include the following:
- A person may not be discriminated against in the employment selection process on the basis of age, race. color. religion. sex. marital status. national origin, or mental or physical disabilities.
- Minimum-wage and overtime pay legislation apply to individuals in certain work settings.
- Workers' compensation (for work-related injury or illness). Social Security, and unemployment insurance are required benefits.
